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Department of Fair Employment and Housing v. Josefine Mayr et al

February 9, 2011

DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, PLAINTIFF AND APPELLANT,
v.
JOSEFINE MAYR ET AL., DEFENDANTS AND RESPONDENTS.



(Santa Cruz County Super. Ct. No. CV158709)

The opinion of the court was delivered by: Elia, J.

CERTIFIED FOR PUBLICATION

After a jury found in favor of the defendants in this housing discrimination action, the trial court ordered the plaintiff, the Department of Fair Employment and Housing (DFEH or Department), to pay the costs and attorney fees of the defendants, the owner of rental property and her property manager. DFEH appeals, contending that the court erroneously applied Code of Civil Procedure section 1028.5 as a sanction for pursuing a meritless action notwithstanding Government Code section 12989.2, which bars awards of litigation costs and fees either to or against a government agency in a housing discrimination action. We agree with DFEH that the latter statute governed the availability of costs and attorney fees in this case. We therefore must reverse the order.

Background*fn1

In June 2006 Ruben and Sandra Mendoza and their three children filed a complaint with DFEH, alleging discrimination based on national origin in the terms and conditions of their apartment rental. The Mendozas charged the apartment owner, Josefine Mayr, and the property manager, James Wilder, with "coercion, intimidation, and harassment" as well as the imposition on them of different terms and conditions from those accorded non-Hispanic tenants.*fn2 After investigating, DFEH found merit in the allegations, and on November 21, 2007, it filed a complaint in superior court alleging housing discrimination, intimidation, and harassment by the owner and property manager, in violation of Government Code sections 12955.7 and 12955, subdivisions (a), (c), and (f).

At the conclusion of the testimony before the jury, the court directed verdicts for respondents as to each of the real parties in interest except Ruben Mendoza, who was the only one for whom there was substantial evidence of damages. The court also directed a verdict for respondents on the second cause of action, in which DFEH had alleged multiple discriminatory statements made by Mayr.

According to the trial court's statement of decision,*fn3 the jurors unanimously found that no discrimination had occurred. At the court's request, the parties then briefed the question of whether the court had the authority to award costs and attorney fees. After receiving argument on the issue, the court rejected DFEH's reliance on Government Code section 12989.2 and ruled that such fees and costs were legally and factually permissible under Code of Civil Procedure section 1028.5. Accordingly, the court ordered DFEH to pay $7,500 to Mayr, $7,500 to Wilder, and $4,200 to Wilder Associates. This appeal followed.

Discussion

The issue before us is whether Code of Civil Procedure section 1028.5 authorized attorney fees and litigation costs to be granted to respondents notwithstanding Government Code section 12989.2 (hereafter, section 12989.2), which prohibits such an award to or against the state in a housing discrimination action.

Section 12989.2, subdivision (a), provides: "(a) In a civil action brought under Section 12989 or 12989.1, if the court finds that a discriminatory housing practice has occurred or is about to occur, the court may award the plaintiff or complainant actual and punitive damages and may grant other relief, including the issuance of a temporary or permanent injunction, or temporary restraining order, or other order, as it deems appropriate to prevent any defendant from engaging in or continuing to engage in an unlawful practice. The court may, at its discretion, award the prevailing party, other than the state, reasonable attorney's fees and costs, including expert witness fees, against any party other than the state." (Italics added.)

Code of Civil Procedure section 1028.5 provides, in relevant part: "(a) In any civil action between a small business or a licensee and a state regulatory agency, involving the regulatory functions of a state agency as applied to a small business or a licensee, if the small business or licensee prevails, and if the court determines that the action of the agency was undertaken without substantial justification, the small business or licensee may, in the discretion of the court, be awarded reasonable litigation expenses in addition to other costs. . . . [¶] (b) 'Reasonable litigation expenses' means any expenses not in excess of seven thousand five hundred dollars ($7,500) which the judge finds were reasonably incurred in opposing the agency action, including court costs, expenses incurred in administrative proceedings, attorney's fees, witness fees of all necessary witnesses, and such other expenses as were reasonably incurred."*fn4

In rejecting DFEH's claim that section 12989.2 precluded an award of costs and attorney fees, the trial court reasoned that this statute "precludes awarding attorney fees against the State if such an award is made on the basis of prevailing party status. It does not specifically preclude an award based on another basis. This Court is awarding some costs and fees but not based on prevailing party status. Code of Civil Procedure § 1028.5 is a more specific statute than Government Code §12989.2(a) and it does allow an award of fees and costs, up to $7,500, when the preconditions are met. The Court finds that they have been." Specifically, the court found that DFEH was a regulatory agency, that the action against respondents "involved its regulatory functions," and that it had brought this action without "substantial justification," within the meaning of Code of Civil Procedure section 1028.5.

The parties primarily focus on two questions: (1) Which of the two statutes applies in this case? and (2) Did this action involve a regulatory agency exercising regulatory functions? The second question, of course, is relevant only if the answer to the first is that Code of Civil Procedure section 1028.5 prevails over section 12989.2.

DFEH maintains that section 12989.2 and Code of Civil Procedure section 1028.5 are in conflict and cannot be harmonized. Looking to the rules applicable to irreconcilable statutes, DFEH argues that section 12989.2, as the more recently enacted and more specific statute, "must be read as an exception to the more general statute." Thus, the Department argues, the court had ...


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