High Court to Decide Whether Plaintiff Recovering No Positive Judgment Because of Section 877 Setoff Is Nevertheless the Prevailing Party for Fee/Costs Award Under Code of Civil Procedure section 1032.
In our June 16, 2008 post on Guerrero v. Rodan Termite Control, a recently disseminated First District, Division Three decision, we noted that the California Supreme Court had extended time for its review decision making with respect to Goodman v. Lozano, formerly published at 159 Cal.App.4th 1313 (4th Dist., Div. 3 2008), authored by Justice Moore in a 3-0 opinion. We predicted that because there was a split among the intermediate appellate courts on this issue, this split would have to be taken up at some point. Well, the state supreme court must have thought the time was ripe now. On June 18, 2008, it granted review in Goodman.
The California Supreme Court framed the issue presented for review like this:
“When a plaintiff settles with one tortfeasor and goes to trial against
another but obtains no additional recovery because the amount of
damages awarded is less than the setoff amount based on the pretrial
settlement, is that plaintiff nevertheless a prevailing party as a matter
of law for purposes of an award of fees and costs under Code of
Civil Procedure section 1032?”
This should present an interesting case for review. Even from an objective perspective, the Courts of Appeal appear fairly evenly split, especially if one pays attention to views set forth in unpublished decisions (while, not citable, nevertheless do tell us how different districts come down on specific issues).
Goodman closely aligned itself with Justice Mihara’s dissent in Wakefield v. Bohlin, 145 Cal.App.4th 963, 992 (2006), deciding that the plaintiff gaining nothing due to pretrial settlement setoffs does not gain money free from deductions and is not the “prevailing party” under section 1032. In an unpublished portion of Brawley v. J.C. Interiors, Inc., Case Nos. F050279 & F051448 (5th Dist. Apr. 8, 2008) (other sections published at 161 Cal.App.4th 1126), the Fifth District agreed with Goodman as follows in an unpublished portion of Brawley: “We need not here restate Goodman’s critique of the Wakefieldmajority’s analysis. It seems to us that the Wakefieldmajority made what might be described as a valiant effort to attempt to read the language of the statute with deference to prior case law interpreting the statute. In the end, however, we agree with Goodman’s conclusion that the language of the statute simply does not permit a judgment of zero to be fairly construed to be a ‘net monetary recovery.’ We also observe that we see no good policy reason for the Legislature to enact a statute that would require a trial court to confer prevailing party status on a party whose civil action for damages resulted in a judgment of zero.” (Slip Opn., at p. 16.)
Of course, the Wakefieldmajority took the opposite tack and found that the “prevailing party” determination was to be made between the two directly involved parties, not considering any settlements or contributions from unrelated defendants or from other parties. (Wakefield, supra, 145 Cal.App.4th at 982). Guerrero, the decision reviewed in our June 16, 2008 post, did not decide the issue, but seemed to side with Wakefieldafter criticizing Goodman for not necessarily producing the equitable results that it envisioned.
Another interesting nuance to follow is whether the California Supreme Court determines if the same “prevailing party” test applies with respect to both the costs and the fee awards, or whether the analysis is somewhat different for each. For example, Brawley—after considering both the unpublished section on costs and a published section on fees—seems to bifurcate the inquiry and suggest that the analysis is not quite the same. With respect to routine costs, there is not much discretion to the trial judge after determining which litigant received the “net monetary recovery.” Conversely, the “prevailing party” under Civil Code section 1717 and many other fee-shifting statutes is a more discretionary call for the trial court based upon pragmatic factors, with the court having discretion to find no prevailing party even though the statute does not expressly say so. (See, e.g., Brawley, supra, 161 Cal.App.4th at 1137 and cases cited therein,) It will be interesting to see how the California Supreme Court decides these issues that have produced sharply differing perspectives among intermediate appellate jurists.