deSaulles v. Community Hospital of the Monterey Peninsula
62 Cal. 4th 1140
| Cal. | 2016Background
- DeSaulles sued Community Hospital alleging multiple employment-related claims; after pretrial rulings, only breach of contract and breach of covenant claims remained for settlement.
- Parties placed a settlement on the record under Code Civ. Proc. § 664.6: Hospital agreed to pay plaintiff $23,500 and plaintiff dismissed those two claims with prejudice; the judgment reserved appeals and deferred costs requests.
- Trial court later entered an amended judgment stating plaintiff recovered nothing overall but noted the parties had settled two claims; plaintiff appealed and lost.
- After remittitur, both sides sought costs; trial court awarded costs to Hospital, but the Court of Appeal reversed, holding the plaintiff obtained a net monetary recovery and was the prevailing party under Code Civ. Proc. § 1032(a)(4).
- The Supreme Court granted review to decide whether a plaintiff who voluntarily dismisses after receiving monetary settlement is a “prevailing party” entitled to costs under § 1032(a)(4).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a dismissal entered pursuant to a monetary settlement is a dismissal "in the defendant's favor" under § 1032(a)(4) | DeSaulles: dismissal after defendant pays money is not "in defendant's favor" because plaintiff obtained monetary relief | Hospital: any dismissal is in defendant's favor, so defendant is prevailing and entitled to costs | Held: A dismissal following a monetary settlement is not a dismissal "in the defendant's favor" for § 1032(a)(4) purposes. |
| Whether settlement proceeds constitute a "net monetary recovery" under § 1032(a)(4) | DeSaulles: settlement payment is a monetary recovery and makes her the prevailing party | Hospital: "recovery" should mean judgment-level recovery; settlements that produce dismissal should not make plaintiff prevailing (Chinn) | Held: Monetary settlements (including stipulated judgments or § 664.6 settlements that result in dismissal) can constitute a "net monetary recovery," making the plaintiff a prevailing party as a default rule. |
| Whether both settling plaintiff and defendant can be prevailing parties entitled to costs as of right | DeSaulles: statute's categories are distinct; settlement gives plaintiff net recovery so plaintiff prevails | Hospital / Dissent: statute facially includes both categories; where both apply the trial court should exercise discretion to decide who prevailed | Held: Court treats settlement plaintiffs as prevailing parties by default; parties remain free to allocate costs by agreement; disagrees with Chinn and declines to automatically treat settling defendant as prevailing. |
| Effect of parties' settlement silence on costs allocation | DeSaulles: silence does not bar plaintiff from seeking costs; default § 1032 rule applies | Hospital: legislative history supports awarding costs to defendant on dismissal despite settlement | Held: § 1032 provides a default rule; if settlement expressly allocates costs, that agreement controls; otherwise plaintiff who received money is presumptively prevailing. |
Key Cases Cited
- Goodman v. Lozano, 47 Cal.4th 1327 (Cal. 2010) (defines “recover”/"net monetary recovery" context and rejects counting settlements that only offset another defendant's verdict)
- Chinn v. KMR Property Mgmt., 166 Cal.App.4th 175 (Cal. Ct. App. 2008) (held settling plaintiff not prevailing where dismissal entered; court here disapproved its rule)
- Folsom v. Butte County Assn. of Governments, 32 Cal.3d 668 (Cal. 1982) (plaintiff may obtain costs when settlement effectuates plaintiff's objectives and agreement is silent on costs)
- Spinks v. Superior Court, 26 Cal.App. 793 (Cal. Ct. App. 1915) (historical authority treating voluntary dismissal as judgment for defendant where no settlement)
- Reveles v. Toyota by the Bay, 57 Cal.App.4th 1139 (Cal. Ct. App. 1997) (upheld plaintiff costs award where defendant paid settlement on morning of trial; recognized settlement as net monetary recovery)