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John Russo Indus. Sheetmetal, Inc. v. City of L.A. Dep't of Airports

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FIVE
Dec 18, 2018
A150652 (Cal. Ct. App. Dec. 18, 2018)

Opinion

A150652 A150654

12-18-2018

JOHN RUSSO INDUSTRIAL SHEETMETAL, INC., Plaintiff, Cross-defendant and Appellant, v. CITY OF LOS ANGELES DEPARTMENT OF AIRPORTS, Defendant, Cross-complainant and Respondent. JOHN RUSSO INDUSTRIAL SHEETMETAL, INC., Plaintiff, Cross-defendant and Appellant; U.S. SPECIALTY INSURANCE CO., Cross-defendant and Appellant, v. CITY OF LOS ANGELES DEPARTMENT OF AIRPORTS, Defendant, Cross-complainant and Respondent.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Mateo County Super. Ct. No. CIV 518872)

John Russo Industrial Sheetmetal, Inc. (JRI) appeals from (1) the trial court's order granting summary adjudication in favor of the City of Los Angeles Department of Airports (known as Los Angeles World Airports, or LAWA) on JRI's claims for violation of its procedural and substantive due process rights, and (2) a postjudgment order awarding LAWA prevailing party costs. We affirm both orders.

We ordered the two appeals consolidated for argument and decision. JRI's surety, U.S. Specialty Insurance Company (the Surety) also appeals from the costs award.

FACTUAL BACKGROUND

The trial court sealed certain documents and transcripts. In accordance with the Rules of Court, those sealed documents and transcripts were filed under seal in this court. (See Cal. Rules of Court, rule 8.46(c).) We have filed both a redacted and sealed opinion. Our redacted opinion, which is part of the public record, does not include facts derived from record materials filed under seal. Our unredacted, sealed opinion is filed concurrently with this redacted opinion.

The Contract

In January 2006, JRI and LAWA entered into a multimillion dollar contract for four aircraft rescue and fire fighting vehicles (the Trucks) to be used at LAWA airports. The contract incorporated the conditions in JRI's winning bid proposal, which provided for delivery of one truck (referred to as Truck #3) within six to nine months and delivery of the remaining trucks (Trucks #1, 2, and 4) within 24 months. An amendment executed in January 2007 added specified components and equipment to each of the Trucks and increased the payment to JRI. The 2007 amendment did not address delivery dates for the Trucks.

[REDACTED] The parties submitted conflicting evidence as to whether Truck #3 suffered from significant mechanical problems attributable to JRI after delivery.

As of February 2010, none of the remaining Trucks had been delivered to LAWA and LAWA sent JRI a notice of its contract breach by failing to timely deliver these vehicles. In response, JRI asserted that completion of the Trucks "has been repeatedly delayed due to lack of final decisions [by LAWA] on configurations/modifications"; a meeting was needed "to finalize the 'as delivered' configuration of the first truck"; and, after such finalization, "we can perform the final configurations and any extra testing needed in order to arrange a delivery to you immediately."

Truck #4 was delivered in May 2010. In July 2010, LAWA sent JRI another notice of default because of the continued failure to deliver Trucks #1 and 2. In response, JRI reiterated a prior "best estimate[]" for delivery of Trucks #1 and 2 as "90 to 120 days from receipt of full payment of Truck #4, and with full cooperation of LAWA/LAFD; excluding circumstances beyond our control." In July or August, LAWA paid JRI in full for Truck #4. As with Truck #3, the parties submitted conflicting evidence as to whether Truck #4 suffered from mechanical problems.

In January 2011, the fire department captain at a LAWA airport submitted the "official recommendation" of his fire station that the contract with JRI be terminated because of "failed promises of deliveries and recent discoveries of the [JRI] apparatus not being able to meet [federal] standards . . . ." The following day, a LAWA deputy executive director noted in an email that the contract with JRI "is likely headed for litigation." [REDACTED] In February 2011, LAWA hired an outside inspector to inspect and evaluate Trucks #3 and 4.

JRI argues the inspectors were associated with one of JRI's competitors, Oshkosh. It relies on documents showing that (1) in 2007, the lead inspector was a deputy fire chief at a Boston airport and communicated with Oshkosh about truck specifications; (2) in 2008, while working as a consultant, the lead inspector coordinated a meeting about "BAE Telenostics & Oshkosh / Pierce Platforms" which included participants from Oshkosh; (3) in March 2011, Oshkosh emailed the lead inspector an inspection checklist for an Oshkosh vehicle; and (4) [REDACTED].

In May 2011, LAWA sent JRI and the Surety a notice of default, citing (1) "countless design, mechanical, electrical, installation, and ergonomic problems" with Trucks #3 and 4, and (2) JRI's continued failure to deliver Trucks #1 and 2 and the late delivery of Truck #4. The notice identified numerous specific deficiencies in Trucks #3 and 4. [REDACTED]

On June 21, 2011, LAWA terminated the contract and made a claim on the Surety. The Surety subsequently declined the claim.

LAWA's Relationship with JRI's Competitors

JRI contends that LAWA's stated reasons for terminating the contract were pretextual, and LAWA in fact terminated the contract because it wanted to purchase trucks from a different manufacturer. JRI submitted the following evidence about LAWA's relationship with JRI's competitors, Oshkosh and Rosenbauer.

JRI claims various evidence supports this contention, including evidence that Trucks #3 and 4 performed well and evidence that a LAWA airport fire chief "g[o]t in trouble" for putting Truck #3, which had been placed out of service, on display during a foreign official's visit pursuant to a request from the Secret Service.

[REDACTED] In January 2011, when the LAWA fire department captain submitted his fire station's recommendation that the JRI contract be terminated, he also recommended finalizing an in-progress specification for a Rosenbauer truck. In March 2011, an internal Oshkosh communication reflects the company's understanding that LAWA will request bids for a new fire truck in mid-April. [REDACTED]

[REDACTED]

PROCEDURAL BACKGROUND

LAWA and JRI sued each other for breach of contract and other claims, in separate lawsuits that were subsequently consolidated in the trial court. As relevant here, JRI's operative third amended complaint alleged LAWA violated JRI's procedural due process rights by effectively debarring JRI, and further violated its substantive due process rights by excluding JRI from its chosen occupation. LAWA moved for summary adjudication of JRI's due process claims. [REDACTED]

Most of the parties' remaining claims were tried to a jury. The jury found against JRI on JRI's contract claims against LAWA, and in favor of LAWA on LAWA's contract claim against JRI. The jury awarded LAWA one dollar in nominal damages and the trial court issued judgment accordingly. The trial court subsequently found LAWA was the prevailing party entitled to statutory costs and, over the objection of JRI and the Surety, awarded costs to LAWA in a postjudgment order. These appeals followed.

The jury also found in favor of LAWA on its claim against JRI and the Surety for enforcement of the performance bond. The parties' remaining claims were either voluntarily dismissed or rejected.

Additional appeals from postjudgment fee orders are currently pending in this court (Nos. A151597, 151682). No party has appealed the jury verdicts.

DISCUSSION

I. Due Process Claims

JRI challenges the trial court's order granting summary adjudication to LAWA on JRI's procedural and substantive due process claims. We affirm.

A. Standard of Review

"Summary adjudication motions are 'procedurally identical' to summary judgment motions. [Citation.] A summary judgment motion 'shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' [Citation.] To be entitled to judgment as a matter of law, the moving party must show by admissible evidence that the 'action has no merit or that there is no defense' thereto.' [Citation.] A defendant moving for summary judgment meets this burden by presenting evidence demonstrating that one or more elements of the cause of action cannot be established or that there is a complete defense to the action. [Citations.] Once the defendant makes this showing, the burden shifts to the plaintiff to show that a triable issue of material fact exists as to that cause of action or defense. [Citations.] Material facts are those that relate to the issues in the case as framed by the pleadings. [Citation.] There is a genuine issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 859-860 (Serri).)

"The trial court's ruling on a motion for summary adjudication, like that on a motion for summary judgment, is subject to this court's independent review." (Serri, supra, 226 Cal.App.4th at p. 858.) "In performing our review, we view the evidence in a light favorable to the losing party . . . , liberally construing [the] evidentiary submission while strictly scrutinizing the moving party's own showing and resolving any evidentiary doubts or ambiguities in the losing party's favor." (Id. at p. 859.)

B. Procedural Due Process

JRI's procedural due process claim alleges that LAWA effectively debarred JRI from future LAWA contracts without due process. Debarment is a " 'sanction[] . . . . imposed upon persons who have engaged in wrongful conduct or who have violated the requirements of a public contract or program. A debarment excludes a person from doing business with the government for a defined period, usually some number of years.' " (Golden Day Schools, Inc. v. State Dept. of Education (2000) 83 Cal.App.4th 695, 703.) "[G]overnment debarment of a contractor, at least one that has an established record of doing business with the government, implicates a liberty interest" entitling the contractor to due process. (Id. at p. 707.) "De facto debarment occurs when a contractor has, for all practical purposes, been suspended or blacklisted from working with a government agency without due process, namely, adequate notice and a meaningful hearing." (Phillips v. Mabus (D.D.C. 2012) 894 F.Supp.2d 71, 81 (Phillips).) "Previous courts considering this matter have established a high standard for plaintiffs to meet when trying to establish a de facto debarment claim. To succeed, [the plaintiff] must demonstrate a 'systematic effort by the procuring agency to reject all of the bidder's contract bids.' [Citation.] Two options exist to establish a de facto debarment claim: 1) by an agency's statement that it will not award the contractor future contracts; or 2) by an agency's conduct demonstrating that it will not award the contractor future contracts." (TLT Const. Corp. v. U.S. (Fed.Cl. 2001) 50 Fed.Cl. 212, 215-216 (TLT).)

In support of its motion for summary adjudication, LAWA submitted a declaration from its executive director averring: "LAWA never debarred JRI from future contracts with LAWA. There is nothing to prevent JRI from submitting a bid on a LAWA contract." [REDACTED]

[REDACTED]. We decline to so hold.

JRI does not contend the contract process was improper.

[REDACTED] Although "an agency's statement that it will not award the contractor future contracts" can be evidence of de facto debarment, JRI has cited no authority finding a statement that does not expressly so state to satisfy the "high standard for plaintiffs to meet when trying to establish a de facto debarment claim." (TLT, supra, 50 Fed.Cl. at pp. 215-216.) Instead, "courts have found categorical statements that contractors will not be awarded any future contracts may amount to a de facto debarment." (Phillips, supra, 894 F.Supp.2d at p. 82, italics added.) For example, where the "contracting officer . . . stated that under no circumstances will he award any contract to . . . the plaintiff, or any other company with which he is associated[,] [t]his amounts to a de facto debarment of [the] plaintiff . . . ." (Related Industries, Inc. v. United States (Cl.Ct. 1983) 2 Cl.Ct. 517, 525; see also Phillips, at p. 82 [de facto debarment claim pled where, inter alia, "plaintiffs have alleged multiple Navy officials stated that plaintiffs would not be awarded any future contracts"].) [REDACTED].

For purposes of this appeal, we will assume the statement is admissible.

Third, JRI points to deposition testimony by a LAWA engineer that, "[a]s far as [he] knew," JRI was "kind of off the table" when LAWA began to develop specifications for additional trucks in 2011 (as discussed above, LAWA ultimately purchased the trucks without bid). We query whether this equivocal statement can be construed as a "categorical statement[] that [JRI] will not be awarded any future contracts . . . ." (Phillips, supra, 894 F.Supp.2d at p. 82.) In any event, JRI fails to submit evidence that a final policymaker was the source of the engineer's understanding or subsequently ratified the statement—a requirement for LAWA's liability. (Lytle v. Carl (9th Cir. 2004) 382 F.3d 978, 987 ["A municipality may be held liable for a constitutional violation if a final policymaker ratifies a subordinate's actions. [Citation.] To show ratification, a plaintiff must show that the 'authorized policymakers approve a subordinate's decision and the basis for it.' [Citation.] The policymaker must have knowledge of the constitutional violation and actually approve of it."].) Evidence of the LAWA executive director's involvement in the decisions to terminate JRI's contract and authorize the Rosenbauer contract does not create an issue of fact as to whether she was the source of, or subsequently ratified, any subordinate's understanding about whether LAWA would refuse to contract with JRI in the future.

[REDACTED]

JRI asserts, and LAWA does not dispute, that LAWA's executive director is the relevant "final policymaker." Although JRI asserts the engineer was on LAWA's "vehicle selection committee," the record citation provided does not so provide. Even so assuming, JRI does not contend the engineer was a final policymaker.

Other similar evidence relied on by JRI is not persuasive. JRI asserts that a LAWA deputy director "conceded that LAWA never considered JRI for the subsequent crash truck contracts," but in the cited deposition testimony the deputy director states she was not involved in the procurement process. JRI also relies on 2014 " 'cheat sheet' notes" prepared by a LAWA deputy for "the Rosenbauer item," stating [REDACTED]. JRI asserts that this statement was part of a memorandum submitted to the LAWA Board when LAWA staff sought approval [REDACTED], but the record citations provided do not support this claim. Absent evidence that a final policymaker ratified the assertions in the " 'cheat sheet,' " it has no relevance to the issue before us.

Fourth, JRI argues LAWA effected a de facto debarment by terminating the contract and making a claim on JRI's surety bond. JRI submits evidence that prospective LAWA contractors are asked whether, in the past five years, they have been denied bonding or had a contract terminated prior to completion, and that the response is a "material consideration to LAWA in deciding to enter into a contract with that contractor." However, JRI submits no evidence that LAWA categorically declines to award contracts to a previously terminated contractor. In contrast, in Mitchell Engineering v. City & County of San Francisco (N.D.Cal., Jul. 19, 2010, No. C 08-04022 SI) 2010 U.S. Dist. LEXIS 72420 (Mitchell Engineering), relied on by JRI, the city's requirements provided that "a contractor could not pre-qualify to bid on future projects if it had been terminated from a project in the past eight years . . . ." (Id. at *11.) JRI also submits evidence [REDACTED], and that a default termination and bond claim generally precludes a contractor from obtaining future surety bonds. However, LAWA submitted evidence—which JRI does not dispute—that LAWA bids require either a bid bond or certified check. In contrast, in Mitchell Engineering, there was "uncontroverted evidence that prior terminations would prevent [the plaintiff] from obtaining surety bonds necessary to bid for all public works contracts." (Id. at *18; see also Kartseva v. Department of State (D.C.Cir. 1994) 37 F.3d 1524, 1529 [government contract employee "must show that her disqualification from future [government contract] opportunities is automatic or formal, not simply that [the government conduct] . . . places her at competitive disadvantage relative to other applicants for these positions"].)

Finally, JRI points to [REDACTED]. Contrary to JRI's argument, [REDACTED]; instead, [REDACTED].

In sum, we conclude that JRI failed to submit evidence that would allow a reasonable trier of fact to find JRI met the requisite "high standard" to demonstrate "a 'systematic effort by the procuring agency to reject all of the bidder's contract bids.' " (TLT, supra, 50 Fed.Cl. at p. 215.)

Because of this conclusion, we need not decide the parties' remaining disputes on this claim, including whether JRI properly pled the claim, JRI has a protected liberty interest in pursuing future LAWA contracts, JRI failed to pursue administrative remedies, and LAWA afforded JRI due process before any debarment.

C. Substantive Due Process

"A 'public employer can violate an employee's rights by terminating the employee if in so doing, the employer makes a charge "that might seriously damage [the terminated employee's] standing and associations in his community" or "impose[s] on [a terminated employee] a stigma or other disability that foreclose[s] his freedom to take advantage of other opportunities.["] ' " (Blantz v. Dept. of Corrections and Rehabilitation (9th Cir. 2013) 727 F.3d 917, 925 (Blantz).) However, "the liberty interests protected by the Fourteenth Amendment are implicated only when the government's stigmatizing statements effectively exclude the employee completely from her chosen profession. Stigmatizing statements that merely cause ' reduced economic returns and diminished prestige, but not permanent exclusion from, or protracted interruption of, gainful employment within the trade or profession' do not constitute a deprivation of liberty. [Citations.] . . . [S]tigmatizing statements do not deprive a worker of liberty unless they effectively bar her from all employment in her field." (Ibid.)

JRI argues it has presented sufficient evidence to allow a factfinder to conclude LAWA's acts and/or statements "effectively exclude [JRI] completely from [its] chosen profession." (Blantz, supra, 727 F.3d at p. 925.) First, JRI argues LAWA's bond claim has rendered JRI unable to obtain bid bonds. Even assuming the bond claim constitutes the kind of government action creating substantive due process liability, LAWA submitted evidence, as noted above, that LAWA bids require either a bid bond or certified check. Moreover, it is undisputed that JRI was able to bid on two proposed contracts in 2015 in other jurisdictions without providing bonds. JRI's argument that the contracts were "small enough that JRI could submit bids without providing bonds" is immaterial. JRI's ability to submit bids without providing bonds fatally undermines its assertion that its inability to obtain bid bonds renders it effectively excluded from its chosen profession. (Ibid. ["Stigmatizing statements that merely cause 'reduced economic returns . . . , but not permanent exclusion from, or protracted interruption of, gainful employment within the trade or profession' do not constitute a deprivation of liberty."].)

Second, JRI points to evidence that it was not awarded either contract and argues it established a fact dispute regarding whether the reason was LAWA's damaging statements about JRI. Specifically, JRI relies on [REDACTED] JRI's contention that these statements were the reason it was not awarded either contract is entirely speculative. For example, JRI cites no evidence that it was the lowest bidder. The conclusory averment of [REDACTED] does not create the necessary fact dispute. " 'An issue of fact can only be created by a conflict of evidence. It is not created by "speculation, conjecture, imagination or guess work." [Citation.] Further, an issue of fact is not raised by "cryptic, broadly phrased, and conclusory assertions" [citation], or mere possibilities [citation].' " (Yuzon v. Collins (2004) 116 Cal.App.4th 149, 166.) This case is thus unlike Braswell v. Shoreline Fire Dept. (9th Cir. 2010) 622 F.3d 1099, relied on by JRI, in which the plaintiff submitted deposition testimony of a fire chief that the plaintiff "would not likely be hired as a paramedic by any other fire department because of" the challenged government action. (Id. at p. 1103.)

As noted above (ante, fn. 7), for purposes of this appeal, we assume these statements are admissible.

Accordingly, we conclude JRI failed to demonstrate a triable issue of fact as to whether it was effectively excluded from its chosen profession.

Because of this conclusion, we need not decide LAWA's remaining contentions on this claim, including whether merely false but not morally stigmatizing statements implicate substantive due process, and whether a final policymaker caused or ratified any due process violation.

II. Prevailing Party Costs

A. Additional Background

Both JRI's and LAWA's operative complaints alleged that LAWA paid JRI approximately $3.4 million out of the total contract price of approximately $5.5 million. JRI's complaint claimed breach of contract damages of the approximately $2 million still owed on the contract. LAWA's complaint claimed breach of contract damages of approximately $3.4 million—the amount it had already paid to JRI on the contract. As noted above, the jury found LAWA did not breach and JRI did breach, and awarded LAWA one dollar in nominal damages for the breach. The jury also found in favor of LAWA on its claim against JRI and the Surety for enforcement of the performance bond.

The only relief provided for in the judgment is the one dollar damage award to LAWA, issued jointly and severally against JRI and the Surety. The trial court found LAWA to be the prevailing party pursuant to Code of Civil Procedure section 1032, subdivision (a)(4). JRI and the Surety filed a motion to strike LAWA's memorandum of costs, arguing LAWA was not a prevailing party under the statute. The trial court rejected the argument and awarded LAWA costs.

All undesignated section references are to the Code of Civil Procedure.

B. Analysis

Pursuant to section 1032, subdivision (b), "a prevailing party is entitled as a matter of right to recover costs in any action or proceeding." Section 1032, subdivision (a)(4), provides: " '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 . . . ." "It is clear from the statutory language that when there is a party with a 'net monetary recovery' (one of the four categories of prevailing party), that party is entitled to costs as a matter of right; the trial court has no discretion to order each party to bear his or her own costs." (Michell v. Olick (1996) 49 Cal.App.4th 1194, 1198.)

JRI argues LAWA was not "the party with a net monetary recovery," despite the damage award of one dollar to LAWA and nothing to JRI, because "the jury allowed JRI to keep the $3.45 million it received from LAWA under the parties' contract" and JRI further sold Trucks #1 and 2, which were never delivered to LAWA, to another airport for more than $1.8 million. We disagree.

In the trial court, JRI also argued a nominal damages award does not entitle a party to prevailing party costs and disputed the amount of costs sought. It has expressly abandoned these arguments on appeal. On appeal, JRI also argues the cost order must be reversed if we reverse the summary adjudication order. As explained in Part I, ante, we are affirming the summary adjudication order.

As an initial matter, both parties assert our review is for abuse of discretion. The issue before us is whether LAWA is "the party with a net monetary recovery" within the meaning of section 1032, subdivision (a)(4). "Generally, a trial court's determination that a litigant is a prevailing party, along with its award of fees and costs, is reviewed for abuse of discretion. [Citations.] However, the issue here involves the interpretation of a statute, a question of law that we review de novo." (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332 (Goodman).)

The California Supreme Court has concluded that "the term 'net monetary recovery' is clear and that we must give effect to it ' "according to the usual, ordinary import of the language employed . . . ." ' " (Goodman, supra, 47 Cal.4th at p. 1334.) Looking solely at the judgment, LAWA is the party with the net monetary recovery, albeit a small one. JRI argues that "determining whether a party has garnered a net monetary recovery can include an analysis of outside factors," including "money received . . . as part of a contractual obligation . . . ." But " ' "[t]he word 'recover' means 'to gain by legal process' or 'to obtain a final legal judgment in one's favor.' " ' " (DeSaulles v. Community Hospital of Monterey Peninsula (2016) 62 Cal.4th 1140, 1153 (DeSaulles).) JRI contends it gained the money LAWA paid on the contract through "legal process" because "[u]pon finding that JRI had breached the contract and knowing the damages that LAWA sought based on that breach, the jury chose not to award the $3.45 million to LAWA." JRI cites no authority for the proposition that money received prior to the commencement of litigation is gained by "legal process" if the outcome of the litigation does not require its return, and we decline to so find. JRI also contends the money it gained from selling Trucks #1 and 2 to another airport was obtained through legal process because it was required by law to mitigate its contract damages. The statutes relied on by JRI for this proposition provide that resale is permissible, not mandatory. (Cal. U. Com. Code, § 2706, subd. (1) ["the seller may resell the goods concerned or the undelivered balance thereof" (italics added)], § 2709, subd. (2) ["Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment." (italics added)].) We decline to hold that money obtained through conduct permitted by statute is thereby obtained through "legal process."

JRI emphasizes that the jury initially awarded zero damages to LAWA, and awarded nominal damages only after the trial court instructed the jury the verdict was inconsistent and further instructed the jury on nominal damages. JRI fails to explain the significance of the initial award. JRI has not appealed from the nominal damages award or otherwise contended the trial court erred in instructing the jury on this issue.

The cases relied on by JRI do not alter this analysis. In DeSaulles, after the plaintiff sued for breach of contract, the parties reached a settlement whereby the plaintiff would dismiss with prejudice her contract claims in exchange for a payment of $23,500, and memorialized it in the record to permit the court to retain jurisdiction under section 664.6. (DeSaulles, supra, 62 Cal.4th at p. 1145.) The trial court concluded it could exercise its discretion to determine the defendant was the prevailing party for purposes of costs. (Id. at p. 1146.) The Supreme Court disagreed, concluding "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 [subdivision (a)(4)], whether or not the judgment mentions the settlement." (Id. at p. 1158.) In reaching this conclusion, DeSaulles reasoned: "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. [Citations.] In this sense, a monetary settlement is ' " 'gain[ed] by legal process.' " ' " (DeSaulles, supra, 62 Cal.4th at p. 1153.) As the court emphasized, settlement payments are made for the purpose of resolving an existing lawsuit. DeSaulles does not suggest that contract payments made before litigation—and therefore unrelated to the purpose of resolving a lawsuit—are gained through legal process. Similarly, Goodman concluded that a plaintiff has not received a net monetary recovery where, although the plaintiff obtained a damages verdict against a nonsettling defendant, the award was reduced to zero by a statutory offset of the amount the plaintiff previously received from settling defendants. (Goodman, supra, 47 Cal.4th at p. 1330.)

The complaint asserted additional claims, which had been adversely disposed of by summary adjudication or in limine rulings. (DeSaulles, supra, 62 Cal.4th at p. 1145.)

JRI also relies on Marina Pacifica Homeowners Assn. v. Southern California Financial Corp. (2018) 20 Cal.App.5th 191 (Marina Pacifica). There, a homeowners association sued the owner of a leasehold estate interest for breach of contract and declaratory relief based on the leasehold estate assignee's calculation of assignment fees due from homeowners; the homeowners argued the fee was invalid or, in the alternative, calculated using an erroneously high rate. (Id. at pp. 195-197.) The outcome of the litigation was the fee was found valid at the lower rate. (Id. at pp. 198-199.) The judgment awarded the homeowners $14,000 in contract damages for past fee overpayments, but also issued a declaratory judgment that the defendant was entitled to collect approximately $12 million in unpaid back fees (owed from those homeowners who withheld payments during the litigation), as well as fees going forward at the reduced rate. (Id. at pp. 199, 209.) The declaratory judgment "declared, by homeowner, the amounts collectible and payable to defendant for fee amounts owed" and provided: " 'To the extent this Final Judgment declares amounts presently owing, it is enforceable as a money judgment.' " (Id. at p. 199.) The Court of Appeal concluded the case was one in which " 'any party recovers other than monetary relief,' " allowing the court to exercise its discretion regarding costs. (Id. at p. 209 [quoting § 1032, subd. (a)(4)].) The court reasoned that, regardless of which party had the net monetary recovery, both parties " 'recover[ed] other than monetary relief,' " to wit, a declaratory judgment providing approximately $12 million currently due to the defendant and also "reduc[ing] plaintiff's potential liability by $58 million" by finding the fee must be calculated at the lower rate. (Id. at p. 209.) The court emphasized the case "involved a judgment that provided declaratory relief affecting future liabilities, as well as monetary recoveries," distinguishing it from other cases involving "monetary recovery and nothing more." (Id. at p. 210, fn. 11.) Unlike Marina Pacifica, this case involves "monetary recovery and nothing more." We decline to construe the jury verdict against JRI and awarding damages to LAWA as providing JRI with "other than monetary relief" simply because the damage award was less than LAWA sought. (See DeSaulles, supra, 62 Cal.4th at p. 1157 ["the rule is that a partial recovery, as long as it is a net monetary recovery, entitles a plaintiff to costs"].)

Indisputably, the jury delivered a mixed result in this case. Nonetheless, LAWA was the party with the net monetary recovery, and JRI did not recover other than monetary relief by the judgment. Accordingly, we affirm the trial court's order awarding LAWA prevailing party costs.

This conclusion renders it unnecessary to decide whether, if we reverse the cost award as to JRI, we must also reverse the cost award as to the Surety.

DISPOSITION

The judgment and the postjudgment order awarding costs to LAWA are affirmed. LAWA shall recover its costs on appeal.

/s/_________

SIMONS, J. We concur. /s/_________
JONES, P.J. /s/_________
BRUINIERS, J.

Retired Associate Justice of the Court of Appeal, First Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------


Summaries of

John Russo Indus. Sheetmetal, Inc. v. City of L.A. Dep't of Airports

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FIVE
Dec 18, 2018
A150652 (Cal. Ct. App. Dec. 18, 2018)
Case details for

John Russo Indus. Sheetmetal, Inc. v. City of L.A. Dep't of Airports

Case Details

Full title:JOHN RUSSO INDUSTRIAL SHEETMETAL, INC., Plaintiff, Cross-defendant and…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FIVE

Date published: Dec 18, 2018

Citations

A150652 (Cal. Ct. App. Dec. 18, 2018)