Opinion
No. 2:01-cv-0459-LRH-PAL.
September 8, 2006
ORDER
The following are currently pending before the court:
Plaintiff Rio Properties, Inc.'s ("Rio" or "Plaintiff") Motion for Attorneys' Fees and Costs (#436), filed March 22, 2006. Defendants Stewart Annoyances, Ltd., et al. (collectively "Defendants") have filed an Opposition (#441), and Plaintiff has filed a Reply (#448).
Refers to the court's docket number.
Plaintiff also submitted a Bill of Costs (#433), filed March 15, 2006. Defendants have filed objections (#439), but Plaintiff has not filed a response.
I. PLAINTIFFS' MOTION FOR ATTORNEYS' FEES AND NON-TAXABLE COSTS A. BACKGROUND
In its motion for attorneys' fees, Plaintiff seeks an award of attorneys' fees in the amount of $1,140.906.75 and an award of non-taxable costs in the amount of $174,266.58. Excluded from this application are sums otherwise previously awarded in the Court's orders of April 4, 2005 ($23,500.00) (#203) and March 3, 2006 ($153,483.70) (#427) and Plaintiff's requested taxable costs of $90,773.63 (#433).
On March 23, 2001, Plaintiff filed suit against Defendants, seeking return of the $2 million Plaintiff prepaid for a concert Defendants did not perform on December 30, 2000. Defendants denied liability. They maintained that Mr. Stewart ("Stewart") was ill, that his illness was a "force majeure" event under the parties' contract, and that, although he did not perform, Defendants were contractually entitled to keep the money and reschedule the cancelled concert (##6, 32). On September 7, 2005, after trial, a jury found the parties "did not mutually consent to the same material terms with respect to rescheduling and/or refund of the [$2 million] guaranteed compensation." The jury further found that Plaintiff should recover its $2 million, plus interest from November 9, 2000, which the court thereafter set at 10% (#402). The court entered its declaratory judgment and judgment on the jury's verdict on March 3, 2006. (## 427, 428).
As part of their contract, the parties agreed that, in the event of litigation arising under their agreement, the prevailing party would be entitled to recover its reasonable attorneys' fees and costs. The March 8, 1999, Agreement (the "March 1999 Agreement") between Plaintiff and Defendants contained two provisions respecting the award of attorneys' fees. These provisions read as follows:
The prevailing party in any litigation arising under this letter agreement shall be entitled to be reimbursed for reasonably [sic] attorneys' fees and other costs and expenses of said litigation.
(March 1999 Agreement ¶ D4.)
In any action or proceeding to enforce the terms of this Agreement, the prevailing Party shall be entitled to reasonable attorneys' fees and costs incurred, whether or not the action is reduced to judgment.
( Id. ¶ D11.)
Plaintiff paid Defendants the $2 million that the jury ordered returned pursuant to the January 6, 2000 Amendment (the "Amendment"). Paragraph 5 of the Amendment, "ratified and affirmed" the "terms of the existing agreement between the parties." ¶ 5.
The parties addressed the matter of pleading and proof of attorneys' fees in the joint pretrial order and in open court on August 23, 2005. They dispensed with presentation of proof at trial respecting fees and costs and agreed to the presentation of applications therefor by post-judgment motion to the court:
Defendants argue that the individual contract provisions, including the choice-of-law and attorneys' fees provisions, do not survive the jury's finding that no enforceable contract exists between the parties. Specifically, they aver that as the jury found that "the parties did not enter into an enforceable contract because they did not mutually consent to the same material terms with respect to rescheduling and/or refund of the guaranteed compensation," (Jury Verdict, (#402)), it follows that the specific provisions of the contract are likewise not enforceable. In response, Plaintiff asserts that only the rescheduling and/or refund provisions of the contract were found to be unenforceable and that the choice-of-law and attorneys' fees provisions remain in full effect.
B. DISCUSSION 1. Choice-of-Law Provision
Paragraph D4 of the March 1999 Agreement states that the agreement "shall be governed and interpreted by the laws of the State of California. . . ." However, Defendants argue that a valid contract never existed in this case, and, as a result, there is no basis upon which to claim that the choice-of-law clause governs this dispute. With respect to the choice-of-law provision in the contract, this court has previously made the following ruling:
Nevada routinely honors choice-of-law provisions. See Engel v. Ernst, 724 P.2d 215, 216-217 (Nev. 1986).
Despite the fact that Nevada routinely enforces choice-of-law provisions, Defendants claim that the choice-of-law provision in the parties' contract, which states that California law shall govern the parties' agreement, see March 1999 Agreement, ¶ D(4), is not applicable to pre-judgment interest because the jury found "that the parties did not enter into an enforceable contract." As a result, Defendants allege that the California choice-of-law clause in the March 1999 Agreement is also unenforceable and that the court must apply Nevada's default choice-of-law rules. Unfortunately, Defendants do not provide any authority for the proposition that where a contract is unenforceable because of mistake regarding a separate material clause, the choice-of-law provision is also unenforceable.
Plaintiffs argue that the choice-of-law provision in the parties' contract remains in force even though the jury found that the contract was unenforceable because the parties "did not mutually consent to the same material terms with respect to rescheduling and/or refund of the guaranteed compensation." Jury Verdict. They claim that the lack of mutual consent goes only to the refund/rescheduling obligation and not to choice-of-law agreement. As authority for their position, they cite to the Restatement (Second) of Conflict of Laws, which states:
The fact that a contract was entered into by reason of misrepresentation, undue influence or mistake does not necessarily [mean] that a choice-of-law provision contained therein will be denied effect. This will only be done if the misrepresentation, undue influence or mistake was responsible for the complainant's adherence to the [choice-of-law] provision. . . . Otherwise, the choice-of-law provision will be given effect. . . .
Restatement (Second) of Conflict of Laws § 201 cmt. c (1971); see also § 187 cmt. b.
Unfortunately, Nevada has neither adopted or rejected the view set forth in the Restatement. In the absence of controlling precedent from the Nevada Supreme Court, this Court must use its own best judgement to predict how the state court would decide the relevant substantive issues. Dimidowich v. Bell Howell, 803 F.2d 1473, 1482 (9th Cir. 1986), reh'g denied, modified, 810 F.2d 1517 (9th Cir. 1987); Takahashi v. Loomis Armored Car Service, 625 F.2d 314, 316 (9th Cir. 1980); Associated Aviation Underwriters, Inc. v. Vegas Jet, L.L.C., 106 F.Supp.2d 1051, 1053 (D.Nev. 2000). "In doing so, this Court may look to state court decisions from sister jurisdictions, treatises and other helpful resources." Vegas Jet, 106 F.Supp.2d at 1053.
As Plaintiff points out, the Ninth Circuit has previously stated that § 201 of the Restatement provides "the traditional view" as to the enforceability of a choice-of-law provision where the contract is otherwise invalid. Sparling v. Hoffman Constr. Co., Inc., 864 F.2d 635, 641 (9th Cir. 1988). In that same case, the court assumed that Washington, which had not decided the issue, would accept the traditional view as stated in the Restatement. Id. Specifically, the court found that Washington courts would enforce a choice-of-law provision in a contract unless that clause itself was obtained by a misrepresentation. Id. Thus, when the United States District Court for the District of Arizona had to decide how a Nevada court would rule on § 201, it applied the Sparling analysis and held that "[l]ike the Ninth Circuit did in Sparling, this Court assumes that the courts of Nevada would adopt `the traditional view.'" Southern Union Co. v. Southwest Gas Corp., 165 F. Supp. 2d 1010, 1027-1028 (D.Ariz. 2001).
The court agrees with the analysis in Sparling and Southern Union, and it finds that the Nevada Supreme Court would adopt the "traditional view" as described in § 201 of the Restatement of Conflicts (Second). The court's decision is further bolstered by the fact that both parties have relied on California law throughout the pendency of this case, including in drafting the jury instructions and verdict forms, and this is the first suggestion made by Defendants that Nevada law should apply to the contract.(March 3, 2006, Order (#427)).
Defendants fail to point out that the court has already ruled that Nevada, as the forum state, would give effect to the parties' contractual choice of California law. (March 3, 2006, Order (#427) at 2:13-4:22). To now find that no provisions of the contract are enforceable and that Nevada law applies would be inconsistent with the court's prior holding. In essence, Defendants are seeking a reconsideration of the court's previous order without specifically making such a request.
Plaintiff argues that Defendants are precluded from rearguing the enforceability of the choice-of-law provision at this juncture. However, on the basis of the following discussion and in the interest of justice, the court will consider Defendants' new arguments. As they did in the motions addressed in the court's March 3, 2006, Order, Defendants argue that because the jury found that "the parties did not enter into an enforceable contract because they did not mutually consent to the same material terms with respect to rescheduling and/or refund of the guaranteed compensation," (Jury Verdict, (#402)), "[t]he ultimate — and only rational — conclusion from the jury's verdict is that the specific provisions of the contract are likewise not enforceable." (Defs.' Opp'n (#441) at 3:16-20.)
Plaintiff, in response, argues that the law supports enforcing the attorneys' fees provisions even though the refund/rescheduling portion of the contract was found to be invalid for reasons of lack of mutual consent and/or mistake. Defendants dispute this characterization, however. They argue that the jury's finding of no enforceable contract meant that "no contract was ever formed." ( Id. at 4:3.)
Defendants now argue that Plaintiff's reliance on the Restatement (Second) of Conflict of Laws, section 201, is misplaced because this is not a case of mistake. Section 201, comment c, provides:
The fact that a contract was entered into by reason of misrepresentation, undue influence or mistake does not necessarily [mean] that a choice-of-law provision contained therein will be denied effect. This will only be done if the misrepresentation, undue influence or mistake was responsible for the complainant's adherence to the [choice-of-law] provision. . . . Otherwise, the choice-of-law provision will be given effect. . . .
Restatement (Second) of Conflict of Laws § 201 cmt. c (1971); see also § 187 cmt. b. Defendants assert that the jury found there was no mutual consent on the material terms. For the first time, they also claim that this is not a case in which the consent was not freely obtained by reason of misrepresentation, undue influence, or mistake. Accordingly, they argue the Restatement is inapplicable to the present situation.
Unfortunately, Defendants failed to make this argument prior to the court's March 3, 2006, Order, in which the court, also relying upon the Restatement, found that Nevada law supports a finding that the choice-of-law provision should be given effect. Indeed, previously, Defendants were silent regarding Plaintiff's reliance on the Restatement, and they did not seek to have the court reconsider the issue following the court's order. In its March 3, 2006, Order, the court specifically relied upon the presence of mistake in making its finding that the choice-of-law provision in the Agreement remained valid.
Defendants now reargue the issue of whether the choice-of-law provision in the Agreement is enforceable. Plaintiffs seek to enforce the choice-of-law and attorneys' fees provisions. Under Plaintiff's interpretation, California law should apply to any disputes arising under the contract, and under California law, Plaintiffs are entitled to their attorneys' fees.
"The rule in this circuit requires that federal courts in diversity actions apply state law with regard to the allowance (or disallowance) of attorneys' fees." Diamond v. John Martin Co., 753 F.2d 1465, 1467 (9th Cir. 1985). Plaintiff's argue that the attorneys' fees provision is governed by California law. They base this assertion on the fact that the March 1999 Agreement contains a California choice-of-law clause, ( see March 1999 Agreement, ¶ D4.) Defendants argue that California law is completely inapplicable to their dispute regarding attorneys' fees because the lack of mutual assent makes the contract unenforceable in every respect. They now aver that the unenforceability of the contract has nothing to do with mistake; instead, it is wholly based on lack of mutual assent.
The confusion regarding mutual assent and mistake has arisen because mistake was obviously at the heart of the jury's finding of lack of mutual assent. When understood in its conventional sense, the jury could certainly find that the parties were mutually mistaken, albeit in different ways, as to the meaning of the Agreement and that their "mistakes" led to a lack of mutual assent between the parties. The same cannot be said if mistake is understood as a legal term. It appears that in many instances, the parties have used "mistake" in both its common and legal meaning, without differentiation. As a result, in post-judgment motions, mistake and lack of mutual assent have become conflated.
When mistake is understood as a legal term, it becomes clear that lack of mutual assent and mistake are indeed distinct and mutually exclusive concepts. In legal terms, mistake is generally used with regard to the formation of contracts, and mistake is referred to in two ways: mutual and unilateral. To prove mutual mistake, a party must demonstrate that there was a shared intention between the parties during contract formation, and there was a mutual but mistaken belief by all parties that the written contract reflects that shared intention. National Reserve Ins. Co. of Illinois v. Scudder, 71 F.2d 884, 886 (9th Cir. 1934); Truck Ins. Exch. v. Wilshire Ins. Co., 8 Cal.App.3d 553, 559 (Cal.Ct.App. 1970). The evidence before the jury did not support a finding that the parties had a shared but mistaken belief regarding the refund/rescheduling provisions of the contract. Therefore, mutual mistake is inapplicable to the present case.
To prove unilateral mistake, a plaintiff must show that: (1) there was a mutual intention of the parties; (2) the written contract fails to reflect the true intention of the parties due to a unilateral mistake; and (3) the defendant actually knew of or suspected the mistake at the time of its drafting and execution. Cal. Civ. Code § 3399; La Mancha Dev. Corp v. Sheegog, 78 Cal.App.3d 9, 16-17 (Cal.Ct.App. 1978). A plaintiff must also show that the defendant unfairly utilized the mistaken belief to take advantage of the plaintiff. Meyer v. Benko, 55 Cal.App.3d 937, 944 (Cal.Ct.App. 1976). Again, the evidence before the jury would not support a finding of any of the elements required to find unilateral mistake. Consequently, unilateral mistake is also inapplicable to this case.
Therefore, Defendants are correct that this is not a case of mistake, and any analysis that relies upon mistake as a basis for enforcing the choice-of-law provision is flawed. Therefore, the question before the court is whether, where a contract is unenforceable because of lack of mutual assent, its choice-of-law provision may still be enforced.
A federal court sitting in diversity jurisdiction applies the forum state's choice-of-law rules. Abogados v. ATT, Inc., 223 F.3d 932, 934 (9th Cir. 2000); Northern Ins. Co. of N.Y. v. Allied Mut. Ins. Co., 955 F.2d 1353, 1359 (9th Cir. 1992). Therefore, the court will apply Nevada's choice-of-law rules in deciding whether or not the California choice-of-law clause should be enforced. Nevada routinely honors choice-of-law provisions. See Engel v. Ernst, 724 P.2d 215, 216-17 (Nev. 1986).
Defendants argue that a distinction exists between contracts which may be rescinded and are therefore unenforceable and contracts which are unenforceable because the contract was never properly formed. To support this proposition, Defendants rely upon Chakmak v. H.J. Lucas Masonry, Inc., 55 Cal.App.3d 124, 127 Cal.Rptr. 404, 407 (Ct.App. 5th 1976). In that case, the court made the following statement:
When concerned with the essential elements of consent a careful distinction must be made between a consent that is not free because it was obtained by duress, menace, fraud, undue influence or mistake ([Cal] Civ. Code §§ 1565, 1567) and a consent that is not mutual because the parties did not agree upon the same thing in the same sense ([Cal] Civ. Code §§ 1565, 1580). ( See 1 Williston on Contracts (3d ed. 1957) § 20, pp. 35-36.) In the situation where the consent is not free the contract is not absolutely void, but may be rescinded by the parties. ([Cal] Civ. Code § 1566.) In the situation where the consent is not mutual, it generally is stated there is no contract.55 Cal.App.3d at 129. See also Meyer v. Benko, 55 Cal.App.3d 937, 942 (Cal.Ct.App. 1976) ("California law requires mutual assent of the parties to form a valid contract); D'Angelo v. Gardner, 819 P.2d 206, 232 (Nev. 1991) ("[C]ontracts are created by mutual assent."); Miller v. Thompson, 160 P. 775, 780 (Nev. 1916) (finding contract unenforceable where mistake led to lack of mutual assent).
In other words, a distinction is to be drawn between contracts that are void because they were never actually formed and those that were formed, but because of a legal fiction, they become unenforceable, or voidable. See 1 Richard A. Lord, Williston on Contracts § 1:20 (4th ed. 2006). Defendants argue that where a contract is void for lack of formation, no part of that contract may be enforced because there was no meeting of the minds on the essential elements of the contract. See Keddie v. Beneficial Ins., Inc., 580 P.2d 955, 956 (Nev. 1978) (stating that contracts require a meeting of the minds as to all essential elements).
In response, Plaintiff first argues that the issue has already been decided by the court, and Defendants do not have the ability to now challenge the court's previous order as part of the current motion. For the most part, Plaintiff continues to argue as if this is an issue of mutual mistake rather than an issue of lack of mutual assent.
However, in a footnote ( see Pl.'s Reply (#448) at 15 n. 6,) Plaintiff does argue that Defendant's argument that the contract in this instance is void, rather than voidable, is wrong as a matter of law. Plaintiff claims that the Chakmak decision relied upon 1 Williston on Contracts § 20 (3d ed. 1957), and that the distinction between void and voidable contracts is no longer supported in the current version of Williston. They claim that Williston now makes "mutual mistake" a subcategory of "no mutuality of assent." The sections they cite to, however, do not support that conclusion. See 1 Richard A. Lord, Williston on Contracts § 1:20 (4th ed. 2006) and 27 Williston on Contracts § 70:14 (4th ed. 2006). Indeed, the court can find nothing in those sections that suggests that the previous distinction no longer exists. On the contrary, § 1:20 specifically discusses the difference between void and voidable contracts.
Plaintiff also cites Alaska Airlines, Inc. v. United Airlines, Inc., 902 F.2d 1400, 1403 (9th Cir. 1990) for the proposition that even where a contract is void, the attorneys' fees and choice of law clauses should still be given effect. In that case, after the parties had entered into a valid contract, presumably meeting the requirement of mutual assent, the government promulgated regulations which made performance of several of the contested contract provisions illegal. The Court, noting that the contract had become "void," stated that the choice-of-law provision was still enforceable. Although the Court used the term "void" to describe the contract, it is obvious that there was no question that a valid contract had been entered into and that the contract had actually become voidable as the result of subsequent government action. Therefore, Alaska Airlines is more akin to a case of mistake than to a case of lack of mutual assent. As a result, Alaska Airlines is not binding or helpful in deciding the issue before the court.
Defendants also look to the issue of the enforceability of arbitration clauses as analogous to the enforceability of attorneys' fees provisions. In Prima Paint v. Flood Conklin, 388 U.S. 395, 402-4 (1967), the Supreme Court held that an arbitration clause is separable from the contract even if a party seeks to rescind or avoid the contract due to fraud in the inducement unless the fraud went to the arbitration clause itself. The California Supreme Court, in dicta, has recognized an exception to the Prima Paint ruling, however, based on the distinction between voidable and void contracts:
The decisions [plaintiff] cites have a logical rationale: If a party can show that it did not know it was signing a contract, or that it did not enter into a contract at all, both the contract and its arbitration clause are void for lack of mutual assent.Saint Agnes Medical Center v. PacifiCare of California, 82 P.3d 727 (Cal. 2003) (citations omitted) (finding that the exception did not apply because it was not a case where mutual assents was lacking). As Plaintiff correctly points out, Saint Agnes addressed arbitration clauses, not choice-of-law provisions, and the statement was not necessary to the holding of the case. However, the rationale behind its statement is well-reasoned, and the court finds the reasoning applicable to the case at bar.
The court finds the distinction between voidable and void contracts to be controlling. Where parties have failed to mutually assent to the same material terms, a contract never came into existence and is therefore void. The jury's verdict, combined with the evidence presented during trial, is clear that the jurors found that a lack of mutual assent rendered the March 1999 Agreement between the parties void rather than voidable. As this is a case where the contract never existed, rather than a case where a legal fiction allows the parties to treat the contract as if it never existed, the choice-of-law provision is unenforceable.
As a result of this finding, the section of the court's March 3, 2006, Order, dealing with the choice-of-law provision appears to have been wrongfully decided due to a mistake of law. As a result, the amount of prejudgment interest would likely be calculated according to Nevada, not California, law. Therefore, the court will sua sponte reconsider that order under Rule 60. See Kingvision Pay-Per-View Ltd. v. Lake Alice Bar, 168 F.3d 347, 351-52 (9th CIr. 1999) (holding that a district court may sua sponte reconsider a previous order under Federal Rule of Civil Procedure 60). The court will provide the parties an opportunity to brief the issue. Plaintiff may file any objections it has within twenty (20) days of this order. Defendant will then have the opportunity to file an opposition within fifteen (15) days of Plaintiff's objections, followed by a reply by Plaintiff within the succeeding seven (7) days.
2. Nevada Law and the Attorneys' Fees Provision
Although Nevada routinely honors choice-of-law clauses, Engel v. Ernst, 724 P.2d 215, 218 (1986), in this case, there is no enforceable choice-of-law clause to honor as the contract was never formed. See D'Angelo v. Gardner, 819 P.2d 206, 232 (Nev. 1991) ("[C]ontracts are created by mutual assent."); Keddie v. Beneficial Ins., Inc., 580 P.2d 955, 956 (Nev. 1978) (stating that contracts require a meeting of the minds as to all essential elements); Miller v. Thompson, 160 P. 775, 780 (Nev. 1916) (finding contract unenforceable where mistake led to lack of mutual assent).Where a choice-of-law clause is not binding on the parties, Nevada courts apply the substantial relationship test. Sievers v. Diversified Mortgage Investors, 603 P.2d 270, 273 (Nev. 1979). Nevada courts look to the following contacts in determining which state's law applies: (a) the place of contracting; (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties. Sotikaris v. United Service Auto. Ass'n, 787 P.2d 788, 790 (Nev. 1990). In the present case, nearly all the contacts militate toward the application of Nevada law in this matter. Only the residence of Defendants and the business address of Defendants' attorneys favor the application of California law to this dispute. Plaintiff does not challenge this conclusion. Therefore, given that the contract is void in its entirety, Nevada law applies to determining whether attorneys' fees should be granted in this case.
Both parties rely on Mackintosh v. California Federal Sav. Loan Ass'n, 935 P.2d 1154 (Nev. 1997) as support for their respective positions regarding attorneys' fees. Plaintiff argues that Nevada law, as explained in Mackintosh, supports Plaintiff's recovery of attorneys' fees. The parties in Mackintosh had an agreement stating that in the event of "legal action . . . arising out the execution of this agreement or sale," the prevailing party could recover its attorneys' fees. The district court rescinded the contract at the behest of the purchaser. According to the Supreme Court:
The district court refused to award attorneys' fees, stating that the rescinded contract was void from its date of inception, just as if the contract had never existed. Bergstrom v. Estate of DeVoe, 109 Nev. 575, 854 P.2d 860 (1993). As rescission has been granted in this case, the contract is null and void. Therefore,
Plaintiffs may not recover attorneys['] fees under the terms of a void contract. Id. at 1162. The Nevada Supreme Court reversed. The problem in Bergstrom, the Court held, was not that the contract was void, but that the plaintiff should not be able to rescind the contract and also recover damages based upon it. Holding the contract void did not decide "the issue of whether an award of attorneys' fees authorized by the contract would be permissible if the contract had been rescinded." Id. Relying on and quoting Katz v. Van Der Noord, 546 So.2d 1047, 1049 (Fla. 1989), the Court held that "when parties enter into a contract and litigation later ensues over that contract, attorneys' fees may be recovered under a prevailing-party attorneys' fee provision contained therein even though the contract is rescinded or held to be unenforceable." Id. at 1049.
At first blush, Mackintosh seems to support the idea that attorneys' fees are recoverable under an attorneys' fees provision even where the contract is "void." However, it is clear that the contract before the Court was not void in the sense that it never existed. Rather, the contract was actually rescindable or voidable. Again, relying on Katz, the Court quoted:
The legal fictions which accompany a judgment of rescission do not change the fact that a contract did exist. It would appear unjust to preclude the prevailing party to the dispute over the contract which led to its rescission from recovering the very attorney's fees which were contemplated by that contract.Mackintosh, 935 P.2d at 1162 (quoting Katz, 546 So.2d at 1049). From this quote, it becomes clear that the Nevada Supreme Court recognized that the contract dispute before it was one in which the contract did exist, but was voidable. The contract was not void in the sense that it was never formed, as is the situation in the case at bar.
Indeed, it appears that the Nevada Supreme Court has not addressed the issue of whether an attorneys' fees provision may be enforced where the contract was never formed because of lack of mutual assent. In the absence of controlling precedent from the Nevada Supreme Court, this court must use its own best judgment to predict how the state court would decide the relevant substantive issues. Dimidowich v. Bell Howell, 803 F.2d 1473, 1482 (9th Cir. 1986), reh'g denied, modified, 810 F.2d 1517 (9th Cir. 1987); Takahashi v. Loomis Armored Car Service, 625 F.2d 314, 316 (9th Cir. 1980); Associated Aviation Underwriters, Inc. v. Vegas Jet, L.L.C., 106 F.Supp.2d 1051, 1053 (D.Nev. 2000). "In doing so, this Court may look to state court decisions from sister jurisdictions, treatises and other helpful resources." Vegas Jet, 106 F.Supp.2d at 1053.
Upon review, it appears the Nevada Supreme Court would adopt the view that an attorneys' fees provision is not enforceable where the contract was never formed as a result of lack of mutual assent. The court has already noted that Nevada law supports the basic contract principle that no contract exists (or ever existed) where the parties do not mutually assent to the same material terms. See D'Angelo v. Gardner, 819 P.2d 206, 232 (Nev. 1991) ("[C]ontracts are created by mutual assent."); Keddie v. Beneficial Ins., Inc., 580 P.2d 955, 956 (Nev. 1978) (stating that contracts require a meeting of the minds as to all essential elements); Miller v. Thompson, 160 P. 775, 780 (Nev. 1916) (finding contract unenforceable where mistake led to lack of mutual assent).
As Defendants point out, the very case upon which the Nevada Supreme Court relied in Mackintosh recognizes and supports the distinction between void and voidable contracts. There, the Florida Supreme Court stated:
The legal fictions which accompany a judgment of rescission do not change the fact that a contract did exist. It would be unjust to preclude the prevailing party to the dispute over the contract which led to its rescission from recovering the very attorney's fees which were contemplated by that contract. This analysis does no violence to our recent opinion in Gibson v. Courtois[, 539 So.2d 459 (Fla. 1989),] in which we held that the prevailing party is not entitled to collect attorney's fees under a provision in the document which would have formed the contract where the court finds that the contract never existed.Katz, 546 So.2d at 1049 (emphasis added). Although Plaintiff attacks Defendants for "taking passages from Katz . . . on which the Mackintosh court did not even rely in its decision," (Pl.'s Reply (#448) at 14,) it is entirely reasonable to conclude that whereas the Nevada Supreme Court relied wholly on Katz in the past, it would continue to do so in the future. Clearly, the reason the Nevada Supreme Court did not include the last sentence from the above-quote is that the issue of lack of formation was not actually before them. Therefore, the court concludes that if the Nevada Supreme Court was faced with the issue of whether a party may enforce an attorneys' fees provision in a contract that was never formed, the Court would follow the rationale of Katz and decide that such fees are not recoverable. Consequently, Plaintiff is not entitled to recover its attorneys' fees arising from the litigation in this case.
Plaintiff's claim that Defendants need to show that Nevada has a strong policy against recovery of fees in order to defeat the California choice-of-law clause is misplaced. The court has already found that the choice-of-law provision is inapplicable because the contract was never formed. It would be nonsensical to therefore require Defendants to show that Nevada has a strong policy against the choice-of-law clause where such clause is otherwise unenforceable.
3. Plaintiff not Estopped from Claiming that California Law Applies
Defendants allege that Plaintiff should be judicially estopped from arguing that Calfornia law applies to this case as Plaintiff previously argued that Nevada law should apply. As an alternative theory, Plaintiff previously argued that Nevada law should apply in its opposition to the Armstrong firm's claims for attorneys' fees (#101). However, the court never reached the issue of which law applied as it held that Armstrong was not the prevailing party.
"[F]ederal law governs the application of judicial estoppel in federal court." Rissetto v. Plumbers Steamfitters Local 343, 94 F.3d 597, 603 (9th Cir. 1996). Under federal law, the doctrine of judicial estoppel only applies to a party "where the court relied on, or `accepted,' the party's previous inconsistent position." Hamilton v. State Farm Fire Cas. Co., 270 F.3d 778, 783 (9th Cir. 2001). As the court did not accept Plaintiff's previous position, judicial estoppel is not warranted in this case.
4. Non-Taxable Costs
In addition to attorneys' fees, Plaintiff seeks an award of $174,266.58 in non-taxable costs. The court has ruled that the attorneys' fees provisions found in the March 1999 Agreement are not enforceable. As a result, the non-taxable costs sought by Plaintiff, which are based on those same provisions, are not recoverable. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987) ("[A]bsent explicit statutory or contractual authorization for the taxation of the expenses . . . federal courts are bound by the limitations set out in 28 U.S.C. § 1821 and § 1920.")
II. BILL OF COSTS
Plaintiff requests $90,773.63 in taxable costs as the prevailing party in this action in their Bill of Costs (#433). Defendants have filed objections (# 439). Plaintiff has not filed a responsive pleading.
The taxation of costs is governed by 28 U.S.C. § 1920, which reads:
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 this 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.
A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.28 U.S.C. § 1920.
A. TRIAL AND HEARING TRANSCRIPTS
Defendants object to $7,420.64 in costs requested by Plaintiff associated with obtaining "Real Time" and daily transcripts from the trial. ( See Bill of Costs (# 433) at Tab 3.) Plaintiff has failed to show how such daily trial transcripts were "necessarily obtained for use in this case." 28 U.S.C. § 1920(2). Furthermore, Local Rule 54-3 states that the costs of trial transcripts are generally not taxable costs:
Transcripts of pretrial, trial, and post-trial proceedings are not taxable unless either requested by the court or prepared pursuant to stipulation approved by the court. Mere acceptance by the court does not constitute a request. Copies of transcripts for counsel's own use are not taxable absent prior special order of the court.
Local Rule 54-3. Daily trial transcripts were not requested by the court, nor were they prepared pursuant to stipulation approved by the court. For this reason, these costs, in the amount of $7,420.64 are not taxable against Defendants.
Similarly, in accordance with Local Rule 54-3, Plaintiff's request for $391.30 in costs relating to the audiotape of argument before the Ninth Circuit is also disallowed.
B. DEPOSITION TRANSCRIPTS AND VIDEOTAPES/DVDS
Plaintiff also seeks its costs to obtain both the stenographic transcript and videotape/DVD for the following depositions:
• Barry Tyerman (video fee of $1022.00);
• Annie Challis (video fee of $827.00);
• Richard Vitali and Craig Hudson, taken by Defendants (video fee of $483.75);
• Cary Rehm, taken by Defendants (video fee of $168.25);
• Mark Tratos, taken by Defendants (video fee of $490.75);
• Scott Bogatz and Joel Fischman, taken by Defendants (video fee of $652.00);
• Gary Loveman, taken by Defendants (video fee of $329.50);
• Shawn Nasseri, M.D. (video fee of $1682.00)
• Barry Baron, M.D. taken by Defendants (video fee of $199.50); and
• John Lipkowitz, taken by Defendants (video fee of $168.25).
(Bill of Costs (#433), Tab 3.)
Defendants argue that these costs should not be taxed to them as none of the above depositions were used at trial. Although the Ninth Circuit seems to be silent on the issue of taxability of video depositions in addition to the taxation of transcriptions, most courts agree that the costs associated with video depositions are taxable as long as they are "necessarily obtained for use in the case." 28 U.S.C. § 1920(2); 10 Wright, Miller Kane, Federal Practice and Procedure § 2676 (3d ed. 1998); see also, Tilton v. Capital Cities/ABC, Inc., 115 F.3d 1471, 1478 (10th Cir. 1997) (holding that both the video and the written transcript may be taxed where they are both "necessarily obtained for use in the case."); Nicolaus v. West Side Transport, Inc., 185 F.R.D. 608, 612 n. 2 (D.Nev. 1999) ("[T]he costs of videotaping and transcribing a deposition are taxable."). It also appears that some of the contested video depositions were conducted with witnesses who were either beyond or may have been beyond the subpoena power of the court at the time of trial. Under the circumstances, the court is satisfied that the video depositions were "necessarily obtained for use in the case." 28 U.S.C. § 1920(2). Consequently, the $6,023.00 for the videotapes/DVDs will be taxed to Defendants.
C. VIDEO EQUIPMENT RENTAL AND TECHNICAL SERVICES AT TRIAL
In Tab 3 Plaintiff also seeks $8,575 in costs associated with "synchronizing transcripts to videos" (in the amount of $1,900.00), for "video equipment rental and technical services" (in the amount of $6,360.00) and "video editing of McGhee testimony for use at trial" (in the amount of $315.00). Similarly, under Tab 9, Rio also seeks $17,325.00 in costs fo the "trial support" and computer services of "Geeks Plus." The invoices for Geeks Plus generally reflect fees for this company to deal with its equipment at trial, to compile and prepare a "medical timeline" not admitted into evidence ( see # 399), and "trial support" work.
The court is unaware of any authority which would allow these costs for various technical services to be taxed against Defendants. They do not appear to fall under any of the categories listed in 28 U.S.C. § 1920, and Plaintiff has not offered any legal support for their inclusion. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42 (1987) (stating that taxable costs limited to those enumerated in 28 U.S.C. § 1920). Plaintiff attempts to shoehorn many of these litigation expenses into the ambit of Local Rule 54-7, which provides:
The cost of maps and charts is taxable if they are admitted into evidence. The cost of photographs, 8" x 10" in size or less, is taxable if admitted into evidence or attached to documents required to be filed and served on opposing counsel. The cost of enlargements greater than 8" x 10", models, summaries, computations, and statistical comparisons is not taxable except by prior order of the court.
Local Rule 54-7. The costs for technical services and trial support services are not included in the costs allowed under Local Rule 54-7. From the descriptions provided by Plaintiff, the court is unable to determine whether any of the services listed included any of the items listed as taxable under 54-7. Therefore, these costs, totaling $25,900 are not taxable.
D. TRAVEL-RELATED EXPENSES FOR DR. BARON
Plaintiff seeks $961.40 in expenses (airfare, lodging, meals, cab fare, and parking) associated with its medical expert's travel from San Francisco to Las Vegas to testify at trial, despite the fact Dr. Baron never testified. Local Rule 54-5(a) provides:
The rate for witness fees, mileage, and subsistence are fixed by statute (see 28 U.S.C. § 1821). Such fees are taxable even though the witness did not testify if its shown that the attendance was necessary, but if a witness is not used, the presumption is that the attendance was unnecessary.
Local Rule 54-5(a). Defendants argue that Plaintiff has not rebutted the presumption that the attendance of Dr. Baron was unnecessary. However, Plaintiff addressed this issue in its Motion for Attorneys' Fees (#436) and its subsequent Reply (#448). Dr. Baron's fees were unavoidable because the decision not to call him to testify was not one that Rio could have made prior to having him stand by, ready to testify at trial. Plaintiff sought to re-open the case when the court ruled that its medical evidence chart was inadmissible; and, if the court had allowed Plaintiff to re-open the case, Plaintiff would have sought to call Dr. Baron to the stand. Therefore, the fees attributed to Dr. Baron are rightfully taxed to Defendants.
E. EXPERT EXPENSES AND TREATING PHYSICIAN DEPOSITION FEES (TAB 8)
Finally, Plaintiff seeks $15,300 in expenses associated with the discovery depositions Plaintiff took of Defendants' experts and Rod Stewart's treating physicians. These are not taxable costs under 28 U.S.C. § 1821. Local Rule 54-4 states that the "[f]ees for the witness at the taking of a deposition are taxable at the same rate as for attendance at trial." The amount is fixed by 28 U.S.C. § 1821, which provides that all witnesses are entitled to a witness fee of $40 per day. See also Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42 (1987) (holding that a court may tax expert witness fees in excess of the amount set in 28 U.S.C. § 1821 only when the witness is court-appointed). As a result, these costs are disallowed. In sum, Plaintiff is entitled to $41,761.69 in taxable costs.
III. CONCLUSION
As the jury found that there was no mutual assent with respect to refund/rescheduling provisions of the parties' disputed contract, the contract was never formed, and the choice-of-law and attorneys' fees provisions are unenforceable.
THEREFORE, Plaintiff's Motion for Attorneys' Fees and Costs (# 436) is DENIED.
FURTHERMORE, Plaintiff's Bill of Costs (# 433) is hereby reduced to allow Plaintiff to recover $41,761.69 in taxable costs.
Plaintiff shall have twenty (20) days in which to challenge the reconsideration of the court's March 3, 2006, Order, with respect to the determination of prejudgment interest. Defendants will then have fifteen (15) days to file an opposition, and Plaintiff will then have seven (7) days to file a reply.
IT IS SO ORDERED.