Fifth District Found Unambiguous Agreement That Rendered Erroneous a Discretionary Costs Award.
In a contractual dispute between the City of Chowchilla and Carr Business Enterprises, the parties stipulated to submission of the case to a referee under Code of Civil Procedure section 638 (consensual referee statute), specifically stipulating that "compensation for the referee shall be paid 50% by [Chowchilla] and 50% by [Carr]." Carr ultimately prevailed and filed a cost memorandum requesting reimbursement of $44,562.50 in costs for the referee. Chowchilla filed a motion to tax costs, which was denied by the trial court—impliedly agreeing that the fees were recoverable under the discretionary authority in Code of Civil Procedure section 1033.5(a)(10). Chowchilla appealed, and won.
The Fifth District, in a 3-0 decision authored by Justice Wiseman, reversed and ordered deletion of the referee cost item. Carr Business Enterprises, Inc. v. City of Chowchilla, Case No. F052704 (5th Dist. Aug. 20, 2008) (certified for publication).
The Carr court found that a judicially ordered reference pursuant to section 638 is essentially a contractual matter between the parties, citing Badie v. Bank of America, 67 Cal.App.4th 779, 788 (1998); Greenbriar Homes Communities, Inc. v. Superior Court, 117 Cal.App.4th 337, 348 (2004). Code of Civil Procedure section 645.1—which provides that the parties’ agreement under section 638 controls—left "no authority for the trial court to determine fee apportionment in the face of an explicit agreement concerning fees." (Slip Opn., at p. 4.) The appellate panel distinguished cases arising under section 639 (nonconsensual court-appointed referee), where usually no agreed-to fee apportionment governed and referee fees could be awarded as costs. Justice Wiseman summed up the basis for denying the costs request this way: "If the parties had wanted to allow recovery of the apportioned fee of the prevailing party as an item of cost, they were free to spell this out in their agreement. They did not do so. We will not permit Carr to circumvent its agreement to pay half the cost of the referee by adding its half of the referee’s fees to its cost bill, especially since nothing in the agreement supports a conclusion that this provision requires that Carr only ‘front’ one-half of the referee’s fees." (Slip Opn., at p. 5.)
BLOG OBSERVATION—We usually see referee stipulations that apportion the fees but reserve to the court or arbitrator the ability to make reapportionments at the end of a matter. Would this have made a difference here? You bet; the failure to specify otherwise was dispositive.