Friday, March 12, 2004
C.A.: Prevailing Party Fees May Be Awarded After Lis Pendens Withdrawn
By a MetNews Staff Writer
A Los Angeles Superior Court judge erred in ruling fees as a prevailing party were not available to a litigant who moved to expunge a lis pendens which was withdrawn before the motion could decided, this district’s Court of Appeal ruled yesterday.
Justice Walter Croskey of Div. Three said Judge Paul Flynn should not have applied an “inflexible rule” barring Alexandra and Edith Castro from recovering fees under Code of Civil Procedure Sec. 405.38. Instead, Croskey explained, Flynn should have taken a “practical approach to determine the prevailing party based on the trial court’s determination of which party realized its objectives in the proceeding.”
“Such a determination requires the trial court to consider the merits of the motion, and whether the lis pendens claimant acted with substantial justification in withdrawing the lis pendens, or whether, in light of all of the circumstances, the imposition of fees would otherwise be unjust.”
The dispute arose during litigation over a $1 million Beverly Hills property to which the Castros held title. They claimed it was a gift.
A trust administered by California Savings contended there was an agreement between the trust and the Castros to renovate and market the property. The trust sued to restore title and filed a lis pendens.
A different judge denied the Castros’ first motion to expunge the lis pendens, but they refiled the motion after additional discovery, citing new grounds. The trust withdrew the lis pendens, citing an inability to complete discovery necessary to meaningfully oppose it.
The same judge conducted a hearing on the motion, at which the Castros pointed out that only the second of two lis pendens filed had been withdrawn. Attorneys for the trust said that was an oversight and agreed to withdraw the first lis pendens, and the judge delayed ruling on the motion.
But the trust later filed a third lis pendens, resulting in a third expungement motion. The case had by then been assigned to Flynn, who granted the motion and awarded the Castros prevailing party fees.
But Flynn rejected the Castros’ motion for fees incurred in bringing the second motion to expunge, reasoning that under Sec. 405.38 the trust could withdraw the lis pendens prior to a court order without incurring liability.
Not so, Croskey said.
Fees for a party prevailing on a motion to expunge a lis pendens are mandatory under the statute, the justice pointed out. Prior cases have not construed “prevailing party” under Sec. 405.38, he noted.
The justice said the “practical approach—adopted to determine the prevailing party for purposes of awarding attorney fees in a pretrial voluntary dismissal case asserting tort claims when the contractual term ‘prevailing party’ was undefined” should be applied under the statute. The same method has been used under the anti-SLAPP statute, Sec. 425.16, he said.
“Under the practical approach, the court determines the prevailing party by analyzing which party realized its litigation objectives,” Croskey explained.
“[T]he withdrawal of an improperly recorded lis pendens, while a motion to expunge is pending, achieves the litigation objectives of the moving party by removing the cloud on the title and permitting the property’s transfer. The moving party thus has obtained the relief that the trial court would have granted had it ruled on the motion. That is not to say, however, that statutory fees under section 405.38 are automatically awarded, only that statutory fees should not automatically be denied.”
A contrary rule would permit a party to file an improper lis pendens in a bid to force a settlement with little risk, frustrating the purpose of Sec. 405.38, the justice pointed out. In ruling on the fees issue, he said, it will be necessary for trial judges to evaluate the merits of the motion to expunge and decide whether the moving party would have prevailed had the lis pendens not been withdrawn.
Croskey noted that the underlying litigation was settled after the matter was argued before the Court of Appeal, so that the issue had become moot.
“Because this appeal, however, involves an issue of continuing public interest that is likely to recur, we exercise our inherent discretion to resolve the attorney fees issue raised in the Castros’ writ petition,” he said.
The case is Castro v. Superior Court (California Savings), B169401.
Copyright 2004, Metropolitan News Company