Judgment Creditor Also Not Entitled to Prevailing Party Fees Under Judgment Enforcement Statute Even Though No Net Monetary Recovery Gained Under the Statute.
Here is a fairly arcane decision for you practitioners that are judgment enforcement specialists, affirming an award of costs to judgment debtors and denying judgment creditor’s appeal that he was entitled to fee because no net monetary recovery was awarded under a specific judgment enforcement statute with prevailing party language.
Commonwealth Land Title Co. v. Zocca, Case Nos. A120397 & A122294 (1st Dist., Div. 1 Oct. 15, 2009) (unpublished) involved a longstanding feud been one brother against another brother and sister-in-law arising out of a $11,800 judgment obtained by bro 1 (judgment creditor) against bro 2/sis-in-law (judgment debtors). Because lots of interest had accrued on the judgment and the judgment debtors wanted to refinance a house, a title company filed an interpleader action to determine everyone’s rights and get itself out of the fracas. That was not the end of things, because judgment debtors filed a tort action based on their view that judgment creditor was demanding an excessive payoff amount in return for release of his judgment lien on the house. Eventually, judgment debtors obtained a summary adjudication ruling that the judgment lien had expired (because it was time barred). The tort claim was dismissed, was appealed, and was reversed and sent back with directions to see if judgment debtors could proceed with a statutory claim under Code of Civil Procedure section 724.070, which allows a judgment debtor to collect actual damages or $250 (whichever is greater) for an intentional excessive payoff demand by a judgment creditor. Following yet another appeal, a jury returned a verdict finding an intentionally excessive payoff by judgment creditor but also found judgment debtors did not suffer any damages. The trial court determined that (1) judgment debtors were entitled to the interpled funds based on the expiration of the judgment lien; (2) judgment debtors were each entitled to the minimum $250 statutory damage award under section 724.070, but no net damages were awardable because of offsetting amounts owed to judgment creditor under the expired judgment; (3) judgment debtors were the prevailing parties for a routine costs award; and (4) no one prevailed for purposes of fees under CCP section 724.080 (which allows fees to a prevailing party in an intentional excessive payoff case).
If you are already significantly confused (although we are not), judgment debtors were apparently okay with the result but not judgment creditor—who appealed many, many rulings (including the prevailing party costs and fees issues).
Justice Margulies, on behalf of a 3-0 panel of the First District, Division 1, affirmed across the board.
The appellate panel had no difficulty finding that judgment debtors prevailed in the interpleader action. They obtained back all of the moneys except those necessary to compensate title company for its attorney’s fees in bringing the interpleader in the first place. Their net monetary recovery was indisputable, according to the Court of Appeal.
That brought the court to the issue of why judgment creditor was not the prevailing party under section 724.080 when there was no net recovery to judgment debtors (after the offsets). After all, judgment creditor prevented judgment debtors from obtaining any damages whatsoever and there is a joint tortfeasor case out there—Goodman v. Lozano [a case we have reviewed in past posts of June 16, 2008 and July 3, 2008]—holding that a party who obtains no net monetary recovery due to a setoff cannot be deemed a prevailing party for purposes of a routine costs award. The difference, according to Justice Margulies, was that “section 724.080, unlike [CCP] section 1032, contains no language requiring a net monetary recovery. . . As the trial court pointed out, it would have a chilling effect on debtors seeking protection under section 724.070 if they were exposed to an attorney fee award unless they paid off all debts claimed by the creditor before suing under the statute. Such an interpretation would in fact undermine the principal purpose of the statute of protecting judgment debtors from unscrupulous debt collection practices.” (Slip Opn., at pp. 18-19.)
As a final salvo on the prevailing party fee issue, judgment creditor tried to analogize to Civil Code section 1717 case law where the litigant obtaining the “greater relief” might be entitled to a fee award. This argument failed because judgment debtor’s success under section 724.070 was measured by a specific statute, where they did get $500 in statutory damages and where the trial court was within its discretion to determine they prevailed for purposes of that statute.