Lead Opinion
Opinion
Code of Civil Procedure section 1032, subdivision (a)(4) defines the “prevailing party” in litigation to include “the party with a net monetary recovery” and “a defendant in whose favor a dismissal is entered.” (All undesignated statutory references are to this code.) A “prevailing party,” so defined, “is entitled as a matter of right to recover costs in any action or proceeding.” (§ 1032, subd. (b).) The question in this case is whether a plaintiff who voluntarily dismisses an action after entering into a monetary settlement is a prevailing party under section 1032, subdivision (a)(4) (hereafter section 1032(a)(4)).
The Court of Appeal below answered in the affirmative, reasoning that the statutory definition of “prevailing party” includes a party that obtains a “net monetary recovery” and that a settlement in which a defendant pays a plaintiff some amount of money is a net monetary recovery, at least under the circumstances of this case. In reaching this conclusion, the Court of Appeal disagreed with Chinn v. KMR Property Management (2008)
We conclude that the Court of Appeal below was correct: When a defendant pays money to a plaintiff in order to settle a case, the plaintiff obtains a “net monetary recovery,” and a dismissal pursuant to such a settlement is not a dismissal “in [the defendant’s] favor.” (§ 1032(a)(4).) As emphasized below, this holding sets forth a default rule; settling parties are free to make their own arrangements regarding costs.
I.
Community Hospital of the Monterey Peninsula (the Hospital) hired Maureen deSaulles in February 2005 as a part-time patient business services registrar. In June 2005, she began complaining about her work shift assignments to the emergency room. The Hospital placed deSaulles on a leave of absence in January 2006 and terminated her employment in July 2006.
After the Hospital’s motion for summary judgment adjudication and subsequent motions in limine, the court ruled that deSaulles would be precluded from introducing evidence and argument regarding any cause of action except the third and fourth causes of action, breach of contract and breach of the implied covenant of good faith and fair dealing.
At the conclusion of those rulings and before a jury was empaneled, the parties placed the following settlement on the record to permit the court to retain jurisdiction under section 664.6: ‘“[I]n consideration for dismissal with prejudice of the two claims of breach of contract and breach of covenant, Defendant will pay Plaintiff within 10 days $23,500.” Defense counsel ‘“will prepare a judgment on the remaining claims which references the dismissal with prejudice and which preserves the right of appeal of the rulings of this court on the remaining causes of action.” “[T]he parties will not file any motions or memoranda for costs or attorney fees[,] holding off until the completion of the appeal
On October 6, 2008, pursuant to the settlement, deSaulles filed a request for dismissal with prejudice of the breach of contract and breach of covenant claims. On January 6, 2009, the trial court entered an amended judgment that said: ‘“Having considered the arguments, oral and written, of all the parties, the records and file herein, and the pretrial motions and oppositions thereto filed herein, and having granted defendant’s Motion in Limine No. 1 to Preclude Any Argument That Defendant Failed to Accommodate Plaintiff’s Disability or to Engage in the Interachve Process, or That Plaintiff Was Harassed, Discriminated or Retaliated Against in Connechon Therewith, the Court finds that plaintiff will be unable to introduce any evidence that would establish plaintiff’s second cause of action for retaliahon, her fifth and sixth causes of action for intenhonal and negligent infliction of emotional distress, or her seventh cause of achon for wrongful termination in violation of public policy; and, [¶] The Court having previously granted summary adjudication of Plaintiff’s first cause of action for failure to accommodate; and, [¶] The parties having settled plaintiff’s third cause of achon for breach of implied in fact contract and Fourth cause [] of action for breach of the covenant of good faith and fair dealing, IT IS HEREBY ADJUDGED that, [¶] 1. Plaintiff
DeSaulles filed an appeal from the amended judgment, and the Court of Appeal affirmed the judgment in an unpublished opinion. After the Court of Appeal issued a remittitur, the parties returned to the trial court, and each claimed to be the prevailing party entitled to recovery of costs. After a hearing, the trial court said: ‘“The Court believes it can exercise its discretion in determining which party did prevail, and because [the Hospital] prevailed on significant causes of action and thereafter entered into a settlement on the remaining costs, the Court finds that [the Hospital] is the prevailing party.” The trial court awarded the Hospital costs of $12,731.92 and denied deSaulles’s request for costs.
The Court of Appeal reversed, concluding that deSaulles had obtained a net monetary recovery and was therefore the prevailing party. As to the Hospital’s argument that it was entitled to costs because it had obtained a dismissal, the Court of Appeal observed that a final dismissal had not disposed of this case: ‘“The summary adjudication did not end the action in Employer’s favor. The sustaining of in limine motions did not end the action in Employer’s favor, as two causes of action remained for trial. The case ended without a trial on the merits because Employee agreed to dismiss her remaining two causes of action, but the judgment entered did not purport to dismiss the entire action. The judgment was intended by its terms to preserve Employee’s right to appeal the court’s rulings on her other claims. Employee did indeed appeal in an ultimately unsuccessful attempt to resurrect those causes of action. [¶] Employee voluntarily dismissed two causes of action and a judgment was entered on the remaining causes. Employer obtained at most a partial voluntary dismissal, which we conclude did not, without more, trigger a mandatory costs award to Employer.”
The Court of Appeal further explained: ‘“The judgment in this case provided that Employee shall recover nothing and also recited that the parties had settled two of the seven causes of action. But the judgment failed to mention that Employee was paid $23,500 in exchange for dismissing those causes of action.” The court cited Friends of the Trails v. Blasius (2000)
II.
In contrast to the American rule that parties to a lawsuit ordinarily pay their own attorney fees, litigation costs have been traditionally awarded to the prevailing party. “Costs are allowances which are authorized to reimburse the successful party to an action or proceeding and are in the nature of incidental damages to indemnify a party against the expense of successfully asserting his rights.” (Purdy v. Johnson (1929)
Section 1032 codifies this approach to allocating costs: “Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (§ 1032, subd. (b).) The statute provides that “unless the context clearly requires otherwise,” the term “ ‘ [prevailing party’ includes the party with a net monetary 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 relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.” (§ 1032(a)(4).)
Section 1032’s definition of “prevailing party” does not control, however, when another statute provides for different means of allocating costs. (Williams v. Chino Valley Independent Fire Dist. (2015)
A.
In claiming to be the prevailing party in this case, the Hospital principally relies on Chinn. There, a tenant and her boyfriend (collectively, Chinn) sued a property management company and the property owner (collectively, KMR), alleging breach of a duty of care to provide for the safety of their tenants. After KMR declined to accept Chinn’s offer made pursuant to section 998, KMR made its own section 998 offer to settle the case for $23,500 (coincidentally the same amount as the settlement in the present case) and to waive all costs in exchange for dismissal of the action. Chinn accepted this offer and filed a notice of settlement pursuant to section 998, and the trial court dismissed the action. Chinn then sought an award of costs, which KMR opposed on the ground that Chinn was not the prevailing party. The trial court disagreed with KMR and awarded Chinn $4,036.58 in costs.
The Court of Appeal reversed, concluding that Chinn was not the prevailing party and therefore could not recover costs. The court did not discuss in any detail the language of section 1032(a)(4), nor did it find ambiguity in the term “net monetary recovery.” Instead, the court construed this term in the context of section 1032’s legislative history. That history provides useful background for understanding this case.
“In 1933, the Legislature enacted sections 1031 and 1032 to consolidate several cost statutes. As enacted, section 1031 provided in municipal and justice courts, ‘the prevailing party, including a defendant as to whom the action is dismissed, is entitled to his costs . . . .’ (Stats. 1933, ch. 744, § 190, p. 1901 [consolidating matter contained in former §§ 831d & 924].) Section 1032 provided for an award of costs as a matter of right in superior court to (1) a party who had a judgment in his favor in specified actions, including ‘an action for the recovery of money or damages,’ as long as the judgment met the trial court’s jurisdictional limit; or (2) a defendant as to whom the action was dismissed. (Stats. 1933, ch. 744, § 191, p. 1901 [consolidating former §§ 1022, 1024-1026].) In all other actions, the court had discretion under section 1032 to award and allocate costs. (Stats. 1933, ch. 744, § 191, p. 1901.) The cost statutes apparently codified case law interpreting a voluntary dismissal as a judgment in the defendant’s favor (Spinks v. Superior Court (1915)
“Under former section 1032, ‘If the parties had competing claims for damages, then the party with a net judgment in his favor was the sole party
In 1986, section 1032 was repealed and reenacted in its present form by Senate Bill No. 654 (1985-1986 Reg. Sess.). As Chinn recounted: ‘“The legislative history of Senate Bill No. 654 (1985-1986 Reg. Sess.) does not indicate any change in the law to consider settlement proceeds or provide costs to a plaintiff after a dismissal. The Legislative Council’s Digest printed on the bill simply states in pertinent part: ‘Existing law contains numerous provisions for the prevailing party in superior, municipal, and justice court actions to receive costs . . . . [¶] This bill would repeal those provisions and instead provide that except as otherwise provided by law, a prevailing party, as defined, is entitled as a matter of right to recover costs in any action or proceeding. This bill would provide for the determination of fees and costs by the court in specified instances[.]’ (Assem. Amend, to Sen. Bill No. 654 (1985-1986 Reg. Sess.) Apr. 17, 1986.)
‘“The Senate Committee on Judiciary, Analysis of Senate Bill No. 654 (1985-1986 Reg. Sess.) as amended April 15, 1986, noted that the purpose of the bill was ‘to consolidate the relevant law governing recovery of costs and to simplify the present procedure for determining these costs, thereby relieving court congestion and easing judicial workload.’ The bill required the Judicial Council to promulgate a uniform set of guidelines governing the award of costs in all courts, and ‘it is assumed that the rules would reflect existing statutory and case law.’ Three minor changes to existing law were noted: the prevailing party would be entitled to recover court reporter expenses, a $5 bonus to the prevailing party would be eliminated, and a $100 cost item in libel and slander cases would be eliminated.
‘“Senate Bill No. 654 (1985-1986 Reg. Sess.) was introduced on behalf of the California Judges Association Civil Law and Procedure Committee. On January 20, 1984, Judge Richard H. Breiner, who was the chairman of the civil law and procedure committee, responded in writing to a telephone call from Assembly Republican consultant Earl Cantos. Judge Breiner stated in pertinent part, ‘The proposed bill merely synthesizes and simplifies the myriad of existing statutes into language which is clear, simple, and located in one place. You expressed concern that the proposal might allow an award of costs against a plaintiff not presently permitted under current law, when an action is dismissed. Under present[] law, costs are allowed to a defendant when plaintiff’s action is dismissed (City of Industry v. Gordon (1972) 29
“Nothing in the background materials accompanying the proposed amendment mentioned settlement proceeds or suggested the definition of ‘prevailing party’ in section 1032 would change existing law to permit an award of costs to a plaintiff following a dismissal. (See Sen. Com. on Judiciary, Analysis of Sen. Bill No. 654 (1985-1986 Reg. Sess.) as amended Apr. 15, 1986; Sen. Com. on Judiciary, legis. bill file on Sen. Bill No. 654 (1985-1986 Reg. Sess.); Assem. Com. on Judiciary, Analyses of Sen. Bill No. 654 (1985-1986 Reg. Sess.) as amended Mar. 31 and Apr. 17, 1986; Office of Assem. Floor Analyses, 3d reading analyses of Sen. Bill No. 654 (1985-1986 Reg. Sess.) as amended Apr. 17, June 5, and July 8, 1986.)” (Chinn, supra, 166 Cal.App.4th at pp. 189-190.)
In light of the language and legislative history of section 1032, Chinn concluded that the dismissal of an action makes the defendant the prevailing party and that settlement proceeds do not qualify as a “net monetary recovery” that would make the settling plaintiff the prevailing party: “Construing the term ‘net monetary recovery’ in context, we conclude that the Legislature did not intend to include settlement proceeds received by the plaintiff in exchange for a dismissal in favor of the defendant. The definition of ‘prevailing party’ provided in section 1032 requires the court to award costs as a matter of right in specified situations. By precluding consideration of settlement proceeds as a ‘net monetary recovery’ when a dismissal is entered in favor of the defendant, only one party qualifies for a mandatory award of costs, consistent with the prior law.
“Chinn contends that the commonsense meaning of the isolated term ‘net monetary recovery’ includes settlement proceeds. However, Chinn’s interpretation would lead to an absurd result, as both plaintiff and defendants would be entitled to an award of costs as a matter of right.” (Chinn, supra,
B.
We first address whether a dismissal obtained in exchange for a monetary settlement may be considered a dismissal in a defendant’s favor within the meaning of section 1032(a)(4).
Relying on Spinks v. Superior Court, supra,
This equitable rationale for awarding costs to a defendant after a dismissal in its favor also appears in a case decided shortly before the 1986 repeal and
Thus, the rationale for awarding costs to a defendant on dismissal was rooted in the injustice that would result if a plaintiff who dismissed an unmeritorious action before judgment could evade an award of costs to compensate the defendant for the costs of preparing for trial. Such an award is an application of the basic rationale for awarding costs, that “ ‘the party to blame pays costs to the party without fault.’ ” (Purdy v. Johnson, supra,
The statement by Judge Breiner quoted in the legislative history above— that “ ‘[ujnder present[] law, costs are allowed to a defendant when plaintiffs action is dismissed (City of Industry v. Gordon[, supra,]
In light of section 1032’s basic purpose of imposing costs on the losing party, and in light of the case law that the statute was intended to incorporate, we conclude that the definition of ‘“prevailing party” as ‘“a defendant in whose favor a dismissal is entered” was not intended to encompass defendants that entered into a monetary settlement in exchange for
Having concluded that a defendant is not a prevailing party as a matter of right in these situations, we must next determine whether a plaintiff who obtains a monetary settlement is a prevailing party.
C.
As noted, section 1032(a)(4) defines the party with a “net monetary recovery” as the “ ‘[prevailing party.’ ” “ ‘The word “recover” means “to gain by legal process” or “to obtain a final legal judgment in one’s favor.” ’ ” (Goodman, supra,
We see no reason why a monetary settlement cannot fit within the definition of “monetary recovery.” Although a monetary settlement is in some ways like a private contract, a settlement is obtained as a means of resolving and terminating a lawsuit. Moreover, settlement agreements pursuant to section 664.6 or section 998 result not only in contractual agreements but also in judgments that conclusively resolve the issues between the parties. (See California State Auto. Assn. Inter-Ins. Bureau v. Superior Court (1990)
Other language in section 1032 suggests a broad understanding of the word “recovery.” Again, “prevailing party” is defined to include “the party with a net monetary 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 relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court . . . .” (§ 1032(a)(4), italics added.) In the statute, “monetary relief’ is synonymous with “net monetary recovery” since a plaintiff is a prevailing party as a matter of right if he or she obtains “monetary relief’ but will be considered a prevailing party at the court’s discretion if she “recovers other than monetary relief.” “Relief,” like “recovery,” is a broad term that can include money obtained through a settlement. This court used the term in that
We conclude that the term “recovery” in section 1032(a)(4) encompasses situations in which a defendant settles with a plaintiff for some or all of the money that the plaintiff sought through litigation. This understanding of “recovery” is in keeping with the purpose of section 1032 discussed above. Just as a plaintiff cannot avoid a cost award by dismissing an action on the eve of trial, so a defendant cannot avoid a cost award merely by settling on the eve of trial. In Reveles v. Toyota by the Bay (1997)
This understanding of “net monetary recovery” is further reinforced by case law predating the 1986 repeal and reenactment of section 1032. The cases make clear that if a settlement agreement, compromise offer pursuant to section 998, or stipulated judgment is silent on the matter of costs, the plaintiff is not barred from seeking costs. (See Folsom v. Butte County Assn. of Governments (1982)
Implicit in this line of cases is the principle, well established before the 1986 repeal and reenactment of the costs statute, that a plaintiff who settles a lawsuit for payment of money or other tangible benefits may be considered a prevailing party. Nothing in the language or legislative history of the statute indicates an intention to change that principle. The Hospital objects that the cases above, with the exception of Folsom, involved judgments entered in the plaintiffs favor rather than dismissals. Rappenecker, for example, involved a compromise offer pursuant to section 998. (Rappenecker, supra, 93 Cal.App.3d at pp. 262-263.) Although the acceptance of a section 998 offer leads to the entry of a judgment (§ 998, subd. (b)(1)), a section 998 offer may also require the plaintiff to dismiss the action as a condition of settlement. (See Chinn, supra, at
The other cases cited above awarded costs after a stipulated judgment in the plaintiffs favor. (Rapp, supra,
Where, as here, the parties stipulate before the court that the plaintiff has been paid a sum of money in exchange for the dismissal of an action, the plaintiff is as legally entitled to receive money from the defendant as a plaintiff who obtains a stipulated judgment without a dismissal. The former plaintiff is every bit as much a prevailing party as the latter. Chinn’s rule that a defendant is the prevailing party if a section 998 offer includes an agreement to dismiss the action, no matter how favorable the offer is to plaintiff, is inequitable and inconsistent with the purpose of section 1032.
Folsom provides additional support for this conclusion. There, the plaintiffs entered into a settlement agreement with government defendants promising to dismiss the case when the defendants established four new transit systems. (Folsom, supra,
The Hospital notes two differences between Folsom and the present case: first, that the dismissal was conditional and delayed, and second, that the relief granted was nonmonetary. But neither of those differences matters here. In light of the equitable purpose of section 1032, there is no reason why a plaintiff that conditions dismissal of the case on the future fulfillment of some of its litigation objectives should be considered the prevailing party, but not a plaintiff that dismisses the action in exchange for the present payment of money.
The Hospital contends that Goodman supports its position. In that case, homeowners sued a home builder and various other defendants for construction defects. They settled with some of the defendants for $230,000 and obtained a $146,000 verdict against another defendant, Lozano. The trial court pursuant to section 877, subdivision (a), which provides that a good faith settlement with some tortfeasors will serve to reduce the claims against the remaining tortfeasors, reduced the award against Lozano to zero. The question was whether Goodman had obtained a net monetary recovery against Lozano for purposes of awarding costs. The court concluded that Goodman had not and affirmed an award of costs to Lozano: “ ‘[T]he common meaning of the phrase “the party with a net monetary recovery” is the party who gains
The Hospital contends that “[i]f settlement funds were included in the term ‘net monetary recovery,’ the Goodman plaintiffs would necessarily have been the prevailing parties because they obtained] settlement funds in an amount of $230,000. Instead, the court looked to the final judgment alone to determine whether the plaintiff obtained a net monetary recovery.” But the question in Goodman was not whether the plaintiffs obtained a net monetary recovery from the settling defendants, but rather whether the plaintiffs obtained such a recovery from Lozano. It is clear they did not. Here, deSaulles obtained a $23,500 settlement from the Hospital. Although Goodman does not dispose of the question before us, its holding is not inconsistent with the conclusion that deSaulles obtained a net monetary recovery from the Hospital.
Of course, a monetary settlement in favor of a plaintiff does not necessarily suggest a meritorious lawsuit; defendants may settle cases with little merit in order to be spared the expense of trial. However, the rule is that a partial recovery, as long as it is a net monetary recovery, entitles a plaintiff to costs. (See Michell v. Olick, supra, 49 Cal.App.4th at pp. 1196, 1198-1199 [although 11 of the plaintiff’s causes of action were not successful, plaintiff’s success on the 12th cause of action for a jury award of $63,000 entitled a plaintiff to costs].) A determination of whether a complaint was truly meritorious “would require the court to try the entire case.” (Olen, supra,
Our dissenting colleagues contend that a settling plaintiff and defendant should both be considered prevailing parties if the settlement calls for a dismissal, and that an award of costs should be left to the court’s discretion. But a corollary of this position is that if the monetary settlement does not call for a dismissal, which is sometimes the case (ante, at pp. 1155-1156), then only the plaintiffs should be considered the prevailing party, even though the latter settlement, like the former, results in the payment of money to the plaintiff and the termination of the action. We decline to treat the two situations differently when the difference is a matter of form and not substance. Such an approach, moreover, would not serve the statute’s goal of simplifying procedures for determining costs and easing judicial workload. (Ante, at pp. 1148-1149.)
In sum, we hold that a dismissal pursuant to a monetary settlement is not a dismissal in the defendant’s “favor” as that term is used in section 1032(a)(4). We further hold that a plaintiff that enters into a stipulated judgment to be paid money in exchange for a dismissal has obtained a “net monetary recovery” within the meaning of section 1032(a)(4), whether or not the judgment mentions the settlement. Our holdings establish a default rule that applies only when the parties have not resolved the matter of costs in their settlement agreement or have not stipulated “to alternative procedures for awarding costs.” (§ 1032, subd. (c).) We disapprove the contrary holding of Chinn v. KMR Property Management, supra,
Conclusion
The judgment of the Court of Appeal is affirmed.
Dissenting Opinion
Dissenting.—I agree with the majority that a plaintiff who receives a monetary settlement in exchange for the dismissal of her claims has received a “net monetary recovery,” and is therefore a “prevailing party” presumptively entitled to costs under Code of Civil Procedure section 1032, subdivision (a)(4). But by the terms of the statute, so, too, is the “defendant in whose favor . . . dismissal is entered.” (Code Civ. Proc., § 1032, subd. (a)(4) (section 1032(a)(4)).) Because both parties cannot be entitled to costs as of right, such cases are covered by the next sentence of the provision, which permits the trial court, “in situations other than as specified,” to determine which party has in fact prevailed and to allocate costs accordingly. (Ibid.) Thus the statute, as I read it, does not treat settling plaintiffs as automatically entitled to costs—no matter how minimal their recovery or how unmeritorious their claims—but permits courts to take into account special circumstances that may render a costs award inequitable or unjust. Because neither the trial court nor the Court of Appeal considered whether such circumstances are present here, I would reverse and remand for further consideration.
In reaching its contrary conclusion, the majority asserts, without further elaboration, that “[w]hen a defendant pays money to a plaintiff in order to settle a case, ... a dismissal pursuant to such a settlement is not a dismissal ‘in [the defendant’s favor].’ ” (Maj. opn., ante, at p. 1144; accord, id. at p. 1158.) Perhaps by this the majority means to suggest that a dismissal entered pursuant to a monetary settlement is not a dismissal that “favors” the defendant, because, as the majority elsewhere puts it, the plaintiff has also “achieved some litigation success through settlement of the case.” (Id. at p. 1153.) But section 1032(a)(4) does not speak of a dismissal “favoring” a defendant, it speaks of a dismissal “entered” in favor of a defendant. Even if a settlement calling for dismissal might not be wholly favorable to the defendant—e.g., because it also calls for the defendant to pay some amount of money—we would have to acknowledge that the resulting dismissal has nevertheless been entered in the defendant’s favor.
In any event, when parties agree to settle a dispute, it is generally because both sides believe that settlement is to their advantage. (Cf. Hazard, The Settlement Black Box (1995) 75 B.U. L.Rev. 1257, 1267 [“[T]he settlement area consists of a wide band of different prices at which it will benefit both parties to settle.”].) And as a practical matter, it is certainly not uncommon for the terms of a settlement to advantage the defendant far more than the plaintiff. If, for example, a plaintiff agrees to dismiss a million-dollar damages claim in exchange for a nuisance payment of $10, with no admission of liability, it would be difficult to dispute that the resulting dismissal was not only entered in the defendant’s favor, but was entered pursuant to a settlement “favorable” to the defendant as well.
In the end, the majority’s reading of section 1032(a)(4)’s dismissal clause rests not on the text of the provision, but on inferences about legislative intent
Of course, as we have repeatedly made clear, the interpretation of a statute necessarily “begin[s] with its text, as statutory language typically is the best and most reliable indicator of the Legislature’s intended purpose.” (Larkin v. Workers’ Comp. Appeals Bd. (2015)
The legislative history on which the majority relies is not especially revealing in any event. The majority relies principally on the Court of Appeal’s observation in Chinn v. KMR Property Management (2008)
But even if the Spinks scenario was the Legislature’s primary concern, that does not mean it was the Legislature’s only concern. Although legislators
In short, I would conclude that the Legislature meant what it said: A defendant in whose favor a dismissal is entered—whether as a result of a monetary settlement or otherwise—is a “prevailing party” within the meaning of section 1032(a)(4). But to be clear, to say that a settling defendant is a “prevailing party” does not mean that it is the “prevailing party,” thereby entitled to payment of costs as of right. As the majority explains, the plaintiff is also a “prevailing party” within the meaning of section 1032(a)(4) because he or she has received a “net monetary recovery” in the form of settlement proceeds. (§ 1032(a)(4); see maj. opn., ante, at pp. 1153-1157.) Because both parties cannot be entitled to costs as of right, we must proceed to the next sentence of section 1032(a)(4), which provides: “When any party recovers other than monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties on the same or adverse sides . . . .” “In cases where both parties achieved a status that Code of Civil Procedure section 1032 defines as a prevailing party, the action ‘falls into the “situation other than as specified” category, calling for an exercise of the trial court’s discretion’ ” to determine which party, if any, should receive costs. (Wohlgemuth v. Caterpillar Inc. (2012)
Recognizing a trial court’s discretion when cases are dismissed pursuant to a monetary settlement also serves the equitable objectives underlying Code of Civil Procedure section 1032. In the typical case, the majority is correct that the equities will favor the plaintiff who has achieved some measure of success through the settlement, and thus can reasonably expect to be compensated for her litigation costs. (Maj. opn., ante, at pp. 1152-1153.) But this will not invariably be so. It is, for example, a simple truth that defendants sometimes settle even frivolous lawsuits simply “because the cost of litigation—either financial or in terms of public relations—would be too great.” (Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources (2001)
As I read it, section 1032(a)(4) imposes no rigid requirement to award costs to a settling plaintiff in such circumstances. The statute instead permits trial courts to determine whether the equities of the case warrant deviation from the usual rule entitling a settling plaintiff to costs. It allows trial courts
Notes
The Court of Appeal in this case did not disagree with this conclusion. The court explained that if defendant hospital “had qualified as a ‘prevailing party,’ this case could be among the ‘situations other than as specified’ for purposes of awarding mandatory costs,” and the court could “exercise discretion to determine which party prevailed based on the merits of the case.” The court ultimately concluded that the hospital did not qualify as a “prevailing party” within the meaning of section 1032(a)(4) because the settlement dismissed only some of plaintiff’s claims; the remainder of the claims were resolved through entry of judgment in defendant’s