Land Use Group Gets Costs and Fees for Killing B&B

Friends of Spring Street v. Nevada City, No. C086563 (D3 Apr. 4, 2019)

Plaintiffs challenged both a local zoning ordinance and a City’s decision to permit an Applicant to run a B&B in a residential area—a nonconforming use under that ordinance. Plaintiffs lost the facial challenge, but—after an intervening appeal—won the as-applied. They seek to recover their costs, see Code of Civil Procedure § 1032, and their attorneys’ fees under the private attorney general doctrine, see § 1021.5. The trial court denied both, finding that the split decision meant there was no prevailing party. 

So far as costs go, when a plaintiff obtains only non-monetary relief, § 1032(a)(4) permits the court to decide who is the prevailing party for cost award purposes. Generally, the court looks to “whether the party succeeded at a practical level by realizing its litigation objectives . . . and the action yielded the primary relief sought in the case.” Because Plaintiffs were successful in getting the decision approving the B&B reversed, they met that standard and should have been awarded costs. The fact that Applicant could potentially re-apply to the City at some point in the future does not change that fact.

Similarly, Plaintiffs should not have been denied their fees under § 1021.5. Plaintiffs conveyed an important benefit on the public. Generally, they vindicated the application of local zoning law. And in particular, they obtained a ruling that upheld the intent of a local ballot initiative that was the basis of their as-applied challenge. But the trial court made no finding on the other element of § 1021.5—whether the necessity and financial burden of private enforcement make a fee award appropriate—so it will need to decide that on remand.

Reversed and remanded. 

Nine Years’ Litigation, Nobody Prevails

Marina Pac. Partners Homeowners Assoc. v. S. Cal. Fin. Corp., No. B276719 (D2d8 Feb. 5, 2018) 

Civil Code § 1717 permits a prevailing party to a contract with an attorney fee provision to recover its fees. The trial court is authorized to determine the prevailing party, who is generally the party that receives the greater of the relief. But the code authorizes the court to decide that there isn’t any prevailing party and, under those circumstances, to decline to shift fees. The Supreme Court has instructed that in making a prevailing party determination, the court should look at the relief obtained in the context of the parties’ litigation objectives. Hsu v. Abbara, 9 Cal. 4th 863 (1995). If the case is truly a mixed bag—like where both parties seek relief and neither gets everything it wanted—then the trial court can find there’s no prevailing party.

This is a long running real estate dispute, filed in 2009. I don’t really care to get into the substance, but the dispute is over a fee. Plaintiff wanted to be entirely absolved from paying it. Defendant asserted that it should be 10 percent over the life of the contract. The judgement landed on 4 percent. Now, both sides try to say that the 4 percent was their true objective and thus that they prevailed. (Because you litigate for 9 years when you basically agree, right?) But that really wasn’t what the case was about. Under the circumstances the trial court didn’t abuse its discretion that no party prevailed to the extent that a fee award was merited. Same goes with the court’s declining to award costs under Code of Civil Procedure § 1032.

Affirmed.

A Demand for Everything Is Apparently Not an Offer of Compromise

Arave v. Merrill Lynch, Pierce, Fenner & Smith Inc., No E061677 (D4d2, as modified, Jan. 23, 2018)

First things first. A footnote at the beginning of this 95-page opinion says “We certify this opinion for publication under California Rules of Court, rules 8.1105(b) and 8.1110, except for parts I.B., I.C., I.D., I.E., I.F., I.G., II.A.1., II.A.2., II.A.4., II.A.5., II.A.6., II.B., II.C., II.D., II.E., II.F., and II.I.” (On a publication request the court struck II.C from the footnote.) So to figure out what is actually being published, you’ll need to make a list (like literally write it down) then scroll through the opinion and figure out by process of elimination what’s not excluded.

§ 998 Shifts Costs in FEHA and POBRA Cases

Sviridov v. City of San Diego, No. D069785 (D4d3 Aug. 15, 2017)

The general rule in California is that a prevailing defendant can recover its costs. See Cal. Code Civ. Proc. § 1032(a). But there are various statutes that create an exception to that rule, permitting cost-shifting only when the claim is objectively devoid of merit. Two such statutes implicated here: The Fair Employment and Housing Act and the Public Safety Officers Procedural Bill of Rights Act. But in this case, costs weren’t awarded just because Defendant prevailed. They were awarded because Plaintiff rejected several offers of judgment under Code of Civil Procedure § 998 and failed to best the offers at trial. In a terse analysis, the Court of Appeal holds here that the FEHA and POBRA do not create exceptions to cost-shifting when it is imposed under § 998(c)(1), as opposed to § 1032.

Affirmed.

Not Dead Yet ...

S. Cal. Sunbelt Developers v. Banyan Ltd. P'ship, No. G051260 (D4d3 Feb. 16, 2017)

This dispute over a joint venture has been going on for twenty years. A receiver was ultimately appointed to wind the thing down. At the bitter end, one question remained: Who pays?

In Split Verdict, Costs Award Cannot Be Formulaic

Charton v. Harkey, No. G050514 (D4d3 May 24, 2016)

Plaintiffs in an investment fraud case won against three Defendants but lost against one other. The prevailing Defendant seeks her costs under Code of Civil Procedure § 1032. No one disputes that this Defendant is the prevailing party under § 1032. But Plaintiffs contend that she is too closely aligned with the losing defendants to be permitted to recover her costs. The trial court rejected that argument, but permitted the moving Defendant to recover only 25 percent of her costs, reasoning that the costs should have been evenly apportioned across both the winning and losing Defendants.

The Court of Appeal agrees on the first point. While some old cases discuss that a prevailing defendant that is closely aligned with one found liable can be deemed a non-prevailing party, those cases were based on an old version of § 1032, which was repealed in 1986. Under the current version of the statute, a defendant against whom no relief is ordered prevails, and is entitled to costs as a matter of right. Full stop.

But as to the apportionment of costs, the court did err. It could not just mechanically say that since one of four defendants won, that Defendant gets 25 percent. Instead, the court should have asked whether: (1) the costs were actually incurred by the prevailing Defendant, (2) they were reasonably necessary to that Defendant’s conduct of the litigation; and (3) they were reasonable. If those tests are met, the costs are recoverable even if they might also have been useful to one of the non-prevailing Defendants. The trial court’s rough justice wouldn’t cut it.

Reversed.

Net Monetary Recovery II

DeSaulles v. Comty. Hosp. of the Monterrey Peninsula, No. S219236 (Cal. Mar. 10, 2016)
 
The Supreme Court granted review of the DeSaulles case that I posted about a little less than two years ago. As a quick recap, the parties entered a settlement where the plaintiff got some cash, but a zero-dollar judgment was entered for Defendant. (The weird setup permitted the manufacture of a judgment so Plaintiff could appeal an unfavorable in limine ruling.) The settlement agreement didn’t say anything about costs. So the question was, who was the prevailing party under Code of Civil Procedure § 1032? Given that the statute describes the prevailing party as someone who wins a “net monetary recovery,” it was unsurprising (to me at least) that it was Plaintiff. But in getting to that result, the Court of Appeal disagreed with some earlier inconsistent precedent. Hence the granted review.

The Court, with Justice Liu writing for a 5-2 majority, affirms the Court of Appeal. “Net monetary recovery” is a pretty broad concept that can include a payment of cash under a settlement. The Court further rejects the argument that § 1032(a)(4)’s alternative definition—a “defendant in whose favor . . . dismissal is granted”—applies to cases where a judgment of dismissal is entered as part of a settlement where defendant nonetheless pays plaintiff some money. Reviewing the history of that language, the court finds that it was intended to ensure that a defendant could recover costs if plaintiff unilaterally dismissed. It was not intended to apply when the dismissal was accompanied by a monetary payment.

Justice Kruger dissents, joined by Justice Werdegar. She agrees that a plaintiff who gets a settlement has won a net monetary recovery. But she’s not so comfortable ignoring what she reads as the plain meaning of the § 1032(a)(4)’s reference to a defendant who obtains a dismissal. This case was, in fact, dismissed. (Given the payment of cash, the majority responds that this is form over substance.) That, of course creates a conundrum, because it would effectively mean that both parties meet different definitions of “prevailing party.”

But Justice Kruger reads the next sentence in § 1032(a)(4) to solve that problem. It says that “in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.” So, according to the dissent, if both sides meet the definition of prevailing, the trial court has the discretion to decide who prevailed and how to allocate costs between the parties. The dissent would thus remand for such a determination in the first instance.

Affirmed.

Everybody Wins!

Sharif v. Mehusa, Inc., No. B255578 (D2d5 Oct. 14, 2015)

An employee brought two different kinds of claims against her employer: claims under the Equal Pay Act, and wage-and-hour claims under the Labor Code. At a jury trial, she prevailed on the former but not the latter.  Both sets of statutes specifically award costs and fees to prevailing parties. Plaintiff contended that since she won a net monetary victory, she was the overall prevailing party and thus only her fees were recoverable. But the trial court disagreed and the court of appeal affirms. The claims weren’t factually related. And since both statutes shifted fees in favor of the prevailing party, both parties were entitled to recover their costs and fees on the parts of the case they prevailed on. When there statute-specific fee provisions, Code of Civil Procedure § 1032’s more general definitions of prevailing party—which look to who got a net monetary recovery—don’t apply.

Affirmed

After Eighteen Years, a Whimper

In re Tobacco Cases II, No. D065165 (D4d1 Sept. 28, 2015)

This case about Philip Morris’s allegedly deceptive marketing of Marlboro Light cigarettes has been kicking around the state courts since 1997! After a bench trial, the trial court found that Defendants violated the Unfair Competition Law, but nonetheless awarded no remedy. It determined that restitution was inappropriate and any injunctive relief had been long ago mooted by federal legislation specifically addressing the labeling practices at issue in the case.

Affirming on the merits, the court of appeal also addresses two procedural issues: (1) Was Defendant the prevailing party under Code of Civil Procedure § 1032, entitling it to recover its costs? And (2) did the trial court properly refuse to award Plaintiffs costs and fees under § 2033.420, as a sanction for Defendants’ unjustified denial of a request for admission.

The first question is an easy one. Section 1032 specifically says that the defendant is the prevailing party when plaintiff takes no relief. That’s the case even if there’s a finding that defendant violated the law but no remedy is afforded.

As to the RFA, the trial court denied Plaintiffs’ fee request because they never provided an accounting of the fees attributable to the unjustified denial of the RFA. Indeed, their request seems mostly to have been an afterthought to offset the $700k in costs that the court awarded to Defendant as prevailing party. Not only was the trial court within its discretion in denying the request in the absence of an accounting, but by failing to provide the information to justify an award, Plaintiffs waived their right to appeal the denial.

Affirmed.

SJ Affirmed, but Likely No Costs

Roman v. BRE Properties, No. B246841 (D2d7 Jun. 17, 2015)

It’s probably not too surprising that in order to bring a claim for disability discrimination, Plaintiff needs to establish that he is disabled within the meaning of the statute. When, in this case, Defendant served discovery asking for evidence of Plaintiffs’ disability, Plaintiff didn’t respond. That nonresponse was sufficient to meet Defendant’s burden when moving for summary judgment. And then when Plaintiff’s opposition offered nothing but his wife’s conclusory statement that she had previously told Defendant he “was disabled,” that wasn’t enough to create a disputed fact issue. So SJ was properly granted.

But the trial court erroneously awarded costs to defendants because it didn’t apply the heightened Christiansburg standard that the Supreme Court’s recent decision in Williams held applies to cost awards in FEHA cases. So the award was reversed and remanded for the trial court to decide whether the Christiansburg standard was met, and if not, what costs could be allocated entirely to claims other than those brought under the FEHA, for which costs could be awarded under the ordinary prevailing party standard under Code of Civil Procedure § 1032.

Reversed and remanded in part.

Three-and-a-Half Years of Appellate Litigation over a $5,368.88 Cost Award

Williams v. Chino Valley Ind. Fire Dist., No S213100 (Cal. May 4, 2015)

Appellate litigation in California can be a long game. The complaint in this case was filed in February 2008. The trial court order at issue—an award of $5,368.88 in costs to a prevailing defendant in a FEHA case—was entered on November 19, 2011. I wrote about this case in the third post on this blog, way back in the summer of 2013. The Supreme Court granted review that fall. And now nineteen months and 350-ish posts later, the court reverses the court of appeal.

Everyone Prevails. Now Go Home.

Macquiddy v. Mercedes-Benz USA, LLC, No B251752 (D2d8 Jan 29, 2015) 

This is a Song-Beverly Warranty Act case about a lemon Mercedes. Mercedes refused to replace the car after numerous failed attempts to repair it. When plaintiff brought suit, however, Mercedes admitted liability in its answer and the parties stipulated as to what the appropriate restitution would be. Mercedes then made a Code of Civil Procedure § 998 offer for the full value of the restriction, plus costs and fees, but plaintiff decided to roll the dice to try to win a statutory penalty, which is available only when the defendant’s violation is proven willful. The jury found no willfulness and thus no penalty was awarded. Based on that verdict, the trial court found that plaintiff could not recover statutory attorneys’ fees because he was not a “prevailing party,” and that costs (not including fees) were awardable to Mercedes. Plaintiff appealed the fee and cost decisions, as well as a related discovery order.

On the discovery issue, the trial court denied a motion to compel and granted a protective order over a bunch of discovery propounded by plaintiff, on the grounds that it was essentially irrelevant because liability wasn’t contested. The court here ducks the question of whether the discovery may have proven relevant to the disputed question of willfulness. Instead, it holds that when a plaintiff challenges a discovery ruling on an appeal of final judgment (as opposed to taking a writ), Art. 6 § 13 of the California Constitution and § 475 require him to substantiate that he was prejudiced by the denial of discovery. Here, plaintiff failed to establish how, had the trial court permitted the discovery, there was a reasonable chance that it would have resulted in a different outcome, so the appeal fails on this issue.

On the attorneys’ fee issue, the Song-Beverly Act affords attorney’s fees to a prevailing plaintiff. See Civil Code § 1794(d). Prevailing party is not defined. Although § 1032, the costs statute—which permits awards of fees when awardable as costs—defines a prevailing party as someone who secures a net monetary recovery, § 1794(d) does not adopt that definition.  The court—citing authority to the effect that when prevailing party is undefined, an assessment should turn on pragmatic considerations—holds that plaintiff did not prevail in this case. Although he secured a net monetary recovery, he did so over only the part of the case that was essentially uncontested. Because the plaintiff did not obtain his main litigation objective—the penalty award—the trial court did not abuse its discretion in finding that he was not the prevailing party.

The Court holds, however, that the § 998 offer was invalid because it was too uncertain. Although the amount offered was clear, the offer was conditioned on the car being returned in an “undamaged condition, save normal wear and tear.” Because that condition was undefined and essentially subjective, the offer was insufficiently certain to be enforceable. And because the § 998 ruling is reversed, the trial court also erred in awarding Mercedes its costs under § 1032. With the § 998 offer invalid, costs are to be awarded to the prevailing party based on the normal statutory standard. As noted, that standard deems the party that receives a net monetary recovery to have prevailed. Here, that was plaintiff.

Reversed and remanded, in part.

A Pleasant Disposition

Ducoing Mortgage v. Superior Court, No. G050457 (D4d3, as amended Feb. 10, 2015*)

Two related company plaintiffs and sued their insurance broker for failing to procure the right policy but got nonsuited at trial. The court awarded defendant about $50k in costs. In a prior appeal, the court affirmed dismissal as to one plaintiff for a somewhat technical reason, but “in all other respects” reversed and remanded for further proceedings.

After remand, the defendant began efforts to collect on the cost judgment against the affirmed plaintiff. In judgment debtor proceedings related to the collection, the trial court held that the costs judgment remained enforceable versus the losing plaintiff, who took a writ.

In reaching the merits, the court makes a number of comments about the nature of an appellate court’s disposition in California. Under Code of Civil Procedure § 43, an appellate court can “affirm, reverse, or modify any judgment or order appealed from, and may direct the proper judgment or order to be entered, or direct a new trial or further proceedings to be had.” This usually occurs in a short paragraph at the end of an opinion. Although it need not be exceedingly detailed, a “disposition is not intended to be a riddle, and the directions in the dispositional language, as conveyed by the remittitur, are to be followed by the trial court on remand.” If a party is confused by the disposition, its proper recourse is a petition for rehearing.

Looking to the prior disposition, the court here holds that its disposition reversing the trial court’s ruling “in all other respects” save the technical reason for bouncing the one plaintiff, in effect, vacated of the costs award too. The court further agrees with the petitioner that it would be “patently unfair” to stick it with a full costs award, given that the defendant still faced full liability on remand from the other plaintiff. Finally, the court notes that § 1032 affords a trial court the discretion to apportion costs. When, like here, two closely affiliated plaintiffs are jointly represented, if one loses but the other potentially prevails, a defendant should only be permitted to recover the marginal costs associated with the joinder of the non-prevailing plaintiff.

Writ granted.

**The court modified its opinion on rehearing to note that a petition for rehearing brought to correct ostensible fact mistakes was brought too late.

A Cost, Is a Cost, Is a Cost ...

Williams v. Chino Valley Independent Fire District, No E055755 (D4d2 July 23, 2012) 

Plaintiff lost a Fair Employment and Housing Act case and the trial court awarded costs under Code of Civil Procedure § 1032(b). On appeal, Plaintiff argued that costs could be awarded to a prevailing FEHA defendant only if the defendant satisfied the standard necessary to recover its attorneys fees under FEHA, i.e., that plaintiffs’ case was “frivolous, unreasonable, or without foundation.” The court of appeal rejected the argument and upheld the fee award.