DeSaulles v. Community Hosp. of the Monterey Peninsula , 62 Cal. 4th 1140 ( 2016 )

Filed 3/10/16
IN THE SUPREME COURT OF CALIFORNIA
MAUREEN DESAULLES, )
)
Plaintiff and Appellant, )
) S219236
v. )
) Ct.App. 6 H038184
COMMUNITY HOSPITAL )
OF THE MONTEREY PENINSULA, )
) Monterey County
Defendant and Respondent. ) Super.Ct. No. M85528
____________________________________)
Code of Civil Procedure section 1032, subdivision (a)(4) defines the
―prevailing party‖ in litigation to include ―the party with a net monetary recovery‖
and ―a defendant in whose favor a dismissal is entered.‖ (All undesignated
statutory references are to this code.) A ―prevailing party,‖ so defined, ―is entitled
as a matter of right to recover costs in any action or proceeding.‖ (§ 1032,
subd. (b).) 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, subdivision (a)(4) (hereafter section 1032(a)(4)).
The Court of Appeal below answered in the affirmative, reasoning that the
statutory definition of ―prevailing party‖ includes a party that obtains a ―net
monetary recovery‖ and that a settlement in which a defendant pays a plaintiff
some amount of money is a net monetary recovery, at least under the
circumstances of this case. In reaching this conclusion, the Court of Appeal
~ SEE DISSENTING OPINION ~
disagreed with Chinn v. KMR Property Management (2008) 166 Cal. App. 4th 175
(Chinn), which held that the defendant is the prevailing party where a settlement
results in a dismissal. Chinn reasoned that the statutory definition of ―prevailing
party‖ includes ― ‗a defendant in whose favor a dismissal is entered‘ ‖ and that a
settlement is not a ― ‗net monetary recovery.‘ ‖ (Id. at p. 188.)
We conclude that the Court of Appeal below was correct: When a
defendant pays money to a plaintiff in order to settle a case, the plaintiff obtains a
―net monetary recovery,‖ and a dismissal pursuant to such a settlement is not a
dismissal ―in [the defendant‘s] favor.‖ (§ 1032(a)(4).) As emphasized below, this
holding sets forth a default rule; settling parties are free to make their own
arrangements regarding costs.
I.
Community Hospital of the Monterey Peninsula (the Hospital) hired
Maureen deSaulles in February 2005 as a part-time patient business services
registrar. In June 2005, she began complaining about her work shift assignments
to the emergency room. The Hospital placed deSaulles on a leave of absence in
January 2006 and terminated her employment in July 2006.
In July 2007, deSaulles filed a complaint alleging that the Hospital had
(1) failed to accommodate her physical disability or medical condition
(susceptibility to infection as a result of cancer); (2) retaliated against her for
exercising her rights under California‘s Fair Employment and Housing Act;
(3) breached implicit conditions of an employment contract; (4) breached an
implied covenant of good faith and fair dealing; (5) negligently and
(6) intentionally inflicted emotional distress; and (7) wrongfully terminated her in
violation of public policy.
After the Hospital‘s motion for summary judgment adjudication and
subsequent motions in limine, the court ruled that deSaulles would be precluded
2
from introducing evidence and argument regarding any cause of action except the
third and fourth causes of action, breach of contract and breach of the implied
covenant of good faith and fair dealing.
At the conclusion of those rulings and before a jury was empaneled, the
parties placed the following settlement on the record to permit the court to retain
jurisdiction under section 664.6: ―[I]n consideration for dismissal with prejudice
of the two claims of breach of contract and breach of covenant, Defendant will pay
Plaintiff within 10 days $23,500.‖ Defense counsel ―will prepare a judgment on
the remaining claims which references the dismissal with prejudice and which
preserves the right of appeal of the rulings of this court on the remaining causes of
action . . . .‖ ―[T]he parties will not file any motions or memoranda for costs or
attorney fees[,] holding off until the completion of the appeal . . . .‖
On October 6, 2008, pursuant to the settlement, deSaulles filed a request for
dismissal with prejudice of the breach of contract and breach of covenant claims.
On January 6, 2009, the trial court entered an amended judgment that said:
―Having considered the arguments, oral and written, of all the parties, the records
and file herein, and the pretrial motions and oppositions thereto filed herein, and
having granted defendant‘s Motion in Limine No. 1 to Preclude Any Argument
That Defendant Failed to Accommodate Plaintiff‘s Disability or to Engage in the
Interactive Process, or That Plaintiff Was Harassed, Discriminated or Retaliated
Against in Connection Therewith, the Court finds that plaintiff will be unable to
introduce any evidence that would establish plaintiff‘s second cause of action for
retaliation, her fifth and sixth causes of action for intentional and negligent
infliction of emotional distress, or her seventh cause of action for wrongful
termination in violation of public policy; and, [¶] The Court having previously
granted summary adjudication of Plaintiff‘s first cause of action for failure to
accommodate; and, [¶] The parties having settled plaintiff‘s third cause of action
3
for breach of implied in fact contract and Fourth cause[] of action for breach of the
covenant of good faith and fair dealing, IT IS HEREBY ADJUDGED that, [¶]
1. Plaintiff recover nothing from defendant; and [¶] 2. The Parties shall defer
seeking any recovery of costs and fees on this Judgment coming final after the
time for all appeals.‖
DeSaulles filed an appeal from the amended judgment, and the Court of
Appeal affirmed the judgment in an unpublished opinion. After the Court of
Appeal issued a remittitur, the parties returned to the trial court, and each claimed
to be the prevailing party entitled to recovery of costs. After a hearing, the trial
court said: ―The Court believes it can exercise its discretion in determining which
party did prevail, and because [the Hospital] prevailed on significant causes of
action and thereafter entered into a settlement on the remaining costs, the Court
finds that [the Hospital] is the prevailing party.‖ The trial court awarded the
Hospital costs of $12,731.92 and denied deSaulles‘s request for costs.
The Court of Appeal reversed, concluding that deSaulles had obtained a net
monetary recovery and was therefore the prevailing party. As to the Hospital‘s
argument that it was entitled to costs because it had obtained a dismissal, the Court
of Appeal observed that a final dismissal had not disposed of this case: ―The
summary adjudication did not end the action in Employer‘s favor. The sustaining
of in limine motions did not end the action in Employer‘s favor, as two causes of
action remained for trial. The case ended without a trial on the merits because
Employee agreed to dismiss her remaining two causes of action, but the judgment
entered did not purport to dismiss the entire action. The judgment was intended
by its terms to preserve Employee‘s right to appeal the court‘s rulings on her other
claims. Employee did indeed appeal in an ultimately unsuccessful attempt to
resurrect those causes of action. [¶] Employee voluntarily dismissed two causes of
action and a judgment was entered on the remaining causes. Employer obtained at
4
most a partial voluntary dismissal, which we conclude did not, without more,
trigger a mandatory costs award to Employer.‖
The Court of Appeal further explained: ―The judgment in this case
provided that Employee shall recover nothing and also recited that the parties had
settled two of the seven causes of action. But the judgment failed to mention that
Employee was paid $23,500 in exchange for dismissing those causes of action.‖
The court cited Friends of the Trails v. Blasius (2000) 78 Cal. App. 4th 810, which
awarded costs to a plaintiff who had obtained a declaration that a public easement
had been created in an irrigation ditch, despite the fact that the judgment stated
that ―no relief is granted in favor of plaintiffs against defendant.‖ (Id. at pp. 838–
839.) ―Blasius illustrates that a costs award should be based on all aspects of a
lawsuit‘s final disposition rather than on an isolated phrase in the judgment.‖ In
so holding, the court expressly disagreed with Chinn, supra, 166 Cal. App. 4th 175.
We granted review.
II.
In contrast to the American rule that parties to a lawsuit ordinarily pay their
own attorney fees, litigation costs have been traditionally awarded to the
prevailing party. ―Costs are allowances which are authorized to reimburse the
successful party to an action or proceeding, and are in the nature of incidental
damages to indemnify a party against the expense of successfully asserting his
rights.‖ (Purdy v. Johnson (1929) 100 Cal. App. 416, 418; see § 1033.5 [costs
include filing fees, ordinary witness fees, costs related to recording and
transcribing depositions, and certain costs of preparing exhibits].) ― ‗The theory
upon which [costs] are allowed to a plaintiff is that the default of the defendant
made it necessary to sue him, and to a defendant, that the plaintiff sued him
without cause. Thus the party to blame pays costs to the party without fault.‘ ‖
(Purdy v. Johnson, at p. 418.)
5
Section 1032 codifies this approach to allocating costs: ―Except as
otherwise expressly provided by statute, a prevailing party is entitled as a matter of
right to recover costs in any action or proceeding.‖ (§ 1032, subd. (b).) The
statute provides that ―unless the context clearly requires otherwise,‖ the term
― ‗[p]revailing party‘ includes the party with a net monetary recovery, a defendant
in whose favor a dismissal is entered, a defendant where neither plaintiff nor
defendant obtains any relief, and a defendant as against those plaintiffs who do not
recover any relief against that defendant. When any party recovers other than
monetary relief and in situations other than as specified, the ‗prevailing party‘
shall be as determined by the court, and under those circumstances, the court, in its
discretion, may allow costs or not and, if allowed may apportion costs between the
parties on the same or adverse sides pursuant to rules adopted under Section
1034.‖ (§ 1032(a)(4).)
Section 1032‘s definition of ―prevailing party‖ does not control, however,
when another statute provides for different means of allocating costs. (Williams v.
Chino Valley Independent Fire Dist. (2015) 61 Cal. 4th 97, 114.) The definition of
―prevailing party‖ in section 1032 is particular to that statute and does not
necessarily apply to attorney fee statutes or other statutes that use the prevailing
party concept. (Heather Farms Homeowners Association v. Robinson (1994) 21
Cal. App. 4th 1568, 1572.) Moreover, section 1032 establishes only a default rule.
(§ 1032, subd. (c) [section 1032 does not ―prohibit parties from stipulating to
alternative procedures for awarding costs‖].) When parties settle a case, they are
free to allocate costs in any manner they see fit, although they must do so in
language specifically addressing such allocation. (Cf. Chinn, supra, 166
Cal.App.4th at pp. 184–185 [compromise offer was silent on costs and therefore
did not preclude the plaintiff from seeking costs].)
6
A.
In claiming to be the prevailing party in this case, the Hospital principally
relies on Chinn. There, a tenant and her boyfriend (collectively, Chinn) sued a
property management company and the property owner (collectively, KMR),
alleging breach of a duty of care to provide for the safety of their tenants. After
KMR declined to accept Chinn‘s offer made pursuant to section 998, KMR made
its own section 998 offer to settle the case for $23,500 (coincidentally the same
amount as the settlement in the present case) and to waive all costs in exchange for
dismissal of the action. Chinn accepted this offer and filed a notice of settlement
pursuant to section 998, and the trial court dismissed the action. Chinn then
sought an award of costs, which KMR opposed on the ground that Chinn was not
the prevailing party. The trial court disagreed with KMR and awarded Chinn
$4,036.58 in costs.
The Court of Appeal reversed, concluding that Chinn was not the prevailing
party and therefore could not recover costs. The court did not discuss in any detail
the language of section 1032(a)(4), nor did it find ambiguity in the term ―net
monetary recovery.‖ Instead, the court construed this term in the context of
section 1032‘s legislative history. That history provides useful background for
understanding this case.
―In 1933, the Legislature enacted sections 1031 and 1032 to consolidate
several cost statutes. As enacted, section 1031 provided in municipal and justice
courts, ‗the prevailing party, including a defendant as to whom the action is
dismissed, is entitled to his costs . . . .‘ (Stats. 1933, ch. 744, § 190, p. 1901
[consolidating matter contained in former §§ 831d & 924].) Section 1032
provided for an award of costs as a matter of right in superior court to: (1) a party
who had a judgment in his favor in specified actions, including ‗an action for the
recovery of money or damages,‘ as long as the judgment met the trial court‘s
7
jurisdictional limit; or (2) a defendant as to whom the action was dismissed.
(Stats. 1933, ch. 744, § 191, p. 1901 [consolidating former §§ 1022, 1024–1026].)
In all other actions, the court had discretion under section 1032 to award and
allocate costs. (Stats. 1933, ch. 744, § 191, p. 1901.) The cost statutes apparently
codified case law interpreting a voluntary dismissal as a judgment in the
defendant‘s favor (Spinks v. Superior Court (1915) 26 Cal. App. 793, 795 [a
voluntary dismissal determines the action in favor of the defendant and ends the
suit, noting dicta in Hopkins v. Superior Court (1902) 136 Cal. 552, 554].)
―Under former section 1032, ‗If the parties had competing claims for
damages, then the party with a net judgment in his favor was the sole party entitled
to costs. [Citations.] But even without competing monetary claims, a plaintiff
who received only partial recovery was still found to be the sole successful party
entitled to costs. The defendant was not entitled to any setoff for his partial
victory. [Citations.]‘ (Michell v. Olick (1996) 49 Cal. App. 4th 1194, 1198–
1199.)‖ (Chinn, supra, 166 Cal.App.4th at pp. 186–187, fns. omitted.)
In 1986, section 1032 was repealed and reenacted in its present form under
Senate Bill No. 654 (1985–1986 Reg. Sess.). As Chinn recounted: ―The
legislative history of Senate Bill No. 654 (1985–1986 Reg. Sess.) does not indicate
any change in the law to consider settlement proceeds or provide costs to a
plaintiff after a dismissal. The Legislative Council‘s Digest printed on the bill
simply states in pertinent part: ‗Existing law contains numerous provisions for the
prevailing party in superior, municipal, and justice court actions to receive costs
. . . . [¶] This bill would repeal those provisions and instead provide that except as
otherwise provided by law, a prevailing party, as defined, is entitled as a matter of
right to recover costs in any action or proceeding. This bill would provide for the
determination of fees and costs by the court in specified instances[.]‘ (Assem.
Amend. to Sen. Bill No. 654 (1985–1986 Reg. Sess.) Apr. 17, 1986.)
8
―The Senate Committee on Judiciary, Analysis of Senate Bill No. 654
(1985–1986 Reg. Sess.) as amended April 15, 1986, noted that the purpose of the
bill was ‗to consolidate the relevant law governing recovery of costs and to
simplify the present procedure for determining these costs, thereby relieving court
congestion and easing judicial workload.‘ The bill required the Judicial Council to
promulgate a uniform set of guidelines governing the award of costs in all courts,
and ‗it is assumed that the rules would reflect existing statutory and case law.‘
Three minor changes to existing law were noted: the prevailing party would be
entitled to recover court reporter expenses, a $5 bonus to the prevailing party
would be eliminated, and a $100 cost item in libel and slander cases would be
eliminated.
―Senate Bill No. 654 was introduced on behalf of the California Judges
Association Civil Law and Procedure Committee. On January 20, 1984, Judge
Richard H. Breiner, who was the chairman of the civil law and procedure
committee, responded in writing to a telephone call from Assembly Republican
consultant Earl Cantos. Judge Breiner stated in pertinent part, ‗The proposed bill
merely synthesizes and simplifies the myriad of existing statutes into language
which is clear, simple, and located in one place. You expressed concern that the
proposal might allow an award of costs against a plaintiff not presently permitted
under current law, when an action is dismissed. Under present[ ] law, costs are
allowed to a defendant when plaintiff‘s action is dismissed (City of Industry v.
Gordon (1972) 29 Cal. App. 3d 90), whether it is a voluntary dismissal with
prejudice (Fisher v. Eckert (1950) 94 Cal. App. 2d 890) or without prejudice
(International Industries, Inc. v. Olen (1978) 21 Cal. 3d 218). The proposed bill
provides for no different result, but rather simply provides in cases of dismissal,
for costs to a ―defendant on dismissal.‖ ‘
9
―Nothing in the background materials accompanying the proposed
amendment mentioned settlement proceeds or suggested the definition of
‗prevailing party‘ in section 1032 would change existing law to permit an award of
costs to a plaintiff following a dismissal. (See Sen. Com. on Judiciary, Analysis of
Sen. Bill No. 654 (1985–1986 Reg. Sess.) as amended Apr. 15, 1986; Sen. Com.
on Judiciary, legis. bill file on Sen. Bill No. 654 (1985–1986 Reg. Sess.); Assem.
Com. on Judiciary, Analyses of Sen. Bill No. 654 (1985–1986 Reg. Sess.) as
amended Mar. 31 and Apr. 17, 1986; Office of Assem. Floor Analyses, 3d reading
analyses of Sen. Bill No. 654 (1985–1986 Reg. Sess.) as amended Apr. 17, June 5,
and Jul. 8, 1986.)‖ (Chinn, supra, 166 Cal.App.4th at pp. 189–190.)
In light of the language and legislative history of section 1032, Chinn
concluded that the dismissal of an action makes the defendant the prevailing party
and that settlement proceeds do not qualify as a ―net monetary recovery‖ that
would make the settling plaintiff the prevailing party: ―Construing the term ‗net
monetary recovery‘ in context, we conclude that the Legislature did not intend to
include settlement proceeds received by the plaintiff in exchange for a dismissal in
favor of the defendant. The definition of ‗prevailing party‘ provided in section
1032 requires the court to award costs as a matter of right in specified situations.
By precluding consideration of settlement proceeds as a ‗net monetary recovery‘
when a dismissal is entered in favor of the defendant, only one party qualifies for a
mandatory award of costs, consistent with the prior law.
―Chinn contends that the commonsense meaning of the isolated term ‗net
monetary recovery‘ includes settlement proceeds. However, Chinn‘s
interpretation would lead to an absurd result, as both plaintiff and defendants
would be entitled to an award of costs as a matter of right.‖ (Chinn, supra, 166
Cal.App.4th at p. 188.) Chinn reasoned that because the Legislature intended only
10
one party to be the prevailing party, that party must be the defendant in whose
favor the dismissal was entered.
B.
We first address whether a dismissal obtained in exchange for a monetary
settlement may be considered a dismissal in a defendant‘s favor within the
meaning of section 1032(a)(4).
In addressing this question, we begin by agreeing with Chinn that absent
indications to the contrary, the Legislature intended the1986 reenacted version of
section 1032 to incorporate existing law regarding defendants as prevailing parties
after a dismissal. (Chinn, supra, 166 Cal.App.4th at p. 190.) In Goodman v.
Lozano (2010) 47 Cal. 4th 1327, 1336–1337 (Goodman), we recognized such a
contrary indication when we held that the definition of ―prevailing party‖ as the
party receiving a ―net monetary recovery‖ in the 1986 version of the statute
effectively repudiated case law that had deemed a party to be a prevailing party if
it had obtained a monetary recovery regardless of any offsets from settling
defendants. Here, by contrast, there is no indication that under the law that existed
prior to 1986, a defendant who obtained a dismissal in exchange for a monetary
payment to the plaintiff was considered a prevailing party for purposes of the costs
statute.
Relying on Spinks v. Superior Court, supra, 26 Cal. App. 793, the court in
Chinn observed that ―[t]he cost statutes apparently codified case law interpreting a
voluntary dismissal as a judgment in the defendant‘s favor.‖ (Chinn, supra, 166
Cal.App.4th at p. 187.) But Spinks illustrates the limited scope of this rule. In that
case, a plaintiff voluntarily dismissed a lawsuit without a settlement on the eve of
trial. The defendant argued that ―a dismissal so made does not interfere at all with
his right to have a judgment following it entered, as he did, which would secure to
him the expenses incurred in the action and which were in their nature proper
11
costs.‖ (Spinks, at p. 795.) The court said: ―We are in complete accord with this
contention and think that it proposes but a fair and reasonable construction for the
statute. . . . While the matter of the recovery of costs is one which rests wholly
upon the authority of the statutes, it cannot be contemplated that the legislature,
having provided authority and means for the securing of costs to litigants, intended
to leave a defendant remediless against a plaintiff who chose to bring an action
and put a defendant to great costs in preparing to meet the same and then dismiss
the suit. This case is a typical illustration of the hardship which might result.
Here the plaintiff filed several complaints, defendant made his verified answer,
and proceedings were had to set the case for trial. Then, on the day before the trial
was to take place, plaintiff appeared at the clerk‘s office and dismissed its action.
The defendant presumably prepared himself for the trial and subpoenaed his
witnesses on the assumption that the plaintiff would proceed at the time regularly
set. A construction of the statute which will allow the recovery of costs in such
cases is one that will appeal to the sense of fairness and justice of every one and is
the one which we will assume the legislature intended should be given to its
declarations upon that subject.‖ (Id. at pp. 795–796.)
This equitable rationale for awarding costs to a defendant after a dismissal
in its favor also appears in a case decided shortly before the 1986 repeal and
reenactment of section 1032. In Catello v. I.T.T. General Controls (1984) 152
Cal. App. 3d 1009, 1013, the court said: ―[A] defendant is entitled to its costs if the
complaint is unfounded, just as much as a successful plaintiff is entitled to its
costs. It is not enough, however, that costs should be awarded solely on the final
judgment in the action. To so limit recovery would permit an unscrupulous
plaintiff with only a marginal chance at recovery and investing only the filing fee
to commence an action, forcing the opposing party to engage in expensive
discovery, only to dismiss the action prior to final judgment when it appeared the
12
case was sinking, Titanic-like, beneath the waves of overwhelming adverse
evidence. Undoubtedly, it was with this evil in mind that the Legislature included
an award of costs to the defendant when the plaintiff voluntarily dismissed its
action.‖
Thus, the rationale for awarding costs to a defendant on dismissal was
rooted in the injustice that would result if a plaintiff who dismissed an
unmeritorious action before judgment could evade an award of costs to
compensate the defendant for the costs of preparing for trial. Such an award is an
application of the basic rationale for awarding costs, that ― ‗the party to blame
pays costs to the party without fault.‘ ‖ (Purdy v. Johnson, supra, 100 Cal.App. at
p. 418.) That rationale does not extend to dismissals pursuant to settlements in
which a plaintiff obtains monetary relief.
The statement by Judge Breiner quoted in the legislative history above —
that ― ‗[u]nder present[ ] law, costs are allowed to a defendant when plaintiff‘s
action is dismissed (City of Industry v. Gordon (1972) 29 Cal. App. 3d 90), whether
it is a voluntary dismissal with prejudice (Fisher v. Eckert (1950) 94 Cal. App. 2d
890), or without prejudice (International Industries, Inc. v. Olen (1978) 21 Cal. 3d
218)‘ ‖ — is not to the contrary. (Chinn, supra, 166 Cal.App.4th at p. 190.) None
of those cases involved a dismissal pursuant to a settlement. (See City of Industry,
at p. 92 [case dismissed after failing to bring the action to trial in five years];
Fisher, supra, at p. 891 [plaintiff files dismissal without defendant‘s consent];
Olen, at p. 221 [same].) The same is true of other pre-1986 cases. (See, e.g.,
McMahan’s of Long Beach v. McMahan Service Corp. (1956) 145 Cal. App. 2d
607, 608–609 [dismissal for lack of prosecution]; Hauptman v. Heebner (1939) 34
Cal. App. 2d 600, 601 [voluntary dismissal without settlement].) The Hospital cites
no contrary example.
13
In light of section 1032‘s basic purpose of imposing costs on the losing
party, and in light of the case law that the statute was intended to incorporate, we
conclude that the definition of ―prevailing party‖ as ―a defendant in whose favor a
dismissal is entered‖ was not intended to encompass defendants that entered into a
monetary settlement in exchange for dismissal. The definition was intended to
promote the equitable rule that unsuccessful plaintiffs could not evade the cost
statute by dismissing their suit. That rule does not apply to plaintiffs that have
achieved some litigation success through settlement of the case.
Having concluded that a defendant is not a prevailing party as a matter of
right in these situations, we must next determine whether a plaintiff who obtains a
monetary settlement is a prevailing party.
C.
As noted, section 1032(a)(4) defines the party with a ―net monetary
recovery‖ as the ― ‗[p]revailing party.‘ ‖ ― ‗The word ―recover‖ means ―to gain by
legal process‖ or ―to obtain a final legal judgment in one‘s favor.‖ ‘ ‖ (Goodman,
supra, 47 Cal.4th at p. 1334.) The Hospital cites some cases that would define
―recovery‖ in a way that precludes settlement proceeds. (See, e.g., Gebelein v.
Blumfield (1992) 231 Ill.App.3d 1011, 1014.)
We see no reason why a monetary settlement cannot fit within the
definition of ―monetary recovery.‖ Although a monetary settlement is in some
ways like a private contract, a settlement is obtained as a means of resolving and
terminating a lawsuit. Moreover, settlement agreements pursuant to section 664.6 or
section 998 result not only in contractual agreements but also in judgments that
conclusively resolve the issues between the parties. (See California State Auto. Assn.
Inter-Ins. Bureau v. Superior Court (1990) 50 Cal. 3d 658, 664 (California State
Auto. Assn.); Milicevich v. Sacramento Municipal Center (1984) 155 Cal. App. 3d
14
997, 1004.) In this sense, a monetary settlement is ― ‗ ―gain[ed] by legal process.‖ ‘ ‖
(Goodman, supra, 47 Cal.4th at p. 1333.)
Other language in section 1032 suggests a broad understanding of the word
―recovery.‖ Again, ―prevailing party‖ is defined to include ―the party with a net
monetary recovery, a defendant in whose favor a dismissal is entered, a defendant
where neither plaintiff nor defendant obtains any relief, and a defendant as against
those plaintiffs who do not recover any relief against that defendant. When any
party recovers other than monetary relief and in situations other than as specified,
the ‗prevailing party‘ shall be as determined by the court . . . .‖ (§ 1032(a)(4),
italics added.) In the statute, ―monetary relief‖ is synonymous with ―net monetary
recovery‖ since a plaintiff is a prevailing party as a matter of right if he or she
obtains ―monetary relief‖ but will be considered a prevailing party at the court‘s
discretion if she ―recovers other than monetary relief.‖ ―Relief,‖ like ―recovery,‖
is a broad term that can include money obtained through a settlement. This court
used the term in that way in Olen, a case predating the 1986 revision of section
1032, where we said: ―Although a plaintiff may voluntarily dismiss before trial
because he learns that his action is without merit, obviously other reasons may
exist causing him to terminate the action. For example, the defendant may grant
plaintiff –– short of trial –– all or substantially all relief sought . . . .‖
(International Industries, Inc. v. Olen, supra, 21 Cal.3d at p. 224, italics added
(Olen).)
We conclude that the term ―recovery‖ in section 1032(a)(4) encompasses
situations in which a defendant settles with a plaintiff for some or all of the money
that the plaintiff sought through litigation. This understanding of ―recovery‖ is in
keeping with the purpose of section 1032 discussed above. Just as a plaintiff
cannot avoid a cost award by dismissing an action on the eve of trial, so a
defendant cannot avoid a cost award merely by settling on the eve of trial. In
Reveles v. Toyota by the Bay (1997) 57 Cal. App. 4th 1139, disapproved on other
grounds in Gavaldon v. DaimlerChrysler Corp. (2004) 32 Cal. 4th 1246, 1261, the
15
defendant agreed on the morning of trial to pay the plaintiff the entire $9,300 that
the plaintiff had previously offered to accept to settle the case. The court upheld a
cost award for the plaintiff, saying ―it cannot be seriously argued that [the
plaintiff] . . . did not obtain a ‗net monetary recovery.‘ ‖ (Reveles, at p. 1151.)
Other courts have similarly concluded that plaintiffs may obtain a net monetary
recovery by settling a lawsuit. (See Wohlgemuth v. Caterpillar Inc. (2012) 207
Cal. App. 4th 1252, 1257, 1264; On-Line Power, Inc. v. Mazur (2007) 149
Cal. App. 4th 1079, 1087.)
This understanding of ―net monetary recovery‖ is further reinforced by case
law predating the 1986 repeal and reenactment of section 1032. The cases make
clear that if a settlement agreement, compromise offer pursuant to section 998, or
stipulated judgment is silent on the matter of costs, the plaintiff is not barred from
seeking costs. (See Folsom v. Butte County Assn. of Governments (1982) 32
Cal. 3d 668, 679 (Folsom); Rappenecker v. Sea-Land Service, Inc. (1979) 93
Cal. App. 3d 256, 263–264 (Rappenecker); Slater v. Superior Court (1941) 45
Cal. App. 2d 757, 761 (Slater); Rapp v. Spring Valley Gold Co. (1888) 74 Cal. 532,
533 (Rapp).) The reason for this rule is that compromise agreements ― ‗regulate
and settle only such matters and differences as appear clearly to be comprehended
in them by the intention of the parties and the necessary consequences thereof, and
do not extend to matters which the parties never intended to include therein,
although existing at the time.‘ [Citations.] Thus they ordinarily conclude all
matters put in issue by the pleadings –– that is, questions that otherwise would
have been resolved at trial. [Citation.] They do not, however (absent affirmative
agreement of the parties), conclude matters incident to the judgment that were no
part of the cause of the action.‖ (Folsom, at p. 677.)
16
Implicit in this line of cases is the principle, well established before the
1986 repeal and reenactment of the costs statute, that a plaintiff who settles a
lawsuit for payment of money or other tangible benefits may be considered a
prevailing party. Nothing in the language or legislative history of the statute
indicates an intention to change that principle. The Hospital objects that the cases
above, with the exception of Folsom, involved judgments entered in the plaintiff‘s
favor rather than dismissals. Rappenecker, for example, involved a compromise
offer pursuant to section 998. (Rappenecker, supra, 93 Cal.App.3d at pp. 262–
263.) Although the acceptance of a section 998 offer leads to the entry of a
judgment (§ 998, subd. (b)(1)), a section 998 offer may also require the plaintiff to
dismiss the action as a condition of settlement. (See Chinn, supra, at 166
Cal.App.4th at p. 184; Goodstein v. Bank of San Pedro (1994) 27 Cal. App. 4th
899, 906–907.) In rejecting the argument that a compromise offer was not valid
under section 998 because it called for payment of money to the plaintiff and
dismissal of the action rather than a judgment in the plaintiff‘s favor, Goodstein
said: ―[A]s between the parties thereto and for purposes of enforcement of
settlement agreements, a compromise agreement contemplating payment by
defendant and dismissal of the action by plaintiff is the legal equivalent of a
judgment in plaintiff‘s favor.‖ (27 Cal.App.4th at p. 907.) The Hospital cites no
authority, other than Chinn, suggesting that the determination of whether a
plaintiff was or could be a prevailing party would turn on the technicality of
whether a section 998 settlement or a stipulated judgment, in addition to resulting
in a monetary settlement in plaintiff‘s favor, also required dismissal of the action.
The other cases cited above awarded costs after a stipulated judgment in the
plaintiff‘s favor. (Rapp, supra, 74 Cal. at p. 533; Slater, supra, 45 Cal.App.2d at
p. 761.) It is true, as the Hospital suggests, that stipulated judgments may be
entered like regular judgments and that the plaintiffs in the cited cases obtained a
17
judgment while the defendants did not obtain a dismissal. (See § 664.6 [upon a
motion, the court may enter judgment pursuant to the terms of a settlement].) But
when a settlement pursuant to a stipulated judgment disposes of the entire case, a
dismissal of the action generally follows as a matter of law. (Cal. Rules of Court,
rule 3.1385(b).) Whether or not a stipulated judgment encompassing a monetary
settlement calls for a dismissal, the effect is the same: a payment of money to the
plaintiff, followed by a termination of the action. The entry of a judgment
pursuant to section 664.6 enables parties to enforce a settlement agreement
without having to file a separate lawsuit. (Viejo Bancorp, Inc. v. Wood (1989) 217
Cal. App. 3d 200, 208.) This is true whether the judgment calls for a dismissal or
not; the only difference is that where a stipulated judgment includes a dismissal,
the parties must ask the trial court to retain jurisdiction before the dismissal
deprives the court of that jurisdiction. (Wackeen v. Malis (2002) 97 Cal. App. 4th
429, 439–440.)
Where, as here, the parties stipulate before the court that the plaintiff has
been paid a sum of money in exchange for a dismissal of an action, the plaintiff is
as legally entitled to receive money from the defendant as a plaintiff who obtains a
stipulated judgment without a dismissal. The former plaintiff is every bit as much
a prevailing party as the latter. Chinn‘s rule that a defendant is the prevailing
party if a section 998 offer includes an agreement to dismiss the action, no matter
how favorable the offer is to plaintiff, is inequitable and inconsistent with the
purpose of section 1032.
Folsom provides additional support for this conclusion. There, the
plaintiffs entered into a settlement agreement with government defendants
promising to dismiss the case when the defendants established four new transit
systems. (Folsom, supra, 32 Cal.3d at p. 675.) The agreement was silent as to
costs as well as attorney fees, and the trial court awarded the plaintiffs costs,
18
concluding that ― ‗this action has resulted in the enforcement of an important right
affecting the public interest.‖ (Id. at p. 676.) This court affirmed, concluding that
the plaintiff had the right to costs where the settlement agreement was silent as to
costs. (Id. at pp. 677–678.)
The Hospital notes two differences between Folsom and the present case:
first, that the dismissal was conditional and delayed, and second, that the relief
granted was nonmonetary. But neither of those differences matters here. In light
of the equitable purpose of section 1032, there is no reason why a plaintiff that
conditions dismissal of the case on the future fulfillment of some of its litigation
objectives should be considered the prevailing party, but not a plaintiff that
dismisses the action in exchange for the present payment of money.
The Hospital contends that Goodman supports its position. In that case,
homeowners sued a home builder and various other defendants for construction
defects. They settled with some of the defendants for $230,000 and obtained a
$146,000 verdict against another defendant, Lozano. The trial court pursuant to
section 877, subdivision (a), which provides that a good faith settlement with some
tortfeasors will serve to reduce the claims against the remaining tortfeasors,
reduced the award against Lozano to zero. The question was whether Goodman
had obtained a net monetary recovery against Lozano for purposes of awarding
costs. The court concluded that Goodman had not and affirmed an award of costs
to Lozano: ― ‗[T]he common meaning of the phrase ―the party with a net
monetary recovery‖ is the party who gains money that is ―free from . . . all
deductions.‖. . . [¶] A plaintiff who obtains a verdict against a defendant that is
offset to zero by settlements with other defendants does not gain any money free
from deductions. Such a plaintiff gains nothing because the deductions reduce the
verdict to zero.‘ ‖ (Goodman, supra, 47 Cal.4th at p. 1334.)
19
The Hospital contends that ―[i]f settlement funds were included in the term
‗net monetary recovery,‘ the Goodman plaintiffs would necessarily have been the
prevailing parties because they obtain[ed] settlement funds in an amount of
$230,000. Instead, the court looked to the final judgment alone to determine
whether the plaintiff obtained a net monetary recovery.‖ But the question in
Goodman was not whether the plaintiffs obtained a net monetary recovery from
the settling defendants, but rather whether the plaintiffs obtained such a recovery
from Lozano. It is clear they did not. Here, deSaulles obtained a $23,500
settlement from the Hospital. Although Goodman does not dispose of the question
before us, its holding is not inconsistent with the conclusion that deSaulles
obtained a net monetary recovery from the Hospital.
Of course, a monetary settlement in favor of a plaintiff does not necessarily
suggest a meritorious lawsuit; defendants may settle cases with little merit in order
to be spared the expense of trial. However, the rule is that a partial recovery, as
long as it is a net monetary recovery, entitles a plaintiff to costs. (See Michell v.
Olick, supra, 49 Cal.App.4th at pp. 1196, 1198–1199 [although 11 of the
plaintiff‘s causes of action were not successful, plaintiff‘s success on the 12th
cause of action for a jury award of $63,000 entitled a plaintiff to costs].) A
determination of whether a complaint was truly meritorious ―would require the
court to try the entire case.‖ (Olen, supra, 21 Cal.3d at p. 224.) We need not
place this burden on courts. Section 1032 merely establishes a default rule, and a
settling defendant is in a far better position to calibrate the terms of a settlement,
including allocation of costs, with appropriate provisions in the settlement
agreement.
Our dissenting colleague contends that a settling plaintiff and defendant
should both be considered prevailing parties if the settlement calls for a dismissal,
and that an award of costs should be left to the court‘s discretion. But a corollary
of this position is that if the monetary settlement does not call for a dismissal,
which is sometimes the case (ante, at pp. 17–18), then only plaintiffs should be
20
considered the prevailing party, even though the latter settlement, like the former,
results in the payment of money to the plaintiff and the termination of the action.
We decline to treat the two situations differently when the difference is a matter of
form and not substance. Such an approach, moreover, would not serve the
statute‘s goal of simplifying procedures for determining costs and easing judicial
workload. (Ante, at p. 8.)
We recognize that sometimes parties may overlook the issue of costs in
their settlement agreements. Through inadvertence, defendants may find
themselves with a bill for costs that substantially increases the amount owed to the
plaintiff. Trial courts should take these realities into account when performing
their gatekeeping function pursuant to section 664.6. (See California State Auto.
Assn., supra, 50 Cal.3d at p. 664). Although not required by law, it is advisable
that trial courts inquire into whether the parties in a given case have resolved the
allocation of costs in their settlement agreement, or whether they wish to have the
court resolve the issue, before placing a judicial imprimatur on the agreement.
In sum, we hold that a dismissal pursuant to a monetary settlement is not a
dismissal in the defendant‘s ―favor‖ as that term is used in section 1032(a)(4). We
further hold that a plaintiff that enters into a stipulated judgment to be paid money
in exchange for a dismissal has obtained a ―net monetary recovery‖ within the
meaning of section 1032(a)(4), whether or not the judgment mentions the
settlement. Our holdings establish a default rule that applies only when the parties
have not resolved the matter of costs in their settlement agreement or have not
stipulated ―to alternate procedures for awarding costs.‖ (§ 1032, subd. (c).) We
disapprove the contrary holding of Chinn v. KMR Property Management, supra,
166 Cal. App. 4th 175, 185–190.
21
CONCLUSION
The judgment of the Court of Appeal is affirmed.
LIU, J.
WE CONCUR:
CANTIL-SAKAUYE, C. J.
CHIN, J.
CORRIGAN, J.
CUÉLLAR, J.
22
DISSENTING OPINION BY KRUGER, J.
I agree with the majority that a plaintiff who receives a monetary settlement
in exchange for the dismissal of her claims has received a ―net monetary
recovery,‖ and is therefore a ―prevailing party‖ presumptively entitled to costs
under Code of Civil Procedure section 1032, subdivision (a)(4). But by the terms
of the statute, so, too, is the ―defendant in whose favor [] dismissal is entered.‖
(Code Civ. Proc., § 1032, subd. (a)(4) (section 1032(a)(4)).) Because both parties
cannot be entitled to costs as of right, such cases are covered by the next sentence
of the provision, which permits the trial court, ―in situations other than as
specified,‖ to determine which party has in fact prevailed and to allocate costs
accordingly. (Ibid.) Thus the statute, as I read it, does not treat settling plaintiffs
as automatically entitled to costs — no matter how minimal their recovery or how
unmeritorious their claims — but permits courts to take into account special
circumstances that may render a costs award inequitable or unjust. Because
neither the trial court nor the Court of Appeal considered whether such
circumstances are present here, I would reverse and remand for further
consideration.
Section 1032 defines the term ― ‗[p]revailing party‘ ‖ to include, as relevant
here, ―a defendant in whose favor a dismissal is entered.‖ (Ibid.) In ordinary
usage, we say that a dismissal is entered in a defendant‘s favor when entry of the
dismissal is ―to the special advantage or benefit of‖ that defendant. (Webster‘s 3d
Internat. Dict. (2002) p. 830 [defining ―in favor of‖].) We thus generally refer to
an order dismissing a plaintiff‘s claims against a defendant as an order entered in
that defendant‘s favor. (See, e.g., Desai v. Farmers Ins. Exchange (1996) 47
Cal. App. 4th 1110; Dominguez v. City of Alhambra (1981) 118 Cal. App. 3d 237,
242.) This is true regardless of the reason for the dismissal — whether pursuant to
demurrer; the plaintiff‘s voluntary abandonment of her claims; or, as in this case, a
negotiated settlement. Indeed, it is difficult to know how else one would describe
the dismissal at issue in this case. Surely we would not describe the dismissal of a
plaintiff‘s own claims as a dismissal entered in the plaintiff’s favor.
In reaching its contrary conclusion, the majority asserts, without further
elaboration, that ―[w]hen a defendant pays money to a plaintiff in order to settle a
case, . . . a dismissal pursuant to such a settlement is not a dismissal ‗in [the
defendant‘s favor].‘ ‖ (Maj. opn., ante, at p. 2; accord, id. at p. 21.) Perhaps by this
the majority means to suggest that a dismissal entered pursuant to a monetary
settlement is not a dismissal that ―favors‖ the defendant, because, as the majority
elsewhere puts it, the plaintiff has also ―achieved some litigation success through
settlement of the case.‖ (Id. at p. 14.) But section 1032(a)(4) does not speak of a
dismissal ―favoring‖ a defendant, it speaks of a dismissal ―entered‖ in favor of a
defendant. Even if a settlement calling for dismissal might not be wholly favorable to
the defendant — e.g., because it also calls for the defendant to pay some amount of
money — we would have to acknowledge that the resulting dismissal has nevertheless
been entered in the defendant‘s favor.
In any event, when parties agree to settle a dispute, it is generally because both
sides believe that settlement is to their advantage. (Cf. Hazard, The Settlement Black
Box (1995) 75 B.U. L.Rev. 1257, 1267 [―[T]he settlement area consists of a wide
band of different prices at which it will benefit both parties to settle.‖].) And as a
practical matter, it is certainly not uncommon for the terms of a settlement to
2
advantage the defendant far more than the plaintiff. If, for example, a plaintiff agrees
to dismiss a million-dollar damages claim in exchange for a nuisance payment of $10,
with no admission of liability, it would be difficult to dispute that the resulting
dismissal was not only entered in the defendant‘s favor, but was entered pursuant to a
settlement ―favorable‖ to the defendant as well.
In the end, the majority‘s reading of section 1032(a)(4)‘s dismissal clause rests
not on the text of the provision, but on inferences about legislative intent based on the
provision‘s history. The majority reasons that section 1032, both as originally enacted
in 1933 and as reenacted in 1986, was designed to codify existing case law
concerning the status of defendants as ―prevailing parties,‖ and ―there is no indication
that under the law that existed prior to 1986, a defendant who obtained a dismissal in
exchange for a monetary payment to the plaintiff was considered a prevailing party
for purposes of the costs statute.‖ (Maj. opn., ante, at p. 11.)
Of course, as we have repeatedly made clear, the interpretation of a statute
necessarily ―begin[s] with its text, as statutory language typically is the best and most
reliable indicator of the Legislature‘s intended purpose.‖ (Larkin v. Workers’ Comp.
Appeals Bd. (2015) 62 Cal. 4th 152, 157.) If the statutory text answers the question
before us — as I believe it does here — that is generally the end of the matter; if there
is no ambiguity or uncertainty in the language, we need ―not resort to legislative
history to cloud a statutory text that is clear.‖ (Ratzlaf v. United States (1994) 510
U.S. 135, 147–148, fn. omitted; accord, e.g., People v. Cornett (2012) 53 Cal. 4th
1261, 1265 [―The plain meaning controls if there is no ambiguity in the statutory
language.‖].)
The legislative history on which the majority relies is not especially revealing
in any event. The majority relies principally on the Court of Appeal‘s observation in
Chinn v. KMR Property Management (2008) 166 Cal. App. 4th 175, that section 1032,
as originally enacted, ― ‗apparently codified case law interpreting a voluntary
3
dismissal as a judgment in the defendant‘s favor.‘ ‖ (Maj. opn., ante, at p. 11, quoting
Chinn, supra, 166 Cal.App.4th at p. 187, and citing Spinks v. Superior Court (1915)
26 Cal. App. 793; see also Catello v. I.T.T. General Controls (1984) 152 Cal. App. 3d
1009, 1013 [observing that the Legislature ―[u]ndoubtedly‖ intended to thwart the
danger of ―unscrupulous plaintiff[s] with only a marginal chance at recovery . . .
forcing the opposing party to engage in expensive discovery, only to dismiss the
action prior to final judgment‖ when it became clear the case would yield an adverse
judgment at trial].) From this the majority concludes that the Legislature must have
intended to limit the reach of section 1032(a)(4)‘s dismissal clause to circumstances
comparable to those in Spinks, in order to address ―the injustice that would result if a
plaintiff who dismissed an unmeritorious action before judgment could evade an
award of costs to compensate the defendant for the costs of preparing for trial.‖ (Maj.
opn., ante, at p. 13.)
But even if the Spinks scenario was the Legislature‘s primary concern, that
does not mean it was the Legislature‘s only concern. Although legislators frequently
draft legislation with a particular problem in mind, the statutes they enact ―often go
beyond the principal evil to cover reasonably comparable evils, and it is ultimately the
provisions of our laws rather than the principal concerns of our legislators by which
we are governed.‖ (Oncale v. Sundowner Offshore Servs. (1998) 523 U.S. 75, 79.) It
may well be that the Legislature that enacted section 1032 was particularly concerned
with the unfairness that would result from depriving defendants of a costs award when
a plaintiff dismisses her unmeritorious claim at the eleventh hour. But I see no clear
basis for concluding that the Legislature did not also address the unfairness that would
result from an inflexible rule requiring a settling defendant to pay the plaintiff‘s costs,
no matter the circumstances of the case. Certainly to the extent there is any doubt on
the subject, the text of the statute ought to control.
4
In short, I would conclude that the Legislature meant what it said: A defendant
in whose favor a dismissal is entered — whether as a result of a monetary settlement
or otherwise — is a ―prevailing party‖ within the meaning of section 1032(a)(4). But
to be clear, to say that a settling defendant is a ―prevailing party‖ does not mean that it
is the ―prevailing party,‖ thereby entitled to payment of costs as of right. As the
majority explains, the plaintiff is also a ―prevailing party‖ within the meaning of
section 1032(a)(4) because he or she has received a ―net monetary recovery‖ in the
form of settlement proceeds. (§ 1032(a)(4); see maj. opn., ante, at pp. 14–20.)
Because both parties cannot be entitled to costs as of right, we must proceed to the
next sentence of section 1032(a)(4), which provides: ―When any party recovers other
than monetary relief and in situations other than as specified, the ‗prevailing party‘
shall be as determined by the court, and under those circumstances, the court, in its
discretion, may allow costs or not and, if allowed may apportion costs between the
parties on the same or adverse sides.‖ ―In cases where both parties achieved a status
that Code of Civil Procedure section 1032 defines as a prevailing party, the action
‗falls into the ―situation other than as specified‖ category, calling for an exercise of
the trial court‘s discretion‘ ‖ to determine which party, if any, should receive costs.
(Wohlgemuth v. Caterpillar Inc. (2012) 207 Cal. App. 4th 1252, 1264, quoting On–
Line Power, Inc. v. Mazur (2007) 149 Cal. App. 4th 1079, 1087; see § 1032(a)(4).) 1
1 The Court of Appeal in this case did not disagree with this conclusion. The
court explained that if the defendant Hospital ―had qualified as a ‗prevailing
party,‘ this case could be among the ‗situations other than as specified‘ for
purposes of awarding mandatory costs,‖ and the court could ―exercise discretion to
determine which party prevailed based on the merits of the case.‖ The court
ultimately concluded that the Hospital did not qualify as a ―prevailing party‖
within the meaning of section 1032(a)(4) because the settlement dismissed only
some of plaintiff‘s claims; the remainder of the claims were resolved through entry
of judgment in defendant‘s favor. But if a defendant would have been entitled to
prevailing party status if it had negotiated dismissal of the entire action, it is not
(footnote continued on next page)
5
The majority suggests that this conclusion elevates form over substance
insofar as it turns on whether the settlement agreement calls for a dismissal. The
majority reasons that some settlement agreements will call for entry of judgment
against a defendant and not dismissal of the action, yet both forms of agreement
will result in the payment of money to the plaintiff and termination of the action.
(Maj. opn., ante, at pp. 20–21.) But the difference between an agreement calling
for a dismissal and one calling for the entry of judgment against the defendant is
not a mere formality. Whether the settlement of the claim will result in a
judgment against the defendant could have practical consequences for the parties
and for that reason may frequently serve as an important point of negotiations. In
any event, however we might judge the practical differences between agreements
calling for dismissal and those calling for entry of judgment against a defendant,
we are not entitled to overlook the plain language of the statute, which treats a
defendant in whose favor a dismissal is entered as a ―prevailing party.‖
Recognizing a trial court‘s discretion when cases are dismissed pursuant to
a monetary settlement also serves the equitable objectives underlying section
1032. In the typical case, the majority is correct that the equities will favor the
plaintiff who has achieved some measure of success through the settlement, and
thus can reasonably expect to be compensated for her litigation costs. (Maj. opn.,
(footnote continued from previous page)
clear why, under the statute, the defendant should cease to be a prevailing party
where, as here, it has negotiated dismissal of some claims and actually prevailed
on the merits with respect to the remainder. (See § 1032(a)(4) [defining
― ‗[p]revailing party‘ ‖ to include both ―a defendant in whose favor a dismissal is
entered‖ and ―a defendant as against those plaintiffs who do not recover any relief
against that defendant‖].)
6
ante, at p. 14.) But this will not invariably be so. It is, for example, a simple truth
that defendants sometimes settle even frivolous lawsuits simply ―because the cost
of litigation — either financial or in terms of public relations — would be too
great.‖ (Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health
and Human Resources (2001) 532 U.S. 598, 617 (conc. opn. of Scalia, J.); cf.
Fisher v. Kelly (7th Cir. 1997) 105 F.3d 350, 352 [―[T]he mere fact that plaintiff
obtained some recovery does not automatically make her a prevailing party
because defendants often settle even meritless lawsuits.‖].) If a plaintiff manages
to extract a monetary recovery in settlement of a meritless lawsuit, hers is a brand
of success we might hesitate to recognize as legitimate — and conduct we might
hesitate to reward by entitling her to payment of costs.
As I read it, section 1032(a)(4) imposes no rigid requirement to award costs
to a settling plaintiff in such circumstances. The statute instead permits trial courts
to determine whether the equities of the case warrant deviation from the usual rule
entitling a settling plaintiff to costs. It allows trial courts to allocate costs in a
manner that takes into account whether, for example, the plaintiff‘s underlying
claim is plainly frivolous, the plaintiff‘s recovery is de minimis, or the plaintiff‘s
success is otherwise clearly insubstantial relative to the nature and scope of the
claims brought (and the costs incurred in prosecuting them). The inquiry would
not require the trial court to ― ‗try the entire case.‘ ‖ (Maj. opn., ante, at p. 20.)
Nor would it prevent parties from making their own arrangements with respect to
the allocation of costs. (See maj. opn., ante, at pp. 20–21; Code Civ. Proc.,
§ 1032, subd. (c).) But in the absence of an express agreement, it would permit
trial courts to refrain from awarding costs to settling plaintiffs in circumstances in
which a costs award would be inequitable or unjust. Granted, this approach may
not simplify procedures to the same extent as the majority‘s rule. (Maj. opn., ante,
at p. 21.) But it is the approach that is most consistent with both the text of the
7
statute and its underlying equitable purposes. To the extent the majority concludes
otherwise, I respectfully dissent.
KRUGER, J.
I CONCUR:
WERDEGAR, J.
8
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion DeSaulles v. Community Hospital of the Monterey Peninsula
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 225 Cal. App. 4th 1427
Rehearing Granted
__________________________________________________________________________________
Opinion No. S219236
Date Filed: March 10, 2016
__________________________________________________________________________________
Court: Superior
County: Monterey
Judge: Lydia Villarreal
__________________________________________________________________________________
Counsel:
Henry Joachim Josefsberg for Plaintiff and Appellant.
The David Firm, Henry S. David, Dana Joy Emmer; Greines, Martin, Stein & Richland, Robert A. Olson
and Edward L. Xanders for David S. Karton, a Law Corporation as Amicus Curiae on behalf of Plaintiff
and Appellant.
Fenton & Keller and Christopher Edward Panetta for Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Henry Joachim Josefsberg
4050 Katella Avenue, Suite 205
Los Alamitos, CA 90720
(562) 342-9401
Christopher Edward Panetta
Fenton & Keller
2801 Monterey-Salinas Highway
Post Office Box 791
Monterey, CA 93942-0791
(831) 373-1241