Nelson v. Anderson

JOHNSON, J., Concurring and Dissenting.

Dissenting.—I concur in the judgment as to all issues except the majority’s reversal of the trial court’s order reducing by two-thirds the cost award to appellant Musick, Peeler & Garrett.

In my view, the trial judge was well within her discretion in determining the “reasonable amount” of defendant’s costs respondent owed only included respondent’s proportionate share of the total costs appellant had to lay out in defending against all three plaintiffs. Appellant law firm does not have an absolute right to recover all its costs against respondent after gaining the benefit of absolving the other plaintiffs of any responsibility for their share of the cost bill when it concluded its settlement agreements with those plaintiffs.

The majority opinion implies the trial court lacks discretion to do anything other than award a prevailing party its full costs from whichever party or parties it chooses to seek its cost award. But this is plainly wrong. It is axiomatic Code of Civil Procedure 1032 and its associated code provisions only authorize a prevailing party to receive the benefit of its reasonable costs once. That is, in multiparty litigation the prevailing party is not entitled to obtain 100 percent of its costs from one opponent, then 100 percent of its costs from a second, then 100 percent from a third, for a total of 300 percent. So apportionment of some sort is nearly inevitable where one party incurs costs in litigation against multiple opponents. As a correlative, unless the parties agree among themselves the percentage of costs each plaintiff shall bear, the trial court must do the apportioning—and exercise its discretion in doing so.

If this case had gone to trial and defendant prevailed against all three plaintiffs, no one would dispute defendant would only have been entitled to recover a total of 100 percent of its reasonable costs apportioned somehow *138 among the three plaintiffs. Furthermore, assume as happened here, two of the three plaintiffs settled with defendant, but the settlement agreements specifically required those settling plaintiffs to pay an identified portion of defendant’s costs. In that instance, the plaintiff who lost at trial would have been able to tax defendant’s total cost bill by the amounts the other plaintiffs had paid out to defray defendant’s costs.

One has to be blind to reality to assume the settlement agreements respondent reached with the settling plaintiffs in this case failed to take into account—in one way or another—appellant’s entitlement to the costs it incurred in defending these two plaintiffs’ actions. In some cases a defendant may reduce the amount it would otherwise pay the plaintiff in damages as part of the settlement by the amount of costs to which it would be entitled after a dismissal of the action pursuant to that settlement. In other words, instead of paying out $500,000 in settlement of plaintiff’s “damages” claim and taking back $100,000 in “costs” it would be owed after plaintiff’s voluntary dismissal of its action, the defendant offers $400,000 in “damages” and foregoes its entitlement to “costs” after settlement. In other cases, in order to gain a settlement a defendant may pay the plaintiff nothing but forego the costs it would otherwise be entitled to after a dismissal. This is the substantial equivalent of giving a plaintiff that sum of money as an inducement to settle.

Either way the net result is the same. The defendant obtains a benefit equal to the costs it could have received from the settling plaintiff. 1 And, either way the defendant should not be entitled to gain a double benefit by collecting the entire cost bill from a nonsettling plaintiff in the same litigation.

In the instant case, the trial court acted reasonably in determining appellant already obtained a benefit equal to two-thirds of the total cost bill as part *139 of its settlement with the two settling plaintiffs. Consequently, in my view the court also was well within the bounds of its discretion in deciding the “reasonable amount” of appellant’s costs remaining to be collected from respondent, the nonsettling plaintiff, was one-third of those costs, not the full amount. Accordingly, were I in. the majority I would affirm that portion of the judgment.

A petition for a rehearing was denied June 14, 1999, and the opinion was modified to read as printed above. The petitions of both respondent and appellants Musick, Peeler & Garrett and Geoffrey C. Brown for review by the Supreme Court were denied September 15, 1999.

Ironically, in its own brief appellant law firm recognizes a defendant’s offer to forego costs it otherwise would be owed is the equivalent of an offer to pay out that same sum in cash as a means of obtaining a given plaintiff’s agreement to settle the case. In arguing why its $5,000 offer to settle respondent Nelson’s suit was a “reasonable” offer and thus one entitling appellant to its expert witness fees, appellant’s brief argues, “the trial court ignored the fact that MPG and Brown offered to waive approximately $100,000 in recoverable costs at the time of the Offer, in addition to paying Nelson $5,000, rendering the value of the Offer much more than the ‘modest’ one authorized in Culbertson.” Likewise, appellant undoubtedly used the waiver of those same costs as a substitute for cash in gaining settlements with the other two plaintiffs. The trial court could properly conclude respondent had already received at least two-thirds of the “reasonable amount” of its costs from the settling plaintiffs just as if those settlement agreements had specifically included those plaintiffs’ payment of a portion of defendant’s costs.