Code of Civil Procedure section 1038 is a specialized fee-shifting statute that allows a winning cross-defendant in an express/implied indemnity action to recover attorney’s fees if an indemnity action was not brought/maintained in good faith and without reasonable cause in a situation where the cross-defendant won a summary judgment.
Cross-defendant in Salinas Energy Corp. v. Am. Pipe & Tubing, Inc., Case No. F063636 (5th Dist. Mar. 25, 2013) (unpublished) won a summary judgment claim against cross-complainant in an indemnity cross-action. Cross-defendant then won costs of $66,891.51 and fees of $139,150.30 under section 1038.
Losing cross-complaint appealed, winning a remand to recalculate fees.
Loser argued that winner untimely filed a costs memorandum, but this one was forfeited because loser did not file a challenging motion to tax costs.
On the merits of the section 1038 argument, the appellate court reversed because they did find loser had a reasonable basis to file the indemnity cross-action. However, the issue of whether loser had a reasonable basis to maintain prosecution of the indemnity action after a summary judgment of the underlying personal injury case was a different matter, with a remand necessary to calculate fees awardable for unreasonably prosecuting the action after this pivotal juncture of the case.