Opinion
B205732
7-15-2009
PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiff and Appellant, v. FIRE INSURANCE EXCHANGE, Defendant and Respondent.
Soltman, Levitt, Flaherty & Wattles LLP, Steven Soltman, Philip J. Bonoli and John Levitt for Plaintiff and Appellant. Tharpe & Howell, Christopher S. Maile and Eric B. Kunkel for Defendant and Respondent.
Not to be Published in the Official Reports
Appellant, Philadelphia Indemnity Insurance Company, appeals from the trial courts orders granting respondent Fire Insurance Exchanges motion for judgment and awarding costs in appellants action for equitable contribution and declaratory relief. Appellant asserts that the court erred in concluding as a matter of law that it was not entitled to contribution based on a conclusion that appellant and respondent did not share the same legal obligation to defend or indemnify a third-party insured in a personal injury action. The trial court concluded that the business pursuits exclusion in a homeowners insurance policy issued to the third-party insured by respondent eliminated coverage for the personal injury. As we explain more fully herein, the uncontroverted evidence in the record demonstrates that the injury at issue occurred during the course of the third-party insureds business and was therefore subject to the business pursuits policy exclusion. Thus the court properly granted judgment for respondent as a matter of law. In addition, we conclude the trial court did not abuse its discretion awarding respondents its litigation costs. Accordingly, we affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The facts giving rise to appellants claim for equitable contribution and declaratory relief have their origin in a separate personal injury action, Visco v. Liebegott, et al., (case No. LC069838) (the "Visco Action") brought against the San Fernando Valley Community Mental Health Center (the "Center") and Gayle Liebegott, a marriage and family therapist intern who worked at the Center. At the time of the incident at issue in the Visco Action, appellant insured the Center under a commercial line policy which included general liability coverage. This policy also extended coverage to employees of the Center for acts within the scope of their employment or while performing duties related to the conduct of the Centers business (the Centers Policy). Respondent had issued a homeowners insurance policy to Liebegott and her husband (the "Liebegott HO policy") which was also in effect at the time of the incident described below.
The policy declarations identified the Center as a "non-profit organization." The Centers Policy had liability limits of $1 million. The Center also had "excess" policy with appellant with policy limits of $2 million. The Commercial General Liability Coverage Part of the Centers policy contained the following: "SECTION II — WHO IS AN INSURED:"
"2. Each of the following is also an insured:
"a. Your `employees, other than either your `executive officers (if you are an organization other than a partnership, joint venture or limited liability company) . . . but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business."
The Leibegott HO policy, which had policy limits of $500,000, provided in pertinent part: "LIABILITY COVERAGE E — Personal Liability"
"We pay those damages which an insured becomes legally obligated to pay because of bodily injury ... personal injury resulting from an occurrence to which this coverage applies." An "occurrence" is defined under the policy to include " an accident including exposure to conditions which results during the policy period in bodily injury or property damage."
The Visco Action . In April 2004, the Center hired Liebegott to work as a mental health therapy intern. In that regard, she conducted private counseling/therapy sessions with clients at the Centers facility in the San Fernando Valley. When she was hired, Liebegott was informed that she would be required to attend weekly after-hours staff meetings from approximately 4:00-6:00 p.m. These mandatory staff meetings generally occurred on Wednesdays.
About a month after she began work at the Center, Liebegott informed her supervisor, Robin Blythe that she would have a problem attending the weekly staff meeting because Liebegotts husband was away on business and would not be home in the evening to let her pit bull dog out of the house. Liebegott was concerned that if she left the Center during her lunch break to go home to let the dog outside she would be late returning to the Center and would miss work. But if Leibegott brought her dog to work with her for the day she would not miss any work and could attend the entire staff meeting in the evening. Blythe agreed to allow Liebegott to bring her dog to work on the day of the staff meeting. Other Center employees had also been permitted to bring their dogs to work on occasion. According to Blythe, she agreed to accommodate Liebegotts request, otherwise Blythe believed Liebegott would not be able to attend the staff meeting in the evening.
Liebegott brought her pit bull to work with her for the day on one occasion in the spring of 2004. She did not use the dog in her therapy sessions, nor had the dog been trained for that purpose.
Approximately six weeks later in June 2004, Liebegott again requested that she be allowed to bring her dog to work for the day because Liebegotts husband was once again out of town. Blythe agreed. Accordingly, on June 2, 2004, Liebegott brought her pit bull to work with her for the day. The dog stayed in the room with Liebegott during the counseling sessions. Late in the afternoon, Liebegott held a counseling session with Joseph Visco. The dog was present during the session. At some point during the session, Visco petted the dog, and the dog began licking Viscos hand and arm. Although Liebegott twice offered to remove the dog from the room, Visco stated it would not be necessary because he liked dogs. The dog began to climb onto Viscos lap and at some point it bit Visco on the upper lip.
On November 10, 2004, Visco filed a personal injury action for negligence and strict liability against the Center and Liebegott alleging the violation of local ordinances and the failure to restrain or prevent the dog from causing injury. Visco sought damages for physical and emotional damage. The complaint further alleged that Liebegott was acting in the course and scope of her employment when the incident occurred.
Appellants Defense of the Visco Action. The Center notified appellant of the action and appellant undertook the joint defense of the Center and Liebegott. Appellant did not reserve the right to dispute its obligation to defend or indemnify Liebegott. Appellant retained the law firm of Lewis, Brisbois, Bisgaard & Smith ("LBBS") to represent the Center and Liebegott.
Liebegott did not notify respondent of the Visco Action because she did not think it was necessary as the incident happened while she was at work and because the defense was being provided by her employer. However, in response to discovery requests, in August 2005, Liebegott identified respondent and disclosed the existence of her homeowners (HO) policy. LBBS lawyer, Elizabeth ODonnell who represented both the Center and Liebegott testified in her deposition that she was aware Liebegott had a homeowners insurance policy. ODonnell decided against notifying respondent of the claim at the time because she was concerned that respondent might cancel the Liebegott HO policy. Although ODonnell had not reviewed the Liebegott HO policy, she nonetheless assumed that it contained a policy exclusion for pit bulls.
The Liebegott HO policy did not contain an exclusion for pit bulls.
In response to written discovery in the Visco Action, the Center and Liebegott conceded that Liebegott was acting in the course and scope of her employment at the time Visco was injured. In September 2005, the Center and Liebegott also stipulated to liability.
During mediation, Visco refused to negotiate for anything less than Centers policy limits. On advice of LBBS counsel, Liebegott on October 5, 2005, signed a stipulation for binding arbitration and agreed to waive her right to appeal and any right to a trial de novo. In addition the stipulation did not limit in any way the amount of damages or interest which could be awarded against the Center or Liebegott and it required that the arbitration be commenced by November 19, 2005.
Notice to Respondent . On October 14, 2005, appellant send respondent a letter notifying it of the Visco Action; appellants letter indicated that the initial trial date (of October 26, 2005) had been postponed and that it was in the process of scheduling the arbitration for the first week in November 2005. The letter further requested that respondent establish a claims file and contact appellant to participate in the arbitration.
According to the representatives of respondent when it received the notice of the claim, it did not make an initial coverage determination under the Liebegott HO policy; respondent neither denied the claim nor accepted it. Respondent did, however, set a loss reserve, which was a standard practice that respondent did prior to a coverage determination being made. Respondents claims adjusters also did not conduct any investigation of the claims because they believed that the "major decisions" in the litigation had already been made, including the stipulation of liability by its insured Liebegott. Respondents claims representatives stated that given that the arbitration was set they did not want to "interfere" or distract LBBS handling of the case. Respondents adjusters were concerned about the lateness of the notice of the claim because of the status and posture of the litigation. Nonetheless, respondent did not make any legal determinations under the policy at that time as to whether the notice was "late" or whether respondent had suffered any prejudice as a result. Also during the time frame between October 2005 and March 2006, respondent did not consider or evaluate whether any coverage exclusions might have applied.
Nonetheless, within 10 days of receiving notice of the claim, adjusters in respondents medical claims unit determined that $ 1,000 policy limit under the Medical Payments to Others provision ("Medical Pay Coverage Provision") should be paid to Visco under the policy. They made this determination based only on the information that the insureds dog had bit a third-party; the adjusters did not evaluate the language of the coverage provision at that time or conduct any further investigation. They did not determine whether any possible coverage exclusions would have applied to the claim.
Liebegotts HO policy "LIABILITY COVERAGE F — Medical Payments To Others" provides in pertinent part: "We pay the necessary medical expenses for services furnished to a person other than [to the insured or resident of the household] . . . from the date of the occurrence causing bodily injury. . . This coverage applies to: [¶¶] (b) persons off the insured location if the bodily injury: [¶¶] (4) is caused by an animal owned by or in the care of the insured." Liebegotts HO policy also contained a provision: "Payment under this [Medical Payments to Others] coverage is not an admission of liability by an insured or us." Notwithstanding respondents initial determination to pay under this provision, respondent did not pay the claim on this coverage to Visco until May 2006.
Respondent did not participate in the arbitration of the Visco Action, which began in mid-November 2005 and ended with an arbitration award in March 2006 for Visco in the amount of $ 2,825,000. The Visco Action was ultimately settled by appellant for $3,045,000.
The Action for Contribution . After paying the settlement in the Visco Action, appellant filed a complaint seeking equitable contribution and declaratory relief against respondent. In respondents answer, it asserted various defenses including a defense based on a policy exclusion in Liebegotts HO policy for "business pursuits."
This exclusion states: "Applying to Coverage E and F — Personal Liability and Medical Payments to Others" "We do not cover bodily injury, property damage or personal injury which: 1. arises from or during the course of business pursuits of an insured."
Respondent and appellant filed cross-motions for summary judgment. In respondents motion, it argued that it had no legal obligation to defend or indemnify Liebegott because no coverage existed under the Liebegott HO policy because of, among other exclusions, the business pursuits exclusion in the policy. Respondent also asserted that appellant was not entitled to contribution because it was not given timely notice of the Visco Action. In appellants opposition and in its summary judgment motion it asserted that respondent had a duty to defend and indemnify Liebegott and to contribute to the defense of the Visco Action, and that neither the business pursuits, nor respondents claim of late notice eliminated the potential for coverage.
Respondent also argued that the "professional services exclusion" applied, but it had not specifically asserted the "professional services exclusion" as an affirmative defense.
In November 2007, the court conducted a hearing on the motions for summary judgment. The court granted respondents motion and denied appellants motion. In reaching these conclusions the court stated: "The exclusion for business pursuits applies." The court further explained that issue was whether Viscos injury arose during the course of Liebegotts business pursuits. The court found that the facts were undisputed that the incident occurred while Liebegott was acting in the course and scope of her employment providing counseling services to Visco. The court described the "relevant" facts as:
a. Liebegott was employed by the Center as a therapist.
b. She was required to attend weekly staff meetings from 4:00-6:00pm.
c. It would have been difficult to attend that day had she left the dog home—"in fact that she was unwilling, according to her deposition, so she brought the dog to work."
d. Her supervisor said she could bring the dog to work.
e. The dog bit Visco while he was in a therapy session with Liebegott.
The court also noted that Liebegott "was in control of the dog while at work, and while pursuing her profession. It does not matter that the dog was not used as part of the business." The court also dismissed an argument by appellant that respondent had "waived" the business pursuits exclusion and should be estopped from asserting it because it paid Visco the $1,000 policy limits on the Medical Pay Coverage Provision, notwithstanding the fact that the Medical Pay Coverage Provision contained the identical business pursuits exclusion. The court noted that the determination to pay under the Medical Pay Coverage Provision was done summarily without a full review of the facts. Finally, the court stated that it found "disturbing and unfair" that respondent did not receive notice of the Visco Action until the agreement to participate in the binding arbitration had been set and that Liebegott had waived certain rights.
Respondent filed a memorandum of costs in the action, seeking approximately $9,791 in litigation costs. Appellant thereafter filed a motion to tax costs, challenging more than $9,000 of the costs sought by respondent. The court denied the motion. The court entered judgment for respondent and awarded it all of the costs it sought. This timely appeal followed.
DISCUSSION
Before this court appellant asserts several errors. First it argues that the court erred in granting respondents summary judgment motion and denying its summary judgment motion. Second, appellant argues the court erred in overruling a number of its objections to the declaration of respondents claims manager Elizabeth Mancilla submitted in support of respondents motion. Finally, appellant complains that the court abused its discretion in denying its motion to tax costs. We address each of these arguments seriatim.
Appellant does not make distinct arguments as to the separate summary judgment motions. Appellants arguments focus on the courts purported errors in granting respondents motion; appellant implicitly suggests that rather than granting the respondents motion the court should have denied it and should have granted appellants motion instead.
I. The Summary Judgment Motions
A. Standard of Review .
On appeal from a summary judgment, we apply a de novo, or independent, standard of review in determining whether there are triable issues of material fact and whether the moving party is entitled to judgment as a matter of law. (Loggins v. Kaiser Permanente International (2007) 151 Cal.App.4th 1102, 1109 (Loggins); Powell v. Kleinman (2007) 151 Cal.App.4th 112, 121; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860 (Aguilar); Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158,1168.) "[W]e must consider all the evidence set forth in the moving and opposing papers except evidence to which objections were made and [properly] sustained. [Citation.]" (Loggins, supra, 151 Cal.App.4th at p. 1109.) "The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar, supra, 25 Cal.4th at p. 843.)
"A defendant moving for summary judgment has the initial burden of showing that a cause of action lacks merit because one or more elements of the cause of action cannot be established or there is an affirmative defense to that cause of action. (Code Civ. Proc., § 437c, subd. (o); Aguilar, 25 Cal.4th at p. 850.) If the defendant fails to make this initial showing, it is unnecessary to examine the plaintiffs opposing evidence and the motion must be denied. However, if the moving papers make a prima facie showing that justifies a judgment in the defendants favor, the burden shifts to the plaintiff to make a prima facie showing of the existence of a triable issue of material fact. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, 25 Cal.4th at p. 849.)
"In determining whether the parties have met their respective burdens, the court must `consider all of the evidence and `all of the inferences reasonably drawn therefrom, and `must view such evidence [citations] and such inferences [citations] ... in the light most favorable to the opposing party. (Aguilar, 25 Cal.4th at pp. 844-845.) `There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Id. at p. 850, fn. omitted.) Consequently, a defendant moving for summary judgment must `present evidence that would require ... a trier of fact not to find any underlying material fact more likely than not. (Id. at p. 845.)" (Powell v. Kleinman, supra, 151 Cal.App.4th at pp. 121-122.)
To obtain a summary judgment, "all that the defendant need do is to show that the plaintiff cannot establish at least one element of the cause of action. . . . [T]he defendant need not himself conclusively negate any such element. . . ." (Aguilar, supra, 25 Cal.4th at p. 853.) "To avoid summary judgment, admissible evidence presented to the trial court, not merely claims or theories, must reveal a triable, material factual issue. [Citation.] Moreover, the opposition to [a motion for] summary judgment will be deemed insufficient when it is essentially [conclusory], argumentative or based on conjecture and speculation. [Citations.]" (Wiz Technology, Inc. v. Coopers & Lybrand (2003) 106 Cal.App.4th 1, 11.)
B. Contentions on Appeal
In this court, appellant argues the trial court erred in ruling that as a matter of law appellant was not entitled to equitable contribution from respondent. Appellant asserts it was entitled to contribution and declaratory relief because respondent had a duty to defend and indemnify Liebegott in the Visco Action based on the Leibegott HO policy. As we shall explain, we disagree. In our view the court properly granted respondent summary judgment (and properly denied appellants summary judgment) on appellants complaint.
1. Legal Principles Governing the Application of Equitable Contribution.
In general, equitable contribution is the right to recover from a co-obligor which shares liability with the party seeking contribution. (Firemans Fund Insurance Company v. Maryland Casualty Company (1998) 65 Cal.App.4th 1279, 1292.) In the context of insurance law, the doctrine of equitable contribution is stated as "[w]here two or more insurers independently provide primary insurance on the same risk for which they are both liable for any loss to the same insured, the insurance carrier who pays the loss or defends a lawsuit against the insured is entitled to equitable contribution from the other insurer or insurers, . . ." (Firemans Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1289.) The right to contribution depends upon the existence of an obligation owed to a common insured. The right arises when one of two or more insurers are "obligated to indemnify or defend" the same loss or claim and one of those insurers has paid more than its share of the loss or defended the action without participation from the others. (Id. at p. 1293.) "Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers and should be shared by them pro rata in proportion to their respective coverage of the risk. The purpose of this rule of equity is to accomplish substantial justice by equalizing the common burden shared by coinsurers, and to prevent one insurer from profiting at the expense of others. [Citations.]" (Id. at pp. 1293-1294; italics in original.) "[T]he reciprocal contribution rights of coinsurers who insure the same risk are based on the equitable principle that the burden of indemnifying or defending the insured with whom each has independently contracted should be borne by all the insurance carriers together, with the loss equitably distributed among those who share liability for it in direct ratio to the proportion each insurers coverage bears to the total coverage provided by all the insurance policies. [Citations.]" (Id. at p. 1294.)
The "duty to defend" is a separate and broader obligation than the insurers duty to indemnify the insured. (State Farm Fire and Casualty Co. v. Superior Court (2008) 164 Cal.App.4th 317, 324.) "[A]n insurer has a duty to defend an insured if it becomes aware of . . . facts giving rise to the potential for coverage under the insuring agreement. [Citations.]" (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 19; italics added.) "`For an insurer, the existence of a duty to defend turns not upon the ultimate adjudication of coverage under its policy of insurance, but upon those facts known by the insurer at the inception of a third party lawsuit. [Citation.] Hence, the duty "may exist even where coverage is in doubt and ultimately does not develop." [Citation.] [Citation.]" (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295.) However, where there is no possibility of coverage, there is no duty to defend. "[W]here the extrinsic facts eliminate the potential for coverage, the insurer may decline to defend even when the bare allegations in the complaint suggest potential liability. [Citations.] This is because the duty to defend, although broad, is not unlimited; it is measured by the nature and kinds of risks covered by the policy. [Citations.]" (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 19.) Hence, "`the insurer need not defend if the third party complaint can by no conceivable theory raise a single issue which could bring it within the policy coverage. [Citation.]" (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at p. 300.)
The crucial principle underlying the doctrine of equitable contribution and in fact the threshold determination in assessing the application of the doctrine is whether two or more insurers share an obligation to the common insured. "Every California case of which we are aware has enforced an insurers contribution claim only where the other insurer was also obligated to pay on the claim. (See, e.g., American Continental Ins. Co. v. American Casualty Co. of Reading, Pa. (1999) 73 Cal.App.4th 508, 513; Fire Insurance Exch. v. American States Ins. Co. (1995) 39 Cal.App.4th 653, 657, 664; Continental Casualty Co. v. Zurich Ins. Co. (1961) 57 Cal.2d 27, 32.) On the other hand, where there is no common obligation that is legally due from multiple insurers, then no basis for contribution exists. [Citations.]" (American Continental Ins. Co. v. American Casualty Co. (2001) 86 Cal.App.4th 929, 937-938 (American Continental ).)
Furthermore, the "burden is on the party claiming coverage to show that a coverage obligation arose or existed under the coinsurers policy." (American Continental, supra, 86 Cal.App.4th at p. 938.) "This is what courts mean when they say they will not order a co-insurer to contribute to a loss that it had no obligation to pay under the terms of the policy." (Safeco Insurance Company of America v. Superior Court (2006) 140 Cal.App.4th 874, 880.)
With these legal concepts in mind we turn to the evidence submitted in support and opposition to the summary judgment motions. To determine whether respondent had a common obligation to defend or indemnify Liebegott for the injuries alleged in the Visco Action we examine the language in the Liebegott HO policy.
2. The Liebegott HO Policy
The policy clearly provided insurance coverage for personal liability arising from bodily injury sustained during the policy period. There is no dispute Visco suffered personal injuries when Liebegotts dog bit him and that the incident occurred during the policy period. It is also uncontroverted that the policy contained a "Business Pursuits" exclusion for bodily injury, which "arises from or during the course of business pursuits of an insured."
a. Business Pursuits Exclusions Generally
Many homeowners insurance policies contain an exclusion from coverage for injuries and damage arising from the activities related to the business of the insured. A "business pursuit" has been defined as a regular activity stemming from the insureds full or part time business, trade, occupation, pursuit carried on for the purpose of profit or gain or livelihood. (See West America Insurance Company v. California Mutual Insurance Company (1987) 195 Cal.App.3d 314, 324.) This standard exclusion has been upheld in California courts as clear and unambiguous. (State Farm Fire and Casualty v. Drasin (1984) 152 Cal.App.3d 864, 869-870.)
Some business pursuits exclusions also contain an express exception to re-instate coverage for an otherwise excluded occurrence for injuries or damage arising out of a business pursuit if the specific activity producing the injury or damage is one that can be characterized as "ordinarily incident to nonbusiness pursuits." (See e.g. Crane v. State Farm Fire and Casualty Company (1971) 5 Cal.3d 112, 115-117 [finding that exception to business pursuits exclusion applied where although the defendants insured had been compensated for babysitting the plaintiffs child, the childs injury occurred during activities which the court of appeal characterized as the insureds "nonbusiness regimen of maintaining a household and supervising her own children"].) Most significantly, the business pursuits exclusion in Liebegotts HO policy did not contain any such exception for nonbusiness activities.
Finally, the language "arising from" used in the business pursuit exclusion has been given a broad interpretation. California courts have consistently given a broad interpretation to the terms "arising out of" or "arising from" in various kinds of insurance provisions, including coverage exclusions. (See Southgate Recreation and Park District v. California Association For Park and Recreation Insurance (2003) 106 Cal.App.4th 293, 301.) "It is settled that this language does not import any particular standard of causation or theory of liability into an insurance policy. Rather, it broadly links a factual situation with the event creating liability, and connotes only a minimal causal connection or incidental relationship." (Medill v. Westport Ins. Corp. (2006) 143 Cal.App.4th 819, 830; Hartford Accident & Indemnity Co. v. Civil Service Employees Insurance Co. (1973) 33 Cal.App.3d 26, 32-33 [holding "arising out of the use of an insured vehicle imports some kind of sequential relationship between the vehicle and the accident"; and further observing that "arising out of has been interpreted more broadly than `caused by to include the notion of `incident to or having connection with"].)
In this case, appellant does not contest the existence of the business pursuits exclusion in the policy or claim the exclusion is vague or ambiguous. Likewise, appellant does not dispute that Viscos injuries occurred at Liebegotts workplace during a therapy session with Visco. Nor does appellant dispute that Liebegotts work as a therapy intern qualifies as a "business pursuit" under the exclusion. Rather, appellant asserts: (1) that as a matter of law the exclusion did not apply because the pit bull was not used in connection with Liebegotts work with Visco; and (2) respondent waived the exclusion when it paid Visco under the Medical Pay Coverage Provision which also contained the business pursuits exclusion. As we shall explain, we do not agree with either of these contentions.
Application of the Business Pursuits Exclusion. Preliminarily we observed that the business pursuits exception in the policy at issue is extremely broad. It applies not only to injuries "arising from" Liebegotts work as a therapy intern, but also to injuries occurring "during the course" of her work.
While the "arising from" language connotes some minimal causal connection between the event creating liability and the excluded risk, the "during the course" language suggests something different. Instead of the focus on causation, the "during the course" language relates to the timing of the event creating liability. Thus, so long as the event causing the injury occurs during the insureds business pursuit the exclusion applies.
It is beyond dispute that Liebegotts dog bit Visco during the therapy session, which occurred during the course of Liebegotts work. Indeed, appellant conceded in the Visco Action that the injury occurred during the scope of the Liebegotts employment at the Center. Thus, it is clear to this court that the business pursuits exclusion applies as a matter of law based on the "during the course" language, and based on this language, standing alone there is no possibility for coverage under Liebegotts HO policy for these injuries.
In any event, we might reach the same conclusion looking at the "arising from" language in the policy. In our view, the undisputed evidence showed the requisite minimal causal connection between the injury—the dog bite—and the excluded risk—Liebegotts work at the Center—to conclude that the injuries arose from Liebegotts business pursuits. Both Liebegott and her supervisor testified that the dog was present at the Center only so that Liebegott would not have to leave work to let the dog out of her house during the day. She was allowed to bring the dog to work so that she could attend the entire day of work and the mandatory after hours staff meeting. In essence, she brought the dog to the Center so that she could perform her work obligations. There is nothing in the record before this court to support appellants speculation in the reply brief that had the Center not accommodated Liebegott and allowed her to bring the pit bull to the Center "other arrangements for the care of the dog would have had to have been made." Indeed, the evidence in the record implies otherwise; that is, Liebegott was prepared to miss work to attend to her dog. Liebegotts work resulted in the dogs presence at the Center and the dogs presence at the Center resulted in Viscos injuries. Consequently, the dog was at the Center, and more specifically in the counseling room, so that Liebegott could pursue her business. Thus, there is no triable issue as to the application of this exclusion.
The fact that Liebegott felt the need to bring her dog to the Center does not address the separate issue of whether the dog actually had to stay in the room with Liebegott during the counseling sessions. It is not clear in the record before this court whether there was somewhere at the Center other than the room where Liebegott conducted counseling sessions where the dog could have been housed while Liebegott met with clients. Liebegotts offer to remove the dog from the room shortly before it bit Visco suggests that such a location might have existed; and if there was such a separate location, then causal connection between the business pursuit and the dog bite is more attenuated. However, neither party has addressed this precise issue before this court. Ultimately, however, the resolution of it is not dispositive given our conclusion that the business pursuits exclusion applied as a matter of law based on the "during the course" language in the Liebegott HO policy.
In reaching this conclusion, we reject appellants construction of the business pursuits exclusion. In appellants view, respondent was required to demonstrate that the dog was being used as part of the therapy to trigger the exclusion. Appellant derives this notion from Safeco Insurance Company of America v. Hale (1983) 140 Cal.App.3d 347 (Hale). In Hale, the insured, Hale, had a homeowners insurance policy with Safeco, which contained a business pursuits exclusion. Hales home had horse stables. She also operated a horse riding business at a separate location. As a favor to a friend, Hale agreed to stable a horse at her residence; Hale did not receive any compensation for the favor and the friends horse was not used in connection with the insureds horse riding business. At some point during this arrangement Hale planned to be away from her home for a long weekend. Consequently, she transported the friends horse from her residence to the stables at her riding business so that the horse could be cared for and protected while Hale was away. While the friends horse was stabled at the business, the horse escaped, wandered onto a highway and caused a car accident. The individuals injured in the accident sued Hale. (Id. at p. 351.)
Safeco filed a declaratory relief action seeking a determination of its nonliability under the policy. Safeco argued, among other exclusions, that the business pursuits exclusion in the homeowners policy eliminated coverage for the injuries caused by the horse. The business pursuits exclusion in the policy provided, in pertinent part: "This policy does not apply: [¶] 1. Under Coverage E-Personal Liability and Coverage F-Medical Payments to Others: . . . . d. to bodily injury or property damage arising out of business pursuits of any insured except activities therein which are ordinarily incident to non-business pursuits." The trial court found that the exclusion did not apply and therefore Safeco was obligated under the homeowners policy to defend Hale in the third-party action. The First District Court of Appeal agreed. The Court of Appeal found that the facts that the horse was stabled at Hales residence as a favor, without charge or compensation for the horses care, and that the horse was not used in Hales horse riding business "lead to one conclusion: the injury arose out of a non-business pursuit. Accordingly, the business pursuits exclusion does not apply." (Id. at p. 352.)
Contrary to appellants belief Hale does not assist its analysis. Hale is distinguishable. The friends horse was stabled at Hales business for a personal reason unrelated to the business, namely, so that Hale could go away for the weekend; having the horse present at her place of business in no way facilitated or was related to the conduct of her business. In contrast, while Liebegott did not use her dog in connection with her work as a therapy intern, the dog was present at Liebegotts workplace only so that Liebegott could perform her work duties. In addition, in contrast to the business exclusion at issue in this appeal, the business exclusion in Hale contained the exception for activities producing the injury or damage that are "ordinarily incident to nonbusiness pursuits." Had the exception to exclusion been included in Liebegotts policy our conclusion might be different, because in that case, the focus would be on the activity/instrumentality causing the injury—the dog—and the inquiry would be whether the dog was "ordinarily incident to nonbusiness pursuits." We do not, however, read Hale to hold that (even absent the nonbusiness pursuits exception) respondent was required to show that Liebegotts dog was used in her business to trigger the exclusion.
In addition, we are not convinced that the fact respondent set a "loss reserve" after receiving notice of the Visco Action, demonstrates respondent had a duty to defend Liebegotts interests in the Visco Action. First, as respondent points out, it was required by the Insurance Code to set a loss reserve when it received notice of the claim. (See Ins. Code § 923.5 ["Each insurer transacting business in this state shall at all times maintain reserves in an amount estimated in the aggregate to provide for the payment of all losses and claims for which the insurer may be liable, and to provide for the expense of adjustment or settlement of losses and claims"].) Second, it is well established that the "main purpose of a loss reserve is to comply with statutory requirements and to reflect, as accurately as possible, the insureds potential liability . . . `a reserve cannot accurately or fairly be equated with an admission of liability or the value of any particular claim." (Lipton v. Superior Court (1996) 48 Cal.App.4th 1599, 1613-1614 (Lipton ).) Indeed, here the undisputed evidence shows respondent set the loss reserve as a matter of standard practice and prior to evaluating the coverage provisions in the policy or considering the application of any policy exclusions. Thus, respondent establishing a loss reserve in the Visco Action is not indicative of whether the claim was covered by the Liebegott HO policy or respondent had a duty to defend Liebegott. As the court in Lipton observed, evidence an insurer set a loss reserve may be relevant in a subsequent bad faith action, where such evidence is an indication that the company was aware of its responsibility to defend its insured. (Lipton, supra, 48 Cal.App.4th 1614 ["where the insurer has denied coverage and refused a defense, the fact that reserve had been set by the insurer might well be relevant to show that the insurer must have had some knowledge that a potential for coverage existed"]; see also Samson v. Transamerica Insurance Company (1981) 30 Cal.3d 220, 240.) This is not a bad faith action, and thus the fact respondent set a loss reserve is not material.
Waiver. Appellant also argues that respondent waived the business pursuits exclusion by paying Visco under the Medical Pay Coverage Provision, which contained the identical exclusion, and thus respondent should be estopped from relying on the exclusion to deny coverage under the personal liability provision. We do not agree. Appellant has cited no legal authority for its waiver/estoppel argument; and our research on the issue has not unearthed any to support it.
In the insurance context, waiver and estoppel have a limited application. If the insurer provides an unconditional defense to the action without a reservation of rights, it is deemed a waiver of the policy terms, estopping the insurer from asserting such grounds to escape coverage. (See Insurance Co. of the West v. Haralambos Beverage Co. (1987) 195 Cal.App.3d 1308, 1319-1321.) However, in general, estoppel and waiver cannot be used to create coverage under an insurance policy where coverage did not originally exist. (Ibid.; Manneck v. Lawyers Title Insurance Corporation (1994) 28 Cal.App.4th 1294, 1303 [Coverage under an insurance policy cannot be established by estoppel or waiver. "The rule is well established that the doctrines of implied waiver and of estoppel, based upon the conduct or action of the insurer, are not available to bring within the coverage of a policy risks not covered by its terms, or risks expressly excluded therefrom, and the application of the doctrines in this respect is therefore to be distinguished from the waiver of, or estoppel to assert, grounds of forfeiture. . . ."; citations omitted].) Furthermore, absent clear and convincing evidence to the contrary, a denial of coverage on one ground does not impliedly waive grounds stated in the denial. (Waller v. Truck Insurance Exchange, Inc., supra, 11 Cal.4th at p. 31.) In fact, at least one court has held that an insurers settlement of claim that contained the same coverage defenses does not preclude the insurer from relying on those defenses to contest a similar claim. (See State Farm & Casualty Company v. Yukiyo (1994) 870 F.Supp. 292, 294-295 [applying California law].)
Based on these concepts the only application waiver and estoppel might conceivably have in this case would be to an effort by respondent to seek reimbursement of the $1,000 it paid to Visco under the Medical Pay Coverage Provision. Having made payment to Visco under the Medical Pay Coverage Provision without any reservation of rights under that provision, we would find respondent waived the right to rely on the coverage exclusions as to any claim under the Medical Pay Coverage Provision. But in this case respondent has not sought to recoup its payment under the Medical Pay Coverage Provision. Instead, this litigation focuses on a personal liability coverage provision in the Liebegott HO policy, which is a different and entirely separate coverage provision and obligation from the medical pay coverage provision. Such provisions are not dependent upon the liability of the insured and are considered to be separate contractual obligations from the rest of the policy. (Harper v. Wausau Ins. Co. (1997) 56 Cal.App.4th 1079, 1089-1090 ["`Medical provisions of liability, or homeowners, policies are a form of minimal group accident insurance provided at minimal cost with a named insured as the entity through whom the coverage is issued. . . . [¶] Generally, medical payment clauses are considered to constitute separate accident insurance coverage. Such coverage is divisible from the remainder of the policy, and creates a direct liability to the contemplated beneficiaries. The purpose is to grant peace of mind and create a fund for the payment of medical services so that those injured will not necessarily be contemplating how to impose liability upon the insured. And, with this in mind, a broad and liberal interpretation will be given. [¶] Such provision is the separate obligation of the insurer, independent of its obligation to pay sums of money as damages under the liability features of the contract. It has no relevance to the financial responsibility law. Nor is liability for such payment in any way dependent upon negligence of the insured.
. . ."].) Thus, the fact the insurer settles under the medical pay provision has limited probative value concerning the insurers treatment of other coverage provisions in the policy. Given the separate considerations that apply to the medical pay coverage provision, it would not be appropriate to find that the insureds implicit waiver of a policy exclusion in medical pay coverage provision also constituted waiver of that exclusion in all of the other coverage provisions in the policy.
In any event, even were we to conclude that the doctrines of waiver and estoppel could apply in general, appellant has failed to present a triable issue of fact that they actually applied here. The burden of proving waiver and estoppel rests with the insured. (Waller v. Truck Insurance Exchange, Inc., supra, 11 Cal.4th at p. 31.) To establish an estoppel, the insured must prove the following four elements: (1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury. (Insurance Co. of The West v. Haralambos Beverage Co. (1987) 1308, 1321.) To establish a waiver, the insured must prove that the insurer (1) intentionally relinquished a known right or (2) engaged in conduct, which is "`so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished." (Ibid. )
The undisputed evidence in the record shows that respondent decided to pay Visco under the Medical Pay Coverage Provision with limited information and without considering the language of the policy or evaluating the possible exclusions. The conduct, however it might be described, cannot be characterized as an intentional relinquishment of a known right. Furthermore, appellant has not pointed to any evidence that it (or Liebegott) relied upon respondents actions to its detriment.
In view of the foregoing, we reject appellants argument that respondent waived the business pursuits exclusion.
In sum, we agree with the trial courts conclusion that the business pursuits exclusion eliminated any possibility of coverage under Liebegotts HO policy. As a result, respondent did not share the same legal obligation to Liebegott as the appellant with respect to the Visco Action. Thus, as a matter of law appellant is not entitled to equitable contribution (declaratory relief) and the trial court properly granted summary judgment for respondent.
Given our conclusion as to the application of the business pursuits exclusion we do not address the parties other arguments concerning other policy exclusions, the timing of the notice of the Visco Action; and any prejudice that respondent may have suffered from the notice.
II. Appellants Objections to Mancillas Declaration
Before this court, appellant complains that the court erred in refusing to sustain all of its objections to the declaration of Elizabeth Mancilla respondent submitted in support of its motion for summary judgment. Mancilla was a "Large Loss Zone Manager" for appellant and was the manager responsible for the management of the notice of claim submitted by appellant in connection with the Visco Action. In this court, appellant argues that the statements included in Mancillas declaration contradicted her sworn deposition testimony and thus Mancillas entire declaration should have been disregarded by the trial court.
Although as we discuss elsewhere here, this court generally applies a de novo standard in reviewing a trial courts order granting or denying a motion for summary judgment, in the course of reviewing a summary judgment "we review the trial courts final rulings on evidentiary objections by applying an abuse of discretion standard. [Citations.]" (Powell v. Kleinman (2007) 151 Cal.App.4th 112, 122; see also Hollywood Screentest of America, Inc. v. NBC Universal, Inc. (2007) 151 Cal.App.4th 631, 643-645; Mitchell v. United National Ins. Co. (2005) 127 Cal.App.4th 457, 467; Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694 ["the weight of authority holds that an appellate court reviews a courts final rulings on evidentiary objections by applying an abuse of discretion standard"].) Accordingly, in reviewing the trial courts rulings overruling appellants objections to Mancillas declaration, we generally defer to the trial court and overrule its evidentiary rulings only if they constitute an abuse of its discretion. With these principles in mind we turn to appellants claims with respect to Mancillas testimony.
Appellant points out that in her deposition Mancilla testified that at the time the claim was submitted to the Large Loss Unit she did not review Liebegotts HO policy and was unaware as to whether any determination had been made as to the application of the business pursuits exclusion. Appellant then references Mancillas declaration in which she stated that the business pursuits exclusion "excludes bodily injury that arises during an insureds pursuit of a business activity or profession." Appellant claims that the statement in the declaration contradicts her deposition testimony and therefore the statement in her declaration should have been disregarded and the trial court erred in failing to sustain its objection. We do not agree.
We are not convinced Mancillas statement in her declaration concerning the business pursuits exception contradicts her deposition testimony. In her declaration, Mancilla is offering her interpretation of the exclusion and what it covers; her statement does not speak to what she did or did not review at the time her unit received the claim, nor does the declaration make any claim about respondents actions to determine the application of the exclusion during the course of the Visco Action. In any event, it does not appear the trial court even considered or relied on Mancillas interpretation of the exclusion. Based on the courts comments during the summary judgment hearing, the court analyzed the language of the exclusion and its scope without reference to views or legal interpretations offered by Mancilla.
Thus, we find no abuse of discretion in the trial courts ruling overruling this objection to Mancillas declaration.
The other complaints appellant raises in this court concerning the trial courts rulings on its objections to Mancillas declaration all pertain to statements in Mancillas declaration she made concerning of timing of the notice of the Visco Action, prejudice respondent purportedly suffered as a result of the late notice and other aspects of respondents conduct and actions during the Visco Action. We do not resolve appellants complaints about these statements in Mancillas declaration because they are irrelevant to the dispositive issues.
III. The Motion to Tax Costs
Appellant asserts the court erred in denying its motion to tax costs. Specifically, appellant claims than nearly all of $9,971 in litigation costs sought by respondent were either unnecessary for the conduct of the litigation, were not supported by sufficient documentation or not allowed under the Code of Civil Procedure.
This court reviews a trial courts costs determination for abuse of discretion. (Science Applications International Corporation v. Superior Court (1995) 39 Cal.App.4th 1095, 1104; Code Civ. Proc., § 1033.5.)
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
Generally speaking, in our system of justice each party pays his own way. There are, however, exceptions. Among them is section 1032, subdivision (b), the statute that entitles the prevailing party to recover "costs" in an action "as a matter of right" except as otherwise expressly provided. (§ 1032, subd. (b).) Section 1033.5 specifies those items that qualify as recoverable "costs" and identifies those that do not.
Section 1033.5, subdivision (a) contains a long list of expenses which are allowable as costs. Under section 1033.5 the allowable expenses are (1) filing, motion and jury fees; (2) juror food and lodging during trial and deliberations; (3) deposition costs (costs for transcription, videotaping and copying and travel expenses to attend); (4) process server costs, (5) expenses of attachment; (6) surety bond premium; (7) ordinary witness fees; (8) fees of expert witnesses ordered by the court; (9) transcripts of court proceedings ordered by the court; (10) attorney fees authorized by contract, statute or law; (11) court reporter fees; (12) models and blowups of exhibits and copies of exhibits reasonably helpful to aid the trier of fact; and (13) any other item required to be awarded to the prevailing party pursuant to statute. (§ 1033.5, subd. (a)(1)-(13).)
Section 1033.5, subdivision (b) identifies nonrecoverable expenses. There are only five in number: (1) fees of experts not ordered by the court (§ 1033.5, subd. (b)(1)); (2) transcripts of court proceedings not ordered by the court (§ 1033.5, subd. (b)(5)); (3) investigation expenses in preparing for trial (§ 1033.5, subd. (b)(2)); (4) postage, telephone, and copying charges except for exhibits (§ 1033.5, subd. (b)(3)); and (5) costs for investigating jurors and preparing for voir dire (§ 1033.5, subd. (b)(4)).
The last part of the statute, subdivision (c), contains the rules which apply to all cost awards. Section 1033.5, subdivision (c)(2) states: "Allowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation." Section 1033.5, subdivision (c)(4) provides: "Items not mentioned in this section and items assessed upon application may be allowed or denied in the courts discretion." When subdivision (c) is read together with the rest of the costs statute, courts have concluded that if an expense is neither expressly allowable under subdivision (a) nor expressly prohibited under subdivision (b), it may nevertheless be recovered if, in the courts discretion, it is "reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation." (§ 1033.5, subd. (c)(2); see also Science Applications International Corporation v. Superior Court, supra, 39 Cal.App.4th at p. 1103; Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774; Ripley v. Pappadopoulos (1994) 23 Cal.App.4th 1616, 1622, 1623; Winston Square Homeowners Assn. v. Centex West, Inc. (1989) 213 Cal.App.3d 282, 293.)
Pursuant to section 1034, prejudgment costs must be claimed in accordance with the rules adopted by the Judicial Council, and California Rules of Court, rule 3.1700(a)(1) relating to prejudgment costs states in pertinent part: "The memorandum of costs must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case." Initial verification will suffice to establish the reasonable necessity of the costs claimed. There is no requirement that copies of bills, invoices, statements, or any other such documents be attached to the memorandum. Only if the costs have been put in issue via a motion to tax costs must supporting documentation be submitted. (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1267.) Once this occurs, the issue becomes whether the required documentation must be of evidentiary quality. Rule 3.1700(a)(1) does not specify the type of documentation required.
With these principles in mind, we turn to appellants specific complaints concerning respondents costs.
Although appellant points out that respondent filed its costs memorandum prior to the entry of judgment, appellant does not claim it suffered any prejudice as a result. Thus appellant has no basis to suggest that the premature filing of the motion amounted to reversible error. (Haley v. Casa Del Rey Homeowners Association (2007) 153 Cal.App.4th 863, 868 ["the premature filing of a memorandum of costs is treated as a `mere irregularity at best that does not constitute reversible error absent a showing of prejudice"].)
A. Ex Parte Filing Fees
Appellant complains that the court should not have awarded respondent filing fees for an ex parte motion to continue the trial ($40) and an ex parte motion to compel the deposition of appellants Person Most Knowledgeable (PMK) ($40). Appellant argues that both of these ex parte motions were unnecessary and caused by respondents failure to conduct discovery in the case until shortly before the trial.
During the oral argument on this issue, the trial court disagreed with appellants characterization of the situation. The court remarked that it recalled that appellant had refused to produce the PMK for deposition unless the deposition was taken in Philadelphia and that there was "gamesmanship" with respect to the depositions and discovery. The courts recollection appears to have support in the evidence in the record before this court.
Appellant served respondent with the complaint in this action on June 27, 2006. Respondent served its answer on July 10, 2006, and served a request for production of documents the next day. Appellant produced the requested documents in stages after several meet-and-confer efforts. The last production of documents occurred in late November 2006. In September 2006, respondent also subpoenaed records from LBBS pertaining to the firms representation of the Center and Liebegott in the Visco Action. LBBS did not produce its five boxes of records until November 2006. In January 2007, respondent noticed appellants PMK and then engaged in several weeks of meeting and conferring on the issue of whether the PMK would appear for deposition in California. Another witness, Robin Blythe appeared to be evading service of her deposition subpoena for a number of weeks in early 2007. The difficulty in scheduling appellants PMK deposition and the disagreement as to where it should occur necessitated respondents ex parte motion as well as the ex parte motion to continue the trial. The trial court granted both of those motions.
In view of this evidence, we conclude that the court did not err in awarding respondents costs (a total of $80) for the ex parte motions to continue the trial and to compel the deposition of the PMK.
B. Deposition Costs
Appellant challenges the costs sought in connection with various depositions.
Travel to Liebegotts Deposition. Appellants claims that $796.12 sought for counsel "travel" to attend the deposition of Liebegott in Texas was unnecessary. Appellant argues that Liebegott was a non-party witness whose deposition only took an hour and that it could have been conducted via telephone. We find no abuse in this cost award. Liebegott was respondents insured and a key witness in the events that gave rise to the Visco Action. Liebegotts testimony concerning the incident was crucial to respondents claim concerning the possible policy exclusions and thus it was not inappropriate for respondent to attend Liebegotts deposition in person to assess the credibility of her testimony.
Transcripts and Travel Expenses for ODonnells Deposition. Appellant complains that respondent sought expenses for transcripts for two sessions of ODonnells deposition. In appellants view, ODonnells deposition should have been completed in one session, and thus, appellant should not be required to pay the costs for the transcript for a second session. ODonnell served as Liebegotts and appellants legal counsel in the Visco Action. During the first day of her deposition, ODonnell stated that she would not proceed to answer questions that implicated privileged information absent a written waiver of the attorney-client privilege; ODonnell refused to proceed based on the oral waiver provided by appellants counsel. Thus, the ODonnell deposition could not be completed in one session; a second session was required. Because appellant has not shown that the second session of ODonnell was unnecessary or was the result of respondents conduct, we conclude the trial court did not abuse its discretion in awarding respondent costs for transcripts from both sessions of the ODonnell deposition.
Electronic Deposition Transcripts. Appellant complains the court awarded respondent costs for the preparation of electronic versions of the depositions of respondents former employees Marie Cummings and Charlene Wallace. Appellants contention is not supported in the record before this court. Based on our review of the record it appears that the costs ($ 439.25 for Cummings and $381.50 for Wallace) for these depositions pertain not to electronic versions, but instead to certified printed copies—which represent costs, which are allowed under section 1033.5, subdivision (a)(1).
Appellant further complains that respondent was awarded $46 for "taking" Cummings deposition. Appellant points out that it, not respondent, took Cummings deposition so these costs should not have been awarded. Respondent explains that this expense actually reflected its reimbursement to Cummings for her mileage and parking to attend the deposition at appellants counsel office. While such costs are not expressly included in section 1033.5, we conclude the court did not abuse its discretion in awarding them because as a former employee of respondent, Cummings could have sought a witness fee which would have been equal to or greater than the $46 awarded as costs.
Depositions of Susan Pauster and Michelle Frietag . Appellant further complains that the deposition costs for witnesses are vague and ambiguous and not supported by the record. We do not agree. Respondent attached the detailed invoices from each of these depositions to the opposition to the motion to tax costs. The detail in these invoices is sufficient to demonstrate these costs.
In addition, appellant complains respondent sought $123.94 in travel expenses to attend the Pauster deposition. Appellant argues that it already reimbursed respondent for the travel costs for this deposition. However, respondent has shown that these particular costs were not a part of that reimbursement. In addition, appellant has not shown that these expenses were unreasonable or excessive; they relate to the costs associated with the rental car and parking for counsel to attend the deposition. These travel costs are permitted under section 1033.5.
Travel Costs for Depositions of Marie Cummings, Valeri Leon, Kathleen McGoin and Sandra Gomez. Appellant complains that the travel costs for respondents counsel to attend Cummings ($ 17.45), McGloins ($12.80) and Gomezs ($12.80) respective depositions should have been the same amount as all three of these depositions were conducted in appellants counsels office. However, as respondent points out, these depositions were all attended by different lawyers traveling from different distances, which accounts for these different costs.
Appellant also complains that respondent should not have been awarded travel costs for Leon ($759.91) and Wallace ($703.75) to attend their respective depositions. Respondent asserts that these travel costs represent the amount it reimbursed both witnesses, who were also former respondent employees, to fly from out of state and stay overnight to attend these depositions.
As explained elsewhere here, the statutory scheme clearly establishes two mutually exclusive sets of trial preparation expenses-one set, which is allowable as a matter of right (§§ 1033.5, subd. (a), 1032, subd. (b)) and one which is not (§§ 1033.5, subd. (b), 1032, subd. (b)). Expenses which do not fit into either category-allowable as a matter of right (§§ 1033.5, subd. (a), 1032, subd. (b)) and one which is not (§§ 1033.5, subd. (b), 1032, subd. (b))-fall into a special statutory safety net: they may be recovered but only at the discretion of the court (§ 1033.5, subd. (c)). Travel costs for witnesses are neither included nor expressly excluded from section 1033.5. Thus, the award of these costs falls within the discretion of the court. Appellant has not convinced us that these costs were unreasonable nor excessive. Both of these witnesses were key employees of the respondent assigned to the Visco Action. They testified concerning respondents actions after it received notice of the action, providing evidence appellant relied upon to bolster its arguments concerning the late notice and prejudice. We find no abuse of discretion.
Service of Process on Robin Blythe. Appellant complains respondent should not have been awarded costs for service of the deposition subpoena on Robin Blythe because she was in communication with respondents counsel. Respondent, however, presented documentary evidence to show that it had difficulty in initially locating Blythe, who appeared to be evading service of process. The costs awarded by the court are those associated with respondents effort to locate Blythe, and are therefore proper.
DISPOSITION
The judgment is affirmed. Respondent is entitled to costs on appeal.
We concur:
PERLUSS, P.J.
ZELON, J.