Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_03-cv-00949/USCOURTS-caed-2_03-cv-00949-36/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

EL DORADO IRRIGATION DISTRICT,

a political subdivision of the

State of California,

NO. CIV. S-03-949 LKK/GGH

Plaintiff,

v. O R D E R

TRAYLOR BROS., INC., an 

Indiana corporation,

Defendant.

 /

AND RELATED COUNTER-CLAIMS.

 /

The El Dorado Irrigation District (“EID”) filed suit against

Traylor Brothers, Inc. (“TBI”) as well as Travelers Casualty and

Surety Company of America (“Travelers”) for breach of contract.

TBI filed a counterclaim against EID also alleging breach of

contract. The matter proceeded to trial on September 19, 2006.

The jury rendered its verdict on November 30, 2006 and found for

TBI. The jury concluded that EID breached its contract with TBI

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One issue has been returned to the parties for further 1

briefing. Thus this order does not resolve all the matters pending

before the court.

 Put slightly differently, the parties asked for a jury 2

verdict, which is what they got. The fact that plaintiff does not

like that verdict is hardly an excuse to undo the trial. 

2

and awarded $6,264,312.00 in damages. 

Pending before the court are the following motions: (1) EID’s

motion for a new trial; (2) EID’s renewed Rule 50 motions; (3)

TBI’s motion for attorneys’ fees; (4) TBI’s Bill of Costs; and (5)

TBI’s motion for prejudgment interest. The court addresses each

motion in turn. 

1

ANALYSIS 

I.

EID’S MOTION FOR NEW TRIAL

A trial court may grant a new trial if “the verdict is

contrary to the clear weight of the evidence, or is based upon

evidence which is false, or to prevent, in the sound discretion of

the trial court, a miscarriage of justice.” Roy v. Volkswagen of

America, Inc., 896 F.2d 1174, 1176 (9th Cir. 1990)(citations

omitted). “While the trial court may weigh the evidence and

credibility of the witnesses, the court is not justified in

granting a new trial ‘merely because it might have come to a

different result from that reached by the jury.’” Id., citing

Wilhelm v. Associated Container Transportation (Australia) Ltd.,

648 F.2d 1197, 1198 (9th Cir. 1981).2

The court finds that the verdict was not “contrary to the

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Or conceivably, only an injury sufficient to justify the 3

difference in the judgment and that which defendants asked the jury

to award TBI. 

3

clear weight of the evidence,” Roy v. Volkswagen, 896 F.2d at 1176.

Two pieces of evidence clearly and directly support the jury’s

verdict. First, in an internal EID e-mail, Len Marino explains to

the EID Board that Project 184 has “operated with no forced outages

exceeding 8 hours in duration since July 17, 2003 through June

2005. That’s 758 days!” See Trial Ex. 448 (emphasis in original).

This e-mail supports a finding that the tunnel was working. The

second piece of evidence is a construction status report for the

month of July 2003 submitted by EID to the Regional Engineer of the

Federal Energy Regulatory Commission (“FERC”). This letter

explained that the project (building the Mill Bull tunnel) was 98%

completed. See Trial Ex. 472. 

In sum, the jury had before it evidence that TBI’s “fix” was

entirely successful. The jury could easily credit that evidence

and conclude that the EID suffered no cognizable injury. In light 3

of this evidence, the court cannot conclude that “the verdict [was]

contrary to the clear weight of the evidence.” Roy v. Volkswagen,

896 F.2d at 1176. For these reasons and for the reasons discussed

in TBI’s opposition to the motion for new trial, the court DENIES

EID’s motion.

II.

EID’S RENEWED RULE 50 MOTIONS

EID filed three renewed motions for judgment as a matter of

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law. A party may renew its motion for judgment as a matter of

law,

[i]f for any reason, the court does not grant a motion for

judgment as a matter of law made at the close of all the

evidence, the court is considered to have submitted the

action to the jury subject to the court's later deciding the

legal questions raised by the motion. The movant may renew

its request for judgment as a matter of law by filing a

motion no later than 10 days after the entry of judgment.

Fed. R. Civ. P. 50(b). A renewed motion for judgment as a matter

of law is proper when the evidence construed in the light most

favorable to the non-moving party permits only one reasonable

conclusion as to the verdict and that conclusion is contrary to the

jury's verdict. See Air-Sea Forwarders, Inc. v. Air Asia Co., 880

F.2d 176, 181 (9th Cir. 1989). 

Two of the three motions are quickly resolved. EID’s motion

on TBI’s cause of action for breach of the covenant of good faith

and fair dealing, as well as EID’s motion regarding EID’s breach

of contract claim and TBI’s breach of contract claim are denied for

the reasons set forth in TBI’s oppositions. 

EID’s third motion, that, as a matter of law TBI failed to

prove certain damages, requires closer analysis. As discussed at

oral argument, the court requests that TBI submit a brief which

sets forth the evidence it believes supports the award of damages.

The brief shall be limited to thirty (30) pages and shall be

submitted to the court not later than thirty days from the date of

this order. EID shall file a response, also not in excess of

thirty pages, which shall be due twenty one (21) days later. The

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 It undisputed that TBI is the prevailing party in this 4

action. 

5

matter will stand submitted. 

III.

TBI’S MOTION FOR ATTORNEYS’ FEES

TBI and Travelers seeks $3,567,646.00 in attorneys’ fees.

EID, however, claims that TBI is not entitled to attorneys’ fees

pursuant to the performance bond and contract. EID also alleges

that TBI’s fees are neither reasonable or necessary. If attorneys’

fees are awarded to TBI/Travelers, EID asks that the amount be

reduced by $1,296,028.40. 

Before addressing the reasonableness of the attorneys’ fees

award, the court must first determine if the contract provides for

attorneys’ fees. 

A. Applicable Law

Where, as here, the suit was based on California substantive

law, an award of attorneys' fees incurred in the suit is governed

by that state’s law. See Kona Enters., Inc. v. Estate of Bishop,

229 F.3d 877, 883 (9th Cir. 2000). Under California law, a

prevailing party is ordinarily not entitled to attorneys' fees

unless the parties have previously agreed to the fees, or the fees

are otherwise provided by statute. See Lerner v. Ward, 13 Cal.

App. 4th 155 (1993)(citing, inter alia, Reynolds Metals Co. v.

Alperson, 25 Cal. 3d 124 (1979)). 

4

California Civil Code Section 1717(a), provides: 

In any action on a contract, where the contract

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specifically provides that attorney's fees and costs,

which are incurred to enforce that contract, shall be

awarded either to one of the parties or to the

prevailing party, then the party who is determined to be

the party prevailing on the contract, whether he or she

is the party specified in the contract or not, shall be

entitled to reasonable attorney's fees in addition to

other costs.

Where a contract provides for attorney's fees, as set

forth above, that provision shall be construed as

applying to the entire contract, unless each party was

represented by counsel in the negotiation and execution

of the contract, and the fact of that representation is

specified in the contract.

West's Ann. Cal. Civ. Code § 1717(a). The California Supreme Court

has stated that “[w]hen a party obtains a simple, unqualified

victory by completely prevailing on or defeating all contract

claims in the action and the contract contains a provision for

attorney fees, section 1717 entitles the successful party to

recover reasonable attorney fees incurred in prosecution or defense

of those claims.” Scott Co. v. Blount, Inc., 86 Cal. Rptr. 2d 614,

618 (1999). 

B. Whether the Contract Provides for Attorneys’ Fees 

The provision giving rise to TBI’s claim for attorneys’ fees

is found in the performance bond. The bond provided in relevant

part: 

1. Contractor and Surety, jointly and severally, bind

themselves . . . to Owner for the performance of the

Construction Contract, which is incorporated by

reference.

9. Any proceeding, legal or equitable, under this Bond may

be instituted in any court of competent jurisdiction.

The prevailing party in any such action shall be

entitled to recover its attorneys' fees, to be taxed as

an item of costs.

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EID maintains that the attorneys’ fees provision in the Bond

is limited only to the bond and does not apply to actions brought

under the contract more generally. See EID Opp’n to TBI’s Mot. for

Attorneys’ Fees (“TBI Opp’n”) at 3. TBI, however, argues that the

performance bond and contract were integrated and therefore, the

attorneys’ fees provision applies to the entire contract. 

Both the facts and the law suggest that the attorneys’ fees

provision in the bond applies to the entire contract. It is

undisputed that the bond is a contract document. The “general

definitions” of the contract expressly provides that the

performance bond and warranty bond are contract documents. See

Contract General Conditions, Trial Ex. 398, Part 1 - Definitions.

The contract language also provides: “[t]he contract documents are

complementary; what is called for by one is as binding as if called

for by all.” See Contract General Provisions, Trial Ex. 398,

Section 3.01.A. 

Viewing the bond as part of the contract is consistent with

well established California law. Indeed, “as a general rule, a

contract performance bond will be read with the contract.” Pacific

Employers Ins. Co. v. City of Berkeley, 158 Cal. App. 3d 145, 150

(1984). As the California Civil Code provides: “Several

contracts relating to the same matters, between the same parties,

and made as parts of substantially one transaction, are to be taken

together.” Cal. Civ. Code § 1642. 

 In Pacific Employers the Court of Appeals found that a

performance bond and contract should be read together. In support

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of this finding, the court cited to a long, but helpful, excerpt

from Couch on Insurance (2d ed. 1982) § 47:137: 

Since the express purpose of the contract performance

bond is to secure the performance of the specified

contract, it is obvious that the bond and the contract

... should be construed together - this for the obvious

reason that when a party enters into a contract to do

certain work on certain terms, and procures a surety to

guarantee the faithful performance of the work, the

surety necessarily contracts with reference to the

contract as made; otherwise it would not know what

obligation it was assuming. And this is particularly so

where the bond expressly declares that the contract is

made a part of the bond and the terms of the contract

are incorporated into the bond. 

Otherwise stated, the liability of a surety on a

contractor's performance bond does not rest solely on

the terms of the bond, but grows out of and is dependent

upon the terms of the contractor's contract, for the

obvious reason that there can be no obligation on the

part of the surety unless there has been a default by

the contractor on his contract. 

Pacific Employers Ins. Co., 158 Cal. App. 3d at 150-151. Here, it

is clear that the bond and the contract were part of the same

transaction and involved the same parties. It is undisputed that

the bond was specifically executed by TBI and EID in conjunction

with the contract which provided for the construction of the Mill

Bull tunnel. See also Continental Cas. Co. v. Hartford Acc. &

Indem. Co., 243 Cal. App. 2d 565, 568 (1966)(finding that when a

contractor's bond incorporates by reference the contract between

the owner and the contractor, all provisions of the contract become

provisions of the bond); Gordy v. United Pac. Ins. Group, 243 Cal.

App. 2d 445, 448(1966)(“It is axiomatic that when a bond refers to

a contract in such terms as to incorporate it within the bond, its

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 The parties’ briefs contain lengthy discussions about the 5

applicability of California Public Contract Code Section 7107. TBI

maintains that it is also entitled to attorneys’ fees under this

section of the Code. Given that the court has concluded that TBI

is entitled to fees under California Civil Code Section 1717, the

court need not also determine if TBI could also recover under

Section 7107. To the extent it is applicable, this section is

discussed with respect to TBI’s motion for prejudgement interest.

9

construction is determined by viewing both the contract and the

bond.”); Myers Building Industries, Ltd. v. Interface Technology,

Inc., 13 Cal. App. 4th 949, 967 (1993) (“Several documents

concerning the same subject and made as part of the same

transaction will be construed together even if the documents were

not executed contemporaneously.”)

Other courts have also concluded that an attorneys’ fees

provision contained in one contract document is properly construed

as applying to the contract as a whole. See Neptune Society Corp.

v. Longanecker, 194 Cal. App. 3d 1233, 1250 (1987) (“Since the

promissory notes were inherent parts of the agreement, which is the

subject matter of the litigation, the attorney's fees provisions

[contained in the notes] are properly construed as applying to the

entire contract.”); see also Torrey Pines Bank v. Hoffman, 231 Cal.

App. 3d 308, 326 (1991).

The court concludes that the contract, which includes the

bond, provides for attorneys’ fees. Therefore, as the prevailing

party, TBI is entitled to attorneys fees pursuant to California

Civil Code Section 1717. The court turns next to EID’s contention 5

that TBI’s attorneys’ fees are neither reasonable nor 

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The court only addresses those fees which are disputed. 6

EID does not, for example, dispute counsels’ hourly rates and

therefore, the court assumes that the hourly rates are undisputed.

It is worth noting, however, that TBI submitted ample evidence that

the rates requested reflect the reasonable market value. See

Declarations of Kenneth R. Stone, Kenneth M, Malovos, Michael D.

Welch and Tina A. Thomas. 

 

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necessary. 

6

C. EID’s Objections to TBI’s Requests for Attorneys’ Fees 

1. Fees for Work On Fraud and False Claims Act Causes of

Action 

EID objects to the attorneys’ fees incurred by TBI to defend

against the California False Claims Act (“FCA”) and fraud claims.

Citing to no legal authority, EID requests that $232,175.00 be

deducted from TBI’s total attorneys’ fees award. The court cannot

comply with plaintiff’s request.

It is well established that attorneys’ fees “need not be

apportioned when incurred for representation on an issue common to

both a cause of action in which fees are proper and one in which

they are not allowed.” Reynolds Metals Co. v. Alperson, 25 Cal.

3d 124, 129-130 (1979); see also Abdallah v. United Sav. Bank, 43

Cal. App. 1101, 1113 (1996)(holding that attorney's fees did not

need to be apportioned between causes of action for contract,

fraud, and RICO violations because the various claims were

inextricably intertwined). 

In the case at bar, the fraud and FCA claims were

“inextricably intertwined” with the contract claims. Both deal

with the Mill Bull tunnel contract, and the events surrounding the

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 The court will not comment on whether plaintiff’s judgment 7

as to staffing was objectively appropriate, given the complexity

and length of the trial. 

11

building of the tunnel. For these reasons, the court will not

segregate out the fees incurred regarding the fraud and FCA claims.

2. Staffing Level At Trial 

EID asserts that TBI was “overstaffed” at trial. EID argues

that TBI impermissibly seeks compensation for courtroom trial time

of counsel Mark Budwig, Michael McGuinness, Steven Owen, and

paralegal Michelle May, “all of whom were in the courtroom almost

continuously throughout the trial.” EID Opp’n at 25. In contrast,

“for most of the trial Eric Firstman was the only trial lawyer in

the courtroom for EID, and his assistant, Maria Medrano, did not

bill EID for her time.” Id. EID asks that TBI be awarded only the

cost of one lawyer in the courtroom, reducing its fee award by

$89,510.00.7

Both the law and motion practice and the trial were protracted

and complicated. Counsel for both parties were, at times,

excessive and extreme in their litigation tactics. To award fees

for three lawyers and one paralegal being present in the courtroom

throughout trial does seem excessive. That said, the court also

notes that EID had, on average, two lawyers at counsels’ table

throughout the trial, which was hardly unreasonable. Therefore,

the court finds it reasonable to award attorneys fees for the time

that both Mr. McGuinness and Mr. Budwig spent in the courtroom.

Accordingly, the court will deduct $34,286.00 for the amount of

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Although TBI objects to the billing of three lawyers 8

during trial, TBI fails to explain how it calculated the time spent

in trial by Mr. Owen. In her declaration, Ms. Cox (an attorney

for EID), simply states that the calculation accounted for hours

spent in trial by Mr. Budwig, Mr. McGuinness and Ms. May. There

is no mention of Mr. Owen. See Cox Decl. ¶ 8. Therefore, the

court sees no need to deduct anything beyond the amount of time

spent by Ms. May in court during trial. 

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time spent by paralegal Michelle May in court, during trial. 

8

3. In-house Counsel Hours 

EID argues that TBI is not entitled to recover attorneys fees

for Mr. Steven Owen, as Mr. Owen is in-house counsel for TBI. EID

asks that the court strike $255,155.00 from the overall award. Mr.

Owen requests $334,775.00 for 956.5 hours (at a rate of $350/hr).

The California Supreme Court has allowed a corporation that

was represented by in-house counsel to recover attorneys' fees. See

PLCM Group, Inc. v. Drexler, 22 Cal. 4th 1084 (2000). In the case

at bar, however, TBI fails to distinguish when Mr. Owen was in fact

“representing” TBI as a lawyer and when he was acting as a client

representative. Accordingly, the court concurs with EID and

deducts those hours that Mr. Owen appears to have been acting as

a client representative and not as an attorney. For these reasons,

the court deducts $255,155.00 from TBI’s total award of attorneys’

fees. 

4. Fees for Injunctive Relief Claim 

EID objects to TBI recovering fees for labor spent on TBI’s

motion for a preliminary injunction and Ninth Circuit appeal. EID

asks that the attorneys’ fee award be reduced by $208,201.90.

The court cannot agree. A prevailing party is entitled to

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compensation for all hours reasonably spent on the litigation.

Serrano v. Unruh, 32 Cal. 3d 621, 639 (1982). Here, the motion for

a preliminary injunction was reasonable. The issues in the motion

were similar to the issues litigated in motion practice and at

trial, to wit, the termination of the contract and the DRB

proceedings. See, e.g., Monroe v. United Air Lines, Inc., 565 F.

Supp. 274, 286 (N.D. Ill. 1983) (party entitled to recover fees for

unsuccessful motion for a preliminary injunction where motion was

based on identical facts and legal theories that underpinned their

ultimate success on the merits). 

5. Theodore Drear’s Fees

In August of 2005, Theodore Drear, one of McKenna’s primary

associates who worked on this case, left the McKenna firm. EID

avers that when Mr. Drear left, “his time was lost as his

replacement, Laurence Phillips, learned the case.” EID’s Opp’n at

26-27. EID asks that Mr. Drear’s time be written down, as well as

Mr. Phillips’ learning time, in the amount of $2,348.00. Neither

party points to any legal authority on the matter.

This case was litigated extensively. By August of 2005,

hundreds of pages of briefs and exhibits had been filed with this

court. Both parties are responsible for the volumes of paper in

this case. Although attorney turn-over is an inevitable part of

practice, the fact remains that because of the size of the case and

the record, the learning time for Mr. Phillips was uniquely labor

intensive. Therefore, the court agrees with EID that the attorneys

fee award should be reduced in the amount of $2,348.00.

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6. Pre-Litigation Fees

TBI seeks attorneys fees for Peter Ippolito. EID asserts that

Mr. Ippolito was only nominally involved in the case, as “he never

appeared in court and appears to have turned over the handling of

this matter to others shortly before litigation began.” EID Opp’n

at 27. EID seeks to have $51,689.00 deducted from the final award.

This sum reflects the amount of time spent by Mr. Ippolito prior

to the filing of the case and for time spent on work that does not

appear related to the case.

In reviewing the time records for Mr. Ippolito it appears that

some of his billed hours are not related to this litigation. For

example, on May 7, 2003, Mr. Ippolito allegedly spent two hours

“preparing for trial.” However, the complaint in this case was not

even filed until the summer of 2003. Not only was there no trial

date set in May of 2003, the case had not even been filed.

Similarly, on November 4, 2002, almost nine months before a

complaint was filed, Mr. Ippolito spent eight hours on the case,

yet the narrative on the time sheet just states “attended meeting.”

TBI fails to explain how these hours related to pre-litigation

conduct connected to this case and on what legal grounds counsel

may recover pre-litigation fees.

In light of these ambiguities, the court agrees with EID and

accordingly, the award will be reduced by $51,689.00.

7. Paralegal Fees

TBI seeks paralegal fees in the amount of $300,937.00. EID

suggests that the fees for paralegals is inappropriate because the

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 The exception being the hours billed for Ms. May during 9

trial, which was previously addressed in this order. 

15

law is not clear that paralegals are entitled to fees. EID also

objects to Ms. May billing at a slightly higher rate than her

predecessor. To the extent that the court does award fees for

paralegals, EID requests that $18,849.00 be deducted from the final

award. 

Awarding fees for the work of paralegals is common place. 

See Sundance v. Municipal Court, 192 Cal. App. 3d 268, 274 (1987).

See also Cook v. Brown, 68 F.3d 447, 453 (Fed. Cir. 1995)(“The

Supreme Court, and lower courts, have approved the inclusion of

fees for paralegals, law clerks, and law students. . . on the

theory that their work contributed to their supervising attorney's

work product, was traditionally done and billed by attorneys, and

could be done effectively by non-attorneys under supervision for

a lower rate, thereby lowering overall litigation costs.”); Guinn

v. Dotson, 23 Cal. App. 4th 262, 268 (1994). In light of the clear

weight of legal authority, the court finds it appropriate to award

attorneys’ fees for work done by paralegals. With respect to

the rate billed by Ms. May, EID fails to demonstrate how a rate of

$30 per hour is unreasonable in light of her experience or

reasonable market rate. For these reasons, the court will not

strike any of the attorneys’ fees award with respect to paralegal

work.9

8. Alleged Pretrial Misconduct 

EID asserts that “TBI should not be awarded attorney fees for

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work that involved addressing its own pretrial misconduct, such as

its failure to look for electronic documents.” EID Opp’n at 28.

In light of this alleged misconduct, EID asks that $138,694.00 be

deducted from the final fee award. 

Throughout the course of this case, both parties have engaged

in very aggressive litigation tactics. Indeed, EID accusing TBI

of misconduct is not unlike the pot calling the kettle black. 

That said, EID’s definition of “misconduct” is unclear and

overly broad. For example, EID claims that on March 16, 2004, TBI

engaged in misconduct when it “prepared correspondence in response

to EID’s March 12 and 15 letters about discovery extension and an

order shortening. . .” It is not clear why this work should be

characterized as “misconduct” as opposed to typical litigation

practice. This is one example of hundreds. The court does not

have the time or inclination to review hundreds of pages of time

sheets to determine which actions should be characterized as

“misconduct” and therefore deducted from the overall award.

Accordingly, the court will not reduce the award of attorneys fees

based on alleged misconduct. 

9. Miscellaneous 

EID asserts that several tasks which TBI billed for should not

be included in an award for attorneys’ fees. The court agrees with

EID that there are a handful of hours billed on the time sheets

that seem improper. For example, TBI billed for time spent

reviewing local media and writing press releases. There is

similarly an entry about a “new secretary issue.” These activities

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cannot properly be characterized as legal work, thereby justifying

attorneys’ fees. However, the amount that EID proposes deducting,

$17,318.00, seems extreme and it is not clear how EID arrived at

this number. In reviewing EID’s calculations as well as the time

sheets submitted by TBI, the court concludes that $3,079.00 is the

proper amount to deduct. 

10. Fees related to Travelers 

Lastly, EID asserts that the McKenna firm billed TBI only and

were paid by TBI only. “Accordingly, Travelers has no right to

recover on any part of McKenna’s bill, because Travelers sustained

no damages for those charges.” EID Opp’n at 29. It is unclear

what EID means by this statement. Indeed, a review of TBI’s papers

reveals that there was an agreement between TBI and Travelers as

to how fees should be paid. EID presents no compelling reason as

to why the court should disturb this arrangement or in any way

adjust the amount of fees that pertain to Travelers. See Decl. of

Pam Ebert, ¶ 3-4. 

C. Final Calculation of Attorneys’ Fees 

For the reasons explained, the following amount is awarded as

attorneys’ fees: 

Amount Requested: $3,567,646.00

Deductions: -$34,286.00 Overstaffing at trial. 

 -$255,155.00 In-House Counsel Fees. 

-$2,348.00 Fees for staff turnover. 

-$51,689.00 Preligitation work of Mr.

Peter Ippolito.

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-$3,079.00 Miscellaneous.

Final Award: = $3,221,089.00

IV.

TBI’S BILL OF COSTS 

TBI submits its Bill of Costs for $94,615.21. This sum

includes the cost of transcripts, copies of deposition transcripts,

copying costs and witness expenses. EID objects to $84,490.28 of

the costs on the grounds that these costs have not been shown to

have been necessarily obtained for use in the case.

A. Applicable Standard

Costs are awarded under the authority of 28 U.S.C. § 1920,

which provides:

A judge or clerk of any court of the United

States may tax as costs the following:

(1) Fees of the clerk and marshal;

(2) Fees of the court reporter for all or any

part of the stenographic transcript

necessarily obtained for use in the case;

(3) Fees and disbursements for printing and

witnesses;

(4) Fees for exemplification and copies of

papers necessarily obtained for use in the

case;

(5) Docket fees under section 1923 of this

title;

(6) Compensation of court appointed experts,

compensation of interpreters, and salaries,

fees, expenses, and costs of special

interpretation services under section 1828 of

this title.

While courts are limited to those sections

enumerated, courts are also free to interpret

the meaning of cost within section 1920.

“[T]he procedures set forth in section 1920 . . . are not

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mere formalisms.” Mason v. Belieu, 543 F.2d 215, 222 (D.C. Cir.

1976). Courts are free to interpret the meaning of the items

designated by Section 1920. Aflex Corp. v. Underwriters Lab.,

914 F.2d 175, 177 (9th Cir. 1990). The items most germane to

this case which have been interpreted to fall within Section 1920

include the cost of daily transcripts, A. B. C. Packard, Inc. v.

General Motors Corp., 275 F.2d 63, 74 (9th Cir. 1960), deposition

transcripts, Evanow v. M/V Neptune, 163 F.3d 1108, 1118 (9th Cir.

1998), copies of deposition transcripts, Aflex, 914 F.2d at 177,

copies of documents necessarily obtained for use in the case,

Haagen-Dazs v. Double Rainbow Gourmet Ice Creams, Inc., 920 F.2d

587, 588 (9th Cir. 1990), and costs for exemplification fees,

Most v. Am. Fed'n of Musicians of the United States, 7 Fed. Appx.

551, 553 (9th Cir. 2001). 

Once an item is identified as being of the type enumerated,

the power to tax such costs is qualified only by the requirement

that they be necessarily obtained for use in the case. Aflex,

914 F.2d at 177. The court should either allow costs or state

the reasons for denying them. Trans Container Serv. (BASEL

A.G.) v. Sec. Forwarders, Inc., 752 F.2d 483, 488 (9th Cir.

1985).

B. Court Reporter Fees

1. Cost of Daily Transcripts

TBI seeks to bill $50,120.57 as taxable costs to EID for

Court Reporter Fees. Of that, $20,810.49 is for the cost of

producing a daily transcript. Both parties had requested a daily

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transcript and agreed to split the cost. The amount of

$20,810.49 represents TBI’s share of the cost. In light of the

agreement between the parties to split the costs, the court

deducts $20,810.49 from TBI’s Bill of Costs.

2. Deposition Costs

The remainder of what TBI seeks to tax under Court Reporter

Fees are for transcriptions of depositions in the amount of

$29,310.08. EID objects to most of these depositions.

First, EID objects to $9,332.20 for depositions taken by TBI

of EID’s current employees who were available as witnesses at

trial. Second, EID objects to $4,365.96 for copies of

depositions that EID took of TBI’s witnesses. Third, EID objects

to $3,575.47 for third party witnesses that did not testify at

trial, and finally, EID objects to $2,664.82 for transcripts of

TBI’s own experts. The remaining costs under this heading,

$9,310.08, are not contested. 

It is well established that the cost of depositions is

encompassed by Section 1920(2). Alflex Corp., 914 F.2d at 177.

This circuit has instructed that “deposition costs are taxable

if they are reasonably necessary for trial.” Evanow, 163 F.3d at

1118; see also Washington State Dept. of Transp. v. Washington

Natural Gas Co., Pacificorp, 59 F.3d 793, 806 (9th Cir.

1995)(“disallowance for expenses of depositions not used at trial

is within the district court's discretion.”); but see Independent

Iron Works, Inc. v. U.S. Steel Corp., 322 F.2d 656, 678 (9th Cir.

1963)(“[i]f the depositions [are] merely useful for discovery

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then they [are] not taxable items and their expense should [be]

borne by the party taking them, as incidental to normal

preparation for trial.”) 

In the case at bar, EID objects to almost all of the

depositions which were used in this case. The objections are,

or are close to, frivolous. Therefore, the court does not make

any deductions with respect to the costs of deposition

transcripts. 

C. Witness Fees

TBI seeks to tax fees for witnesses in the amount of

$3,459.65. EID objects to $2,080.50 of these costs as they were

expended primarily for the travel costs of a current TBI

employee.

Parties are generally not able to recover witness fees for

their own trial attendance. Barber v. Ruth, 7 F.3d 636, 646 (7th

Cir. 1993). However it is proper for the court to assess witness

fees for directors and officers of a corporate party who are not

personally involved in the litigation. See Kemart Corp. v.

Printing Arts Research Labs., Inc., 232 F.2d 897, 901-902 (9th

Cir. 1956).

As TBI properly points out, Mr. Cangelosi is not a party to

this litigation; rather, he is an employee of a corporate party,

to wit, TBI. Such costs are properly included in the amount of

witness fees, and $3,459.65 for witness fees and expenses

(including witness fees for Mr. Cangelosi) are granted.

D. Fees for Exemplification and Copies

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TBI requests $41,034.99 for costs associated with

photocopying, scanning, electronic duplication, and

exemplification as part of its Bill of Costs. EID objects to all

but $3,867.93 of this amount as not having been shown to be

necessarily obtained.

The power to tax the cost of copies is qualified only by the

requirement that the copies be necessarily obtained for use in

the case. Aflex, 914 F.2d at 177. The phrase “necessarily

obtained for use in the case” encompasses more than the copying

costs of only those documents actually used in the case and made

part of the trial record. See Haagen-Dazs Co., 920 F.2d at 588

(“Section 1920(4) enables a court to award copying costs for any

document ‘necessarily obtained for use in the case’ and does not

specifically require that the copied document be introduced into

the record to be an allowable cost.”). That said, the costs of

copies may not include every document "that may pass through a

law firm's xerox machines." Fogleman v. ARAMCO, 920 F.2d 278,

286 (5th Cir. 1991). See also 6 Moore's Federal Practice ¶

54.77[6], p. 54-465 (2d ed. 1988) (a document “may be

‘necessarily obtained for use in the case’ though it is not

offered in evidence at a hearing or trial.”).

In support of its Bill of Costs for copies, TBI submitted

sixty-four pages of receipts. The only summation and explanation

of charges is on TBI’s Schedule E, which concludes: 

Copy Charges: $27,791.73

Scan Charges: $10,966.13

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Electronic Duplication: $775.68

Blow up and mounting: $ 1,501.45

The court does not have the time nor the inclination to

decipher which copies were necessary and which were not. Some

of the invoices for copy services have handwritten notes which

demonstrate that the “necessity” of the copies is questionable.

For example, one receipt has a note stating “scan/OCR milk crates

and binders from George Mitteer’s files.” Mr. Mitteer is an

employee of TBI. No explanation is offered as to what “OCR milk

crates and binders” are, or why copies of them were necessarily

obtained. 

Put simply, not enough has been done to explain and justify

these costs. The mere recital of the phrase “necessarily

obtained” is not enough to justify copy costs of $41,034.99. 

The court cannot say with certainty that all the copies were

necessarily obtained for use in the case. The court is

confident, however, that given the length and complexity of the

case, the number of copies “necessarily obtained” is not lower

than three fourths of the copies billed for. 

TBI also asserts that scanning a document should be included

under Section 1920 because it is akin to copying. Documents that

are scanned can be entered into a computer and then be used to

make exhibits for exemplification. The court agrees that

scanning is akin to photocopying. The purposes of the two

methods are largely the same, to reproduce a document so that it

may also be utilized by multiple parties and individuals. 

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The cost of making CDs of scanned documents is for the

convenience of counsel. These costs should not be included in

the final Bill of Costs. In one instance, TBI billed for 19

copies of a CD at a cost of $25.00 per CD. This is an example of

items which do not appear to be necessary for use in the case.

Accordingly, the court will not award costs for electronic

duplication.

In conclusion, the court awards costs for three fourths of

the copying and half the scan charges, no costs for electronic

duplication and the amount of costs requested for blow-up and

mounting. The award of costs for copying is summarized below: 

Copy Charges: $20,843.81(three fourths of

27,791.72 requested by TBI).

Scan Charges: $5,483.00 (half of $10,966.13

requested by TBI).

Electronic Duplication: $ 0.00

Blow up and mounting: $ 1,501.45

TOTAL AWARD: $ 27,827.45

E. Final Calculation of Bill of Costs 

For the reasons discussed herein, the court awards costs as

follows: 

Amount Requested: $ 94,615.21

Deductions: - $20,810.49 Cost of daily transcript.

- $13,207.54 Excessive copy costs. 

TOTAL COSTS: = $ 60,597.18

V.

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TBI’S MOTION FOR PREJUDGMENT INTEREST 

TBI asserts that it is entitled to prejudgment interest on

the damages awarded pursuant to California Civil Code, Sections

3287 and 3289 at a rate of 10 % per year. TBI also seeks

interest of 2% per month on retention funds “improperly withheld

by EID” pursuant to California Public Contract Code Section

7107(f). See TBI Mot. for Prejudgment Interest at 1. 

TBI seeks either $3,224,400 (monthly interest at 2% on

retention and annual interest at 10% on balance of judgment); or

$2,076,686 (just annual interest at 10% on entire judgment). EID

objects on the grounds that the amount of damages was

unliquidated and uncertain. For the reasons explained herein,

the court declines to award any prejudgement interest. 

A. Applicable Law 

California Civil Code Section 3287 provides:

§ 3287. Authorization

(a) Every person who is entitled to recover damages

certain, or capable of being made certain by calculation,

and the right to recover which is vested in him upon a

particular day, is entitled also to recover interest

thereon from that day, except during such time as the

debtor is prevented by law, or by the act of the creditor

from paying the debt. This section is applicable to

recovery of damages and interest from any such debtor,

including the state or any county, city, city and county,

municipal corporation, public district, public agency, or

any political subdivision of the state.

(b) Every person who is entitled under any judgment to

receive damages based upon a cause of action in contract

where the claim was unliquidated, may also recover

interest thereon from a date prior to the entry of

judgment as the court may, in its discretion, fix, but in

no event earlier than the date the action was 

filed.

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Cal. Civ. Code § 3287. The interest rate of 10% per year is

provided for in California Civil Code Section 3289.

As a general rule, “prejudgment interest is awarded only

when the sum is liquidated within the meaning of the statute.” 

Fireman's Fund Ins. Co. v. Allstate Ins. Co., 234 Cal. App. 3d

1154, 1172 (1991). However, as one California court aptly

remarked, “the statutory test ‘capable of being made certain by

calculation’ is not an easy one to apply.’” Marine Terminals Corp

v. Paceco, Inc., 145 Cal. App. 3d 991, 995 (1983). The

certainty requirement of Section 3287(a) has been reduced to two

tests: “(1) whether the debtor knows the amount owed, or (2)

whether the debtor would be able to compute the damages.”

Fireman's Fund, 234 Cal. App. 3d at 1173 (internal citations

omitted). See also Chesapeake Industries, Inc. v. Togova

Enterprises, Inc., 149 Cal. App. 3d 901, 907 (1983) (explaining

test as: “did the defendant actually know the amount owed or from

reasonably available information could the defendant have

computed that amount. Only if one of those two conditions is met

should the court award prejudgment interest.”)

Damages are considered certain when there is no dispute as

to the amount of damages, and instead, the dispute centers on

whether the debtor is liable for the damages. Stein v. Southern

Cal. Edison Co., 7 Cal. App. 4th 565, 571 (1992)(explaining that

“damages are deemed certain or capable of being made certain . .

. where there is essentially no dispute between the parties

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concerning the basis of imposition of damages that are

recoverable but where the dispute centers on the issue of

liability giving rise to the damage.”) 

The code does not authorize prejudgment interest where the

amount of damages, as opposed to the determination of liability,

“depends upon a judicial determination based upon conflicting

evidence and is not ascertainable from truthful data supplied by

the claimant to his debtor.” Fireman's Fund, 234 Cal. App. 3d at

1173. Stated somewhat differently, “interest is not allowable as

a matter of right where the amount of damages is unliquidated and

depends upon the jury's resolution of conflicting evidence.”

Marine Terminals Corp, 145 Cal. App. 3d at 995. 

Further, “the cases indicate that where there is a large

discrepancy between the amount of damages demanded in the

complaint and the size of the eventual award, that fact militates

against a finding of the certainty mandated by [Civil Code

section 3287].” Polster, Inc. v. Swing, 164 Cal. App. 3d 427,

435 (1985). Conversely, where there is no significant disparity

between the amount claimed in the complaint and the final

judgment, this factor generally tends to show that damages were

certain or capable of calculation. Wisper Corp. v. California

Commerce Bank, 49 Cal. App. 4th 948, 961 (1996). The greater the

disparity between the amount claimed and the amount rewarded,

however, the less likely prejudgment interest is appropriate.

Id.

B. Whether TBI’s Total Damages Are “Certain” 

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In light of the facts and circumstances of this case, it is

impossible to conclude that TBI’s damages were “certain” as

defined by Section 3287. There is clearly “conflicting evidence”

which would bar application of the code. See Fireman's Fund,

234 Cal. App. 3d at 1173. 

Most obviously, the amount awarded by the jury was not the

total amount of damages that TBI sought. TBI submitted a claim

for $6,578,817.00 and was awarded $6,264,312.00. The difference

between the amount claimed and the amount awarded is $314,505.00,

or 5% of the original amount requested. TBI’s accounting expert,

Robert Taylor, posits that the jury did in fact grant full relief

on unpaid retention (in the amount of $2,588,812.00) and that the

remainder of the jury’s award was divided among TBI’s other

claims for damages, such as delay after hole through

($2,080,000.00), and adjustments for unit quantities ($890,000),

among others. See Taylor Decl. Ex. 1. 

Concluding that the $2,588,812.00 is the amount the jury

awarded for the unpaid retention is pure speculation. Indeed, it

is just as possible that the jury awarded damages for the other

elements of TBI’s damages claims and not for the unpaid

retention. The fact that the jury did not award TBI the sum it

was seeking indicates that the jury found that there was some

dispute over the amount of damages which could not be easily

resolved. 

 Moreover, a discrepancy between the amount claimed and the

amount awarded is a factor that suggests that the amount of

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damages was unliquidated. Polster, 164 Cal. App. 3d at 435. As

a whole dollar amount, $314,505.00 is a large number, as a

percentage of the total amount claimed, less than 5%, appears

less significant. Nonetheless, this 5% discrepancy suggests that

the jury had to make a factual determination regarding the

damages, rather than merely finding that EID was liable. 

The actual amount owed by EID to TBI is also not clear. For

example, on August 27, 2003, TBI submitted a “final application

for payment” to EID. The amount due was listed as $2,236,226.00.

However, TBI now claims that the proper amount of liquidated

damages is actually $2,588,812.00. See TBI’s Mot. for

Prejudgement Interest. There is a difference of $350,000 between

these two sums. It is not clear why the amount owed changed over

time. This difference also suggests that the court cannot

determine with certainty the amount of damages owed. 

It is also not clear if EID provided to TBI all the

information necessary for TBI to know the amount owed. See 

Chesapeake Industries, 149 Cal. App. 3d at 907 (explaining test

as: “did the defendant actually know the amount owed or from

reasonably available information could the defendant have

computed that amount.”) For example, EID claims that it was

unclear in advance of construction exactly what quantity of

material or services would be required. Accordingly, for certain

items, TBI billed EID for a “unit price.” At the end of the

construction TBI claimed that the cost of construction was

increased by $890,000.00 for unit priced material. EID asserts,

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however, that TBI never provided EID with any information on how

this unit price was calculated. According to EID, “the unit

price items was solely within the knowledge of TBI.” EID Opp’n to

Mot. for Prejudgment Interest at 6. This situation suggests

that EID did not actually know the amount owed. 

In light of the forgoing, it is clear that there is a

dispute as to the certainty of the liquidated damages. See

Stein, 7 Cal. App. 4th at 571. Accordingly, damages are not

“capable of being made certain by calculation” as required by

Civil Code Section 3287 and thus, TBI cannot recover prejudgement

interest pursuant to Section 3278. 

C. Applicability of Penalty Interest under Public Contract Code

Section 7107(f).

TBI also seeks interest pursuant to Public Contract Code

Section 7107(f). Section 7107 provides, in pertinent part: 

(a) This section is applicable with respect to all

contracts entered into on or after January 1, 1993,

relating to the construction of any public work of

improvement.

(b) The retention proceeds withheld from any payment by

the public entity from the original contractor, or by

the original contractor from any subcontractor, shall

be subject to this section.

(c) Within 60 days after the date of completion of the

work of improvement, the retention withheld by the

public entity shall be released. In the event of a

dispute between the public entity and the original

contractor, the public entity may withhold from the

final payment an amount not to exceed 150 percent of

the disputed amount... 

(f) In the event that retention payments are not made

within the time periods required by this section, the

public entity or original contractor withholding the

unpaid amounts shall be subject to a charge of 2

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percent per month on the improperly withheld amount, in

lieu of any interest otherwise due. Additionally, in

any action for the collection of funds wrongfully

withheld, the prevailing party shall be entitled to

attorney's fees and costs.

Cal. Pub. Con. Code § 7107 (emphasis added).

It undisputed that EID withheld TBI’s retention payment

(though, as discussed above, the exact amount is disputed). TBI,

however, claims that “there can be no reasonable dispute that

with the rejection of EID’s claims in their entirety by the jury,

and with the award of 95% of TBI’s requested damages, the

withholding of TBI’s retention was improper.” TBI Mot. for

Prejudgement Interest at 4. TBI explains the various ways it

believes that EID’s withholding of the funds was not in good

faith.

A plain reading of the code indicates that in order to

receive the 2% per month penalty interest rate, there must be a

showing that the amount was “improperly” and or “wrongfully”

withheld. Whether EID improperly or wrongfully withheld the

retention amount is a question of fact which the jury did not

resolve. It is not clear from the jury verdict if the jury

concluded that EID “improperly” withheld the retention amount.

Clearly, the jury found that EID breached the contract with TBI

when EID failed to pay TBI. It does not follow, however, that a

finding of breach of contract conclusively established that EID

was improper or wrongful in withholding the retention amounts. 

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Indeed, the California law specifically provides that in the

“event of a dispute between the public entity and the original

contractor, the public entity may withhold from the final payment

an amount not to exceed 150 percent of the disputed amount . . .”

Cal. Pub. Con. Code § 7107 (c). Here, there was clearly a

dispute between EID and TBI. Accordingly, EID was entitled to

initially withhold the final payment because there was a dispute.

Whether EID acted in a way that was “improper” or “wrongful” is

a separate question. This question was not before the jury and

therefore, its verdict cannot be read to include a finding that

EID’s withholding of the retention amount was “wrongful” or

“improper.” Accordingly, EID is not entitled to interest under

Section 7107. 

V.

CONCLUSION 

For the reasons explained, the court orders as follows: 

1. EID’s Motion for a New Trial is DENIED.

2. EID’s Amended Renewed Motion for Judgment as a Matter of Law

on TBI’s Cause of Action for Breach of the Covenant of Good

faith and Fair Dealing is DENIED.

3. EID’s Renewed Motion for Judgment as a Matter of Law on: (1)

EID’s Breach of Contract Claim; and (2) TBI’s Breach of

Contract Claim are DENIED.

4. The court defers judgment on EID’s Renewed Motion for

Judgment as a Matter of Law that TBI has failed to prove

certain damage claims. The court requests that TBI submit

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a brief which sets forth the evidence it believes supports

the award of damages. The brief shall be limited to thirty

(30) pages and shall be submitted to the court thirty days

from the date of this order. EID shall file a response,

also not in excess of thirty (30) pages, which shall be due

twenty one (21) days later. 

5. TBI’s Motion for Attorneys’ Fees is GRANTED in the amount of

$3,221,089.00;

6. TBI’s Bill of Costs is TAXED in the amount of $ 60,597.18;

7. TBI’s Motion for Prejudgement Interest is DENIED. 

IT IS SO ORDERED. 

DATED: February 9, 2007.

Case 2:03-cv-00949-LKK -GGH Document 824 Filed 02/12/07 Page 33 of 33