Second District, Division Four So Rules in Case Where Plaintiff Only Recovered Restitutionary Judgment Equaling Deposit Check Returned by Defendants Prior to Lawsuit Commencement.
In our category “Cases: Costs,” we have surveyed decisions interpreting assessment of routine costs to a “prevailing party” under Code of Civil Procedure section 1032. This provision is fairly mechanistic when determining a prevailing party entitled to costs as a matter of right—one of four situations must exist, namely, a litigant obtaining a net monetary recovery; a defendant obtaining a favorable dismissal; a defendant where no relief is awarded to either side; or a defendant where plaintiff obtains no relief against that defendant. Aside from these situations, the court has discretion to determine the prevailing party for costs purposes and “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 [procedural rules for claiming prejudgment costs].” Section 1032’s discretionary prong was in play in the next case we discuss.
Hagopian v. Barron, Case No. B204524 (2d Dist., Div. 5 Dec. 4, 2008) (unpublished) involved an aborted sale of property and possibly business assets between putative sellers and buyers. Sellers returned a $25,000 deposit check to purchasers, before purchasers sued for damages and specific performance. Eventually, purchasers lost most of their claims except on the restitutionary/promissory estoppel counts. However, the lower court basically ordered return of the $25,000 check, something which had already been tendered back by sellers but refused by purchasers prior to suit. (The appellate court did modify the judgment to reflect that sellers’ tender of the check was not conditional, meaning that the restitutionary judgment was effectively moot in nature.) The lower court found no one obtained a net monetary recovery, awarding 10% of purchasers’ incurred routine costs to purchasers and 90% of sellers’ incurred routine costs to sellers—with the result that sellers obtained a “net” costs award of $10,278.31 against purchasers.
Purchasers appealed, claiming they were the prevailing parties. No way, ruled the Court of Appeal in affirming the lower court’s determination. Where no litigant obtains a “net monetary recovery” (one of the costs-as-a-matter-of-right triggers), the trial court has discretion to determine the prevailing party and allocate costs based on the relief obtained in line with the parties’ respective litigation objectives. (See Chinn v. KMR Property Management, 166 Cal.App.4th 175, 187-188 (2008), reviewed in our post of August 24, 2008.) In this situation, the judgment (as modified by the appellate court’s determination that sellers made an unconditional tender of the deposit check) meant that purchasers only received a $25,000 restitution decree—no net monetary recovery given that the $25,000 deposit check returned prior to suit essentially “washed out” any pragmatic gain from the judgment. The lower court’s “prevailing party” and allocation decisions were sustained based on what occurred after trial and the modification on appeal.