Date: 08-19-2015

Case Style: Chodos v. Borman

Case Number: B260326

Judge: Richard M. Mosk

Court: IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

Plaintiff's Attorney: Philip Kaufler

Defendant's Attorney: Ronald N. Richards and Nicholas A. Bravo

Description: Attorney represented client “in two divorce cases and a related Marvin[ ] action without a statutorily required written hourly or contingency fee agreement, [and thereafter] sued his client [in a quantum meruit action] for the reasonable value of the services he rendered in the three cases.” (Chodos I, supra, 227 Cal.App.4th at p. 82). The jury awarded attorney $7.8 million by special verdict, finding a reasonable hourly rate of $1,000 per hour, a reasonable number of hours expended on the two divorce cases and the Marvin action of 1,800, and a multiplier of five. On September 19, 2013, the trial court, in accordance with the jury’s special verdict, entered a final judgment for attorney of $7,717,421, reflecting two stipulated adjustments deducting the costs paid to attorney for his work on the three actions and adding attorney’s out-of-pocket costs. On September 24, 2013, attorney filed a memorandum of costs setting forth his trial court costs, which client did not challenge.
Client appealed from the judgment in Chodos I, supra, 227 Cal.App.4th at page 82, contending, inter alia, that the trial court erred by instructing the jury that it could apply a multiplier to the lodestar amount. We determined that, as a matter of law, the multiplier was not appropriate and therefore that the instruction allowing the jury to award a multiplier was erroneous.
Our disposition in Chodos I, filed on June 18, 2014, read as follows: “The judgment is reversed and the matter is remanded to the trial court with instructions to enter a new judgment based on that portion of the special verdict form that awarded the attorney a $1.8 million lodestar amount based on the jury’s finding of a reasonable hourly rate of $1,000 and a reasonable number of hours expended on the two divorce cases and the Marvin action of 1,800. As it did in the original judgment, the trial court shall make adjustments to the $1.8 million award by adding the amount of $24,921 and deducting the amount of $107,000. Client shall recover her costs on appeal.” (Chodos I, supra, 227 Cal.App.4th at pp. 105-106.)
We issued a remittitur on November 4, 2014, and two days later, attorney filed an ex parte application for entry of a revised judgment. Attorney’s ex parte application sought, inter alia, postjudment interest on the trial court’s revised final judgment and on his trial court costs incurred in his quantum meruit action at 10 percent per annum from September 19, 2013. Client filed an opposition to attorney’s ex parte application, and on November 6, 2014, the trial court issued a minute order stating, “The court declines to hear the matter raised by [attorney’s] Ex Parte Application since there is no showing of any urgency much less an emergency.”
On November 14, 2014, the trial court entered a new final judgment of $1,717,921 in attorney’s favor, noting that “[a]ny previously issued Judgment in this case ha[s] been vacated and set aside by virtue of an order by the Court of Appeal . . . .” Attorney filed an appeal on November 25, 2014, contending that the postjudgment interest in the judgment should have run from September 19, 2013, not from November 14, 2014, at 10 percent per annum, and that he should be awarded trial costs from Chodos I, supra, 227 Cal.App.4th 76 of $12,983.99, with interest thereon from September 19, 2013.

DISCUSSION:

I. Standard of Review
The principal issue on appeal is whether attorney is entitled to postjudgment interest on the revised judgment and on his trial court costs from the date of entry of the original judgment or only from the date of entry of the revised judgment. Code of Civil Procedure section 685.020, subdivision (a) provides in part that “interest commences to accrue on a money judgment on the date of entry of the judgment.” The date from which interest should run and the interest rate “are questions of law, which we review de novo.” (Roden v. AmerisourceBergen Corp. (2010) 186 Cal.App.4th 620, 658 (Roden).) The legal question of whether attorney is entitled to interest at the statutory rate from the date of entry of the trial court’s original judgment depends on whether our holding in Chodos I, supra, 227 Cal.App.4th 76 was in legal effect a modification or a reversal of the trial court’s original judgment. (Snapp v. State Farm Fire & Cas. Co. (1964) 60 Cal.2d 816, 818.)

II. Interest on the Judgment
A judgment bears interest from the date of its entry in the trial court even though the judgment is still subject to direct attack. (Bellflower City School Dist. v. Skaggs (1959) 52 Cal.2d 278, 280.) As stated in Munoz v. City of Union City (2009) 173 Cal.App.4th 199, “‘When a judgment is modified upon appeal, whether upward or downward, the new sum draws interest from the date of the entry of the original order, not from the date of the new judgment. [Citations.] On the other hand, when a judgment is reversed on appeal the new award subsequently entered by the trial court can bear interest only from the date of entry of such new judgment. [Citation.]’ [Citation.]” (Id. at p. 203; see 7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 333, p. 938.)
Whether an order by an appellate court is a modification or a reversal depends on the substance and effect of that order. (Snapp v. State Farm Fire & Cas. Co., supra, 60 Cal.2d at p. 821; see Lucky United Properties Investment, Inc. v. Lee (2013) 213 Cal.App.4th 635, 653.) An appellate court order is “a reversal in the legal sense” when it reverses the trial court and remands an issue to the trial court for further hearing and factfinding necessary to the resolution of the issue forming a basis for appeal. (Stockton Theatres, Inc. v. Palermo (1961) 55 Cal.2d 439, 441, 444.) The reversal of a trial court judgment on grounds of insufficient evidence is also a substantive reversal. (Ehret v. Congoleum Corp. (2001) 87 Cal.App.4th 202, 210.) Furthermore, when a “trial court ha[s] no authority to award damages at th[e] point” when the award is made, a reversal on appeal is a substantive reversal. (Roden, supra, 186 Cal.App.4th at p. 660.) In Roden, the Court of Appeal had reversed the award of damages entirely because the trial court had no authority to award damages at the time the award was made. (Ibid.)
When, however, an order stated in terms of reversal amends a trial court order on remand to “state what it should have stated on th[e] date” of the original order, it is “in law and in fact, a modification.” (Stockton Theatres, Inc. v. Palermo, supra, 55 Cal.2d at pp. 443-444.) An order can be “couched in terms of a reversal with directions . . . [but have] the legal and practical effect of modifying the original award.” (Id. at p. 444.) Language in an appellate court order that “purportedly set[s] aside the original findings and award, [and] which is inconsistent with the actual effect of the decision, should be disregarded.” (Myers v. Workmen’s Comp. App. Bd. (1969) 2 Cal.App.3d 621, 630.)
In Snapp v. State Farm Fire & Cas. Co., supra, 60 Cal.2d at page 818, for example, our Supreme Court held that an appellate court order providing that “the judgment is reversed with directions to enter a judgment for plaintiffs in the amount of $25,000” was in legal and practical effect a modification when the trial court had originally entered a judgment for plaintiffs in the amount of $8,168.25. The Supreme Court noted that “since the appellate court on the first appeal decided that not $8,168.25 but $25,000 was due as a matter of law, and no further proceedings were required, it could and perhaps should have formally modified the first judgment . . . .” (Id. at p. 821.) If a trial court erred as a matter of law by failing to enter a judgment for costs at the time it should have been entered, a higher court’s subsequent proper entry of such judgment for costs is a modification, and interest runs from the date on which the judgment should originally have been entered by the trial court. (Stockton Theatres, Inc. v. Palermo, supra, 55 Cal.2d at pp. 443-444.)
Although our disposition in Chodos I, supra, 227 Cal.App.4th 76 was “couched in terms of a reversal with directions, it had the legal and practical effect of modifying the original award.” (Stockton Theatres, Inc. v. Palermo, supra, 55 Cal.2d at p. 444.) In effect, we ordered the trial court to modify the judgment by reducing the award to a specified sum. The trial court entered a revised judgment in accordance with our order and without any further factfinding proceedings. Our disposition in Chodos I was not based on insufficient evidence or on some other basis that eliminated all damages. As in Snapp v. State Farm Fire & Cas. Co., supra, 60 Cal.2d at page 821, our holding in Chodos I had the effect of modifying the amount of the money judgment entered by the trial court. We did not hold in Chodos I that attorney was entitled to no compensation for attorney fees, but rather that attorney was entitled to a lesser specific amount due to an error in the jury instructions at trial. (Chodos I, supra, 227 Cal.App.4th at p. 82.) In reality, we modified the original judgment, reducing attorney’s fee recovery from $7,717,921 to $1,717,921. Because our disposition in Chodos I was in legal and practical effect a modification, rather than a reversal to set aside all damages, attorney is entitled to recover interest at 10 percent per annum from September 19, 2013, the date of the original judgment entered by the trial court.

III. Trial Court Costs
Attorney argues that he is entitled to recover his trial court costs of $12,983.99 as a matter of right because client concedes that she did not challenge his memorandum of costs of September 23, 2013; attorney was the prevailing party at trial; and the trial court erred when it failed to award attorney’s trial court costs in its original judgment. Code of Civil Procedure section 1032, subdivision (b) states that “[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” Subdivision (a)(4) of that section defines “prevailing party” as “the party with a net monetary recovery.” Under California Rules of Court, rule 3.1700(b)(4), after the 15-day time period to file a motion to strike or to tax costs following service of the memorandum of costs has passed, “the clerk must immediately enter the costs on the judgment.”
Attorney timely filed and served a memorandum of costs in accordance with California Rules of Court, rule 3.1700(a)(1). Client concedes that she did not contest attorney’s memorandum of costs. Therefore, attorney, as the prevailing party, was entitled to recover his trial court costs as a matter of right, and the clerk should have entered the costs on the original judgment within 15 days after attorney served and filed his memorandum of costs.
Attorney also asserts that he is entitled to interest at 10 percent per annum on his trial court costs of $12,983.99 from September 19, 2013, the date of entry of the trial court’s original judgment. “A judgment for costs should be governed by the law applicable to judgments generally.” (Stockton Theatres, Inc. v. Palermo, supra, 55 Cal.2d at p. 443.) “Where costs are established by the judgment, but the amount of the award is ascertained at a later time, the court clerk enters the costs on the judgment after the amount is determined.” (Lucky United Properties Inv., Inc. v. Lee (2010) 185 Cal.App.4th 125, 137.) The “‘[p]rincipal amount of the judgment’” is “the total amount of the judgment as entered or as last renewed, together with the costs thereafter added to the judgment pursuant to [Code Civ. Proc., s]ection 685.090, reduced by any partial satisfactions . . . .” (Code Civ. Proc., § 680.300.) Here, the requested trial court costs should have been entered as part of the original judgment. Those costs, if properly entered, would not have been changed by the revised judgment, which altered only the amount of the attorney fees award.
“Interest at the rate of 10 percent per annum accrues on the unpaid principal amount of the judgment ([Code Civ. Proc.,] § 685.010), including the amount of the cost award and attorney fees award ([Code Civ. Proc.,] § 680.300), as of the date of judgment entry ([Code Civ. Proc.,] § 685.020, subd. (a)). Therefore, interest ordinarily begins to accrue on the prejudgment cost and attorney fees portion of the judgment as of the same time it begins to accrue on all other monetary portions of the judgment—upon entry of judgment.” (Lucky United Properties Inv., Inc. v. Lee, supra, 185 Cal.App.4th at pp. 137-138.) We thus apply the same analysis to the trial court’s judgment awarding attorney trial court costs as we did to the trial court’s judgment awarding attorney his attorney fees. Having held that attorney is entitled to interest on the judgment for his attorney fees from its original date of entry, we also hold that attorney is entitled to interest on his trial court costs of $12,983.99 from the date of the original judgment

Outcome: The judgment is modified to reflect that attorney shall recover postjudment interest from September 19, 2013, on the trial court’s final judgment and shall also recover the trial court costs claimed in his cost memorandum. Interest on the $1,717,921 attorney fees award and the $12,983.99 in trial court costs shall be calculated at 10 percent per annum from September 19, 2013. As so modified, the judgment is affirmed. Attorney shall recover his costs on appeal.

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