[REVIEW GRANTED BY CAL. SUPREME COURT]
Monterey County Superior Court Superior Court No. M85528 Hon. Lydia Villarreal
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Henry Joachim Josefsberg for Plaintiff and Appellant.
Fenton & Keller and Christopher Edward Panetta for Defendant and Respondent.
Dismissal of a civil complaint is said to be voluntary when requested by the plaintiff and involuntary when ordered by the court. A dismissal may be
partial, as in this case, where plaintiff Maureen desaulles (Employee) agreed to dismiss two of her seven causes of action with prejudice in exchange for a payment of $23, 500 from defendant Community Hospital of the Monterey Peninsula (Employer). A civil judgment may also be described as voluntary when entered by stipulation or involuntary when entered by the court after either a judicial decision or a jury verdict.
When an action ends in any of these ways, if the parties have not otherwise agreed on who will pay the costs of litigation, one party may be deemed the prevailing party entitled to mandatory costs. In this appeal by Employee challenging a costs award to Employer, both sides claim entitlement to mandatory costs.
Mandatory costs are governed by Code of Civil Procedure section 1032. As revised in 1986 (Stats. 1986, ch. 377, §§ 5, 6, p. 1578), section 1032 states: “(b) 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.” Section 1032, subdivision (a)(4) (subdivision (a)(4)) provides a nonexclusive definition of “ ‘prevailing party, ’ ” listing four categories. Three of the categories apply only to defendants, namely “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.” (Subd. (a)(4).) Only one category ‒ “the party with a net monetary recovery” ‒ is applicable to both defendants and plaintiffs.
Employee characterizes Employer’s settlement payment to her as a net monetary recovery, while Employer says that settlement payments must be disregarded under Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175 [82 Cal.Rptr.3d 586] (Chinn). Without separately appealing, Employer contends that it is a defendant in whose favor a dismissal was entered, and also contends that, as the judgment provides that Employee “recover nothing, ” it is a defendant against whom Employee recovered no relief.
The trial court awarded costs of $12, 731.92 to Employer in the exercise of its discretion, as a trial court may do when costs are not mandatory. “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 ….” (Subd. (a)(4).)
This appeal requires us to determine whether either party was entitled to mandatory costs. As we will explain, the case ended in three stages without
a trial on the merits. Employer did not obtain a favorable dismissal of the action, but did obtain a judgment denying Employee relief. However, Employer obtained the judgment by making a settlement payment that can be considered a net monetary recovery by Employee. As section 1032 does not contemplate both sides prevailing, the trial court exercised discretion in awarding costs. We will reverse the order awarding costs to Employer and denying costs to Employee, determining that, since the parties’ settlement was silent regarding costs, Employer’s payment of $23, 500 triggered mandatory costs as a “net monetary recovery” under the plain language of the statute.
II. PROCEDURAL HISTORY
A. PREJUDGMENT PROCEEDINGS
Employee was hired in February 2005 as a part-time patient business services registrar. Employee began complaining about her work shift assignments to the emergency room in June 2005. Employer placed Employee on a leave of absence in January 2006 and terminated her employment in July 2006.
In July 2007, Employee filed a complaint alleging that Employer had: (1) failed to accommodate Employee’s physical disability or medical condition (susceptibility to infection as a result of cancer); (2) retaliated against Employee for exercising her rights under the California’s Fair Employment and Housing Act (Gov. Code, § 12900); (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 Employee in violation of public policy.
On August 1, 2008, the trial court entered a nine-page order ruling on Employer’s alternative motions for summary judgment or summary adjudication. The court denied summary judgment, but granted Employer’s motion for summary adjudication of the first cause of action alleging a failure to accommodate. The trial court found triable factual issues as to the remaining causes of action and denied summary adjudication of those claims.
Based on the summary adjudication, Employer filed several in limine motions. After hearing argument on September 2, 2008, the trial court orally granted motions in limine numbered 1, 8, and 11, specifically precluding argument by Employee “that [Employer] failed to accommodate [Employee’s] disability or to engage the interactive process or that [Employee] was harassed, discriminated or retaliated against in connection with any claims of failure to accommodate or failure to engage the interactive process, ” or “regarding
[Employee’s] safety complaints, retaliation on union issues … ” and excluding “evidence of discrimination or failure to accommodate or retaliation claims against [Employer] based on failure to accommodate or engage in the interactive process or make complaints about failure to accommodate or engage in the interactive process.”
At the conclusion of those rulings and before a jury panel was called, the parties placed the following settlement on the record: “[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 ….”
B. THE JUDGMENT AND POST-JUDGMENT COSTS CLAIMS
On October 6, 2008, pursuant to the settlement, Employee 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 which stated: “Having considered the arguments, oral and written, of all the parties, the records and file herein, and the pre-trial 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 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.”
Employee filed an appeal from the amended judgment, and this court affirmed the judgment in an unpublished opinion filed on June 29, 2011.
After this court issued a remittitur, Employer filed a memorandum in the trial court seeking costs of $11, 918.87. Employee filed a memorandum seeking costs of $14, 839.71 and a motion to strike Employer’s memorandum, asserting that Employer was not the prevailing party. Employer responded with a motion to strike Employee’s memorandum, asserting that Employee was not the prevailing party. Each side filed opposition to the other’s motion to tax costs.
After a hearing, the trial court stated, “The Court believes it can exercise its discretion in determining which party did prevail, and because [Employer] prevailed on significant causes of action and thereafter entered into a settlement on the remaining costs, the Court finds that [Employer] is the prevailing party.” The trial court awarded Employer costs of $12, 731.92, which added $813.05 to the amount sought in ...