First District, Division 2 So Holds in Lengthy Unpublished Opinion.
In our category “Costs,” we have explored Code of Civil Procedure section 1032’s definition of prevailing party for purposes of a costs award. Although there are mandatory triggers requiring an award of costs to defined prevailing parties, the trial court has discretion to award or not award costs in instances where (1) a party recovers “other than monetary relief and in situations other than as specified” (section 1032(a)(4)); and (b) another statute allows costs to be considered in a discretionary (rather than matter of right) fashion (section 1032(b)). Those provisions dictated the result in the next decision we explore.
Hogan v. DeAngelis Construction, Inc., Case Nos. A117321, A118257, A120840 (1st Dist., Div. 2 May 20, 2009) (unpublished) concerned disgruntled purchasers who sued for both damages and rescission on multiple theories relating to their purchase of a home on Gardenview Place in Santa Rosa for the purchase price of $499,000. Seller early on in the litigation opted to accept buyers’ offer to rescind. What followed was a trial on the remaining claims, with the appellate court ultimately affirming adjunct awards of rescissionary consequential damages to buyers (after giving sellers significant offsets) and reversing a duplicative fraud damages award by the jury. The trial court then refused to award buyers routine costs of $41,058, determining that there was no prevailing party.
The First District, Division 2 affirmed the costs ruling, in a 3-0 opinion penned by Justice Haerle.
Buyers did not recovery any monetary damages with respect to their legal claims, but only recovered ancillary consequential damages based on rescission. Because “other than monetary relief” was involved, the trial court had discretion to determine who prevailed. The appellate panel found that buyers were properly found not to prevail, because they tried to seek legal damages when they had clearly elected (and had to accept) rescission based on sellers’ agreement—such that they were unsuccessful in their primary goal at trial to obtain legal damages to which they were not entitled. Beyond that, Justice Haerle found that the trial court had discretion to allocate costs because the rescission statutory scheme (Civil Code section 1692) requires the trial court “to balance the equities and decide that plaintiffs were not, under the circumstances, entitled to recover their costs of suit.” (Slip Opn., at p. 56.) Put another way, section 1692 was a special statute that trumped the general costs statute to the extent it could be construed to be to the contrary.
BLOG UNDERVIEW—This unpublished decision has one of the best discussions on rescission and election of remedies that we have seen in this area of the law. It is must reading for any litigants bringing rescission-based claims.