Are costs for unused trial exhibits recoverable?

Plaintiffs sued defendants for fraud. The jury returned a defense verdict. Defendants filed a memorandum of costs seeking recovery of trial expenses, including photocopies of exhibits, exhibit binders, and closing argument demonstrative aides that were prepared for -- but not ultimately used -- at trial. Plaintiffs moved to tax costs challenging those items not used at trial. Are defendants entitled to recover such costs?

Maybe, according to a recent state supreme court decision, Segal v. ASICS America Corporation, 2022 DJDAR 477. The opinion resolves a conflict among the courts of appeal regarding recovery of costs for unused exhibits and demonstratives.

Relevant CCP Sections. The statutory scheme for recovery of trial preparation expenses is in the Code Civil Procedure. Under Section 1032, the prevailing party is entitled to recover costs as a matter of right. Section 1033.5(a) sets forth those costs that are specifically allowed, and 1033.5(b) lists those costs that are expressly prohibited. In between these mutually exclusive sets of trial preparation costs -- one that is allowable as a matter of right, and one that is not -- lies a safety net for expenses that fall into neither category but may be awarded in the sound discretion of the trial court under 1033.5(c)(4). The latter section provides: "[i]tems not mentioned in this section and items assessed upon application may be allowed or denied in the court's discretion."

All costs, whether expressly authorized under Section 1033.5(a), or awarded in the court's discretion under Section 1033.5(c)(4), must be "reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation," pursuant to Section 1033.5(c)(2), and "reasonable in amount" under Section 1033.5(c)(3).

Finally, Section 1033.5(a)(13) provides that costs for "[m]odels, the enlargements of exhibits, and photocopies of exhibits, and the electronic presentation of exhibits, including costs of rental equipment and electronic formatting, may be allowed if they were reasonably helpful to aid the trier of fact." Prior to Segal, there was a split of appellate authority regarding whether costs for unused demonstratives and photocopies of trial exhibits are recoverable, either categorically under Section 1033.5(a)(13) or in the court's discretion under Section1033.5(c)(4).

Conflicting Appellate Court Decisions. Two prior appellate court decisions -- Seever v. Copley Press, Inc., 141 Cal. App. 4th 1550 (2006), and Ladas v. California State Auto. Assn.,19 Cal. App. 4th761 (1993) -- held that unused trial exhibits and demonstratives are not recoverable under Section 1033.5(a)(13). Seever also held such costs are not recoverable in the court's discretion under Section 1033.5(c)(4) because the limiting language of Section 1033.5(a)(13) (i.e., "were reasonably helpful to aid the trier of fact") places unused exhibits outside the scope of what the trial court may award in its discretion.

Three different appellate court decisions, Benach v. County of Los Angeles, 149 Cal. App. 4th 836 (2007), Science Applications International Corp. v. Superior Court, 39 Cal. App. 4th1095 (1995), and Applegate v. St. Francis Lutheran Church, 23 Cal. App. 4th 361 (1994), reached contrary results, holding that the costs for unused exhibits and demonstratives are recoverable in the court's discretion under Section 1033.5(c)(4).

In Benach, the court noted that the parties completed a mutual exchange of exhibits before trial, and prepared exhibit binders for the court and witnesses. The court observed that the prevailing party could not have anticipated that many of its prepared exhibits would not be used in trial.

In Science Applications, the appellate court concluded that expenses which do not fit into either category of those costs approved in Section 1033.5(a), nor disapproved in Section 1033.5(b), are recoverable in the discretion of the trial court under Section 1033.5(c)4) if "reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation."

In Applegate, the plaintiff dismissed the action on the day of trial. The reviewing court affirmed the trial court's award of costs that defendants "were forced to continue preparing for" until the case was ultimately dismissed.

The Segal case. Plaintiffs Size It, LLC, and Mickey Segal sued ASICS America Corporation and others for fraud. The case proceeded to trial and the jury rendered a defense verdict. The trial court awarded defendants their costs, including those incurred for unused trial exhibits, exhibit binders, and demonstrative boards and slides.

The court of appeal affirmed, noting that the interpretation of Section 1033.5(a)(13) "must reflect the reality of how complicated cases are tried," and that the trial court's own procedures require counsel to pre-mark and prepare multiple copies of their exhibits. Even the most experienced trial counsel will not know exactly which exhibits and demonstratives will be used until the trial progresses, but those exhibits must be prepared well in advance of trial.

Thus, the court of appeal justified its broad interpretation of the phrase "reasonably helpful to the trier of fact" to be "broader than the limited notion of helpfulness in the specific task of finding facts, and encompasses as well the more general concept of helpfulness in the form of efficiency in the trial in which the trier of fact is asked to perform that task." Under this logic, exhibits prepared for the efficient presentation at trial are reasonably helpful to the trier of fact, even if a particular exhibit is not actually used. For the same reasons, the court of appeal determined that the costs for unused trial exhibits are permitted in the trial court's discretion under Section 1033.5(c)(4).

The supreme court affirmed the appellate court, but on narrower grounds. The high court rejected the appellate court's broad interpretation of Section 1033.5(a)(13), the plain language of which excludes unused demonstratives and exhibits because they could not have assisted the trier of fact. In describing recoverable costs, the Legislature used the past tense -- "were reasonably helpful" -- not "would be" or "could be" helpful in assisting the trier of fact. Therefore, only the costs for demonstratives and photocopies of trial exhibits that were put before the trier of fact are recoverable under Section 1033.5(a)(13).

The remaining issue was whether the trial court may in its discretion award costs for unused exhibits under Section 1033.5(c)(4). The court embraced the statutory construction espoused in Science Applications and Applegate, concluding that expensed not specifically addressed in Section 1033.5(a), and not proscribed in Section 1033.5(b), may nevertheless be recoverable in the discretion of the trial court under Section 1033.5(c)(4) if "reasonably necessary to the conduct of the litigation."

The supreme court specifically rejected the rationale in Seever, which held that by imposing limits on certain categories of allowable costs under Section1033.5(a), the Legislature implicitly precluded the recovery of additional subcategories of those same items, even if they were not explicitly prohibited under Section 1033.5(b). However, "other provisions of the costs statute undermine Seever's analysis and demonstrate that when the Legislature intended to preclude the recovery of costs related to items described in subdivision (a), it did so explicitly -- and not implicitly."

Therefore, Section 1033.5 must be viewed as silent regarding unused exhibits and demonstratives rendering them "[i]tems not mentioned in this section" that "may be allowed or denied in the trial court's discretion." On that basis, that portion of the court of appeal's decision, affirming the trial court's award of costs for unused trial exhibits and demonstratives under Section 1033.5(c)(4), was affirmed.

Takeaways for Practitioners. Segal establishes a bright-line rule for unused exhibits and demonstratives -- their costs are not recoverable as a matter of right under Section 1033.5(a)(13), but only in the trial court's discretion under 1033.5(c)(4). Such costs are recoverable if reasonably necessary to prosecute or defend the action and reasonable in amount.

The courts have recognized the inequitable result of denying as allowable costs exhibits and demonstratives that a prudent attorney would prepare well in advance of trial. Indeed, the local rules of most trial courts require counsel to pre-mark and exchange trial exhibits before trial, and experienced trial counsel cannot possibly know all exhibits and demonstratives that will be needed during trial, but mut prepare them for possible use in any event.

Conclusion. Trial preparation expenses for unused exhibits and demonstrative are recoverable in the court's discretion. When seeking recovery of such costs, counsel should emphasize the above-referenced points that have resonated with the trial and appellate courts. 