Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County Super. Ct. No. GIC827701, Richard E.L. Strauss, Judge.
McINTYRE, J.
Ron and Teresa Miletich appeal a judgment entered after the trial court granted summary adjudication of their claims for tortious breach of the implied covenant (bad faith), fraud, unfair business practices and violations of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.) against their insurer, Travelers Property Casualty Insurance Company (Travelers), and a jury found in Travelers' favor on their remaining cause of action for breach of contract. The Miletichs argue that the court (1) erred in granting summary adjudication in Travelers' favor on their bad faith claim; (2) abused its discretion in denying their subsequent motion to reclassify the case as a limited jurisdiction matter (i.e., one where the amount in controversy was less than $25,000 (Code Civ. Proc., § 403.070)); and (3) abused its discretion in awarding Travelers expert witness fees as an element of costs. (All further statutory references are to the Code of Civil Procedure.) The order denying the request to reclassify the case as a limited jurisdiction matter as that order is not properly appealable and we otherwise find the Miletichs' arguments unavailing. Accordingly, we affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
In November 2002, the Miletichs filed a claim with Travelers under their homeowners' insurance policy for damage to their home after a storm. After inspection of the property by a Travelers' adjuster, the insurer initially denied coverage for certain claimed items, including damage to the roof of the house. The Miletichs retained counsel, who demanded that Travelers reconsider its coverage decision relating to the roof damages and presented Travelers with photographs of the roof and a repair estimate prepared by a general contractor to support the Miletichs' position that the damage was caused by wind and thus covered under the policy. Travelers had the roof inspected by a roofing consultant, who opined that the damage to the roof was primarily the result of erosion and normal wear and tear rather than wind.
Travelers paid the Miletichs for the damage to their fence and the interior of the house, less their deductible, but declined their demand to replace the roof, instead offering them $350 to replace shingles that were blown off by the wind. In March 2004, the Miletichs filed this action against Travelers arising out of the denial of coverage for their roof damage.
Prior to trial, the trial court granted Travelers' motion for summary adjudication of the Miletichs' breach of implied covenant, fraud, unfair business practices and Consumer Legal Remedies Act claims. Shortly thereafter, Travelers made a compromise offer under section 998 to settle the Miletichs' claims for $5,000, with each side to bear its/their own costs. The Miletichs did not accept the offer, but instead objected to it on the ground that it was made to them jointly.
Concerned about the costs of bringing their expert from Florida to testify at trial, the Miletichs made an ex parte request to have the case reclassified as a limited jurisdiction matter so that they could rely on the expert's deposition testimony instead. The court, however, denied their request and the case proceeded to trial on the remaining claim for breach of contract. A jury found that their policy's exclusion for losses caused by "wear and tear, marring, deterioration, and failure to maintain" precluded coverage for the roof damages and the court entered judgment in Travelers' favor.
Travelers submitted a memorandum of costs seeking to recover, inter alia, expert witness fees totaling $27,816.47. The Miletichs moved to strike the cost memo or, alternatively, requested that the court tax various cost items, including the request for expert fees. The court granted the motion to tax in part, awarding Travelers expert witness fees of $25,660.34. The Miletichs appeal.
DISCUSSION
1. Summary Adjudication of the Miletichs' Bad Faith Cause of Action
The Miletichs contend that the trial court erred in granting summary adjudication of their bad faith claim because much of Travelers' evidence in support of the motion was inadmissible, Travelers' separate statement was inadequate, the admissible evidence was insufficient to establish Travelers' entitlement to judgment as a matter of law and their evidence was sufficient to establish a triable issue of fact as to whether there was a genuine dispute as to the cause of their loss. However, in light of the jury's ultimate determination that there was no coverage for the Miletichs' roof damage under the Travelers policy, any error by the trial court in granting summary adjudication of the bad faith claim was in any event harmless and does not support a reversal of the judgment in Travelers' favor. (See Benavides v. State Farm General Ins. Co. (2006) 136 Cal.App.4th 1241, 1250 ["[i]f the insurer's investigation - adequate or not - results in a correct conclusion of no coverage, no tort liability arises for [tortious] breach of the implied covenant"] and authorities cited therein; compare McMillin Scripps North Partnership v. Royal Ins. Co. (1993) 19 Cal.App.4th 1215, 1222.)
2. Denial of Request to Have the Matter Reclassified
The Miletichs also argue that the court erred in denying their request to have the case reclassified as a limited jurisdiction matter. However, the denial of a motion for reclassification is not appealable, but must instead be challenged by writ of mandate. (§ 403.080; Garau v. Torrance Unified School Dist. (2006) 137 Cal.App.4th 192, 199; see also Yousafzai v. Hyundai Motor America (1994) 22 Cal.App.4th 920, 925-926.) Accordingly, we reject the Miletichs' appeal from the order denying reclassification.
3. The Award of Expert Witness Fees
Section 998 provides relevant in part:
"(a) The costs allowed under Sections 1031 and 1032 shall be withheld or augmented as provided in this section.
"(b) Not less than 10 days prior to commencement of trial . . . any party may serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time. The written offer shall include a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted. . . .
". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"(c)(1) If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer. In addition, . . . the court . . . in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses . . . ."
This statute is designed to encourage the settlement of lawsuits prior to trial by penalizing litigants who fail to accept an offer that, with the benefit of hindsight, was reasonable. (Bodell Construction Co. v. Trustees of Cal. State University (1998) 62 Cal.App.4th 1508, 1518.)
The Miletichs contend that the trial court abused its discretion in denying their motion to tax Travelers' expert witness fees as an element of costs. Specifically, the Miletichs contend that (A) Travelers' section 998 offer was defective; (B) the fee award improperly included fees incurred prior to the date of the offer and fees relating to experts who were never deposed and who did not testify at trial; (C) the amount of the fee award was facially invalid because it exceeded the amount of damages they were seeking to recover at trial; and (D) the award included fees to Exponent, Inc. that were for duplicative work or were unsubstantiated. We address these arguments in turn below.
A. The Validity of the Offer
The Miletichs contend that Travelers' section 998 offer was invalid because it was made to them jointly. They correctly point out that a section 998 offer made to multiple parties is generally valid only if it is expressly apportioned among them and not conditioned on acceptance by all of them. (Menees v. Andrews (2004) 122 Cal.App.4th 1540, 1544; Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102, 112.) However, this general rule does not apply where the parties to whom the offer is made have a unity of interest and a single indivisible injury. (Vick v. DaCorsi (2003) 110 Cal.App.4th 206, 210-213.)
The Miletichs nonetheless argue that because they were legally separated and "in the process of filing for divorce" at the time the offer was made, the unity of interest exception was inapplicable. Travelers counters that the Miletichs never informed it of their estranged status and further failed to provide the trial court with evidence or legal authority to establish that they no longer had a unity of interest (for example, by showing that the property was no longer community property) or an indivisible injury underlying their breach of contract claim.
As the offeror, Travelers had the burden of establishing the validity of its offer. (Taing v. Johnson Scaffolding Co. (1992) 9 Cal.App.4th 579, 585.) Travelers met that burden. The allegations of the Miletichs' complaint and the evidence in the record establish that they each had a community property interest in the house and both were named as insureds under the Travelers' policy, at and after the time the offer was made. Although the Miletichs submitted evidence that they promptly objected to the offer on the ground that it was made to them jointly and, in reply, submitted evidence that they had been separated at the time of the offer, they failed to make any argument supported by legal authorities that the fact of the separation had changed the nature of their ownership interests in the property or rendered their claim for breach of the insurance policy divisible. Likewise, the Miletichs have not established these matters on appeal. Accordingly, they have not shown that the trial court erred in finding that Travelers' section 998 offer was valid.
B. Components of the Fee Award
The Miletichs contend that the court erred in awarding Travelers expert witness fees that were incurred before the date of the offer and fees related to experts who were not deposed and did not testify at trial. However, section 998 does not preclude a trial court from exercising its discretion to award expert witness fees incurred by the offeror prior to the date of the offer (Regency Outdoor Advertising, Inc. v. City of Los Angeles (2006) 39 Cal.4th 507, 532-533) and those incurred in preparing for trial, regardless of whether the expert actually testifies in deposition or at trial. (§ 998, subd. (c)(1); Michelson v. Camp (1999) 72 Cal.App.4th 955, 975.) Accordingly, the Miletichs' arguments in this regard are unavailing.
C. Reasonableness of the Award Relative to the Amount of Damages Sought
The Miletichs argue that the award was invalid on its face because it exceeded the amount of damages they were seeking to recover at trial. However, this argument misses the mark. While the amount of damages sought by an offeree may be relevant in determining whether an offer is reasonable and made in good faith, it is not a relevant factor to be considered in determining whether a fee award is reasonable. (See generally Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1262-1263, 1265-1268 [reasonableness of fee award is determined from a consideration of the hours]; Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 699-700; also § 2034.430.)
D. The Fees Relating to Exponent, Inc.
Finally, the Miletichs contend that the court should not have awarded Travelers fees it paid to Exponent, Inc. because the expert did not provide an itemized list of his fees at trial and because the invoices showed that some of the work was duplicative and included items that were not adequately explained. Although a memorandum of costs is generally prima facie evidence of the propriety of the costs requested therein, the burden shifts to the claiming party to establish the reasonableness of any costs as to which a proper objection is raised. (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774.) However, a party's "mere statements in the points and authorities accompanying its notice of motion to strike cost bill" are insufficient to constitute a proper objection or to rebut the prima facie showing that the costs were necessarily incurred. (Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 266.)
Here, the only evidence submitted by the Miletichs in support of their challenge to the fees relating to Exponent, Inc. consisted of the declaration of their counsel that the expert "refused to testify under oath" at trial regarding the amount of time he had spent on the case. This evidence, however, is insufficient to substantiate the Miletichs' conclusory challenge to the reasonableness or necessity of the fees in question. Further, the expert testified at trial as to the nature of the work that Exponent, Inc. performed in the case and the court could reasonably have relied on that testimony in determining that the fees attributable to Exponent, Inc. were reasonable and necessary. The Miletichs have not shown that the trial court abused its discretion in awarding Travelers Exponent, Inc.'s fees.
DISPOSITION
The judgment is affirmed. Travelers is awarded its costs of appeal.
WE CONCUR: HALLER, Acting P.J., McDONALD, J.