# Fillerup v. Franchise Tax Board CA3

> California Court of Appeal · December 11, 2024

URL: https://www.frixlaw.com/law-library/cases/10758531

## Case

- **Court:** California Court of Appeal
- **Decided:** December 11, 2024
- **Precedential status:** Unpublished
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

Filed 12/11/24 Fillerup v. Franchise Tax Board CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----

DAVID FILLERUP, C099158

Plaintiff and Appellant, (Super. Ct. No. 34-2022-
00328966-CU-MC-GDS)
v.

FRANCHISE TAX BOARD,

Defendant and Respondent.

Prevailing parties in civil actions generally are entitled to recover their costs as a
matter of right. (Code Civ. Proc., § 1032, subd. (b) [references to statutory sections that
follow are to the Code of Civil Procedure].) For purposes of section 1032, and “unless
the context clearly requires otherwise,” a prevailing party includes, among others, the
party with a net monetary recovery, and a defendant in whose favor a dismissal was
entered. (§ 1032, subd. (a)(4) [first sentence].)

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Section 1032 also defines when a trial court has discretion to award costs. The
statute states that if any party recovers “other than monetary relief and in situations other
than as specified,” the trial court shall determine who is the prevailing party. Under those
circumstances, the court in its discretion may or may not allow costs. If it allows costs in
that instance, it may apportion costs between the parties. (§ 1032, subd. (a)(4) [second
sentence].)
In pro. per. plaintiff David Fillerup contends the trial court erred when it granted a
motion filed by defendant Franchise Tax Board (the Board) to strike his memorandum of
costs following his dismissing this action without prejudice. He dismissed the action
because the Board had granted him the nonmonetary relief he had sought. The court
found that the Board was the prevailing party as a defendant in whose favor a dismissal
was entered and was thus entitled to costs as a matter of right. The court rejected
plaintiff’s argument that he was the prevailing party as a party with a net monetary
recovery from the Board’s granting him the requested relief. The court also found that
plaintiff did not qualify as a prevailing party under any of the other categories in section
1032.
On appeal, plaintiff asserts the trial court erred by concluding the Board was
entitled to costs as a matter of right. The court should have exercised its discretion to
determine the prevailing party under the second sentence of section 1032 and considered
whether plaintiff was the prevailing party because he recovered other than monetary
relief or in a situation other than those specified in the statute. (§ 1032, subd. (a)(4).)
Plaintiff also asks us to address additional arguments the Board had raised in support of
its motion to strike.
We reverse the trial court’s order.

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FACTS AND HISTORY OF THE PROCEEDINGS
Plaintiff filed this action seeking declaratory and injunctive relief concerning the
Board’s mishandling of his payment of estimated taxes. Plaintiff alleged that on
December 14, 2021, he mailed to the Board an estimated tax payment in the amount of
$1,500. He designated in writing that the estimated payment was to be applied to the
2021 tax year.
The Board received plaintiff’s estimated tax payment. However, contrary to
plaintiff’s designation and allegedly in violation of Revenue and Taxation Code section
19007 and the Board’s administrative policy, the Board applied the payment to plaintiff’s
2020 taxes. The Board did not notify plaintiff of its action.
Meanwhile, the Board notified plaintiff in two separate notices that he owed
additional sums for his 2020 taxes. The first notice demanded plaintiff pay $5,987.48.
The second notice demanded plaintiff pay another $4,763.64. Plaintiff paid both amounts
totaling $10,751.12 to the Board under protest.
In February 2022, the Board issued refunds to plaintiff in the amount of $9,101.13.
In response, plaintiff demanded that the Board refund him an additional $1,649.99, the
difference between the amount he had paid under protest and the amount the Board had
refunded him. Plaintiff also asked the Board to allocate the $1,500 estimated tax
payment to the 2021 tax year. The Board did not respond to plaintiff’s demand.
On June 7, 2022, plaintiff submitted a formal claim for refund to the Board. He
again asked the Board to refund $1,649.99 and to allocate the $1,500 estimated tax
payment to the 2021 tax year. On August 18, 2022, the Board issued a refund to plaintiff
in the amount of $3,195.71 for the 2020 tax year. This amount included refunds of
$1,649.99 for the 2020 tax year and $1,500 for the estimated tax payment.
Plaintiff returned the refund in total to the Board. He demanded that the Board
reissue a refund for $1,649.99 and that it allocate the $1,500 estimated tax payment to the

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2021 tax year as he had originally requested. On October 10, 2022, however, the Board
reissued a refund to defendant in the amount of $3,195.71, again combining the refund
claimed for $1,649.99 and the estimated tax payment of $1,500.
Plaintiff filed this action against the Board on October 27, 2022. He sought
declaratory and injunctive relief that the Board’s allocation of the $1,500 estimated tax
payment to his 2020 taxes violated Revenue and Taxation Code section 19007 and
administrative policy and his right to due process. He also prayed that the court enjoin
the Board to apply the estimated tax payment to his 2021 taxes as of the date the Board
received the payment.
The Board filed a demurrer against the complaint. It argued that no justiciable
controversy existed. On December 14, 2022, the Board’s Taxpayer Rights Advocate had
issued a letter to plaintiff informing him the Board had applied his $1,500 estimated tax
payment to the 2021 tax year as of December 15, 2021, the day the Board had received
the payment. As a result, the Board argued that plaintiff had received his requested relief
and the action was now moot.
Choosing not to oppose the demurrer, plaintiff filed a request for dismissal without
prejudice. The trial court entered the dismissal the day it was filed.
On March 13, 2023, plaintiff filed a notice of dismissal and a memorandum of
costs. He sought costs in the amount of $565: $435 for filing and motion fees and $130
for service of process.
The Board filed a motion to strike the memorandum of costs. The trial court
granted the Board’s motion. It found that the Board was the prevailing party as a
defendant in whose favor a dismissal was entered. It also found that plaintiff was not a
party with a net monetary recovery as he had argued, nor did he fit under any of the other
categories of prevailing parties set forth in section 1032. Accordingly, the action did not
fall into section 1032’s category of “situations other than as specified” which would
require the court to exercise its discretion to determine the prevailing party. The court

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stated that although the Board was not seeking costs, it was the only party entitled to
costs as a matter of right, and the court had no discretion to order otherwise.

DISCUSSION
Plaintiff contends the trial court erred by determining the Board was the only party
entitled to costs under section 1032 as a matter of right and that the court was not
required to determine whether it should exercise its discretion in awarding costs. Plaintiff
argues that section 1032 required the court to exercise its discretion to determine the
prevailing party because he recovered relief “other than monetary relief,” even if another
party qualified as a prevailing party under one of the statute’s other categories. (§ 1032,
subd. (a)(4).)

I

Forfeiture

Initially, the Board contends plaintiff has forfeited his claim that he was a
prevailing party based on him recovering “other than monetary relief.” (§ 1032, subd.
(a)(4).) The Board argues that plaintiff did not raise this contention before the trial court
and cannot raise it for the first time on appeal.
As the trial court found, the thrust of plaintiff’s opposition to the Board’s motion
to strike was that he was a prevailing party under section 1032 because he had recovered
relief akin to a net monetary recovery. But plaintiff further argued that the Board was not
a defendant in whose favor a dismissal had been entered. The rationale for awarding
costs is that the party to blame pays costs to the party without fault. (DeSaulles v.
Community Hospital of Monterey Peninsula (2016) 62 Cal.4th 1140, 1152.) The Board
was the party to blame because it had misallocated his estimated tax payment. Plaintiff
argued that in this context, where he obtained the relief he had sought in his complaint,
the complaint became moot and he properly dismissed it. It was thus not dismissed in the
Board’s favor.

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Plaintiff next quoted the second sentence from section 1032, subdivision (a)(4) as
an argument heading: “ ‘If a party recovers other than monetary relief and in situations
other than as specified, the “prevailing party” shall be as determined by the court . . . .’ ”
Under this heading, plaintiff argued that because he had shown the Board was not a
defendant in whose favor a dismissal was entered and thus was not the prevailing party,
he was the prevailing party because he obtained the relief he had sought in the complaint
and was thus entitled to costs under section 1032.
In this argument, plaintiff implied that the relief he had obtained was something
other than monetary relief. The trial court rejected this argument by determining plaintiff
was not the prevailing party under any of the categories set forth in section 1032. While
plaintiff’s argument could have been made more explicit, we conclude it sufficiently
raised the issue of being the prevailing party by recovering other than monetary relief for
the issue to be raised on appeal.

II

Discretionary Determination of Prevailing Party Under Section 1032

Generally, we review a trial court’s determination of costs for abuse of discretion.
(MacQuiddy v. Mercedes-Benz USA, LLC (2015) 233 Cal.App.4th 1036, 1050.)
“However, where ‘the determination of whether costs should be awarded is an issue of
law on undisputed facts, we exercise de novo review.’ ” (Ibid.)
Subdivision (b) of section 1032 establishes the right to costs. It states: “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).) Subdivision (a)(4)
defines who is a “prevailing party.” It reads:
“(a) As used in this section, unless the context clearly requires otherwise: [¶] . . .
[¶]

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“(4) ‘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. If 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, subd. (a)(4).)
Section 1032, subdivision (a)(4), classifies prevailing parties into two distinct
groups. The first group is comprised of four categories of litigants—including a
defendant in whose favor a dismissal is entered—who qualify automatically as prevailing
parties. “[T]he 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.”
(Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 975, disapproved on another ground in
Goodman v. Lozano (2010) 47 Cal.4th 1327, 1330; accord, Vought Construction Inc. v.
Stock (2022) 84 Cal.App.5th 622, 635.)
Section 1032 also identifies a second group––parties who recover other than
monetary relief and those in situations other than as specified in the first prong of the
statute––for which the trial court may exercise its discretion to determine who is the
prevailing party and award costs. (Wakefield v. Bohlin, supra, 145 Cal.App.4th at p. 977.)
The second prong, found in section 1032, subdivision (a)(4)’s second sentence, “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 express statutory exception to
the general rule that a prevailing party is entitled to costs as a matter of right.” (Ibid,
italics added.)
“The word ‘includes’ [at the beginning of section 1032, subdivision (a)(4)] is an
open ended term which is expansive in scope and fails to limit the definition of the

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prevailing party to the enumerated instances.” (Pirkig v. Dennis (1989) 215 Cal.App.3d
1560, 1565, disapproved on another ground in Goodman v. Lozano, supra, 47 Cal.4th at
p. 1337.) The language in the second prong permits “parties who do not recover
monetary relief or ones who do not come within the enumerated examples, . . . [to] be
declared prevailing parties and awarded costs in the discretion of the court.” (Pirkig, at
p. 1566; accord, Texas Commerce Bank v. Garamendi (1994) 28 Cal.App.4th 1234,
1249.)
Thus, a trial court must declare a party a prevailing party under the first prong of
section 1032 if that party falls within the enumerated categories, unless any party
recovers other than monetary relief or the action presents a situation other than specified.
Under the latter two circumstances, it falls to the discretion of the court to determine the
prevailing party. The trial court is not required initially to find the first prong
inapplicable, i.e., find a situation other than specified, before determining the action is an
action in which “any party recovers other than monetary relief.” (Wolf v. Walt Disney
Pictures & Television (2008) 162 Cal.App.4th 1107, 1142-1143 [where defendant
prevailed on a cross-complaint for declaratory relief, trial court should exercise discretion
to determine prevailing party even though plaintiff obtained net monetary recovery];
Lincoln v. Schurgin (1995) 39 Cal.App.4th 100, 104-106 [trial court had discretion to
determine prevailing party where plaintiffs recovered a money judgment but defendants
won declaratory relief].)
Whether a party falls within one of the four categories authorizing the recovery of
costs as a matter of right is a question of law we review de novo. (Charton v. Harkey
(2016) 247 Cal.App.4th 730, 739.) The trial court rightly rejected plaintiff’s contention
that the relief he obtained qualified as a net monetary recovery. The court also correctly
determined that the Board was a defendant in whose favor a dismissal was entered. But
the court further determined that plaintiff could not qualify as the prevailing party “under
any of the other categories of ‘prevailing party’ set forth in section 1032.” We conclude

8
the court abused its discretion when it made that finding, as plaintiff recovered other than
monetary relief.
“ ‘ “The word ‘recover’ [as used in section 1032] means ‘to gain by legal process’
or ‘to obtain a final legal judgment in one’s favor.’ ” ’ ” (DeSaulles v. Community
Hospital of Monterey Peninsula, supra, 62 Cal.4th at p. 1153, italics added.) We also
consider the purpose of section 1032 in determining whether the relief plaintiff gained—
the reallocation of his estimated tax payment—is a recovery within the meaning of the
statute. “ ‘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.’ [Citations.] ‘ “The theory upon
which [costs] are allowed to a plaintiff is that the default of the defendant made it
necessary to sue him; and to a defendant, that the plaintiff sued him without cause. Thus
the party to blame pays costs to the party without fault.” ’ [Citation.] [¶] Section 1032
codifies this approach to allocating costs. . . .” (DeSaulles, at p. 1147.)
Plaintiff was not an unsuccessful party. He had requested the Board to allocate his
estimated tax payment to the 2021 tax year three times, to no avail. It was not until he
sued the Board that the Board reallocated his payment. That he dismissed his complaint
without prejudice did not erase the recovery he had gained through the legal process—a
recovery that was other than monetary relief. Accordingly, it fell to the discretion of the
trial court to determine which party was the prevailing party because a party recovered
other than monetary relief. (See Wakefield v. Bohlin, supra, 145 Cal.App.4th at p. 977.)
The Attorney General contends plaintiff cannot recover costs because his recovery
was not the result of a court order. Rather, it was the result of the Board resolving
plaintiff’s still pending administrative tax refund claim. We disagree. The Board
resolved the claim only upon plaintiff suing it. And while the recovery was not the result
of a court order, it was the result of legal process. Hence, costs may be available to a

9
party following a voluntary dismissal without prejudice. (See Cano v. Glover (2006)
143 Cal.App.4th 326, 331.)
For the reasons stated, we will reverse the trial court’s order striking the
memorandum of costs.

III

Plaintiff’s Additional Arguments

In its motion to strike plaintiff’s memorandum of costs, the Board contended that
in addition to the Board being the prevailing party under section 1032, plaintiff could not
recover costs in an action the Board argued was barred by article XIII, section 32 of the
California Constitution. The Board had also raised this issue as a ground for its demurrer
against the complaint.
Because the trial court determined the Board was the prevailing party and that
plaintiff could not qualify as the prevailing party, the court concluded it was not
necessary to address the Board’s argument that plaintiff could not recover costs in an
action that was constitutionally and procedurally barred.
Plaintiff contends the trial court abused its discretion by not addressing the
Board’s constitutional argument. He asserts that “conclusions of law on these legal issues
raised by [the Attorney General] are substantive aspects of who is the prevailing party in
the court’s exercise of discretion ‘in situations other than as specified’ under Section
1032(a)(4), second sentence. These issues relate to the validity of the demurrer and the
validity of the complaint.”
Plaintiff also contends the trial court abused its discretion by not making findings
of fact necessary to determine who is the prevailing party, and by denying plaintiff’s
request for judicial notice of the Board’s administrative procedure manual.
Because we have found plaintiff was a party who recovered other than monetary
relief, we need not address plaintiff’s additional arguments concerning whether his

10
complaint was constitutionally barred or that the situation was other than as specified in
section 1032. The parties are free to raise any relevant arguments to the trial court upon
its reconsideration of the motion to strike.

DISPOSITION
The order granting the Board’s motion to strike plaintiff’s memorandum of costs is
reversed. The matter is remanded to the trial court with instructions to vacate its order
granting the motion to strike, reconsider the motion to strike in a new hearing, exercise its
discretion to determine who is the prevailing party, and award costs as provided in the
second sentence of section 1032, subdivision (a)(4).
Costs on appeal are awarded to plaintiff. (Cal. Rules of Court, rule 8.278(a).)

HULL, Acting P. J.

We concur:

MAURO, J.

FEINBERG, J.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10758531. Public record. Not legal advice.