California Appellate Law Blog

California Appellate Law Blog

News and Insights about Appellate Law

Prevailing Party Costs Under CCP Section 1032

Posted in Appellate Practice, Appellate Procedure, Civil Procedure

The California Supreme Court recently held that a plaintiff who obtains a monetary settlement and dismisses the action is the prevailing party entitled to statutory costs under Code of Civil Procedure section 1032. DeSaulles v. Community Hospital of the Monterey Peninsula 2016 Cal LEXIS 1281. Most often, parties reaching settlement will dispose of any costs issues as part of the settlement agreement. Therefore, DeSaulles should only come into play when for whatever reason, costs are not resolved in the settlement and entitlement to costs is then litigated.

In DeSaulles, after being stripped of other causes of action by prior motions, the plaintiff settled her remaining causes of action for the sum of $23,500 in return for dismissal with prejudice of those claims. The settlement reserved plaintiff’s right to appeal the previously dismissed causes of action, and expressly reserved resolution of costs until completion of that appeal. After plaintiff lost the appeal, plaintiff and defendant each moved for statutory costs. Plaintiff claimed to be the statutory “party with a net monetary recovery” as set forth in section 1032(a)(4). Defendant claimed entitlement to costs under that same provision as “a defendant in whose favor a dismissal is entered.”

As the Supreme Court put it, the “question in this case is whether a plaintiff who voluntarily dismisses an action after entering into a monetary settlement is a prevailing party under section 1032 … .” Despite the question presented, Justice Goodwin H. Liu, writing for the majority, began the analysis by answering a different question, “first address[ing] whether a dismissal obtained in exchange for a monetary settlement may be considered a dismissal in a defendant’s favor” under section 1032. To answer that question, the majority looked not so much to the language of the statute, but to the legislative history. Based on the purpose of the statute—imposing costs on the losing party—and the codification of prior case law, the Court concluded that “a defendant is not a prevailing party as a matter of right” when the plaintiff’s dismissal is obtained by way of a settlement payment.

The Court then turned to the question at hand, whether a plaintiff who obtains a monetary settlement—no matter the amount or the circumstances—is a statutory prevailing party under section 1032. Looking to the statute, the Court noted that it provides trial court discretion in only two situations: “[w]hen any party recovers other than monetary relief;” and “in situations other than as specified.” Having found “no reason why a monetary settlement cannot fit within the statutory definition of a ‘net monetary recovery,’” the Court concluded that settlement payments are among the “monetary relief” that precludes trial court discretion under the “other than monetary relief” prong. And having found that settlement payments qualify as a statutory net monetary recovery and that dismissals in conjunction with settlement are not “in a defendant’s favor,” the Court impliedly rejected the dissent’s premise that operation of the discretionary clause for “situations other than as specified” should control.

Justice Leondra R. Kruger, joined by Justice Kathryn M. Werdegar, dissented. To the dissent, the same assumptions and logic that led the majority to conclude that settlement payments are a net monetary recovery should have led it to conclude that a dismissal pursuant to settlement is still a dismissal for prevailing party purposes. The dissent contended that because the settlement-driven dismissal is still a dismissal in a defendant’s “favor,” these situations create two potential prevailing parties (the plaintiff with the net monetary recovery and the defendant with the dismissal), bringing into play the discretionary “situations other than as specified” clause. According to the dissent, in such situations, the trial court can evaluate all the circumstances and award costs as is just.

The majority made the bright line rule, but did the dissent have the better interpretation? Under the dissent’s analysis, a trial court could decide that a plaintiff obtaining only a nominal settlement despite numerous causes of action, large demands and lengthy litigation, is not entitled to costs. And just because a plaintiff is not entitled to costs does not mean that costs will automatically go to defendants. Under the discretionary provision, a trial court “may allow costs or not.” The dissent, however, failed to come to terms with the incongruity noted by the majority that under the dissent’s construction of the statute, a plaintiff who obtains a settlement that includes entry of judgment is a prevailing party entitled to costs as a matter of right, whereas a plaintiff who obtains the exact same settlement in return for a dismissal, is not.

This is one of those decisions that while creating a bright line rule, may have little application in the future. But in the event that costs are not being resolved under the terms of a settlement, DeSaulles makes it clear that no matter how nominal the settlement and despite the dismissal, the plaintiff will be entitled to costs.

High Court Reviews Protected Activity Under SLAPP Statute

Posted in Appellate Practice, Appellate Procedure, Civil Procedure, Recent Decisions

In yet another installment of the gravamen of the complaint conundrum, the California Supreme Court is currently reviewing Park v. Board of Trustees of California State University (2015) 239 Cal.App.4th 1258. The issue is whether the SLAPP statute, Code of Civil Procedure section 425.16, “authorize[s] a court to strike a cause of action in which the plaintiff challenges only the validity of an action taken by a public entity in an ‘official proceeding authorized by law’ (subd. (e)) but does not seek relief against any participant in that proceeding based on his or her protected communications?” Say what?

In Park, plaintiff sued a university alleging racial discrimination as grounds for denial of tenure. The university filed a SLAPP motion arguing protected conduct in the form of official proceedings. The trial court denied the SLAPP motion, finding that the gravamen of the complaint was not protected activity such as the tenure review process, but rather, discrimination against plaintiff based on race. Because it denied the motion for lack of protected activity, the trial court did not reach the probability of success on the merits. But the Court of Appeal reversed, holding that alleged discriminatory motivations aside, since all of the operative facts involved various tenure review processes and communications, the gravamen of the complaint was in fact claims arising from protected activity. The Court of Appeal remanded for the trial court to consider plaintiff’s probability of success on the merits, but the high court intervened.

Park is still in the briefing stage, but could be far-reaching, depending on how it is decided. The grant of review itself is curious, given the narrow holding in Park that all of the allegations involved protected activity, and the fact that neither court reached the reasonable probability of success prong. Following the statutory scheme, courts have stayed away from injecting motive into the protected activity analysis. And no matter how tempting, carving out exemptions for suits brought solely to challenge “the validity of an action taken by a public entity” is bound to generate yet more volumes of SLAPP decisions. Stay tuned!

SLAPP Statute and the Mixed Cause of Action

Posted in Appellate Practice, Appellate Procedure, Civil Procedure

The California Supreme Court is reviewing the mixed cause of action conundrum in Baral v. Schnitt (2015) 233 Cal.App.4th 1423. According to the Court’s docket, the issue is whether the SLAPP statute, Code of Civil Procedure section 425.16, “authorize[s] a trial court to excise allegations of activity protected under the statute when the cause of action also includes meritorious allegations based on activity that is not protected under the statute.” (See, e.g., Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90 [in a mixed cause of action, if plaintiff demonstrates a probability of prevailing on “any part of its claim,” then the entire cause of action is left intact and the SLAPP motion is denied]; Cho v. Chang (2013) 219 Cal.App.4th 521 [within a mixed cause of action, a trial court may strike the allegations arising from protected activity, while allowing only the meritorious claims to proceed].)

In Baral, plaintiff’s breach of fiduciary duty cause of action included claims that defendant prevented plaintiff from participating in a pre-litigation audit of the company’s books. Defendant’s SLAPP motion sought to strike the allegations related to the audit on the grounds that the litigation privilege precluded such claims and argued that under the SLAPP statute, the trial court could excise parts of a cause of action. The trial court denied the motion, comparing the relief requested to an ordinary motion to strike and concluding that a SLAPP motion is not a similar procedure.

The Court of Appeal affirmed, holding that since plaintiff demonstrated a reasonable probability of prevailing with respect to the claims that did not involve protected activity, the SLAPP motion had to be denied in its entirety. Baral disagreed with Cho and other decisions striking the claims of protected activity from an otherwise meritorious cause of action. Baral joined cases holding that when it comes to the SLAPP statute, a cause of action stands or falls, it is not subject to amputation of its parts.

What will the Supreme Court decide? For a cogent analysis, see Justice Henry Needham’s majority opinion in Wallace v. McCubbin (2011) 196 Cal.App.4th 1169. As Wallace observes, allowing meritless claims based on protected activity to remain because the same cause of action is adorned with meritorious claims arising out of nonprotected activity defeats the purpose of the SLAPP statute. According to Wallace, the Mann approach is problematic because it enables a plaintiff to succeed in demonstrating a reasonable probability of prevailing on the merits without even addressing the allegations of protected activity. So long as any meritorious claim is found within the cause of action, the defendant whose SLAPP motion is denied is saddled with defending the allegations based on protected activity until such time as those claims can be summarily adjudicated. Yet, it was the inadequacy of the summary judgment mechanism for preventing the chilling of protected activity that led to the SLAPP statute’s enactment in the first place. For the contrary view that when any merit is found, the cause of action is not a SLAPP, see the concurrence in Wallace. The merits were fully briefed as of November, so stay tuned for high court resolution of yet another SLAPP conundrum.

Calculating Prejudgment Interest in Personal Injury Actions

Posted in Civil Procedure, Recent Decisions

Civil Code section 3291 provides that if the plaintiff in a personal injury action makes a Code of Civil Procedure section 998 offer to compromise which the defendant does not accept, and the plaintiff obtains a more favorable judgment, “the judgment” shall bear interest at the legal rate of 10 percent per annum calculated from the date of the plaintiff’s 998 offer until the judgment is satisfied. But what does “the judgment” include for purposes of calculating prejudgment interest in a personal injury action?  In a recently published decision, Bean v. Pacific Coast Elevator Corporation, Division One of the Fourth District Court of Appeal provided some answers to this question.

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Evidence of Immigration Status: Rarely Relevant, Almost Always Prejudicial

Posted in Civil Procedure, Recent Decisions

Now, more than ever, terms like “illegal alien,” “illegal immigrant,” and “undocumented worker” generate fear and controversy in our society.  And in the courtroom setting, the passionate responses inspired by “immigration” carry a significant danger of interfering with the fact finder’s duty to engage in reasoned deliberation.  So significant is this danger that courts across the country (including in California) are increasingly excluding evidence of a litigant’s immigration status—even if arguably relevant to an issue in the case—because it is too prejudicial to be heard by a jury.  In a recently published decision, Velasquez v. Centrome, Inc., the Second District Court of Appeal followed suit, recognizing “the strong danger of prejudice attendant with the disclosure of a party’s status as an undocumented immigrant.”

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Legal Writing: Speak Freely (But Plainly, Please!)

Posted in Appellate Practice, Appellate Procedure, On Being a Lawyer

“This petition . . . ask[s] this Court to unmistakably clarify, to the whole patent community, that its Mayo/Biosig/Alice decisions (“3 decisions”) ended the claim construction anomaly hampering especially ET CIs – but meet, by their ‘ET proof’ refined claim construction, all ET CIs needs.”

So begins the petition for review filed by a respected law firm in Sigram Schindler Beteiligungsgesellschaft MBH v. Lee.  Where it ends is not yet clear, but in denying the petition the U.S. Supreme Court issued an order to show cause as to why the attorney drafting the petition should not be sanctioned for submitting the often incomprehensible brief.  Apparently the client drafted much of the petition, and that may well explain how it reads–or should I say, looks?

The petition includes such illuminating prose as “[p]rolongating this claim construction anomaly in the NPS – i.e. its current schisms encouraging sloppiness in SPL precedents – badly hampers the innovativity of the US economy in all areas of ET, just as it stopped the petitioner’s investments to follow-up technologies of the ‘453 technology (see Section IV).”

Is this code?  If it is, the U.S. Supreme Court justices and clerks couldn’t break it.  In reading the Schindler petition I was frequently reminded of Circuit Judge Alex Kozinski’s The Wrong Stuff, which among other things, recited this passage from an appellate brief:

“LBE’s complaint more specifically alleges that NRB failed to make an appropriate determination of RPT and TIP conformity to SIP.”  To which Kozinski commented, “Even if there was a winning argument buried in the midst of that gobbledygook, it was DOA.”

There must be a backstory explaining how such an awful petition gets filed, and it may well be the result of a client control train wreck.  But in general, why do lawyers so often come up short as wordsmiths?  Shortage of time?  (“If I had more time I would have written a shorter letter?”)  Lack of basic writing skills?  (In a profession that depends on writing and requires 7 years of college and professional education?)  Difficult clients?  (Sometimes, but who writes the briefs?)  Dreaded legalese?  (Is there a cure yet?)  Whatever the reasons, since legal writing is coin of the realm for attorneys, what is said about the clients and the cases when lawyers submit briefs that are difficult to decipher?  Judge Kozinski had this suggestion:


If we live and die by our briefs (and we do), then perhaps as lawyers, we need to find a way to do better.  And in some instances, much better.  If a court can’t quickly tell what we want, where are we?  Judge Kozinski had plenty of ideas about that too.

Changing of the Guard at State’s High Court

Posted in Appellate Practice, On Being a Lawyer

The California Supreme Court is undergoing a few changes. Justice Joyce L. Kennard has retired and has not yet been replaced. And Justice Marvin R. Baxter is leaving at the end of the year. Much has already been written about Governor Brown’s opportunity to continue remaking the Court in his (latter-day) image. Having appointed Justice Goodwin Liu, speculation is rampant about just how liberal Brown’s “new” court will become, and which demographic each new justice will represent. This post has nothing to say on that.

Instead, this post takes a moment to reflect on the loss to the public of these two devoted jurists and fine people. The necessary distance that judges must maintain from the public they serve and the lawyers appearing before them, often makes it difficult to gauge judge as person. And many advocates, driven as they must be by their client’s cause, may not care about such things. The Court will shape the law, and the individual justices will shape the Court’s decisions. Fair enough. But having been fortunate to spend a little time with Justice Kennard and Justice Baxter outside the realm of judge and lawyer, I have gained some small insights into their personalities. And so I write to say a few words about what will be lost to the legal community, rather than to speculate about what the new Court will look like.  

Justice Kennard’s fierce independence and keen interest in oral argument are well known. If one knows her only by the command presence she so easily manifests, it might be possible to conclude there is little warmth–but that conclusion would be dead wrong. I have been fortunate to spend some time with Justice Kennard outside the realm of advocate and Court. Over the last few years, Justice Kennard generously shared her time with some of my U.C. Hastings appellate clinical program students. In chambers, Justice Kennard made us all feel like long-time friends: insisting that we have cookies and refreshments; regaling us with her passion for the majesty of the law and the fidelity the law demands; reminding us–as tender aunt, not scolding justice–of the serious responsibility we have as advocates to strive for perfection in all things; and endearing us with her willingness to share thoughts about, among other things, her love for gardening. Each of our meetings ended long after the appointed time, and only out of our worry that we might wear out our welcome, not because Justice Kennard tired of our visits.

I met Justice Baxter at a reception at U.C. Hastings. Up until that moment, the prism through which I viewed Justice Baxter was that of all advocates–my reading of his decisions and occasional presence at Court arguments. But at the reception, and at a chance meeting in a nearby eatery a few years later, I was impressed by how soft-spoken and gentle Justice Baxter is. Free of (most) of the constraints that we don upon entering the Court, we shared long conversations about public school roots, public universities, pro bono programs, the Central Valley, and sports cars. And each time I walked away, I felt as if I had met with a friend I had known for many years.

Because we are always fighting a client’s battles, we see jurists as those who can make or break our case and have little reason to think of them in any other light. Because we are ethically bound to remain distant, we have little opportunity to meet with those deciding the cases. Others will write about the rich contributions Justices Kennard and Baxter have made to life and law in California. Others are already writing about the new Court that is in the making. I have written here to say farewell not just to two fine jurists, but also two nice people.


Contractual Attorney Fee Provisions: Words Matter

Posted in Appellate Practice, Civil Procedure, Recent Decisions

This blog entry provides an analytical metric for double-checking assumptions about application of Civil Code section 1717 and contractual attorney fee awards.  As the case law demonstrates, it is easy to misapprehend how and when the statute actually operates. 

Section 1717(a) states that “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the prevailing party on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney fees in addition to other costs.”  Section 1717(b)(1) states that “[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.”  And section 1717(b)(2) states that “Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.”

It sounds straight forward and if section 1717 applied to every single suit involving a contractual attorney fee provision, it would be.  But of course, it’s not that simple.  A two-step analysis of attorney fee provisions in contracts may be helpful in determining the applicability and reach of section 1717.

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‘Tis the Season for Social Host Liability

Posted in Recent Decisions

With Christmas just around the corner, the holiday season is well underway.  For many, this means that the next few weeks will be filled with buying and wrapping gifts, baking and decorating cookies, listening to festive holiday tunes, and of course, hosting and attending parties.  It’s fitting, then, that earlier this month the California Supreme Court heard oral arguments in Ennabe v. Manosa, a case that presents some unanswered questions about social host liability.  

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Mandatory Relief from Summary Judgment? Courts Are Still Split.

Posted in Civil Procedure, Recent Decisions

Code of Civil Procedure section 473, subdivision (b) requires a court, under certain circumstances, to grant relief from default or dismissal that results from counsel’s mistake, inadvertence, surprise, or neglect.  In a recently-published opinion, Las Vegas Land & Development Co. v. Wilkie Way (2013) 219 Cal.App.4th 1086, 1090, Division Three of the Second Appellate District reminded us that California appellate courts are currently split on whether this mandatory provision applies to summary judgment.  There, the court joined the majority and held that it does not.  (Id. at p. 1091.)

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