Attorney Winning Contractual Costs Assessment Dispute Collected Substantial Costs.
Here is one demonstrating how prevailing party costs determinations are frequently discretionary in nature in multi-count litigation involving both monetary and nonmonetary claims.
In Petrik v. Mahaffey, Case No. G042114 (4th Dist., Div. 3 June 9, 2011) (unpublished), plaintiff was represented by a law firm (attorney) who sent 13 separate CCP § 998 offers in a construction defect case, with the various offers exceeding the amount of the prior rejected global demand Plaintiff’s counsel later tried to withdraw these offers, arguing he did not have authority to extend them even though the offers had been accepted. Attorney’s argument for withdrawal was rejected by both the trial and appellate courts in earlier proceedings. Client then sued attorney on a number of legal and equitable theories, but the thrust was legal malpractice in failing to obtain 998 offer transmittal authorization as well as centering on the contractual interpretation of whether a costs assessment was triggered under the parties’ legal services engagement agreement.
The matter was bifurcated for trial, with the court initially granting partial nonsuits in favor of attorney. The jury found some for and some against each side, but determined that the client owed lawyer about $28,000 in costs under the costs assessment provision. The court found this latter determination was “purely advisory” in nature and proceeded to change it so that attorney was owed $228,260 by client under the contract costs assessment claim. Then, the lower court determined that attorney was the prevailing party and assessed litigation costs of $274,594.27 against client, which obviously prompted an appeal.
Client lost.
Our local Fourth District, Division 3, in a 2-1 panel decision penned by Justice O’Leary (drawing a dissent by Acting Presiding Justice Bedsworth on the contractual interpretation issue), decided that the lower court had discretion to determine the prevailing party for purposes of the $274,594.27 costs award. The reason? Attorney, besides obtaining some mixed results on the legal claims, did prevail on the non-monetary claims (such as the accounting claim), which triggered the rule that the prevailing party call is a discretionary one. (Sears v. Baccaglio, 60 Cal.App.4th 1136, 1155-1158 (1998).) Given the determination on the costs assessment issue, client lost much of what is sought, with the appellate panel majority calculating that client owed attorney money in the end. The prevailing party affirmance also disposed of the argument that attorney did not beat client’s 998 offer, because client did not prevail.
The fact that client won a small amount did not mean client was a prevailing party, all things considered.
BLOG UNDERVIEW–We have heard that Justice Rylaarsdam has been appointed Presiding Justice of the 4/3 appellate court after the recent retirement of Justice Sills. Our congratulations to him on this accomplishment.