Daily Blast - January 9, 2019 - Lewis Brisbois Bisgaard & Smith LLP

On January, 7, 2019, the Fifth District Court of Appeal published its opinion in Berkeley Cement, Inc. v. Regents of the University of California (Jan. 7, 2019, F073455, F073586)__Cal.App.5th ___ [ 2019 Cal.App. Lexis 17], holding, among other things, that fees incurred in participating in a voluntary mediation during the course of litigation may, in the discretion of the trial court, constitute a recoverable cost under Code of Civil Procedure section 1033.5. The court concluded that because such mediation costs are not expressly allowable under section 1033.5, subdivision (a), nor expressly disallowed under section 1033.5, subdivision (b), the trial court may, in its discretion, award such costs to the prevailing party if “reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.” (Slip opn., p. 33.)

After prevailing at trial, the University was awarded its costs, which included $15,950 for fees it paid to mediators, including $7,500 as its share of a nonrefundable fee for a mediation that was cancelled by Berkeley. Berkeley challenged the award, arguing that while the costs of court-ordered mediation may be recoverable under section 1033.5 (see Gibson v. Bobroff (1996) 49 Cal.App.4th 1202), voluntarily incurred mediation costs are not reasonably necessary to the conduct of the litigation, as required under section 1033.5, subdivision (c)(2), and therefore are not recoverable. The court refused to adopt such a blanket rule and, quoting Gibson, supra, at p. 1209, concluded that “mediation [both court-ordered and voluntary] is fundamental to the conduct of litigation as it encourages parties to settle their disputes before trial and exposes parties who fail to agree to a reasonable settlement proposal to a risk of a discretionary court determination that they should pay their opponent’s share of the failed mediation.” (Slip opn., p. 36.) Accordingly, mediation fees incurred in mediations not ordered by the court “are not categorically nonrecoverable as “not reasonably necessary to the conduct of litigation,” and whether such fees may be awarded is best left to the discretion of the trial court “based on the facts and circumstances of the particular action.” (Id. at p. 37.)