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Court of Appeal:
Judge Has Power to Make Interim Award of Attorney Fees
Panel Holds Judgment Creditor Bringing Action to Enforce Judgment Need Not Attain Status of Prevailing Party in Second Lawsuit to Qualify, Under Code of Civil Procedure §685.040, for Grant of Fees, Costs
By a MetNews Staff Writer
A Westlake Village corporation that won a $477,075.71 default judgment in 2019, then brought a second action in 2020 to enforce the first judgment, was entitled to an award of attorney fees and costs in 2022 based on its litigation efforts in the second suit even though it had not yet succeeded, Div. One of the Fourth District Court of Appeal has held.
The opinion by Acting Presiding Justice Richard D. Huffman was filed Feb. 26 and certified for publication on Friday. It reverses an order by San Diego Superior Court Judge Ronald F. Frazier taxing costs.
Judgment creditor G.F. Galaxy Corporation sought attorney fees and costs amounting to $276,643.72. Frazier held that Galaxy’s claim was premature because it had not yet prevailed in its action to enforce a judgment in which it was seeking to block allegedly fraudulent transfers.
Galaxy’s motion was pursuant to Code of Civil Procedure §685.040 which provides:
“The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorney’s fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law. Attorney’s fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney’s fees to the judgment creditor….”
The 2019 award included attorney fees.
Huffman’s Opinion
Huffman wrote:
“On its face, section 685.040 does not require the judgment creditor to be the prevailing party. Section 685.040 provides only that ‘[t]he judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment.’ It does not include additional language specifying that such enforcement efforts must be concluded or successful. Nor does it contain language we find ambiguous relating to this issue such that resort to extrinsic evidence is necessary to determine the legislative intent….”
He went on to say:
“We see no reason why a court could not assess whether interim costs of enforcing a judgment are reasonable and necessary just as adeptly as it could evaluate final costs. Therefore, we conclude the Legislature did not intend section 685.040 to include a prevailing party requirement.”
CCP §685.070(b)
The justice pointed to Code of Civil Procedure §685.070(b) which says:
“Before the judgment is fully satisfied but not later than two years after the costs have been incurred, the judgment creditor claiming costs under this section shall file a memorandum of costs with the court clerk and serve a copy on the judgment debtor.”
Huffman noted:
“If we were to require the creditor to wait more than two years until it obtained a judgment in the enforcement case, it would waive its right to attorney fees for that time period under section 685.070. Such an interpretation, which incentivizes delay tactics by a debtor who has already resisted paying a debt, cannot be the intent of the Legislature.”
He commented:
“[A] cost memorandum filed after the judgment is fully satisfied is barred….Thus, the trial court’s logic would leave the creditor in the untenable position of having to quickly file its cost memorandum in the small window between when it obtained a judgment in the enforcement action and when the debtor complied with that judgment or be forever barred from recovering its fees and costs. And again, the creditor would still lose out on fees and costs in this scenario if it took more than two years to secure a judgment in the enforcement action.”
Dismissal of Appeal
The judgment debtor, Phuoc Lee Johnson, argued that because the judgment has now been paid in full, the appeal must be dismissed. But, Huffman noted, the judgment was satisfied after Galaxy filed its cost memorandum, reasoning:
“Johnson knew the amount he paid did not constitute the full amount of the judgment Galaxy sought and that the appeal remained pending, but nonetheless apparently took a gamble on attempting to manufacture a scenario that would allow him to extricate himself from potential liability for hundreds of thousands of dollars in attorney fees and costs before final resolution of the appeal.”
The case is G.F. Galaxy v. Johnson, 2024 S.O.S. 935.
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