MURILLO v. FLEETWOOD ENTERPRISES INC

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Court of Appeal, Fourth District, Division 1, California.

Roberto M. MURILLO, Plaintiff and Appellant, v. FLEETWOOD ENTERPRISES, INC., et al., Defendants and Respondents.

No. D021836.

Decided: December 18, 1996

Taylor & Hodges, Berta Peterson–Smith, Glendale, and Cassandra A. Walbert, for Plaintiff and Appellant. Summers & Shives and Maureen A. Summers, San Diego, for Defendant and Respondent Fleetwood Motor Homes of California, Inc. (and for Defendant and Respondent Fleetwood Enterprises, Inc., sometimes referred to as Fleetwood Enterprises Incorporated [see fn. 1, post] ). Neil, Dymott, Perkins, Brown & Frank, Michael I. Neil, Tim S. McClain and Thomas H. Knudsen, San Diego, for Defendant and Respondent Oshkosh Truck Corporation.

Plaintiff Roberto M. Murillo (Murillo) appeals an order denying his motion to strike the memoranda of costs filed by defendants Fleetwood Enterprises, Inc. (sometimes referred to as Fleetwood Enterprises Incorporated), Fleetwood Motor Homes of California, Inc. (together Fleetwood) 1 and Oshkosh Truck Corporation (Oshkosh).   The court entered judgment in favor of Fleetwood and Oshkosh (together Sellers) following the jury's special verdict rejecting Murillo's claims against Sellers alleging, inter alia, violations of the Song–Beverly Consumer Warranty Act (Civ.Code, § 1790 et seq.), hereafter the “Act.” The court ruled that Sellers were entitled to their costs 2 as prevailing parties pursuant to the provisions of Code of Civil Procedure 3 sections 1032 and 998.   On appeal, Murillo contends the court erred as a matter of law because Civil Code section 1794, subdivision (d) awards costs, expenses and attorney fees only to prevailing buyers and precludes awards of costs to prevailing sellers in actions under the Act. We affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

On November 2, 1991, Murillo purchased a new motorhome which was covered by Sellers' express warranties.   On March 16, 1993, Murillo filed this action against Sellers alleging causes of action for breach of express and implied warranties in violation of the Act. In October 1993, Sellers made a joint section 998 offer to compromise, offering to pay Murillo $12,000 and allowing him to retain possession of the motorhome.   Murillo rejected the offer and the action proceeded to trial.   The jury found by special verdict that Sellers did not breach any implied or express warranties under the Act. The court entered judgment in favor of Sellers.

Fleetwood filed a memorandum of costs seeking $3,744.43, including $1,517.99 for expert witness fees.   Oshkosh filed a memorandum of costs seeking $2,898.56, including $375 for expert witness fees.   Murillo moved to strike the memoranda of costs or, alternatively, to tax them.   Sellers opposed Murillo's motions.   The court issued a tentative ruling stating:

“[Murillo's] motions to strike the memorandum of costs filed by [Sellers] are denied.  Civil Code Section 1794(d) does not bar [Sellers'] respective entitlements to costs under Code of Civil Procedure Section[ ] 998 or 1032.  [Murillo's] alternative motions to tax are also denied in their entirety.”

Following a hearing the court affirmed its tentative ruling denying Murillo's motions and awarded Sellers their requested costs.

DISCUSSION

IThe Language of the Act Does Not Expressly Preclude Awards of Costs to Prevailing Defendants Pursuant to Sections 1032 and 998

 Murillo contends the Act 4 precludes awards of costs to prevailing sellers which are claimed under sections 1032 and 998.   Because the language of the Act awards costs, expenses and attorney fees only to prevailing buyers, Murillo infers that the Act clearly precludes awards of costs to prevailing sellers which are claimed under sections 1032 and 998.   We disagree.

 The proper interpretation of statutes is a question of law, and we review de novo the trial court's interpretation of the Act and sections 1032 and 998.  (Sutco Construction Co. v. Modesto High School Dist. (1989) 208 Cal.App.3d 1220, 1228, 256 Cal.Rptr. 671.)  Section 1032, subdivision (a)(4) defines a “prevailing party” as including “a defendant as against those plaintiffs who do not recover any relief against that defendant.”   Sellers clearly qualify as “prevailing parties” under section 1032 because the judgment was in their favor and denied Murillo any relief.   Section 1032, subdivision (b) 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.”   (Italics added.)

A prevailing party therefore is entitled to an award of its costs unless a statute “expressly” provides otherwise.

Murillo asserts the Act “expressly” provides otherwise and precludes awards of section 1032 costs to prevailing seller defendants, citing Civil Code section 1794, subdivision (d):

“If the buyer prevails in an action under this section, the buyer shall be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses, including attorney's fees based on actual time expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.”

The Act therefore entitles a prevailing buyer to recover his costs, expenses and attorney fees.   This recovery is greater than the recovery a prevailing buyer would otherwise obtain under section 1032 as a prevailing party.   Rather than obtaining only those section 1032 costs listed in section 1033.5, a prevailing buyer under the Act receives litigation expenses in addition to section 1032 costs, including attorney fees based on actual time expended.   This greater recovery of litigation expenses presumably is intended to make a prevailing buyer whole and to reduce a buyer's disincentives to filing and prosecuting a meritorious action under the Act.

However, we do not conclude from the Act's intent to make a prevailing buyer whole that the Act also intends to deprive prevailing sellers from recovering their section 1032 costs incurred in defending a meritless action.   The language of the Act does not “expressly” exclude section 1032 cost recovery by prevailing sellers, and we cannot infer from the language of the Act an “express” exclusion.   Webster's Third New International Dictionary (1961) at page 803 defines “express” as “directly and distinctly stated or expressed rather than implied or left to inference.”  (Italics added.)   The Act is silent on the issue of whether prevailing sellers retain statutory rights to recover their section 1032 costs.   Because of that silence we do not find any “express” exception in the Act required by section 1032 to eliminate prevailing parties' statutory right to costs.

 Although, as Murillo notes, the Act “is manifestly a remedial measure intended for the protection of the consumer [and] it should be given a construction calculated to bring its benefits into action” (Kwan v. Mercedes–Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 184, 28 Cal.Rptr.2d 371), nothing in the Act indicates any intent to deprive prevailing sellers from obtaining section 1032 costs.   Awarding prevailing sellers section 1032 costs does not detract from the Act's intent to encourage and make whole prevailing buyers who file and prosecute meritorious actions.   We must presume the Legislature was aware of the existing rights of prevailing defendants (and prevailing plaintiffs) when it enacted the Act in 1970.   We must presume that by excluding language from the Act expressly precluding awards of section 1032 costs to prevailing sellers the Legislature did not intend to deprive prevailing sellers of those statutory rights.   Further, we conclude no inherent conflict exists between the fee-shifting provisions of the Act and the cost-shifting provisions of sections 1032 and 998.   The Legislature clearly intended to favor prevailing buyers under the Act to a much greater degree than prevailing sellers by awarding buyers attorney fees and other litigation expenses in addition to section 1032 costs to which prevailing parties (whether plaintiffs or defendants) are otherwise entitled as a matter of right.   It left untouched the right of prevailing sellers to section 1032 costs.5

 Sellers were also properly awarded the costs of the services of expert witnesses, because Murillo rejected Sellers' joint section 998 compromise offer and then failed to obtain a more favorable result.  Section 998 states in part:

“(a) The costs allowed under Sections 1031 and 1032 shall be withheld or augmented as provided in this section.

“․

“(c) If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment, the plaintiff shall not recover his or her costs and shall pay the defendant's costs from the time of the offer.․ In addition, in any action or proceeding other than an eminent domain action, the court, in its discretion, may require the plaintiff to pay the defendant's costs from the date of filing of the complaint and a reasonable sum to cover costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, the preparation or trial of the case by the defendant.”

By awarding Sellers their costs of expert witnesses, the court properly exercised its discretion under section 998, subdivisions (a) and (c) to “augment” its award of costs otherwise allowed under section 1032.6  Again, no “express” provision of Civil Code section 1794, subdivision (d) precludes the award.

II

Case Law Does Not Support Murillo's Contention

Murillo fails to cite, and we are unaware of, any controlling case authority supporting his position that the Act precludes awards of section 1032 costs to prevailing sellers.   Contrary to Murillo's assertion, Brown v. West Covina Toyota (1994) 26 Cal.App.4th 555, 32 Cal.Rptr.2d 85 is inapposite and does not support his position.   The Brown court addressed whether the prevailing defendant was entitled to attorney fees and costs under the provisions of the Rees–Levering Motor Vehicle Sales and Financing Act (Civ.Code, § 2981 et seq.) which award attorney fees and costs “to the prevailing party in any action on a contract or purchase order subject to the provisions of this chapter regardless of whether the action is instituted by the seller, holder or buyer.”  (Civ.Code, § 2983.4.) The Court of Appeal held that the action was not an action or claim under the Rees–Levering Act and therefore the prevailing party attorney fee and costs provisions of the Rees–Levering Act were not applicable.   Because there was no other basis on which to award attorney fees to the prevailing defendant, the reviewing court reversed the trial court's award of attorney fees and costs to the prevailing defendant.  (Brown, supra, at pp. 562, 566, 32 Cal.Rptr.2d 85.)   The court did not address the issue of whether the prevailing defendant was entitled to an award of costs under section 1032.   The Court of Appeal noted that the Act was not applicable to the case because the purchased vehicle in question was a used vehicle not subject to an express warranty.  (Civ.Code, § 1795.5.) The gratuitous remarks of the court regarding costs available to a prevailing defendant seller under the Act are therefore unnecessary dicta.

Murillo cites Covenant Mutual Ins. Co. v. Young (1986) 179 Cal.App.3d 318, 225 Cal.Rptr. 861, which is also inapposite.   The court there held that the provisions of Civil Code section 3318 expressly awarding litigation expenses to a prevailing plaintiff in a breach of warranty of agency action did not apply in a reciprocal manner to allow an award of attorney fees to a prevailing defendant.  (Covenant Mutual Ins. Co., supra, at pp. 321–323, 225 Cal.Rptr. 861.)   The court rejected the argument that Civil Code section 1717 requires reciprocity of the statutory attorney fee provision, because the action was not on any contract which included an attorney fee provision.   (Id. at pp. 323–324, 225 Cal.Rptr. 861.)   The court was not presented with and did not discuss the issue of section 1032 prevailing party costs.   Unlike the Covenant Mutual case, Sellers here do not contend the attorney fee provision of the Act which awards attorney fees only to a prevailing buyer should be interpreted to be reciprocal under Civil Code section 1717 and therefore be available to a prevailing defendant seller.   This was the issue in controversy in Covenant Mutual.

Murillo cites Dawson v. Westerly Investigations, Inc. (1988) 204 Cal.App.3d Supp. 20, 251 Cal.Rptr. 633 as an analogous situation in which a court inferred an express exception to section 1032.   In Dawson the Appellate Department of the Los Angeles County Superior Court interpreted the provisions of Labor Code section 98.2 which award attorney fees and costs against an unsuccessful appellant in a de novo hearing after an initial adverse result from the labor commissioner.  (Dawson, supra, at pp. 23–25, 251 Cal.Rptr. 633.)   The court held that Labor Code section 98.2 did not permit an award of attorney fees and costs to a successful appellant and reversed such an award by the municipal court.  (Dawson, supra, at pp. 24–25, 251 Cal.Rptr. 633.)   The court also apparently concluded that the successful appellant was not entitled to section 1032 costs as a prevailing party:

“It is a fundamental principle that the prevailing party is entitled, as a matter of right, to recover costs in an action or proceeding (see Code Civ. Proc., § 1032, subd. (b));  however, section 1032, subdivision (b) allows for exceptions to this principle.  [A footnote in the opinion then quotes and italicizes the phrase from section 1032, subdivision (b):  “Except as otherwise expressly provided by statute ․”]  Labor Code section 98.2 presents such an exception.   Costs (and attorneys' fees) are not awarded to a successful appellant under Labor Code section 98.2, but are only allowed against an unsuccessful appellant.”  (Dawson, supra, at p. 24, 251 Cal.Rptr. 633, original italics.)

The Dawson court apparently reached the conclusion that Labor Code section 98.2's award of attorney fees and costs to a prevailing respondent in a de novo hearing was an “express” exception to the provisions of section 1032 and precluded an award of section 1032 costs to the prevailing appellant in the de novo hearing.   However, the court failed to provide any analysis supporting this conclusion, possibly believing its conclusion was self-evident.   We do not believe, however, that an “express” exception can be inferred from a statutory provision awarding only one party (e.g., prevailing buyer, successful respondent) greater relief than the party would otherwise obtain under section 1032.   Accordingly, although the issues in Dawson and this case are analogous, we decline to follow the summary analysis and conclusion reached by the Dawson court to the extent it found an “express” exception to section 1032 without any express language or direct conflict with another statute (e.g., Lab.Code, § 98.2).

DISPOSITION

The order is affirmed.

FOOTNOTES

1.   The complaint names Fleetwood Enterprises, Inc. as a defendant;  however, Fleetwood Motor Homes of California, Inc. rather than Fleetwood Enterprises, Inc. answered the complaint.   The record is devoid of any default by or dismissal of Fleetwood Enterprises, Inc. as a defendant.   Similarly, the record is devoid of any amendment to the complaint adding Fleetwood Motor Homes of California, Inc. as a defendant.   Because of the apparent treatment by the parties and trial court of Fleetwood Enterprises, Inc. and Fleetwood Motor Homes of California, Inc. as one party, we consider them to be one party for purposes of this appeal.

2.   The term “costs” in this opinion does not include attorney fees.   Although attorney fees may be “costs” under Code of Civil Procedure section 1033.5, subdivision (a)(10), there is no contract, statute or law authorizing attorney fees in this case and therefore the terms “costs” and “attorney fees” are mutually exclusive in this opinion.

FN3. All statutory references are to the Code of Civil Procedure unless otherwise specified..  FN3. All statutory references are to the Code of Civil Procedure unless otherwise specified.

4.   In general, “[t]he Act regulates warranty terms, imposes service and repair obligations on manufacturers, distributors, and retailers who make express warranties, requires disclosure of specified information in express warranties, and broadens a buyer's remedies to include costs, attorney's fees, and civil penalties.”  (Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213, 285 Cal.Rptr. 717.)

5.   We need not address the legislative history underlying the Act because the statutory language of the Act and of sections 1032 and 998 is not ambiguous or unclear.  (Halbert's Lumber, Inc. v. Lucky Stores, Inc. (1992) 6 Cal.App.4th 1233, 1239, 8 Cal.Rptr.2d 298.)   In any event, Murillo fails to cite any legislative history which clearly shows a legislative intent to preclude awards of section 1032 costs to prevailing sellers.

6.   We reject Murillo's assertion that section 998 is inapplicable to actions under the Act because actions under the Act purportedly involve “all-or-nothing” relief.   Whether the Act's remedies provide “all-or-nothing” relief, we conclude the underlying public policy of section 998 to encourage settlement is applicable to actions under the Act. Because of the inherent risks and uncertainty in pursuing actions under the Act, a buyer cannot be assured of prevailing.   Accordingly, a compromise for less than full value of a claim usually will remain a realistic option for most buyers.   As this case shows, Murillo would have been in a better position had he accepted Sellers' joint offer to compromise for $12,000.  (Cf. Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102, 119–120, 30 Cal.Rptr.2d 486;  Culbertson v. R.D. Werner Co., Inc. (1987) 190 Cal.App.3d 704, 710–711, 235 Cal.Rptr. 510.)   Nothing in the language or underlying public policy of the Act precludes application of section 998 to allow Sellers to recover their costs of expert witnesses.Murillo cites In re Marriage of Green (1989) 213 Cal.App.3d 14, 261 Cal.Rptr. 294 as support for his assertion that section 998 does not apply when a statutory scheme contemplates a different mechanism for awards of litigation costs.   However, Green is inapposite because it involves the special statutes and public policies underlying family law which clearly evince a different mechanism for awards and allocations of litigation costs and attorney fees (i.e., in the discretion of the trial court rather than as a matter of right), thereby preempting section 998.  (Green, supra, at pp. 23–24, 261 Cal.Rptr. 294.)Murillo also cites Gould v. Moss (1910) 158 Cal. 548, 111 P. 925, which is also inapposite because it involves a statute (i.e., § 1095) which expressly gives the trial court discretion to award costs to a prevailing party in certain cases, directly conflicting with section 1032.   Thus, an “express” exception to section 1032 must be found, given the different statutory scheme for awards of costs in those specific cases.

McDONALD, Associate Justice.

WORK, Acting P.J., and BENKE, J., concur.