Metropolitan News-Enterprise


Thursday, June 19, 2008


Page 3


S.C. to Resolve Appellate Conflict Over Definition of ‘Prevailing Party




The California Supreme Court yesterday agreed to decide whether a plaintiff whose verdict is completely offset by prior settlements can be the “prevailing party” for the purpose of recovering costs.

The justices, at their weekly conference in San Francisco, voted 4-0 to review the Feb. 8 ruling of the Fourth District Court of Appeal, Div. Three, in Goodman v. Lozano, 159 Cal.App.4th 1313. Chief Justice Ronald M. George and Justices Kathryn M. Werdegar and Carol Corrigan were not at the conference and did not take part in the vote.

The case concerned the proper application of Code of Civil Procedure Sec. 1032, which provides in part that “[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,” and that:

“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....”

The Fourth District panel, in an opinion by Justice Eileen Moore, held that Orange Superior Court Judge Ronald L. Bauer properly awarded costs to defendants Jesus and Natalia Lozano and denied them to plaintiffs Randall Goodman and Linda Guinther.

Bauer, after a non-jury trial, concluded that Goodman and Guinther had suffered $146,00 in damages as a result of construction defects in a house they had purchased from the Lozanos. But when it was subsequently disclosed to the judge that other defendants had paid $230,00 in settlements, Bauer exercised his discretion to find that the Lozanos were the prevailing parties.

The judge reasoned that if the parties were asked how the trial came out, the defendants would probably have answered, “Great!  We don’t have to pay a thing,” while the plaintiffs would likely have said “Bad.  We didn’t get anything because the judge missed the point on our damages and got it all wrong.”  

Moore, writing for the Court of Appeal, acknowledged that Bauer’s ruling was inconsistent with Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, which was decided while Goodman and Guinther’s appeal was pending. In Wakefield, a divided Sixth District Court of Appeal held, under facts very similar to those of Goodman, that the plaintiffs—who were awarded less than $34,000 in damages after settling with other parties for nearly $100,000—were prevailing parties as a matter of law and that the trial judge had no discretion to rule otherwise.

Moore, however, concluded that the Sixth District and other courts that have reached similar rulings were wrong.

“The essential problem is that the Wakefield majority substituted its own words for the actual words in the statute,” the justice wrote. “The statute says ‘recovery.’  It does not say ‘award’ or ‘verdict.’”


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