Second District, Division 1 Reverses Supplemental Fee Award Based Upon Lack of Notice.
Under Code of Civil Procedure section 685.040, a judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Recoverable costs include attorney’s fees incurred in enforcing a judgment, where the original judgment includes a fee award pursuant to a contractual fees provision. The judgment creditor can seek recovery of those enforcement fees by filing either a costs memorandum under section 685.070(b) or a noticed motion under section 685.080(a). Judgment creditor (an attorney) doggedly pursued judgment debtor (ex-client) for supplemental fees on a default judgment for a 4-year enforcement period by filing an application for supplemental fees (deemed to be the equivalent of a costs memorandum) without notice to the judgment debtor. The simple question for the Court of Appeal: was the application valid without notice to the debtor?
Answer: No.
The Second District, Division 1, in Karton v. Dougherty, Case No. B201663 (2d Dist., Div. 1 Feb. 17, 2009) (certified for partial publication), decided that a supplemental 2007 fee award to judgment creditor under the described procedure was invalid because section 685.070(b) requires that creditor serve a copy of the application/memorandum on debtor. Judgment creditor relied on a different statute, Code of Civil Procedure section 1010, which provides that certain documents do not have to be served on a party whose default has been taken (as was the case with debtor). “We conclude nonetheless that section 685.070 must be interpreted as requiring service of the memorandum of costs on all judgment debtors, including default judgment debtors . . . . if [judgment creditor] were right that a default judgment debtor is not entitled to notice of a memorandum of costs under section 685.070, then trial courts would always be compelled, by statute, to grant all of the costs requested in such memoranda, because judgment debtors who were unaware of the proceedings will never have the opportunity to file motions to tax. In effect, every default judgment would become a blank check in favor of the judgment creditor. We cannot believe that the Legislature intended to create such a rule, which would make error and mischief virtually inevitable.” (Slip Opn., at pp. 15-16.)
The appellate panel buttressed its rationale even farther, pointing out the supplemental fee award had arithmetic errors that added an extra $145,000 to the original default judgment (originally worth $86,000 even though debtor paid off $56,000 less than a month after judgment entry).
Just like that—poof!—a $1,146,578.38 default judgment with interest of $159,679.92 was vacated for lack of notice.