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Document(1) 1. Wakefield v. Bohlin, 145 Cal. App. 4th 963

Client/matter: FR-007

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Wakefield v. Bohlin Court of Appeal of California, Sixth Appellate District

December 15, 2006, Filed H028310

Reporter: 145 Cal. App. 4th 963; 52 Cal. Rptr. 3d 400; 2006 Cal. App. LEXIS 1945; 2006 Cal. Daily Op. Service 11499; 2006 Daily Journal DAR 16330

including negligence, negligent misrepresenta-tion, fraud, developers’ strict liability, and

RONALD WAKEFIELD, Plaintiff and Appel-lant, v. JEFF BOHLIN et al., Defendants and Respondents.

Subsequent History: Review denied by, Re-quest denied by Wakefield v. Bohlin, 2007 Cal. LEXIS 2079 (Cal., Mar. 14, 2007)

Prior History: [***1] Santa Clara County Superior Court, No. CV808361, Leslie C. Nich-ols, Judge. Wakefield v. Bohlin, 2006 Cal. LEXIS 5722 (Cal., May 10, 2006)

Core Terms

prevailing party, trial court, attorney’s fees, settlement, the, prevail, offset, net monetary recovery, mediate, prong, monetary, matter of right, zero, cause of action, categorically,recovery, apportion, indirect, arbitrate, misrepresent, tortfeasor, seller, net, award of attorney’s fees, discretionary, contractual, prevailing, buyback, fink, unity

Case Summary

Procedural PosturePlaintiff home buyer appealed a post-judgment order entered by the Santa Clara County Su-perior Court, California, awarding attorney fees and costs to defendant home sellers, a hus-band and wife, based on the trial court’s deter-mination that they were prevailing parties in the buyer’s action that alleged causes of action

breach of implied warranty.

OverviewOn the negligent misrepresentation claim, the jury exonerated the wife seller but found against the husband seller and in favor of the buyer, and it awarded the buyer damages. The buyer ar-gued he was a prevailing party entitled to his costs under Code Civ. Proc., § 1032. The court held that, under the first prong of § 1032,subd. (a)(4), the buyer categorically qualified as the prevailing party because he obtained a net monetary recovery, which entitled him to an award of litigation costs as a matter of right. Code Civ. Proc., §§ 1021 and 1033.5, com-bined with the parties’ contract, providedthat the buyer’s costs included reasonable attor-ney fees. By contrast, the wife seller was gov-erned by the second prong of § 1032, subd.(a)(4). Although the jury exonerated her, she was not entitled to costs as a matter of right be-cause of her unity of interest with the husband seller. The two were represented by the same attorney, filed a joint answer to the buyer’s com-plaint, and joined in the same motions and re-sponses. Any cost award in her favor was dis-cretionary with the trial court and subject to apportionment. Under the parties’ contract, she was also not entitled to attorney fees.

OutcomeThe court reversed the order and remanded the matter to the trial court, instructing it to find that the buyer was the prevailing party and award him costs, including attorney fees in an

Page 2 of 31145 Cal. App. 4th 963, *963; 52 Cal. Rptr. 3d

amount within its discretion. The trial court was to exercise its discretion to award or deny costs to the wife seller, and, if awarded, to ap-portion any costs she incurred jointly with the husband seller. It was not to award attorney fees to the wife seller.

LexisNexis® Headnotes

Civil Procedure > ... > Costs & Attorney Fees > Costs > General Overview

HN1 The right to recover costs is wholly depen-dent on statute.


HN2 See Code Civ. Proc., § 1032, subd.(a)(4).


HN3 See Code Civ. Proc., § 1032, subd. (b).

Civil Procedure > ... > Costs & Attorney Fees > Attor-ney Fees & Expenses > General Overview

HN4 Attorney fees are allowable as costs, but only if they are authorized by law or by con-tract. Code Civ. Proc., §§ 1033.5, subd. (a)(10), 1021. Thus, recoverable litigation costs do include attorney fees, but only when the party entitled to costs has a legal basis, in-dependent of the cost statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees.


HN5 If a contractual attorney fee provision is phrased broadly enough, it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims. But different statutes govern recov-ery of fees in the two types of actions.

Civil Procedure > ... > Attorney Fees & Ex-penses > Basis of Recovery > Statutory Awards Contracts Law > Remedies > General Overview

400, **400; 2006 Cal. App. LEXIS 1945, ***1

HN6 In contract actions, Civ. Code, § 1717, gov-erns attorney fee agreements. Section 1717 is

the applicable statute when determining whether and how attorney fees should be awarded un-der a contract. Under § 1717, as a general rule,

the party prevailing on the contract shall bethe party who recovered a greater relief in the ac-tion on the contract. Civ. Code, § 1717, subd.(b)(1). But the statute also allows the court to de-termine that there is no party prevailing onthe contract for purposes of the section. Nota-bly, however, § 1717 has a limited application. It covers only contract actions, where the theory of the case is breach of contract, and where the contract sued upon itself specifically provides for an award of attorney fees incurred to en-force that contract. Thus, it has been held,that section would not govern where - for ex-ample - the buyers initially sued for breach of contract, but they did not go to trial on that ba-sis and instead limited their action to fraud and negligent misrepresentation.

Civil Procedure > ... > Attorney Fees & Ex-penses > Basis of Recovery > Statutory Awards

HN7 For attorney fee awards when the claim is not on the contract, the California Code of Civil Procedure governs. Code Civ. Proc., §§

1021 and 1033.5, are the relevant provisions.


HN8 See Code Civ. Proc., § 1021.


HN9 See Code Civ. Proc., § 1033.5, subd.(a)(10).


HN10 Under some circumstances, attorney fees may be recovered under the California Code of Civil Procedure, even when they are pre-cluded under Civ. Code, § 1717. The argument

has been rejected that attorney fees incurred to litigate tort or other noncontract claims, which


are outside the scope of § 1717, may never be re-covered as costs under a contractual attorney fee provision. Thus, even where a litigant does not qualify as a party prevailing on the con-tract under § 1717 - for example, when there has been a voluntary dismissal - that circumstance does not affect the right to recover as costs the attorney fees incurred in defense of the tortclaims. Because § 1717 does not apply to those claims, it does not bar recovery of attorneyfees that were incurred in litigation of those claims and that are otherwise recoverable as a matter of contract law. But Code Civ. Proc., § 1021, does not independently authorize recov-ery of attorney fees. Rather, consistent with Code Civ. Proc., § 1033.5, subd. (a)(10), §1021 recognizes that attorney fees incurred in prosecuting or defending an action may be re-covered as costs only when they are other-wise authorized by statute or by the parties’ agreement.


HN11 The statutory definition of prevailing party contains two sentences, each representing a separate definitional prong. Code Civ. Proc., § 1032, subd. (a)(4). Section 1032 splits prevailing parties into two distinct groups: those specified in the four categories contained in the first sentence of § 1032, subd. (a)(4), and those who are within a trial court’s discre-tion as defined in the second sentence of § 1032, subd. (a)(4).


HN12 A trial court has no discretion to deny pre-vailing party status to a litigant who fallswithin one of the four statutory categories in the first prong of Code Civ. Proc., § 1032, subd. (a)(4). Section 1032 declares that costs are available as a matter of right when the prevail-ing party is within one of the four categories designated by statute. Code Civ. Proc., § 1032, subds. (a)(4), (b). A party meeting any one of these four definitions is the prevailing party as a matter of right under § 1032, subd. (b).

400, **400; 2006 Cal. App. LEXIS 1945, ***1


HN13 Under the first category of Code Civ. Proc., § 1032, subd. (a)(4), a trial court must award reasonable and reasonably necessary costs to a party who has obtained a net monetary re-covery. A litigant with a straightforward netmonetary recovery falls squarely within the first statutory definition and thus qualifies categori-cally as a prevailing party. When there is aparty with a net monetary recovery (one of the four categories of prevailing party), thatparty is entitled to costs as a matter of right; the trial court has no discretion to order each party to bear his or her own costs. In contrast to the first category, which applies to any party, the other three categories affect defendants only. As with the first category, however, a determi-nation of prevailing party status generally is automatic for a defendant who falls within any of them. Prevailing party status is non-discretionary under the third categorical defini-tion, which applies when neither plaintiff nor defendant obtains any relief. The same is also true with respect to the fourth definitional cat-egory of prevailing party, which specifies a de-fendant as against those plaintiffs who do not recover any relief against that defendant. Sec-tion 1032, subd. (a)(4). Generally speaking,under any of these three sets of circumstances, the defendant categorically qualifies as theprevailing party.

Civil Procedure > Judicial Officers > Judges > Discre-tionary PowersCivil Procedure > ... > Costs & Attorney Fees > Costs > General Overview

HN14 The second prong of the statutory defini-tion in Code Civ. Proc., § 1032, subd. (a)(4), provides for situations not described in the first prong. Where the prevailing party is one not specified, § 1032, subd. (a)(4), permits a trial court to determine the prevailing party and then allow costs or not, or to apportion costs, in its discretion. The statute requires the trial court to determine which party is prevailing and then exercise its discretion in awarding costs. The second prong of the statute thus permits a rul-ing ordering each side to pay its own costs,


even where appellants were without question the prevailing parties - having sought and ob-tained non-monetary declaratory relief. Thisprong of the statute thus calls for the trial court to exercise its discretion both in determining the prevailing party and in allowing, denying, or apportioning costs. It operates as an expressstatutory exception to the general rule that a pre-vailing party is entitled to costs as a matter of right. Section 1032, subd. (b).

Civil Procedure > ... > Costs & Attorney Fees > Attor-ney Fees & Expenses > General OverviewCivil Procedure > Appeals > Standards of Re-view > Abuse of DiscretionCivil Procedure > Appeals > Standards of Re-view > De Novo Review

HN15 On review of an award of attorney fees af-ter trial, the normal standard of review isabuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for anaward of attorney fees and costs in this context have been satisfied amounts to statutory con-struction and a question of law. On the other hand, depending on the circumstances of the case, the prevailing party determination, the cost award, or both may be committed to the trial court’s discretion. In such cases, an appellate court reviews the trial court’s determinationfor an abuse of discretion.

Civil Procedure > ... > Costs & Attorney Fees > Costs > General OverviewTorts > Procedural Matters > Multiple Defen-dants > Joint & Several LiabilityTorts > ... > Settlements > Releases From Liabil-ity > Validity

HN16 Under Code Civ. Proc., § 877, a release given in good faith before verdict or judg-ment to one or more of a number of tortfeasors claimed to be liable for the same tort shall re-duce the claims against the others in the amount stipulated by the release or in the amount of the consideration paid for it whichever is the greater. Section 877 thus requires that a judg-ment be reduced by amounts paid by settling joint tortfeasors. Where a plaintiff’s settlement completely offsets the damages assessedagainst a nonsettling joint tortfeasor, it reduces

400, **400; 2006 Cal. App. LEXIS 1945, ***1

the judgment to zero by operation of law. The purpose of this legislation is to provide for eq-uitable sharing of damages among the parties at fault and to encourage settlement. In addi-tion, the offset provided for in § 877 assures that a plaintiff will not be enriched unjustly by a double recovery, collecting part of his total claim from one joint tortfeasor and all of his claim from another. But a plaintiff does not get double recovery when obtaining costs from a remaining defendant, unless the plaintiff’s com-promise agreement with the joint tortfeasorcovers costs of pursuing the action against the remaining defendant.

Civil Procedure > Settlements > General Overview

HN17 Beyond promoting equitable sharing, en-couraging settlement, and guarding againstdouble recovery, the good faith settlement stat-utes embody another important public policy: the maximization of recovery to the plaintiff for the amount of injury to the extent that negli-gence or fault of others has contributed to it.


HN18 The first part of the statutory phrase “net monetary” in Code Civ. Proc., § 1032, subd. (a)(4), comes into play in situations when par-ties on both sides of the litigation have dam-age claims against each other. Thus, when a plaintiff and a defendant have competing mon-etary claims, then the party in whose favorthe net amount is due qualifies as the prevail-ing party, the party with a net monetary recov-ery. Thus, for example, where defendantshave dismissed their cross-complaint, leaving the plaintiff as the only party seeking damages, any award in the plaintiff’s favor qualifies as a net monetary recovery. The second part of the statutory phrase in § 1032, subd. (a)(4), is re-covery. As generally understood, the term “re-covery” is broad enough to encompass anydamage award. The words “recovery” or “recov-ered” have the common connotation of repre-senting the entirety of a sum obtained by pro-cess and course of law, which includessettlement.



HN19 The party with the net monetary recov-ery is determined by comparing the competing damage claims on both sides of the litigation. If both sides have claims, whichever party ob-tains the most money from the other prevails. If only one party has damage claims, any suc-cess in pressing those claims against the los-ing party results in a net award.


HN20 As used in Code Civ. Proc., § 1032, subd. (a)(4), “net monetary recovery” is deter-mined after netting out any competing dam-age claims as between a plaintiff and a defen-dant, without regard to settlements or other contributions from unrelated defendants orfrom other parties.

Civil Procedure > Settlements > General Overview Civil Procedure > ... > Costs & AttorneyFees > Costs > General Overview

HN21 Settlements by other parties and corre-sponding offsets do not affect a prevailing party determination.


HN22 When a jury verdict results in a damage award for one litigant, that party has obtained a net monetary recovery for purposes of the pre-vailing party determination under Code Civ. Proc., § 1032, even if the judgment is later re-duced to zero as a result of offsets for good faith settlements under Code Civ. Proc., § 877.


HN23 One defendant who prevails may re-cover costs even though the plaintiff recoversagainst another defendant. However, there is an exception: in those instances in which several defendants are united in interest or join in mak-ing the same defenses in the same answer, the

400, **400; 2006 Cal. App. LEXIS 1945, ***1

prevailing defendant definition in Code Civ. Proc., § 1032, subd. (a)(4), does not apply and the defendant against whom the plaintiff doesnot recover is not entitled to costs as a matter of right. Instead the allowance or disallowanceof costs to the prevailing defendant lies within the sound discretion of the trial court, asdoes the apportionment of those costs, if al-lowed. Where one of multiple, jointly repre-sented defendants presenting a unified defense prevails in an action, the trial court has dis-cretion to award or deny costs to that party.


HN24 Factually, the unity of interest principle has been applied where, for example, the los-ing defendant was a company associated with the winning defendants. It has also been ap-plied where the losing defendant was a prop-erty owner and the winning defendant was her agent.


HN25 A key consideration in a trial court’s ex-ercise of discretion is the necessity for theclaimed costs. A prevailing party is entitled to re-cover only those costs actually incurred bythat party or on that party’s behalf in prosecut-ing or defending the action. When a prevail-ing party has incurred costs jointly with one or more other parties who are not prevailing par-ties for purposes of an award of costs, the judge must apportion the costs between the parties. A related factor is fairness. Yet another perti-nent consideration is whether the partiesachieved their principal litigation objectives. A plaintiff’s litigation objectives may beachieved through settlement with some defen-dants, even where others escape liability; at the same time, such settlement also may advance the objectives of non-settling defendants by re-ducing their liability.



HN26 Under Code Civ. Proc., §§ 1021 and 1033.5, attorney fees incurred in prosecuting or defending an action may be recovered as costs only when they are otherwise authorized by statute or by the parties’ agreement.

Civil Procedure > Appeals > Standards of Re-view > De Novo ReviewContracts Law > Contract Interpretation > General Overview

HN27 Where extrinsic evidence has not been of-fered to interpret a contract, and the facts are not in dispute, such review is conducted de novo. In the absence of evidence to the contrary, a re-viewing court assumes that the parties under-stood the term “prevailing party” in its ordi-nary or popular sense.

Civil Procedure > ... > Costs & Attorney Fees > Attor-ney Fees & Expenses > Reasonable Fees

HN28 A trial court has broad authority to deter-mine the amount of a reasonable fee.

Headnotes/Syllabus

SummaryCALIFORNIA OFFICIAL REPORTS SUM-MARY

The trial court made a postjudgment award of at-torney fees and costs to two home sellers, ahusband and wife, based on its determination that they were prevailing parties in the buyer’s action that alleged causes of action including negligence, negligent misrepresentation, fraud, developers’ strict liability, and breach of im-plied warranty. On the cause of action for neg-ligent misrepresentation, the jury exonerated the wife seller but found against the husband seller and in favor of the buyer on that claim, and it awarded the buyer damages. The buyer as-serted that he was a prevailing party entitled to his costs as a matter of right under Code Civ. Proc., § 1032. (Superior Court of Santa Clara County, No. CV808361, Leslie C. Nichols,Judge.)

The Court of Appeal reversed the order and re-manded the matter to the trial court for fur-

400, **400; 2006 Cal. App. LEXIS 1945, ***1

ther proceedings. The court held that the trial court erred in finding that the husband seller was a prevailing party. Under the first prong of Code Civ. Proc., § 1032, subd. (a)(4), the buyer categorically qualified as the prevailing party because he obtained a net monetary recovery, which entitled him to an award of litigationcosts as a matter of right. Code Civ. Proc., §§ 1021 and 1033.5, combined with the parties’ contract, provided that the buyer’s costs in-cluded reasonable attorney fees. By contrast, the wife seller was governed by the second prong of § 1032. Although the jury exonerated her, she

was not entitled to costs as a matter of right be-cause of her unity of interest with the hus-band seller. The two were represented by the same attorney, filed a joint answer to the buy-er’s complaint, and joined in the same motions and responses. For that reason, the categorical prevailing party definition did not apply to the wife seller. Any cost award in her favor was discretionary with the trial court and subject to apportionment. Furthermore, under the par-ties’ contract, she was not entitled to attorney fees. Neither the husband seller nor the wife seller had any claims against the buyer.Thus, it was not a situation where both sides were victorious on competing claims. (Opinion by McAdams, J., with Elia, Acting P. J., con-curring. Dissenting opinion by Mihara, J. (see p. 990).) [*964]

HeadnotesCALIFORNIA OFFICIAL REPORTS HEAD-NOTESClassified to California Digest of Official Re-ports

CA(1) (1)Costs § 2 > Right to Costs.

The right to recover costs is wholly dependent on statute.

CA(2) (2)Costs § 1 > Prevailing Party Determinations > Matter of Right.

Code Civ. Proc., § 1032, defines prevailing party for purposes of an award of litigation costs.


Under § 1032, the prevailing party in litigation is entitled to costs. In the absence of evi-dence to the contrary, a court will assume that the parties understood the term “prevailingparty” in its ordinary or popular sense. The statu-tory definition of prevailing party containstwo sentences, each representing a separate defi-nitional prong ( Code Civ. Proc., § 1032, subd. (a)(4)). Section 1032 splits prevailing par-ties into two distinct groups: those specified in the four categories contained in the first sen-tence of § 1032, subd. (a)(4), and those who

are within a trial court’s discretion as defined in the second sentence of § 1032, subd. (a)(4).A trial court has no discretion to deny prevail-ing party status to a litigant who falls within one of the four statutory categories in the first prong of § 1032, subd. (a)(4). Section 1032 de-clares that costs are available as a matter ofright when the prevailing party is within one of the four categories designated by statute( Code Civ. Proc., § 1032, subds. (a)(4), (b)). A party meeting any one of these four defini-tions is the prevailing party as a matter of right under § 1032, subd. (b).

CA(3) (3)Costs § 13 > Attorney Fees > When Allow-able > Authorized by Law or Contract.

Attorney fees are allowable as costs, but only if they are authorized by law or by contract ( Code Civ. Proc., §§ 1033.5, subd. (a)(10), 1021). Thus, recoverable litigation costs do in-clude attorney fees, but only when the party entitled to costs has a legal basis, independent of the cost statutes and grounded in an agree-ment, statute, or other law, upon which toclaim recovery of attorney fees. For attorney fee awards when the claim is not on the con-tract, the Code of Civil Procedure governs. Sec-tions 1021 and 1033.5 are the relevant provi-sions.

CA(4) (4)Costs § 25 > Attorney Fees > Contract Provi-sions > Action Alleging Both Contract and Tort Claims.

If a contractual attorney fee provision is phrased broadly enough, it may support anaward of attorney fees to the prevailing party

400, **400; 2006 Cal. App. LEXIS 1945, ***1

in an action alleging both contract and tort claims. But different statutes govern recovery of fees in the two types of actions.

CA(5) (5)Costs § 25 > Attorney Fees > Contract Provi-sions > Prevailing Party.

In contract actions, Civ. Code, § 1717, governs

attorney fee agreements. Section 1717 is the applicable statute when determining whether and how attorney fees should be awarded under a contract. Under § 1717, as a general rule, the party prevailing on the contract shall be theparty who recovered a greater relief in the ac-tion on the contract ( Civ. Code, § 1717, subd.(b)(1)). But the statute also allows the court to determine that there is no party prevailing on the contract for purposes of the section. Nota-bly, however, § 1717 has a limited application. It covers only contract actions, where the theory of the case is breach of contract, and where the contract sued upon itself specifically provides for an award of attorney fees incurred to en-force that contract. Thus, it has been held, that section would not govern where—for ex-ample—the buyers initially sued for breach of contract, but they did not go to trial on that ba-sis and instead limited their action to fraud and negligent misrepresentation.

CA(6) (6)Costs § 20 > Attorney Fees > Other Particular Statu-tory Provisions > Recovery Under Code of Civil Pro-cedure Where Precluded Under Another Statute.

Under some circumstances, attorney fees may be recovered under the Code of Civil Proce-dure, even when they are precluded under Civ. Code, § 1717. The argument has been re-jected that attorney fees incurred to litigate tort or other noncontract claims, which are out-side the scope of § 1717, may never be recov-ered as costs under a contractual attorney fee provision. Thus, even where a litigant does not qualify as a party prevailing on the contract un-der § 1717—for example, when there has been a voluntary dismissal—that circumstance does not affect the right to recover as costs the attor-ney fees incurred in defense of the tortclaims. Because § 1717 does not apply to those claims, it does not bar recovery of attor-


ney fees that were incurred in litigation of those claims and that are otherwise recoverable as a matter of contract law. But Code Civ. Proc., § 1021, does not independently autho-rize recovery of attorney fees. Rather, consis-tent with Code Civ. Proc., § 1033.5, subd. (a)(10), § 1021 recognizes that attorney fees in-curred in prosecuting or defending an action may be recovered as costs only when they are oth-erwise authorized by statute or by the parties’ agreement.

CA(7) (7)Costs § 1 > Prevailing Party Determinations > Net Mon-etary Recovery.

Under the first category of Code Civ. Proc., § 1032, subd. (a)(4), a trial court must award rea-sonable and reasonably necessary costs to aparty who has obtained a net monetary recov-ery. A litigant with a straightforward net mon-etary recovery falls squarely within the first statutory definition and thus qualifies categori-cally as a prevailing party. When there is aparty with a net monetary recovery (one of the four categories of prevailing party), thatparty is entitled to costs as a matter [*966] of right; the trial court has no discretion to order each party to bear his or her own costs. In con-trast to the first category, which applies toany party, the other three categories affect de-fendants only. As with the first category, how-ever, a determination of prevailing party sta-tus generally is automatic for a defendant who falls within any of them. Prevailing party sta-tus is nondiscretionary under the third categori-cal definition, which applies when neitherplaintiff nor defendant obtains any relief. The same is also true with respect to the fourth defi-nitional category of prevailing party, whichspecifies a defendant as against those plaintiffs who do not recover any relief against that de-fendant ( § 1032, subd. (a)(4)). Generally speak-ing, under any of these three sets of circum-stances, the defendant categorically qualifies as the prevailing party.

CA(8) (8)Costs § 1 > Prevailing Party Determinations > Trial Court’s Discretion.

400, **400; 2006 Cal. App. LEXIS 1945, ***1

The second prong of the statutory definition in Code Civ. Proc., § 1032, subd. (a)(4), pro-vides for situations not described in the first prong. Where the prevailing party is one not specified, § 1032, subd. (a)(4), permits a trial court to determine the prevailing party andthen allow costs or not, or to apportion costs, in its discretion. The statute requires the trial court to determine which party is prevailing and then exercise its discretion in awardingcosts. The second prong of the statute thus per-mits a ruling ordering each side to pay itsown costs, even where appellants were without question the prevailing parties—havingsought and obtained nonmonetary declaratory relief. This prong of the statute thus calls for the trial court to exercise its discretion both in de-termining the prevailing party and in allow-ing, denying, or apportioning costs. It operates as an express statutory exception to the gen-eral rule that a prevailing party is entitled to costs as a matter of right ( § 1032, subd. (b)).

CA(9) (9)Compromise, Settlement, and Release § 9 > Re-lease > Construction, Operation, and Effect > Settling and Nonsettling Joint Tortfeasors.

Under Code Civ. Proc., § 877, a release given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort shall reduce the claims against the others in the amount stipulated by the release or in the amount of the consider-ation paid for it whichever is the greater. Sec-tion 877 thus requires that a judgment be re-duced by amounts paid by settling jointtortfeasors. Where a plaintiff’s settlement com-pletely offsets the damages assessed against a nonsettling joint tortfeasor, it reduces the judg-ment to zero by operation of law. The pur-pose of this legislation is to provide for equi-table sharing of damages among the parties at fault and to encourage settlement. In addi-tion, the offset provided for in § 877 assures that a plaintiff will not be enriched unjustly by a double recovery, collecting part of his orher total claim from one joint tortfeasor and all of his or [*967] her claim from another. But

a plaintiff does not get double recovery when ob-taining costs from a remaining defendant, un-


less the plaintiff’s compromise agreement with the joint tortfeasor covers costs of pursuingthe action against the remaining defendant. Be-yond promoting equitable sharing, encourag-ing settlement, and guarding against double re-covery, the good faith settlement statutesembody another important public policy: the maximization of recovery to the plaintiff for the amount of injury to the extent that negligence or fault of others has contributed to it.

CA(10) (10)Costs § 1 > Prevailing Party Determinations > Net Mon-etary Recovery.

The first part of the statutory phrase “net mon-etary” in Code Civ. Proc., § 1032, subd.(a)(4), comes into play in situations when par-ties on both sides of the litigation have dam-age claims against each other. Thus, when a plaintiff and a defendant have competing mon-etary claims, then the party in whose favorthe net amount is due qualifies as the prevail-ing party, the party with a net monetary recov-ery. If only one party has damage claims, any success in pressing those claims against the los-ing party results in a net award. Thus, for ex-ample, where defendants have dismissed their cross-complaint, leaving the plaintiff as theonly party seeking damages, any award in the plaintiff’s favor qualifies as a net monetary re-covery. The second part of the statutoryphrase in § 1032, subd. (a)(4), is recovery. As generally understood, the term “recovery” is broad enough to encompass any damageaward. The words “recovery” or “recovered” have the common connotation of representing the entirety of a sum obtained by process and course of law, which includes settlement. As used in § 1032, subd. (a)(4), “net monetary re-covery” is determined without regard to settle-ments or other contributions from unrelated de-fendants or from other parties.

CA(11) (11)Costs § 1 > Prevailing Party Determinations > Effect of Settlements by Other Parties.

Settlements by other parties and corresponding offsets do not affect a prevailing party deter-mination. When a jury verdict results in a dam-

400, **400; 2006 Cal. App. LEXIS 1945, ***1

age award for one litigant, that party has ob-tained a net monetary recovery for purposes of the prevailing party determination under Code Civ. Proc., § 1032, even if the judgment is later reduced to zero as a result of offsets for good faith settlements under Code Civ. Proc., § 877.

CA(12) (12)Costs § 1 > Prevailing Party Determinations > Effect of Defendants’ Unity of Interest > Trial Court’s Dis-cretion.

One defendant who prevails may recover costs even though the plaintiff recovers against an-other defendant. However, there is an excep-tion: In those instances in which several de-fendants are united in interest or join in making the [*968] same defenses in the same an-swer, the prevailing defendant definition in Code Civ. Proc., § 1032, subd. (a)(4), does not ap-ply and the defendant against whom the plain-tiff does not recover is not entitled to costsas a matter of right. Instead the allowance or dis-allowance of costs to the prevailing defendant lies within the sound discretion of the trial court, as does the apportionment of those costs, if al-lowed. Where one of multiple, jointly-represented defendants presenting a unified de-fense prevails in an action, the trial court has discretion to award or deny costs to that party. Factually, the unity of interest principle hasbeen applied where, for example, the losing de-fendant was a company associated with thewinning defendants. It has also been applied where the losing defendant was a property owner and the winning defendant was his or heragent.

CA(13) (13)Costs § 1 > Prevailing Party Determina-tions > Necessity for Claimed Costs > Fair-ness > Apportionment Between Parties.

A key consideration in a trial court’s exercise of discretion is the necessity for the claimed costs. A prevailing party is entitled to re-cover only those costs actually incurred by that party or on that party’s behalf in prosecuting or defending the action. When a prevailing party has incurred costs jointly with one or moreother parties who are not prevailing parties for


purposes of an award of costs, the judge must ap-portion the costs between the parties. A re-lated factor is fairness. Yet another pertinent con-sideration is whether the parties achievedtheir principal litigation objectives. A plain-tiff’s litigation objectives may be achieved through settlement with some defendants, even where others escape liability; at the sametime, such settlement also may advance the ob-jectives of nonsettling defendants by reducing their liability.

CA(14) (14)Costs § 1 > Prevailing Party Determinations > Net Mon-etary Recovery > Defendants’ Unity of Interest.

Under the first prong of Code Civ. Proc., § 1032, subd. (a)(4), a home buyer categorically qualified as the prevailing party in litigation against the sellers, a husband and wife, be-cause he obtained a net monetary recovery, which entitled him to an award of litigation costs as a matter of right. Code Civ. Proc., §§1021 and 1033.5, combined with the parties’ contract, provided that the buyer’s costs in-cluded reasonable attorney fees. By contrast, the wife was governed by the second prong of § 1032. Although the jury exonerated her, she was not entitled to costs as a matter of right be-cause of her unity of interest with her husband, who the jury had found against. Any costaward in her favor was discretionary with the trial court and subject to apportionment. Further-more, under the parties’ contract, she was not entitled to attorney fees.

[7 Witkin, Cal. Procedure (4th ed. 1997) Judg-ment, §§ 90, 91, 94.]

Counsel: Jeffrey P. Widman and Timothy D. Widman for Plaintiff and Appellant.

Law Offices of Edward P. Mathewson, EdwardP. Mathewson; Ropers, Majeski, Kohn & Bent-ley, Mark G. Bonino and Theresa M. Biagini for Defendants and Respondents.

Judges: McAdams, J., with Elia, Acting P. J.,

400, **400; 2006 Cal. App. LEXIS 1945, ***1

concurring. Dissenting opinion by Mihara, J.

Opinion by: McADAMS

Opinion

[**403] McADAMS, J.—This is the second appeal in this civil action, which was brought by plaintiff Ronald Wakefield following his pur-chase of a home from defendants Jeff and Char-lotte Bohlin. In Wakefield’s first appeal, we af-firmed the trial court’s disposition of threecauses of action in the Bohlins’ favor, two by summary adjudication and one by nonsuit. In this appeal, Wakefield contests the trialcourt’s postjudgment award of attorney fees and costs to the Bohlins, which was based onthe court’s determination that they were prevail-ing parties.

We conclude that the trial court erred. As we ex-plain: (1) Plaintiff Ronald Wakefield categori-cally qualifies as a prevailing party, and he is en-titled to recover his litigation costs, including attorney fees. (2) Defendant Jeff Bohlin is not a prevailing party, and he may not [***2] re-cover costs or fees. (3) Because of the Boh-lins’ unity of interest in this litigation, Char-lotte Bohlin is not categorically a prevailing party, and any cost award in her favor is discre-tionary and subject to apportionment; more-over, she is not entitled to recover attorney fees. We therefore reverse the order awarding costs and fees, and we remand the matter to the trial court for further proceedings.

BACKGROUND1

FactsIn 1999, the Bohlins purchased a house on Finch Drive in San Jose. Jeff Bohlin exten-sively remodeled the house, essentially con-structing a new, larger home around the old one, leaving only the original foundation.

In 2001, Wakefield purchased the Finch Drive property from the Bohlins. Shortly after Wake-

1 As requested by the Bohlins, we have taken judicial notice of the clerk’s transcript in the parties’ first appeal, Wakefield v.Bohlin (Feb. 8, 2006, H028008) (nonpub. opn.).


field moved into the property, various construc-tion defects and other problems with thehome became evident. [*970]

The ComplaintIn June [***3] 2002, Wakefield filed this liti-gation against the Bohlins and others. Theother defendants included the Bohlins’ real es-tate agent, Fred Davis, and his agency, Cen-tury 21, SVCA, Inc. (collectively, the realtor de-fendants), and Talaveras Plastering and some of its principals (collectively, the plastering de-fendants). The litigation also generated third party cross-complaints, but neither the Bohlins nor any other defendants cross-complainedagainst Wakefield.Wakefield asserted six causes of action in his complaint: negligent misrepresentation andfraud, which Wakefield asserted against the Boh-lins and the realtor defendants; professionalnegligence, against the realtor defendants only; negligence, against Jeff Bohlin and the plaster-ing defendants; and developers’ strict liability and breach of implied warranty, assertedagainst the Bohlins only. Wakefield [**404]sought compensatory and punitive damages, plus costs of suit, including attorney fees.

Resolution of Wakefield’s ClaimsSummary Adjudication: In May 2004, the trial court disposed of the fifth and sixth causes of ac-tion of Wakefield’s complaint (for strict liabil-ity and breach of implied warranty) when itgranted [***4] the Bohlins’ motion for sum-mary adjudication as to those claims.

Settlements: As the August 2004 trial date ap-proached, Wakefield settled his claims against all defendants except the Bohlins. The realtor defendants, who were named in the first, sec-ond, and third causes of action, paid Wake-field $ 45,000. The plastering defendants, named in the fourth cause of action, paid Wakefield $ 51,700.

Nonsuit: In August 2004, the case went to jury trial. Following Wakefield’s offer of proof,the trial court granted nonsuit in favor of Jeff Bohlin on Wakefield’s fourth cause of action for

400, **403; 2006 Cal. App. LEXIS 1945, ***2

negligence.

Verdict: Wakefield’s remaining claims for fraud and negligent misrepresentation were thentried to the jury. On the fraud claim, the jury re-turned with a verdict in favor of both Jeff and Charlotte Bohlin. On the cause of action for neg-ligent misrepresentation, the jury exonerated Charlotte Bohlin, but it found against Jeff Boh-lin and in favor of Wakefield on that claim,and it awarded Wakefield $ 33,950 in dam-ages.

JudgmentIn August 2004, the court entered judgment.[*971]

The judgment recites the results of the special jury verdicts, and it also notes the earlierdisposition [***5] of Wakefield’s other claims by summary adjudication, nonsuit, and settle-ment.

The judgment orders (1) that “plaintiff shall take nothing by his complaint from defendantCharlotte Bohlin and that Charlotte Bohlin have and recover from [Wakefield] costs and attor-ney fees as provided by law”; and (2) “that plain-tiff shall take nothing by his complaint from de-fendant Jeff Bohlin. Any claim for costs and attorney fees as between these parties shall be determined in accordance with law.”

Cost AwardIn August 2004, Wakefield objected to the court’s preliminary determination that the Boh-lins were the prevailing parties. The Bohlins re-sponded to that objection.

In September 2004, the Bohlins and Wakefield each filed a memorandum of costs. Each side also moved to strike or tax the costs claimed by the other.

In October 2004, Wakefield filed a motion, seek-ing a determination that he was the prevailing party and asking the court for attorney fees. The Bohlins filed a similar motion.

In November 2004, the court heard argument from both parties, then took the matter under


submission. Its subsequent written ruling states: “The court determines that defendants Jeff and Charlotte [***6] Bohlin are prevail-ing parties. Costs are awarded in favor of Jeff and Charlotte Bohlin and against Ronald P. Wakefield, jointly and severally, as follows: $ 100,000.00 as reasonable attorney’s fees and $ 7,721.00 non-attorney fee costs as shown on the memorandum of costs filed September 7, 2004. Total costs, including attorney’s fees are awarded in favor of Jeff and Charlotte Bolin and against Ronald P. Wakefield, jointly and sev-erally, in the amount of $ 107,721.00. [¶] The motion brought by Ronald P. Wakefield to deter-mine [**405] that he is the prevailing party, and to award him attorney fees and costs, is de-nied in its entirety.”

AppealsIn his first appeal, Wakefield challenged the Au-gust 2004 judgment, asserting that the trialcourt erred in disposing of his fourth, fifth, and sixth causes of actions by nonsuit and sum-mary adjudication. We resolved those claims ad-versely to Wakefield in our unpublished opin-ion in Wakefield v. Bohlin, supra, H028008.[*972]

Wakefield gave notice of this second appeal in December 2004. In this appeal, Wakefieldchallenges the November 2004 postjudgment or-der that awards the Bohlins their costs, includ-ing attorney fees.

CONTENTIONSWakefield asserts that he is [***7] a prevail-ing party entitled to his costs as a matter of right under Code of Civil Procedure section 1032.2 He contends that the trial court lacked discre-tion to consider the pretrial settlements in mak-ing its prevailing party determination. Alterna-tively, Wakefield argues, the court abused its discretion in awarding costs to the Bohlins, be-cause they failed to comply with the media-tion clause in the real estate purchase contract. The Bohlins defend the trial court’s order.First, they dispute Wakefield’s entitlement to

400, **404; 2006 Cal. App. LEXIS 1945, ***5

costs under section 1032, arguing that he does not fall within any of the four categorical defi-nitions of prevailing party that give rise to a mandatory cost award. By contrast, they assert, categorically, Charlotte Bohlin was a prevail-ing party. Finally, they contend, the trial court’s award of costs and fees to Jeff Bohlin waswithin its discretion.

DISCUSSIONTo provide the [***8] proper framework for our analysis, we begin by describing the govern-ing legal principles. We then apply them tothe case at hand.

I. General Legal PrinciplesHN1 CA(1) (1) “The right to recover costs is wholly dependent on statute.” ( Crib Retaining Walls, Inc. v. NBS/Lowry, Inc. (1996) 47 Cal.App.4th 886, 889 [54 Cal. Rptr. 2d 850].) In this case, the relevant statute is section 1032.

A. Prevailing Party

1. DefinitionCA(2) (2) Section 1032 defines prevailing party for purposes of an award of litigation costs. It reads: “(a) HN2 As used in this sec-tion, unless the context clearly requires other-wise: [¶] … [¶] 4) ‘Prevailing party’ in-cludes the party with a net monetary recovery, a defendant in whose favor a dismissal is en-tered, a defendant where neither plaintiff nor de-fendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief [*973] against that defendant. Whenany party recovers other than monetary relief and in situations other than as specified, the ‘pre-vailing party’ shall be as determined by thecourt, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties [***9] on the same or adverse sides pur-suant to rules adopted under Section 1034.”( § 1032, subd. (a)(4).)

2 Further unspecified statutory references are to the Code of Civil Procedure.


2. Entitlement to costsUnder section 1032, the prevailing party in liti-gation is entitled to costs. Subdivision (b)thus provides: HN3 “Except as otherwise[**406] expressly provided by statute, a pre-

vailing party is entitled as a matter of right to recover costs in any action or proceeding.”( § 1032, subd. (b); see Chaparral Greens v. City of Chula Vista (1996) 50 Cal.App.4th 1134, 1151-1152 [58 Cal. Rptr. 2d 152].)

B. Attorney Fees as Allowable CostsHN4 CA(3) (3) Attorney fees are allowable as costs, but only if they are authorized by law or by contract. ( §§ 1033.5, subd. (a)(10), 1021.) “Thus, recoverable litigation costs do include attorney fees, but only when the party entitled to costs has a legal basis, independent of thecost statutes and grounded in an agreement, stat-ute, or other law, upon which to claim recov-ery of attorney fees.” ( Santisas v. Goodin (1998) 17 Cal.4th 599, 606 [71 Cal. Rptr. 2d 830, 951 P.2d 399] (Santisas).)

CA(4) (4) Here, both sides claim attorney fees based on their real estate purchase contract, which contains a broad attorney fee clause. 3

HN5 “If a contractual attorney fee [***10] pro-vision is phrased broadly enough, … it maysupport an award of attorney fees to the prevail-ing party in an action alleging both contractand tort claims … .” ( Santisas , supra , 17 Cal.4th at p. 608 .) But different statutes govern recov-ery of fees in the two types of actions.

1. Contract claims; Civil Code section 1717HN6 CA(5) (5) In contract actions, Civil Code section 1717 governs attorney fee agree-ments. ( Sweat v. Hollister (1995) 37 Cal.App.4th 603, 610 [43 Cal. Rptr. 2d 399] , disapproved

400, **405; 2006 Cal. App. LEXIS 1945, ***9

on another point in Santisas , supra , 17 Cal.4th at p. 609, fn. 5 .) “ Section 1717 is the appli-cable statute when determining [***11] whether and how attorney’s fees should be awarded un-der a contract.” ( Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1157 [70 Cal. Rptr. 2d 769] [*974] (Sears).) Under Civil Code sec-tion 1717, as a general rule, “the party prevail-ing on the contract shall be the party who re-covered a greater relief in the action on the contract.” ( Civ. Code, § 1717, subd. (b)(1).) But the statute also allows the court to “deter-mine that there is no party prevailing on the con-tract for purposes of this section.” (Ibid.)

Notably, however, “ Civil Code section 1717 has a limited application. It covers only con-tract actions, where the theory of the case is breach of contract, and where the contractsued upon itself specifically provides for an award of attorney fees incurred to enforce that contract.” ( Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342 [5 Cal. Rptr. 2d 154].) Thus, it has been held that sec-tion would not govern where—for example— “the buyers initially sued for breach of con-tract,” but “they did not go to trial on thatbasis [and instead] limited their action to fraud and negligent misrepresentation.” [***12]( Childers v. Edwards (1996) 48 Cal.App.4th 1544, 1548 [56 Cal. Rptr. 2d 328].)

2. Noncontract claims; Sections 1021 and 1033.5As HN7 for attorney fee awards when the claim is not on the contract, the Code of Civil Procedure governs. ( Sweat v. Hollister, su-pra , 37 Cal.App.4th at p. 610 .) Sections 1021 and 1033.5 [**407] are the relevant provi-sions. 4 They appear in part 2, title 14, chap-ter 6, which deals with litigation costs.

3 Paragraph 17C of the parties’ agreement provides: “In event of any legal action, arbitration, or other proceeding between

Buyer and Seller arising out of this Contract, the prevailing Buyer or Seller shall be awarded reasonable attorneys’ fees and court or arbitration costs in addition to any other judgment or award.”4

Section 1021 provides as follows: HN8 “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs … as hereinafter provided.”


[***13] “Using section 1021 as a foundation, a line of cases has held that the type of con-tractual attorney fee provision at issue here is broad enough to authorize a request for attor-ney fees in a tort-based misrepresentation ac-tion arising out of the contract.” ( Childers v. Ed-wards, supra , 48 Cal.App.4th at p. 1549 .)That line of cases culminated with the Califor-nia Supreme Court’s decision in Santisas, su-pra , 17 Cal.4th 599 .CA(6) (6) As our state’s high court clarified in Santisas, HN10 under some circumstances, at-torney fees may be recovered under the Code of Civil Procedure, even when they are pre-cluded under Civil Code section 1717. ( Santi-sas , supra , 17 Cal.4th at pp. 617-618, 619 .) In Santisas, the court thus rejected the argument that “attorney fees incurred to litigate tort or other noncontract claims, which are outsidethe scope of section 1717, may never be recov-ered [*975] as costs under a contractual attor-ney fee provision.” ( Id. at p. 618 .) Thus,even where a litigant does not qualify as a “party prevailing on the contract” under CivilCode section 1717—for example, when [***14] there has been a voluntary dismissal, as was the case in Santisas—that circumstance “does not affect the … right to recover as costs the at-torney fees … incurred in defense of the tort claims. Because section 1717 does not apply to those claims [citations], it does not bar recov-ery of attorney fees that were incurred in litiga-tion of those claims and that are otherwise re-coverable as a matter of contract law.” ( Santisas , at p. 619.) But as the court explained, “ sec-tion 1021 does not independently authorize re-covery of attorney fees. Rather, consistentwith subdivision (a)(10) of … section 1033.5, … section 1021 recognizes that attorney fees in-curred in prosecuting or defending an action may be recovered as costs only when they are otherwise authorized by statute or by the par-

ties’ agreement.” ( Id. at p. 607, fn. 4 , italics added.)

II. Analysis: Prevailing Party Determination

400, **407; 2006 Cal. App. LEXIS 1945, ***13

HN11 The statutory definition of prevailing party contains two sentences, each representing a separate definitional prong. (See § 1032, subd. (a)(4).) As the Bohlins aptly describe it, “ section 1032 splits ‘prevailing parties’ into two distinct groups: Those [***15] specified in the four categories contained in the first sen-tence of subdivision (a)(4), and those who are

within the court’s discretion as defined in the second sentence of subdivision (a)(4).”

A. Section 1032, Subdivision (a)—First ProngThe first prong describes four categories of liti-gants who automatically qualify as prevailing parties. It reads: “ ‘Prevailing party’ includes [1] the party with a net monetary recovery, [2] a defendant in whose favor a dismissal is en-tered, [3] a [**408] defendant where neither plaintiff nor defendant obtains any relief, and [4] a defendant as against those plaintiffs who do not recover any relief against that defendant.” ( § 1032, subd. (a)(4).)

1. The prevailing party determination is not dis-cretionary under the first prongAs explained in the relevant case law, HN12 the trial court has no discretion to deny prevailing party status to a litigant who falls within one of the four statutory categories in the first prong of the provision. “As rewritten [in 1986], section 1032 now declares that costs are available as ‘a matter of right’ when the pre-vailing party is within one of the four catego-ries designated by statute. [***16] ( § 1032, subds. (a)(4), (b).)” ( Michell v. Olick (1996) 49 Cal.App.4th 1194, 1197 [57 Cal. Rptr. 2d 227]; accord, Building Maintenance Service Co. v. AIL Systems, Inc. (1997) 55 Cal.App.4th 1014, 1025 [64 [*976] Cal. Rptr. 2d 353]; see also, 7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 90, p. 620; cf., Sears, supra , 60 Cal.App.4th at p. 1156 [describing the statu-tory categories as “guidelines”].)

Consistent with the foregoing authority, the par-ties in this case acknowledge the automatic na-

Section 1033.5 provides in pertinent part as follows: “(a) HN9 The following items are allowable as costs under Section 1032: [¶] … [¶] (10) Attorney fees, when authorized by any of the following: [¶] (A) Contract. [¶] (B) Statute. [¶] (C) Law.”


ture of a prevailing party determination under the first prong of the statute. As Wakefield puts it: “A party meeting any one of these [four]definitions is the prevailing party as a matter of right under … § 1032(b).” The Bohlins agree, characterizing the first prong as including “four categories of mandatory prevailing parties.”

2. The automatic nature of the determination ap-plies to all four categoriesHN13 CA(7) (7) Under the first category, “the court must award reasonable and reasonably necessary costs to a party who has obtained a ‘net monetary recovery.’ ” ( Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, 1151 [67 Cal. Rptr. 2d 543], italics [***17] added, disapproved on other points in Gavaldon v. DaimlerChrysler Corp. (2004) 32 Cal.4th 1246, 1261 [13 Cal. Rptr. 3d 793, 90 P.3d 752]; Snukal v. Flightways Manufacturing, Inc. (2000) 23 Cal.4th 754, 775, fn. 6 [98 Cal. Rptr. 2d 1, 3 P.3d 286]. Cf., Sears, supra , 60 Cal.App.4th at p. 1155 [stating that the statute does not “limit[] the court’s inquiry solely to net monetary recovery”].) A litigant with a straight-forward net monetary recovery falls squarely within the first statutory definition and thus qualifies categorically as a prevailing party. “It is clear from the statutory language that whenthere is a party with a ‘net monetary recovery’ (one of the four categories of prevailingparty), that party is entitled to costs as a matter of right; the trial court has no discretion to or-der each party to bear his or her own costs.” ( Mi-chell v. Olick, supra , 49 Cal.App.4th at p. 1198.)

In contrast to the first category, which applies to any party, the other three categories affect de-fendants only. As with the first category, how-ever, a determination of prevailing party sta-tus generally is automatic for a defendant who falls within any of them.

In Santisas, the California Supreme Court [***18] adverted to this conclusion in connec-

tion with the second category, saying: “Be-cause plaintiffs voluntarily dismissed this ac-tion with prejudice, the seller defendants are defendants in whose favor a dismissal has been

400, **408; 2006 Cal. App. LEXIS 1945, ***16

entered. Accordingly, they are ‘prevailing par-ties’ within the meaning of … section 1032, sub-division (b), and are ‘entitled as a matter ofright to recover costs’ unless another statute ex-pressly provides otherwise.” ( Santisas , [**409] supra , 17 Cal.4th at p. 606 ; see

also, e.g., Crib Retaining Walls, Inc. v. NBS/Lowry, Inc., supra , 47 Cal.App.4th at p. 890 .) By the

same logic, prevailing party status is nondis-cretionary under the third [*977] categorical definition, which applies when neither the plain-tiff nor the defendant obtains any relief. (See, e.g., Chaparral Greens v. City of Chula Vista, su-pra , 50 Cal.App.4th at p. 1152 ; Childers v. Ed-wards, supra , 48 Cal.App.4th at p. 1549 .)The same is also true with respect to the fourth definitional category of prevailing party,which specifies “a defendant as against those plaintiffs who do not recover any relief against that defendant.” ( § 1032, subd. (a)(4); see,[***19] e.g., Nelson v. Anderson (1999)

72 Cal.App.4th 111, 128 [84 Cal. Rptr. 2d 753] [be-cause “MPG was a defendant against whom Nelson obtained no relief, MPG was the prevail-ing party”].) Generally speaking, under any of these three sets of circumstances, the defendant categorically qualifies as the prevailingparty.

B. Section 1032, Subdivision (a)—Second ProngHN14 CA(8) (8) The second prong of the statu-tory definition provides for situations not de-scribed in the first prong. That part of the stat-ute reads: “When any party recovers otherthan monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those cir-cumstances, the court, in its discretion, mayallow costs or not and, if allowed may appor-tion costs between the parties on the same or ad-verse sides pursuant to rules adopted under Sec-tion 1034.” ( § 1032, subd. (a)(4).)

The operation of this second prong has been de-scribed as follows: “Where the prevailing

party is one not specified, … section 1032, sub-division (a)(4) permits the trial court to deter-mine the prevailing party and then allow costs or not, or to apportion costs, in its discretion.


The statute [***20] requires the trial court to de-termine which party is prevailing and then ex-ercise its discretion in awarding costs.”( Texas Commerce Bank v. Garamendi (1994) 28 Cal.App.4th 1234, 1248-1249 [34 Cal. Rptr. 2d 155], fn. omitted ; accord, Lincoln v.Schurgin (1995) 39 Cal.App.4th 100, 105 [45 Cal. Rptr. 2d 874].) The second prong of the stat-ute thus “permits [a] ruling … ordering each side to pay its own costs, even [where] appel-lants were without question the prevailing par-ties”—having sought and obtained nonmon-etary declaratory relief. ( Texas Commerce Bank v. Garamendi , at p. 1249 ; cf., e.g., Villa De

Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 94 [14 Cal. Rptr. 3d 67, 90 P.3d 1223] [where homeowners association won declaratory and injunctive relief, “the trial court did not abuse its discretion in determin-ing that the Association was the prevailing party”].)

This prong of the statute thus calls for the trial court to exercise its discretion both in deter-mining the prevailing party and in allowing, de-nying, or apportioning costs. It operates as an express statutory exception to the general rule that a prevailing party is entitled to costs as a matter of right. ( § 1032, subd. (b).) [***21][*978]

III. Application to this Case

A. Review StandardHN15 “On review of an award of attorney fees after trial, the normal standard of review isabuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for anaward of attorney fees and costs in this context have been satisfied amounts to statutory con-struction [**410] and a question of law.” ( Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142 [118 Cal. Rptr. 2d 569]; accord, Baker-Hoey v. Lockheed Martin Corp. (2003) 111 Cal.App.4th 592, 596 [3 Cal. Rptr. 3d 593]; Acosta v. SI Corp. (2005) 129 Cal.App.4th 1370, 1374 [29 Cal. Rptr. 3d 306];

see also, e.g., Silver v. Boatwright Home In-spection, Inc. (2002) 97 Cal.App.4th 443, 448-

400, **409; 2006 Cal. App. LEXIS 1945, ***19

449 [118 Cal. Rptr. 2d 475].) On the other hand, depending on the circumstances of thecase, the prevailing party determination, the cost award, or both may be committed to the trial court’s discretion. ( Silver v. Boatwright Home Inspection, Inc. , at p. 449 .) In such cases,we review the trial court’s determination for an abuse of discretion. ( Ibid.)

B. Prevailing Party DeterminationWe first consider whether the nondiscretionary [***22] prong of section 1032 applies to

any of the litigants. At issue is “whether the cri-teria for an award of attorney fees and costs in this context have been satisfied … .” ( Carver v. Chevron U.S.A., Inc., supra , 97 Cal.App.4th at p. 142 .) That issue presents a question of law. (Ibid.)

We start with the first category described in the statute, which defines a prevailing party as one with a net monetary recovery. ( § 1032, subd. (a)(4).)

1. Did Wakefield obtain a net monetary recov-ery?Wakefield argues that he falls within this first category, having won a jury verdict of nearly $ 34,000 from Jeff Bohlin. The Bohlins dis-agree, arguing that Wakefield “did not obtain a net monetary recovery, because his awardwas smaller than the amount of his settlements with the other defendants.”

The parties’ competing contentions require us to consider the effect of the other defendants’ settlements. As we now explain, althoughWakefield’s judgment may have been reduced to zero by operation of section 877, that circum-stance does not affect the prevailing party de-termination under section 1032. [*979]

a. Effect of settlement on the judgment under sec-tion 877HN16 CA(9) (9) Under section [***23] 877,

a release “given in good faith before verdict or judgment to one or more of a number of tort-feasors claimed to be liable for the same tort … [¶] … shall reduce the claims against the oth-


ers in the amount stipulated by the release … or in the amount of the consideration paid for it whichever is the greater.” Section 877 thus “re-quires that a judgment be reduced by amounts paid by settling joint tortfeasors.” ( Jaramillo v. State of California (1978) 81 Cal. App. 3d 968, 971 [146 Cal. Rptr. 823].) “Where a plain-tiff’s settlement completely offsets the dam-ages assessed against a nonsettling joint tortfea-sor, it reduces the judgment to zero byoperation of law.” ( Syverson v. Heitmann (1985) 171 Cal. App. 3d 106, 110 [214 Cal. Rptr. 581].)

“The purpose of this legislation is to provide for equitable sharing of damages among the par-ties at fault and to encourage settlement.”( Great Western Bank v. Converse Consultants, Inc. (1997) 58 Cal.App.4th 609, 613 [68 Cal. Rptr. 2d 224] .) “In addition, the offset pro-vided for in section 877 assures that a plaintiff will not be enriched unjustly by a double re-covery, collecting part of his total claim from one joint tortfeasor [***24] and all of his claim from another.” ( Reed v. Wilson (1999) 73 Cal.App.4th 439, 444 [86 Cal. Rptr. 2d 510].) But “a plaintiff does not get double recovery when obtaining costs from a remaining defen-dant, unless plaintiff’s [**411] compromise agreement with the joint tortfeasor coverscosts of pursuing the action against the remain-ing defendant.” ( Id. at p. 445 .) HN17 Beyond promoting equitable sharing, encouraging settle-ment, and guarding against double recovery, the good faith settlement statutes embody “an-other important public policy: ‘ “the maximi-zation of recovery to the plaintiff for the amount of … injury to the extent that negligence orfault of others has contributed to it.”… .’ ” ( Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1556-1557 [31 Cal. Rptr. 3d 319].)

Here, although both parties refer to good faith settlements between Wakefield and the settling defendants, the appellate record does not in-clude them. We nevertheless assume that the trial court found the realtor defendants to be joint tortfeasors with Jeff Bohlin with respect to

Wakefield’s negligent misrepresentation claim. We likewise assume that the trial court offset

400, **410; 2006 Cal. App. LEXIS 1945, ***23

the damages [***25] that Wakefield won on that claim, applying the $ 45,000 settlement from the realtor defendants against the $ 33,950 verdict from Jeff Bohlin, thereby bringingWakefield’s net judgment to zero. [*980]

b. Effect of settlement on the prevailing party de-termination under section 1032Assuming that a good faith settlement reduced Wakefield’s judgment to zero, that circum-stance does not compel a finding that he failed to obtain a net monetary recovery. To the con-trary, we conclude, Wakefield did obtain such a recovery from Jeff Bohlin.

(i) Current statutory languageIn reaching that conclusion, we begin with the statutory language. (See, e.g., Pirkig v. Den-nis (1989) 215 Cal. App. 3d 1560, 1565 [264 Cal. Rptr. 494].) The relevant portion of the stat-ute defines prevailing party to include “theparty with a net monetary recovery.” ( § 1032, subd. (a)(4).)

HN18 CA(10) (10) The first part of the perti-nent statutory phrase—“net monetary”—comes into play in situations when parties on bothsides of the litigation have damage claims against each other. Thus, when “plaintiff and de-fendant [have] competing monetary claims,then the party in whose favor the net amount is due [***26] qualifies as the prevailing party, the party with a net monetary recovery.” ( Mi-chell v. Olick, supra , 49 Cal.App.4th at p. 1198; accord, Biren v. Equality Emergency Medical Group, Inc. (2002) 102 Cal.App.4th 125, 139 [125 Cal. Rptr. 2d 325].) Thus, for example, where the defendants have dismissed their cross-complaint, leaving the plaintiff as “the only party seeking damages,” any award in the plain-tiff’s favor qualifies as a net monetary recov-ery. ( Michell v. Olick , at p. 1198 .) This prin-ciple of setting off competing counterclaimsto determine net recovery has long been the rule. More than 70 years ago, the California Su-preme Court entertained cross-appeals “from a judgment establishing a balance due fromthe defendant [property owner], to the plain-tiffs, … contractors under a building construc-


tion contract.” ( Hansen v. Covell (1933) 218 Cal. 622, 624 [24 P.2d 772].) “During the course of the trial the owner paid the claims of me-chanics who had filed liens … .” ( Id. at p. 625 .) For purposes of the cost award, the court net-ted the amounts due on either side of the litiga-tion, saying: “The total of the lien claims plus the interest thereon [***27] … deducted from the amount found due to the plaintiffs fromthe defendant, still leaves a balance due to the plaintiffs, and this condition under the find-ings also disposes of the contention that the [plaintiff] contractors [**412] are not entitled to their costs in the trial court.” ( Id . at pp. 632- 633.)

The second part of the relevant statutory phrase is “recovery.” As generally understood, the term “recovery” is broad enough to encom-pass any damage award. (Cf. People v. Reis (1888) 76 Cal. 269, 279 [18 P. 309] [as used in former Pol. Code, § 3886, “recovery” is broadly construed, consistent with [*981] “its ordinary and popular meaning”].) “The words ‘recovery’ or ‘recovered’ have the common con-notation of representing the entirety of a sum obtained by process and course of law which in-cludes settlement … .” ( Dunne & Gaston v. Keltner (1975) 50 Cal. App. 3d 560, 564 [123 Cal. Rptr. 430] [broadly interpreting agreement between law firm and withdrawing attorney for recovery of fees].)

Thus, we conclude, HN19 the party with the net monetary recovery is determined by compar-ing the competing damage claims on bothsides of the litigation. If both sides [***28] have claims, whichever party obtains the most money from the other prevails. If only oneparty has damage claims, any success in press-ing those claims against the losing party re-sults in a net award.

(ii) Comparison with predecessor statuteOur construction of the statutory language is bol-stered by contrasting the present provisionwith the predecessor statute. “The current ver-sion of section 1032 is the product of a 1986 ma-jor revision of the statutes governing the recov-ery of costs. The legislation was sponsored

400, **411; 2006 Cal. App. LEXIS 1945, ***26

by the California Judges Association. (Sen. Rules Com. [Off. of Sen. Floor Analyses], 3dreading analysis of Sen. Bill No. 654 (1985-1986 Reg. Sess.) as amended July 8, 1986,pp. 1-3.) Senate Bill No. 654, as enacted, re-pealed former section 1032 and enacted a new section 1032 in its place.” ( Acosta v. SICorp. , supra , 129 Cal.App.4th at p. 1375 .) Noth-ing in the new statute or its history suggests a legislative intent to constrict the class of prevail-ing parties, however. (Ibid.; see also Pirkig v. Dennis, supra , 215 Cal. App. 3d at pp. 1565-1566.)

Prior to 1986, the statute allowed costs as a mat-ter of right to a “plaintiff [***29] upon a judg-ment in his favor.” (Former § 1032, subd.(a), italics added.) Under the former statute, and “even without competing monetary claims, a plaintiff who received only partial recoverywas still found to be the sole successful party en-titled to costs.” ( Michell v. Olick, supra , 49 Cal.App.4th at pp. 1198-1199.) Furthermore, de-spite the explicit reference in the former stat-ute to a “judgment,” courts had no difficulty awarding costs to plaintiffs who won a ver-dict that was later offset by compensation from other parties. (See, e.g., Ferraro v. Southern Cal. Gas Co. (1980) 102 Cal. App. 3d 33, 52 [162 Cal. Rptr. 238] (Ferraro); Syverson v. Heit-mann, supra , 171 Cal. App. 3d at p. 113 .) In Ferraro, for example, the court rejected the ar-gument “that appellants, while they did re-ceive a verdict in their favor, did not receive a fa-vorable net judgment.” ( Ferraro , at p. 52 .) As the Ferraro court explained: “To consider appel-lants as not having received a ‘favorable judg-ment’ would exalt form over substance.They certainly were the prevailing party in the lawsuit and the fact that the [defendant] didnot have to [***30] actually pay them any dam-ages was due not to any deficiency in theircase, but due to [*982] circumstances not di-rectly stemming from the issues regarding li-ability as litigated between the parties. Disallow-ance of an award of costs to appellants under these circumstances could only be based upon a hypertechnical construction of the [**413]words of section 1032 … unsupported by case law.” ( Id. at pp. 52-53 .)


The current language of the statute, which em-ploys the phrase “net monetary recovery”rather than the term “judgment,” makes it even easier to distinguish between a jury verdictawarding net damages to a litigant (a net recov-ery) and the ultimate judgment, which neces-sarily comes later and may reflect offsets from other parties’ contributions. ( § 1032, subd. (a)(4).) To summarize, HN20 as used in sec-tion 1032, subdivision (a)(4), “net monetary re-covery” is determined after netting out anycompeting damage claims as between the plain-tiff and the defendant, without regard to settle-ments or other contributions from unrelateddefendants or from other parties.

(iii) Case authority

Our construction of the statutory language is borne out by cases decided both before and af-ter section 1032 was [***31] rewritten in1986. (See, e.g., Zamora v. Shell Oil Co. (1997) 55 Cal.App.4th 204, 215 [63 Cal. Rptr. 2d 762] [the cases decided before 1986 “continue to have precedential effect”].)

CA(11) (11) As courts have repeatedly empha-sized: HN21 “Settlements by other partiesand corresponding offsets do not affect a prevail-ing party determination.” ( Great Western Bank v. Converse Consultants, Inc. , supra , 58 Cal.App.4th 613, citing Zamora v. Shell Oil Co., supra , 55 Cal.App.4th at pp. 213-215 ; Pirkigv. Dennis, supra , 215 Cal. App. 3d at pp. 1565-1568; Syverson v. Heitmann, supra , 171 Cal. App. 3d at pp. 112-114; see also Ferraro, su-pra , 102 Cal. App. 3d at pp. 52-53 .) The Zamora case demonstrates the operation of that prin-ciple: “Had some of Western’s codefendants not settled with the homeowners prior to or dur-ing trial, judgments would have been entered against Western in the aggregate amount of 20 percent of $ 222,282. Under these circum-stances, Western cannot proclaim itself to be the section 1032 prevailing party.” ( Zamora v.

400, **413; 2006 Cal. App. LEXIS 1945, ***30

Shell Oil Co. , at p. 215 .)

We agree with the foregoing statements of law, which necessarily [***32] follow from our in-terpretation of the statutory phrase “net mon-etary recovery.” 5 We therefore hold as fol-lows: HN22 When a jury verdict results in a damage award for one litigant, that party has ob-tained a net monetary recovery for purposes of [*983] the prevailing party determination un-der section 1032, even if the judgment is later reduced to zero as a result of offsets for good faith settlements under section 877.

[***33] c. Conclusion: Categorically, Wake-field is the prevailing party, entitled to costs as a matter of right

In this case, Wakefield won a verdict against Jeff Bohlin. Neither Jeff Bohlin nor Charlotte Bohlin had any claims against Wakefield. Thus, this is not a situation where both sides were vic-torious on competing claims. (Cf. Lincoln v. Schurgin, supra, 39 Cal.App.4th at p. 105[where plaintiffs obtained [**414] a money judgment, and defendants obtained declara-tory relief on their cross-complaint, the second statutory prong applied and the trial courthad discretion to determine the prevailing party].) Moreover, the fact that Wakefield suc-ceeded on only one cause of action does not operate to deprive him of his status as prevail-ing party. ( Michell v. Olick , supra , 49 Cal.App.4th at p. 1199; see also id. at pp. 1200- 1201.) Nor is this a case where Wakefield’s “net recoveries … were actually Pyrrhic victo-ries.” ( Sears , supra , 60 Cal.App.4th at p. 1155.)

For all of these reasons, under the nondiscretion-ary statutory definition, Wakefield is the pre-vailing party. We therefore reject the Bohlins’ contrary assertion that [***34] “the trial court had the authority to decide whether [Wake-field] or Jeff Bohlin had prevailed.”

5 The Pirkig case appears to conflate the concepts of net monetary recovery and net judgment, as reflected in this passage: “The only reason respondents failed to obtain a net monetary recovery [from the remaining defendant, the realtor] at the second trial was because respondents settled before trial with the sellers for a greater amount than awarded by the second court.” ( Pirkig v. Dennis, supra , 215 Cal. App. 3d at p. 1566 .) To the extent that Pirkig can be read as equating net monetary recovery with judgment after offsets, we disagree with its conclusion.


2. Was Jeff Bohlin a prevailing party?Relying on the second prong of the statute, the Bohlins assert that the trial court had discre-tion to determine that Jeff Bohlin prevailed and that Wakefield did not. As just explained, how-ever, that assertion must be rejected. Wake-field falls within the first prong of the statute; the trial court thus was required to find that Wakefield prevailed. ( § 1032, subd. (a)(4).)That said, there is no basis on which Jeff Boh-lin can be deemed to qualify as a prevailing party. To the contrary, Jeff Bohlin lost at trial, and Wakefield recovered against him. In short, Jeff Bohlin is not a prevailing party under sec-tion 1032.

3. Was Charlotte Bohlin a prevailing party?According to the Bohlins, this question must be answered in the affirmative. As they pointout, it is undisputed that the jury entered ver-dicts in favor [*984] of Charlotte Bohlin on the intentional and negligent misrepresentationcauses of action. Thus, they argue, Charlotte Bohlin categorically qualifies as a prevailing party under the first prong of the statute, fourth category, [***35] being “a defendant asagainst those plaintiffs who do not recover any relief against that defendant.” ( § 1032, subd.(a)(4).)The argument advanced by the Bohlins derives from the language of the statute, and we ac-knowledge its validity—as a general principle. But in this case, as we explain, an exception overrides that general rule.

a. The general ruleCA(12) (12) The general rule under this por-tion of section 1032, as expressed by Witkin, is as follows: HN23 “One defendant who pre-vails may recover costs even though the plain-tiff recovers against another defendant.” (7Witkin, Cal. Procedure, supra, Judgment, § 94,

400, **414; 2006 Cal. App. LEXIS 1945, ***34

p. 625.)

b. Exception for defendants with a unity of in-terestAs Witkin further observes, however, there is an exception: “In those instances in which sev-eral defendants are united in interest or join in making the same defenses in the same an-swer, the prevailing defendant definition in … 1032(a)(4) does not apply and the defendant against whom the plaintiff does not recover is not entitled to costs as a matter of right. In-stead the allowance or disallowance of costs to the prevailing defendant lies within the sound discretion of the court, [***36] as does the ap-portionment of those costs, if allowed.” (7Witkin, Cal. Procedure, supra, Judgment, § 94, pp. 625-626, italics added.) Put another way, “where one of multiple, jointly represented de-fendants presenting a unified defense prevails in an action, the trial court has discretion[**415] to award or deny costs to that

party.” ( Textron Financial Corp. v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061, 1075 [13 Cal. Rptr. 3d 586].)

The unity of interest principle originally was a creature of statute. (See, e.g., Smith v. CircleP. Ranch Co. (1978) 87 Cal. App. 3d 267 [150

Cal. Rptr. 828], quoting former § 1032.)6 Its application was described in the Smith case as follows: “In those instances in which several de-fendants are united in interest and/or join inmaking the same defenses in the same answer, the [*985] allowance or disallowance of an award to prevailing defendants lies within the sound discretion of the trial court.” ( Smith v. Circle P. Ranch Co., supra , 87 Cal.App.3d at p. 272.) Although the statutory language has changed, the underlying precept enunciated in Smith continues to apply. (See, e.g., Textron Financial Corp. v. National Union Fire Ins. Co., supra , 118 Cal.App.4th at p. 1075 ; [***37] Slavin v. Fink (1994) 25 Cal.App.4th 722,

726 [30 Cal. Rptr. 2d 750].)

6 Former section 1032 allowed costs as a matter of right to “ ‘the defendant upon a judgment in his favor … [and] when there are several defendants in any action … not united in interest, and making separate defenses by separate answers, and plaintiff fails to recover judgment against all, the court must award costs to such of the defendants as have judgment in their favor.’ ” (Former § 1032, as quoted in Smith v. Circle P. Ranch Co., supra , 87 Cal. App. 3d at p. 271 , italics omitted.)


HN24 Factually, the unity of interest principle has been applied where, for example, the los-ing defendant was a company associated with the winning defendants. ( Smith v. Circle P. Ranch Co., supra , 87 Cal. App. 3d 267 .) It has also been applied where the losing defendant was a property owner and the winning defen-dant was her agent. ( Slavin v. Fink, supra , 25 Cal.App.4th 722.) In this case, where the de-fendants were husband and [***38] wife, sued as a result of their joint sale of a home, their unity of interest appears equally strong, if not stronger.

c. Conclusion: Charlotte Bohlin does not cat-egorically qualify as a prevailing partyAccording to the undisputed facts, Jeff Bohlin (the losing defendant) and Charlotte Bohlin (the winning defendant) were represented by thesame attorney, filed a joint answer to Wake-field’s complaint, and joined in the same mo-tions and responses. The Bohlins thus share a unity of interest. For that reason, the categori-cal prevailing party definition “does not apply” to Charlotte Bohlin. (7 Witkin, Cal. Proce-dure, supra, Judgment, § 94, pp. 625-626.)

4. The trial court erred in making its prevail-ing party determinationsAs explained above, Wakefield categorically qualifies as a prevailing party as a matter of law under the first prong of section 1032, subdivi-sion (a)(4). The trial court thus erred in finding that he was not. The trial court likewise erred in finding that Jeff Bohlin was a prevailing party. As to Charlotte Bohlin, she does not categori-cally qualify as a prevailing party with statu-tory entitlement to an award of costs.

[***39] C. Allowance of CostsGiven the trial court’s erroneous prevailing party determinations, it is not clear that the court understood the nature and extent of its discre-tion in awarding costs. Under the first prong of section 1032, subdivision (a)(4), the trial court lacks discretion to deny litigation costs to

a litigant who categorically qualifies as the pre-vailing party. Plaintiff Ronald Wakefield falls

400, **415; 2006 Cal. App. LEXIS 1945, ***37

within this prong. Under the second prong of the statute, the trial court retains [**416] dis-cretion to award, deny, or allocate costs. De-fendant Charlotte Bohlin falls [*986] within this prong. In exercising its discretion under the second prong, the trial court necessarily isguided by applicable legal principles.

HN25 CA(13) (13) A key consideration in the court’s exercise of discretion is the necessity for the claimed costs. (See, e.g., Fennessy v.DeLeuw-Cather Corp. (1990) 218 Cal. App. 3d 1192, 1194-1195 [267 Cal. Rptr. 772] [prevail-ing defendant was not entitled to all of the costs that he claimed “because they had been in-curred collectively by all the defendants”].) As explained in the Judges Benchbook: “A pre-vailing party is entitled to recover only those costs actually incurred [***40] by that party or on that party’s behalf in prosecuting or defend-ing the action. When a prevailing party has in-curred costs jointly with one or more other par-ties who are not prevailing parties for purposes of an award of costs, the judge must appor-tion the costs between the parties.” (Cal. Judges Benchbook: Civil Proceedings—Trial (CJER 1997) Judgment, § 16.40, p. 686; see also, e.g., Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1297 [87 Cal. Rptr. 2d 497][in indemnity action, where plaintiffs won against three of four remaining defendants, “the trial court’s failure to apportion the attorney fees was an abuse of discretion”].)

A related factor is fairness, as explained in Slavin v. Fink, supra , 25 Cal.App.4th 722 . Inthat case, the plaintiff contractor prevailed at trial against the property owner, defendantBorinstein, but he lost against her agent, defen-dant Fink. Although Fink was a prevailing de-fendant, the trial court taxed his costs, explain-ing: “ ‘Fink has claimed the same costs ascould have been claimed by [Borinstein], had she been a prevailing party in the case. … Borin-stein was the “main” defendant in the case.Fink acted as her disclosed agent. [***41] …Fink became entitled to a judgment in his fa-vor by the mere failure of [plainitiff] Slavin to present any evidence in support of a judg-ment against him personally.’ ” ( Id. at pp. 724- 725.) The trial court thus concluded that “an al-


location must be made between the costs Borinstein would have been entitled to had she prevailed, and those necessarily incurred by Fink.” ( Id. at p. 725 .) The trial court made a dis-cretionary allocation, awarding Fink the cost of his appearance fee, plus 5 percent of the re-maining costs claimed by him. (Ibid.) That award was affirmed on appeal. ( Id. at p. 727 .) As the appellate court stated: “Under the circum-stances, it would have been unjust to allow ap-pellant to impose upon respondent all costs in-curred which benefitted both appellant and Borinstein.” ( Id. at p. 726 , italics added.) We believe that the same is true here.

Yet another pertinent consideration is whether the parties achieved their principal litigation ob-jectives. (Cf. Villa De Las Palmas Homeown-ers Assn. v. Terifaj, supra , 33 Cal.4th at p. 94.) Here, Wakefield [***42] won recovery—by settlement or verdict—from all defendants ex-cept Charlotte Bohlin, albeit not on every cause of action and not in the amount he sought. A plaintiff’s [*987] litigation objectives may be achieved through settlement with some defen-dants, even where others escape liability; at the same time, of course, such settlement alsomay advance the objectives of nonsettling defen-dants, like the Bohlins, by reducing their liabil-ity. (See Silver v. Boatwright Home Inspec- tion, Inc., supra , 97 Cal.App.4th at p. 452 .)Beyond necessity, fairness, and litigation suc-cess, other factors may be relevant here. (See, e.g., Cal. Judges Benchbook: [**417] Civil Proceedings—Trial, supra, Judgment, § 16.40,p. 686.) To the extent that such factors ap-ply, the trial court may consider them in the ex-ercise of its discretion in apportioning costs.

D. Allowance of Attorney FeesOn appeal, neither party disputes the propriety of awarding attorney fees as an element ofcosts. To the contrary, both sides maintain en-titlement to a fee award, notwithstanding the fact that the case was tried exclusively on Wake-field’s noncontract claims.

1. Statutory basis for an attorney [***43] fee award

400, **416; 2006 Cal. App. LEXIS 1945, ***41

Because there was no action on the contract in this case, Civil Code section 1717 has no op-eration here. (See, e.g., Santisas, supra, 17 Cal.4th at pp. 615, 619; Childers v. Edwards, supra , 48 Cal.App.4th at p. 1548 .) The prevail-ing party determination instead depends onthe application of section 1032, as comple-mented by sections 1021 and 1033.5. ( Childersv. Edwards , at p. 1549 .)

2. Entitlement to fees as prevailing party

a. Section 1032We start with section 1032 in determining the

prevailing party for purposes of an award of at-torney fees. More specifically, we look to the statute’s straightforward definition of prevail-ing party as a litigant with a net monetary re-covery. For all the reasons explained above, Wakefield falls squarely within that defini-tion.

Here, no countervailing statutory provision casts doubt on that definition. In this case,whether “prevailing party” is defined under Civil Code section 1717 or under section 1032, itmeans the same thing. (Cf. Santisas, supra , 17 Cal.4th at pp. 608-609 [discussing the differ-ing definitions of “prevailing [***44] party” un-der the two statutes, where the litigation ends by voluntary dismissal].) Thus, this is not a case where “the term has more than one technical[*988] meaning.” ( Id. at p. 609 .) Hence,

this is not a case where “the court must look to the parties’ contractual attorney’s fees provi-sion to determine if it defines who is a prevail-ing party … .” ( Silver v. Boatwright Home In-spection, Inc., supra , 97 Cal.App.4th at p. 452.) That being so, for purposes of analysis under section 1032, we need not separately determine prevailing party status under the real estate pur-chase contract.

Section 1032 itself does not specifically refer to attorney fees, however. Instead, the allow-ance of fees is governed by sections 1021and 1033.5. We therefore consider the opera-tion of those provisions.

b. Sections 1021 and 1033.5


As relevant here, sections 1021 and 1033.5 tether the right to recover attorney fees to the parties’ contract. HN26 Under those provi-sions, “attorney fees incurred in prosecuting or defending an action may be recovered as costs only when they are otherwise authorized by statute or by the parties’ agreement.” ( Santisas, supra , 17 Cal.4th at p. 607, fn. 4 .) [***45] In this case, “the party entitled to costs has a le-gal basis, independent of the cost statutes and grounded in an agreement, … upon which to claim recovery of attorney fees.” ( Id. at p. 606.) That agreement—the parties’ real estate purchase contract—provides that “the prevail-ing Buyer or Seller shall be awarded reason-able attorneys’ fees and court … costs [**418]in addition to any other judgment or award.”

Since neither party presented any extrinsic evi-dence to shed light on the contract’s mean-ing, determining who prevailed under the con-tractual language presents a question of law. HN27 “Where extrinsic evidence has not been offered to interpret the [contract], and thefacts are not in dispute, such review is con-ducted de novo.” ( Carver v. Chevron U.S.A., Inc., supra , 97 Cal.App.4th at p. 142 .) And asour high court instructs, “in the absence of evi-dence to the contrary, [we assume] that the par-ties understood the term [prevailing party] in its ordinary or popular sense.” ( Santisas, supra , 17 Cal.4th at p. 609, fn. omitted.)

Using the term “prevailing” in its ordinary sense, Wakefield is the prevailing buyer here.His “objective [***46] in bringing this litiga-tion was to obtain the relief requested in the complaint. The objective of the seller defen-dants in this litigation was to prevent [him] from obtaining that relief.” ( Santisas, supra , 17 Cal.4th at p. 609.) At the end of the day, Wake-field obtained monetary relief, and the Boh-lins did not prevent him from doing so. “Plain-tiff[] obtained [his] litigation objective,recovery of damages, through settlements with defendants other than [the Bohlins].” ( Silver v. Boatwright Home Inspection, Inc., supra , 97 Cal.App.4th at p. 446 .) In addition, Wake-

field won a jury verdict from Jeff [*989] Boh-lin. Thus, even “if we consider only the rules of contract law, [Wakefield is] entitled to re-

400, **417; 2006 Cal. App. LEXIS 1945, ***44

cover the amounts [he] incurred as attorney fees in [prosecuting] all claims asserted in this action.” ( Santisas , at p. 609 .)

Conversely, Charlotte Bohlin is not the prevail-ing seller. In the first place, the contractplainly contemplates that only one party will prevail—either the buyer (Wakefield) or the seller (both Jeff and Charlotte Bohlin together). Since Wakefield is the prevailing buyer under the contractual language, Charlotte [***47]Bohlin cannot be. This conclusion is consis-tent with the determination that the Bohlins are united in interest in this litigation, whetherthat concept is tested under the statute or under the contractual language.

3. Effect of the mediation clause

In light of our determination that Wakefield is the prevailing party, we need not reach the is-sue that he raises concerning the Bohlins’ as-serted failure to mediate, as required by the real estate purchase agreement as a condition of a fee award. (Cf. Frei v. Davey (2004) 124 Cal.App.4th 1506, 1512 [22 Cal. Rptr. 3d429] [sellers who “refused the [buyers’] re-quest for mediation … may not recover their at-torney fees, despite the fact they were the pre-vailing parties in the litigation”].)

4. Amount of the attorney fee awardIt is well settled that HN28 “the trial court has broad authority to determine the amount of a reasonable fee.” ( PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095 [95 Cal. Rptr. 2d 198, 997 P.2d 511] [contract action]; see also, e.g., Carver v. Chevron U.S.A., Inc., supra , 97 Cal.App.4th at p. 142.) On remand, the trial court shall exercise its discretion in settingthe amount of Wakefield’s fees. [***48]

SUMMARY OF CONCLUSIONSCA(14) (14) Under the first prong of section 1032, subdivision (a)(4), plaintiff Ronald Wake-field categorically qualifies as the prevailing party. He obtained a net monetary recovery, which entitles him to an award of [**419] liti-gation costs as a matter of right. Sections


1021 and 1033.5, combined with the parties’ contract, provide that Wakefield’s costs include reasonable attorney fees.

By contrast, defendant Charlotte Bohlin is gov-erned by the second prong of the statute. Al-though the jury exonerated her, she is not en-titled to costs as a matter of right because of her unity of interest with Jeff Bohlin. Any costaward in her favor is discretionary with the trial court and subject to apportionment. Further-more, under the contract, she is not entitled to at-torney fees. [*990]

DISPOSITIONWe reverse the postjudgment order of Novem-ber 15, 2004. We remand the matter to thetrial court with the following instructions: (1) the court shall find that Ronald Wakefield is the prevailing party and it shall award him costs, including attorney fees in an amount within its discretion; (2) the court shall exercise its dis-cretion to award or deny costs to Charlotte Boh-lin, [***49] and, if awarded, to apportionany costs she incurred jointly with Jeff Bohlin. The court shall not award attorney fees toCharlotte Bohlin.

Wakefield shall be entitled to his costs on ap-peal.

Elia, Acting P. J., concurred.

Dissent by: Mihara

Dissent

MIHARA, J., Dissenting.—The key to this case is the statutory construction of the words“the party with a net monetary recovery” in Code of Civil Procedure section 1032’s defini-tion of “prevailing party.” If plaintiff Ronald Wakefield was “the party with a net mon-etary recovery,” the trial court was required to designate him as the prevailing party, our stan-dard of review is de novo, and the trial court erred in failing to award him his costs. IfWakefield was not “the party with a net mon-etary recovery,” the trial court was free to exer-cise its discretion to decide which party was

400, **419; 2006 Cal. App. LEXIS 1945, ***48

the prevailing party, our standard of review is abuse of discretion, and we are required to de-fer to the trial court’s discretionary decision. Because I am convinced that Wakefield was not “the party with a net monetary recovery,” I dis-sent.

I. BackgroundIn March 2001, Wakefield purchased real prop-erty from defendants Jeff [***50] and Char-lotte Bohlin. In June 2002, Wakefield filed an ac-tion against the Bohlins, the Bohlins’ realestate agents and a plastering company. He as-serted five causes of action against the Boh-lins: negligence, strict liability, breach of im-plied warranty, negligent misrepresentation and fraud. Wakefield settled with the real estateagents for $ 45,000 and with the plastering com-pany for $ 51,700 in advance of trial.

After all of his other causes of action were dis-posed of, Wakefield’s causes of action for in-tentional and negligent misrepresentation against the Bohlins were submitted to a jury. Thejury returned special verdicts in favor of the Bohlins on the intentional misrepresentation cause of action and in favor of Charlotte Boh-lin on the negligent misrepresentation cause of action. The jury returned a verdict in favor of Wakefield on his negligent misrepresenta-tion cause of action against Jeff Bohlin andset the damages at $ 33,950. [*991]The court entered judgment in favor of Char-lotte Bohlin and ordered that Wakefield “shall take nothing against Defendant Jeff Bohlin” due to Wakefield’s prior settlements with the other defendants. Wakefield did not challenge the court’s action offsetting [***51] the ver-dict to zero due to his settlement with the real es-tate agents.

[**420] The court’s judgment provided that Charlotte Bohlin was entitled to her costs and at-torney’s fees, but it deferred the question ofwhether Jeff Bohlin or Wakefield was entitled to costs and attorney’s fees. The Bohlins and Wakefield filed memorandums of costs, mo-tions to strike or tax each other’s costs, and mo-tions seeking to recover their attorney’s fees


from each other. The trial court determined that the Bohlins were the prevailing parties and awarded them their costs and attorney’s fees. Wakefield filed a timely notice of appeal.

II. Discussion

A. Interpretation of Code of Civil Procedure Section 1032Wakefield claims that Code of Civil Procedure section 1032 required the trial court to desig-nate him as the prevailing party. His claim re-quires us to construe the meaning of this stat-ute.

1. Standard of Review

“The construction of a statute and its applicabil-ity to a given situation are matters of law to be determined by the court.” ( Estate of Madi-son (1945) 26 Cal.2d 453, 456 [159 P.2d 630] .) “When construing [***52] a statute, we must ‘ascertain the intent of the Legislature so as to effectuate the purpose of the law.’ [Citation.] The words of the statute are the starting point. ‘Words used in a statute … should be giventhe meaning they bear in ordinary use. [Cita-tions.] If the language is clear and unambigu-ous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature … .’ [Citation.] If the lan-guage permits more than one reasonable inter-pretation, however, the court looks to a vari-ety of extrinsic aids, including the ostensible objects to be achieved, the evils to be rem-edied, the legislative history, public policy,contemporaneous administrative construction, and the statutory scheme of which the statute is a part. [Citation.] After considering these ex-trinsic aids, we must select the construction that comports most closely with the apparent in-tent of the Legislature, with a view to promot-ing rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences.” ( Wilcox v. Birtwhistle (1999) 21 Cal.4th 973, 977-978 [90 Cal. Rptr. 2d 260, 987 P.2d 727].) [***53] [*992]

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2. Common Meaning Is Clear and Unambigu-ousThe current version of Code of Civil Procedure section 1032 ( section 1032) provides: “ ‘Pre-vailing party’ includes the party with a net mon-etary 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. When any party recovers other than monetary re-lief 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 and, if allowed may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.” ( § 1032, subd. (a)(4).) “Except as otherwise expressly provided by statute, a prevailing party is en-titled as a matter of right to recover costs in any action or proceeding.” ( § 1032, subd. (b).)

The question before us is whether, under sec-tion 1032, a plaintiff qualifies as “the party[***54] with a net monetary recovery”

where the monetary value of a damages verdict in favor of the plaintiff against the defendant at trial is offset to zero due to [**421] settle-ments with other defendants and produces no net gain for the plaintiff. The common mean-ing of the word “net” is “free from all charges or deductions” or “to get possession of: GAIN.” (Webster’s Collegiate Dict. (10th ed. 1993) p. 780.) The word “monetary” obvi-ously means “relating to money.” (Webster’s Collegiate Dict. (10th ed. 1993) p. 750.) The word “recover” means “to gain by legal pro-cess” or “to obtain a final legal judgment in one’s favor.” (Webster’s Collegiate Dict. (10th ed. 1993) p. 977.) Thus, the common mean-ing of the phrase “the party with a net mon-etary recovery” is the party who gains money that is “free from … all deductions.” (Italics added.)

A plaintiff who obtains a verdict against a de-fendant that is offset to zero by settlements with other defendants does not gain any money

free from deductions. Such a plaintiff gains


nothing because the deductions reduce the ver-dict to zero. Hence, the common meaning of the phrase “the party with a net monetary recov-ery” does not include such plaintiffs [***55] among those whom the trial court is required to declare the prevailing party.

Wakefield’s theory appears to be that “the party with a net monetary recovery” was not in-tended to refer to a party’s recovery after all offsets but only to a party’s recovery after those offsets attributable to a verdict in favor of a par-ticular adverse party. This distinction is be-tween what might be called “direct offsets”— those between a particular plaintiff and a particular defendant—and “indirect offsets”— which include offsets for a plaintiff’s settle-ments with other defendants. [*993]While the Legislature could have reasonably chosen to draft section 1032 so that it distin-guished between direct and indirect offsets, this theory runs aground on the unalterable factthat the Legislature included no language what-soever in section 1032 which even suggeststhat it intended to make such a distinction. This court lacks the “power to rewrite the statuteso as to make it conform to a presumed inten-tion which is not expressed. This court is lim-ited to interpreting the statute, and such interpre-tation must be based on the language used.” ( Seaboard Acceptance Corp. v. Shay (1931) 214 Cal. 361, 365 [5 P.2d 882].) [***56] “In inter-preting statutes, we follow the Legislature’sintent, as exhibited by the plain meaning of the actual words of the law, ‘ “ ‘whatever may be thought of the wisdom, expediency, or policy of the act.’ ” ’ ” ( California Teachers Assn. v. Gov-erning Bd. of Rialto Unified School Dist. (1997) 14 Cal.4th 627, 632 [59 Cal. Rptr. 2d 671, 927 P.2d 1175].)

The intent to distinguish between direct and in-direct offsets is nowhere expressed in section 1032, and it defies the common meaning of the plain language that the Legislature actually

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chose to use in the statute. It is notable that the Legislature used the word “net” only in the first of the four definitions of those parties that the trial court was required to designate as the prevailing party. The third and fourth defi-nitions used the words “any relief” and omitted the word “net,” and the fourth definition also included language that was very specific as to the relationships between the parties. The Leg-islature’s choice to use the word “net” in one definition and not the others confirms that it intended a different meaning when it used that word than when it did not, and its very spe-cific language in the fourth definition shows that it knew how to be specific [***57] when it so desired. 1

[**422] As the plain language of the statute is clear and unambiguous with regard to the meaning of the phrase “the party with a netmonetary recovery,” “ ‘there is no need for con-struction, nor is it necessary to resort to indi-cia of the intent of the Legislature … .’ ” ( Wil-cox v. Birtwhistle, supra , 21 Cal.4th at p. 977.) The analysis should end here. Yet, to fore-stall any argument that sources other than the plain language of the statute support an alterna-tive construction, I will proceed to demon-strate that no support exists outside the statu-tory language [***58] for the distinction that Wakefield asks us to engraft onto section1032. [*994]

3. Legislative History and ContextThe history of section 1032 is instructive. For-mer section 1032 had since 1933 providedthat a plaintiff or defendant was entitled to re-cover costs as a matter of right “upon a judg-ment in his favor.” Where neither party ob-tained “a judgment in his favor,” the courthad discretion with regard to costs. (Stats. 1933, ch. 744, § 191, p. 1901.) In 1980, Ferraro v. Southern Cal. Gas Co. (1980) 102 Cal. App. 3d 33 [162 Cal. Rptr. 238] (Ferraro) held that a judgment reduced to zero by offsets for settle-

1 The result is that where a plaintiff does not achieve a “net monetary recovery” because the judgment is reduced to zero by indirect offsets, the trial court is not required to designate the defendant as the prevailing party because, while the plaintiff has failed to obtain a “net monetary recovery,” the plaintiff has not failed to obtain “any relief.” The discretionary provisions of section 1032 are therefore applicable.


ments with other defendants (i.e., indirect off-sets) was nevertheless “a judgment in [the plain-tiffs’] favor” within the meaning of formersection 1032.

In Ferraro, the plaintiffs had obtained insur-ance proceeds and then settled with two defen-dants during trial for a total recovery of over $ 100,000. ( Ferraro , supra , 102 Cal. App. 3d at p. 38.) The jury thereafter returned a damages verdict against the sole remaining defendant for less than $ 100,000. ( Ferraro , at p. 40 .) After deductions for the settlement [***59] and insur-ance proceeds, a judgment “of zero dollars”was entered. ( Ferraro , at pp. 37, 40 .) The trial court awarded the plaintiffs their costs. ( Fer-raro , at p. 40 .) On appeal, the defendant claimed that the plaintiffs were not entitled to costs be-cause they “did not receive a favorable netjudgment.” ( Ferraro , supra , 102 Cal. App. 3d at p. 52 .) The Court of Appeal concluded that the judgment was still “favorable” to the plain-tiffs for the purpose of costs recovery, even though the plaintiffs had not obtained a “net judgment.” ( Ferraro , at p. 52 .) “To consider ap-pellants as not having received a ‘favorablejudgment’ would exalt form over substance. They certainly were the prevailing party in the lawsuit and the fact that the Gas Companydid not have to actually pay them any damages was due not to any deficiency in their case,but due to circumstances not directly stemming from the issues regarding liability as litigated between the parties. Disallowance of an award of costs to appellants under these circum-stances could only be based upon a hypertech-nical construction of the words of section1032, Code of Civil Procedure [***60] , unsup-ported by case law.” ( Ferraro , at pp. 52-53 .) Thus, Ferraro held that the plaintiffs’ failure to obtain a “net judgment,” due to indirect off-sets, did not mean that the plaintiffs had not ob-tained a “favorable judgment” within the mean-ing of former section 1032.

In February 1985, Senate Bill No. 654 (1985-1986 Reg. Sess.) (Senate Bill 654) was intro-duced proposing that former section 1032 be

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repealed and a new section 1032 be enacted. Senate Bill 654 proposed that a [**423] trial court be [*995] required to identify “theparty with a net monetary recovery” as the pre-vailing party and award that party its costs. 2

Senate Bill 654 also identified several other situ-ations where the trial court would be required to identify a particular party as the prevailing party and in other situations granted the trial court discretion to designate either party as the prevailing party. Senate Bill 654 was spon-sored by the California Judges Association to “eliminate confusion” and “simplify” the pro-cess for costs awards, thereby reducing court congestion and easing judicial workload. (Sen. Rules Com., Off. of Sen. Floor Analyses,Analysis of Sen. Bill 654, May 29, 1985; As-sem. Jud. Com., Analysis of Sen. Bill 654, Apr. 4, 1986.)

[***61] In May 1985, while Senate Bill 654 was pending before the Legislature, Syverson v. Heitmann (1985) 171 Cal. App. 3d 106 [214 Cal. Rptr. 581] was filed. In Syverson, the plain-tiff had settled with codefendants in advance of trial for $ 100,000. The jury returned a ver-dict against the remaining defendant for $100,000. ( Syverson , at p. 108 .) The Court of Ap-peal described the result of the trial as a“zero net judgment” and noted “[t]he fact that plaintiff is not entitled to recover damages from defendant,” but it concluded, relying on Fer-raro, that the plaintiff had nevertheless “re-ceived ‘a judgment in his favor’” and therefore was entitled to recover costs as a matter ofright under former section 1032. ( Syverson , at pp. 113, 114.) In July 1986, Senate Bill 654 was passed by the Legislature and signed by theGovernor.

Ferraro and Syverson provide an informative context in which to consider the Legislature’s in-tent in repealing former section 1032 and en-acting a new section 1032. In those cases, the Courts of Appeal concluded that, eventhough the plaintiffs had failed to obtain “net judgment[s]” and were “not entitled to re-

2 The committee reports and legislative analysis contain no specific information regarding the Legislature’s intent on the pre-cise question before us.


cover” any damages from the [***62] defen-dants due to indirect offsets, the plaintiffs were nevertheless entitled to recover their costsfrom the defendants under former section 1032 because the judgments were nevertheless “in [their] favor.” ( Syverson v. Heitmann, supra , 171 Cal.App.3d at pp. 112-113; see id . at p. 114 ; Ferraro, supra , 102 Cal.App.3d at pp. 51, fn. 4, 52, italics added.) The Legislature’s decision in July 1986, after both Ferraro and Syverson, to repeal the “judgment in his favor” lan-guage in former section 1032 and replace it with “the party with a net monetary recovery”in the new section 1032 can easily be seen as a rejection of the results in Ferraro and Syver-son. Ferraro and Syverson both dealt with indi-rect offsets and characterized the results ofthese indirect offsets as the absence of a recov-ery and the absence of a “net” judgment. Inlight of Ferraro and Syverson, the Legisla-ture’s decision to use the phrase “net monetary recovery” without any qualification that pre-cluded consideration of indirect offsets demon-strated that the Legislature was aware that a party whose judgment was reduced to zero by in-direct offsets would not be [*996] consid-ered “the party with a net monetary recovery” and that the Legislature intended that the trial court not be required to designate such aparty as a prevailing [***63] party.

Such an interpretation is also consistent with the overriding purpose of Senate Bill 654. Sen-ate Bill 654 was intended to “eliminate confu-sion.” Ferraro and Syverson demonstrated that former section 1032’s “judgment in his fa-vor” language was less than clear. Senate Bill 654’s solution to this lack of clarity was to use language which could be applied with math-ematical precision. A party would be entitled to be designated the prevailing party if thatparty achieved “a net monetary recovery.” If the Legislature had intended to distinguish be-tween indirect and direct offsets, it surelywould [**424] have included precise lan-guage identifying that distinction in its attempt to “eliminate confusion.” Its failure to do so reflects that it intended no such distinction.

4. Subsequent Cases

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None of the cases that have interpreted the 1987 version of section 1032 have held that “the party with a net monetary recovery” includes a party who obtains a net zero judgment due to indirect offsets.

In Pirkig v. Dennis (1989) 215 Cal. App. 3d 1560 [264 Cal. Rptr. 494] (Pirkig), the plaintiff buyers of real property obtained a jury ver-dict for $ 51,000 against the defendant sellers, agent and brokers. [***64] The agent was found to be responsible for 21 percent of the damages. ( Pirkig , at p. 1563 .) The court there-after granted defense motions to dismiss thebrokers from the case and for a new trial on dam-ages. ( Pirkig , at p. 1563 .) While the new trial was pending, the plaintiffs settled with the sell-ers for $ 28,300. ( Pirkig , at p. 1563 .) At the new trial in which the only defendant was the agent, the court found that the plaintiffs’ dam-ages were limited to $ 7,500. After offsetting for the settlement with the sellers, the plaintiffs did not recover anything from the agent.( Pirkig , at p. 1563 .) The trial court neverthe-less found that the plaintiffs were the prevail-ing parties and awarded them their costs and at-torney’s fees. ( Pirkig , at p. 1564 .)On appeal, the agent challenged the award of costs to the plaintiffs under section 1032. He

claimed that they could not be prevailing par-ties because they had not obtained a “net mon-etary recovery.” The Court of Appeal agreed that the plaintiffs had not obtained a “net mon-etary recovery,” but it found no abuse of dis-cretion in the trial court’s discretionary selec-tion of the plaintiffs as the prevailing parties under the [***65] discretionary provisions of section 1032. ( Pirkig, supra , 215 Cal.App.3d at pp. 1565-1566.) [*997]After reaching this unassailable conclusion, the Court of Appeal launched into a lengthy bitof dicta. “The only reason respondents failed to obtain a net monetary recovery at the sec-ond trial was because respondents settled be-fore trial with the sellers for a greater amount than awarded by the second court. That such a coincidence does not affect the plaintiff’sright to recover costs and attorney fees under section 1032 is well established by the govern-


ing case law, especially Ferraro [, supra ,] 102 Cal. App. 3d 33 and Syverson v. Heitmann [, supra, ] 171 Cal. App. 3d 106 .” ( Pirkig, supra , 215 Cal.App.3d at p. 1566.) After discussing the facts and holdings in Ferraro and Syverson,the Court of Appeal returned to the crux of the matter. “[U]nder the unambiguous languageof the amended statute, ‘prevailing party’ in-cludes not only the party with net monetary re-covery, but also in the discretion of the court, any party who recovers other than monetary re-lief and also includes all other parties who do not fall within the specified [***66] instances listed in the statute. The case at bench be-longs in the latter categories.” ( Pirkig , at p. 1567.) Thus, Pirkig held that, where a plain-tiff’s verdict against a defendant is reduced tozero due to indirect offsets, the plaintiff is not “the party with a net monetary recovery” and therefore not necessarily the prevailing party, but the trial court may properly designate the plain-tiff as the prevailing party under the discre-tionary provisions of section 1032.

In Zamora v. Shell Oil Co. (1997) 55 Cal.App.4th 204 [63 Cal. Rptr. 2d 762](Zamora), the jury returned a verdict for $ 222,282 in favor of the plaintiffs and [**425]found that 20 percent of the damages were at-tributable to defendant Western. However, the trial court entered a judgment of $ 0 due tothe plaintiffs’ prior settlements with other defen-dants. ( Zamora , at p. 207 .) The trial courtfound that the plaintiffs were the prevailing par-ties as against Western and awarded themtheir costs. ( Zamora , at pp. 213, 214 .) Western claimed that the plaintiffs should not be de-clared the prevailing parties because they had not actually recovered anything from Western. ( Zamora , at pp. 213-214 .) Relying onPirkig, [***67] the Court of Appeal found no er-ror in the trial court’s discretionary selection of the plaintiffs as the prevailing parties.( Zamora , at pp. 214-215 .)In Great Western Bank v. Converse Consul-tants, Inc. (1997) 58 Cal.App.4th 609 [68 Cal.

Rptr. 2d 224] (Great Western Bank), the cross-defendant entered into a good faith settlement with the plaintiff and obtained dismissal ofthe cross-complaint. The trial court found the

400, **424; 2006 Cal. App. LEXIS 1945, ***65

cross-defendant to be the prevailing party on the cross-complaint and awarded costs to cross-defendant against the defendant and cross-complainant. On appeal, the defendant and cross-complainant challenged the costs award to the cross-defendant. Since section 1032 explic-itly provided that “a defendant in whose fa-vor a dismissal is entered” is the prevailing party, the Court of Appeal concluded that the cross-defendant was entitled to be designated the pre-vailing party and to recover costs. ( Great West-ern Bank , at pp. 612-613 .) The Court of Appeal inexplicably included [*998] the fol-lowing dicta in its opinion: “Settlements by other parties and corresponding offsets do not af-fect a prevailing party determination. ( Zamora [,

supra ,] 55 Cal.App.4th 204, 213-215 [63 Cal.Rptr.2d 762]; [***68] Pirkig [, supra ,] 215 Cal. App. 3d 1560, 1565-1568 [264 Cal.Rptr. 494]; Syverson v. Heitmann [, supra ,] 171 Cal. App. 3d 106, 112-114 [214 Cal.Rptr. 581].)” ( Great Western Bank , at p. 613 .) This state-ment had no impact on the result in Great West-ern Bank and was not supported by the cited cases.

Because Pirkig, Zamora and Great Western Bank were issued long after the Legislature’s en-actment of the version of section 1032 that con-tains the phrase “the party with a net mon-etary recovery,” these cases do not tell us what the Legislature intended when it used that phrase. However, their holdings are consistent with the common meaning of the statutory lan-guage and the extrinsic evidence of the Legis-lature’s intent. Both Pirkig and Zamora held that a party whose recovery is reduced to zero by in-direct offsets and who therefore recovers a judgment of $ 0 is not “the party with a net mon-etary recovery.” Such a party is simply eli-gible to be designated by the trial court as a pre-vailing party under the discretionary provisions of section 1032. Great Western Bank did not involve the phrase “the party with a net mon-etary recovery,” [***69] and its dicta tells us nothing.

5. Summary

Nothing in the plain language of section 1032 re-flects that “the party with a net monetary re-


covery” was intended to distinguish between in-direct and direct offsets such that indirectoffsets that eliminated any recovery and re-duced the judgment to zero would not preventa party from being “the party with a net mon-etary recovery.” The history of the enactment of this language and the cases interpreting this language are completely consistent with thecommon meaning of the plain language of the statute. Accordingly, the trial court did not err in concluding that Wakefield was not “the party with the net monetary [**426] recovery” and refusing to find him to be the prevailingparty.

B. Discretionary Determination of Prevailing PartySince the court was not obligated by section 1032 to select Wakefield as the prevailing party, it was free to exercise its discretion to select ei-ther party as the prevailing party under thediscretionary provisions of section 1032. Wake-field claims that the court abused its discre-tion in deciding that Jeff Bohlin was the prevail-ing party.

Three of Wakefield’s five causes of action against Jeff [***70] Bohlin were dismissed.Two were presented to the jury, and Jeff Boh-lin prevailed on one of the two. On the sole re-maining cause of action, the jury’s verdict in fa-vor [*999] of Wakefield was for far lessthan Wakefield’s settlement with Jeff Bohlin’s joint tortfeasors (the real estate agents). Under these circumstances, the trial court could have reasonably concluded that Jeff Bohlin had pre-vailed at trial by successfully avoiding any fi-nancial obligation to Wakefield. The court did not thereby abuse its discretion.

C. Attorney’s Fees

Wakefield contends that, even if the Bohlins were properly determined to be the prevailing parties, the trial court erred in awarding the Boh-lins their attorney’s fees because they refused or resisted mediation.

1. Background

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The purchase contract’s attorney’s fees clause provided that “the prevailing Buyer or Seller shall be awarded reasonable attorneys’ feesand court or arbitration costs … .” The con-tract provided that the parties “agree to medi-ate any dispute between them arising out of this transaction” and “[a] buyer or seller who re-fuses or resists mediation shall not be entitled to recover prevailing party attorneys’ fees.”[***71] The mediation clause also pro-

vided that “matters excluded from arbitration… are also excluded from mediation.” The arbi-tration clause provided that “matters to which [ Code of Civil Procedure] §§ 337.1 or 337.15 apply” (i.e., construction defects) were ex-cluded from arbitration.

In October 2001, an attorney representing Wake-field sent a letter to the Bohlins’ attorney “de-mand[ing] binding arbitration” and stating“[w]e are prepared to mediate this dispute.” The Bohlins’ attorney responded with a list of“potential mediators or arbitrators … .” Wake-field’s attorney responded by listing his first and second choices of “mediators.” He as-serted: “If we can not settle this case through mediation, then we would proceed to binding arbitration except as to the construction defects … . Those matters are an exception to arbitra-tion, and Mr. Wakefield would proceed to a court action for those.” The Bohlins’ attorney re-sponded: “Although not required we are will-ing to mediate this matter,” and he sought avail-able dates for a mediation. He also wrote: ?I am curious as to which issues you feel would come within the mediation/arbitration [***72] clause since it is my understanding that all of Mr. Wakefield’s claims relate to some kind of construction defect which are excluded from both the mediation clause and arbitration clause of the contract.”

In December 2001, Wakefield’s attorney sent a response to the Bohlins’ attorney. “I thinkyou are correct about the mediation/arbitration clause. In reviewing the contract, I see that claims concerning construction defects are[*1000] made exceptions to both mediation and binding arbitration. Those claims comprisethe bulk of these issues I now see in this case. As a result, the contract gives us only a


court action concerning the construction de-fects under [**427] various legal theories. [¶] Nevertheless, I think we should attempt a me-diation [in order to comply] with the court’s re-quirement for alternate dispute resolution in ad-vance.”

In January 2002, the Bohlins’ attorney sent an-other letter to Wakefield’s attorney. “As Itold you on the telephone my client is not will-ing to mediated [sic] any claims relating to con-struction defects or which are excluded under the arbitration/mediation provisions of the Real Es-tate Purchase Contract. He is willing to sub-mit all matters to binding [***73] arbitration. Therefore if your client is not willing to goto binding arbitration, I assume that he will have to file a complaint with the court and we will go from there.”

Wakefield filed his action in June 2002. The ac-tion was submitted to mediation in December 2003, but the mediation failed.

2. AnalysisWakefield claims that the Bohlins should be de-nied attorney’s fees because they refused tomediate. The purchase contract did not obli-gate the parties to mediate construction defects claims. The exchange of letters between theparties’ attorneys prior to the filing of the com-plaint reflects that Wakefield’s attorney ex-

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pressly represented to the Bohlins’ attorney that Wakefield’s claims were not subject to me-diation under the contract’s mediation clause because Wakefield’s construction defect claims “comprise the bulk of these issues … in this case.” Since the complaint had not yet been filed, the Bohlins had no choice but to accept Wakefield’s attorney’s representation. Indeed, the Bohlins’ attorney repeatedly expressed a willingness to mediate any claims to which the mediation clause applied. He only resisted mediation of claims to which the mediation clause did [***74] not apply. After Wake-field filed a complaint that included causes of ac-tion that were not for construction defects, the case was submitted to mediation.

On these facts, the trial court did not err in con-cluding that the Bohlins had not refused or re-sisted mediation and awarding them their at-torney’s fees as the prevailing parties. [*1001]

III. ConclusionI would hold that the trial court did not err in de-termining that the Bohlins were the prevailing parties and awarding them their costs and attor-ney’s fees.

Respondents’ petition for review by the Su-preme Court was denied March 14, 2007,S149467. Baxter, J., was of the opinion that the petition should be granted.

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