Castro Holds That A Practical Prevailing Party Test Governs An Award of Fees When A Lis Pendens Is Withdrawn.
Code of Civil Procedure section 405.38 provides that the prevailing party on a motion to expunge a lis pendens is entitled to an award of reasonable attorney’s fees and costs in bringing or opposing the motion unless the opponent acted with substantial justification or unless the imposition of fees/costs would be unfair under the circumstances of the particular case. However, the provision does not address what happens if a lis pendens is withdrawn before the ruling on an expungement motion. Is the trial court divested of jurisdiction to award fees/costs or can fees/costs be assessed depending on the circumstances of what happened in the case below? Happily, there is a published case to answer this question, a case holding that the trial court can award fees/costs for a withdrawn lis pendens after applying a multi-prong test for determining if one is a section 405.38 prevailing party.
Castro v. Superior Court, 116 Cal.App.4th 1010 (2004) articulated a “practical approach” to determining if a litigant is a prevailing party when a lis pendens is withdrawn rather than expunged. Beyond that, however, the decision elucidated the factors that should be used in determining whether one is a prevailing party under section 405.38 in lis pendens withdrawal situations.
The crucial issue for determination in Castro was defining exactly who is a “prevailing party” under section 405.38, because the statute contains no definition of the term. This presented a perfect legal question for the Second District, Division Three to decide. No less than Justice Croskey, a veteran jurist and an eloquent writer, was selected to be the author penning the “prevailing party” test under the lis pendens fee-shifting scheme.
Justice Croskey took on his task with rigor on behalf of the Second District.
Castro initially decided that a “practical approach” to prevailing party status should be adopted under section 405.38, accepting identical results reached in analogs under Civil Code section 1717 pretrial dismissals (Santisas v. Goodin, 17 Cal.4th 599, 622 (1998)) and the SLAPP statute (Coltrain v. Shewalter, 66 Cal.App.4th 94, 107 (1998)). It expressly rejected a rigid formula, focusing instead on a multifaceted test.
With the basics out of the way, after announcing the general test, Justice Croskey proceeded to put some meat on the bones of this prevailing party standard under section 405.38. It is not enough to consider that there has been a lis pendens withdrawal; rather, three nonexhaustive factors must be weighed in determining if there is a prevailing party when a lis pendens has been withdrawn: (1) whether the party moving for fees/costs would have prevailed on the lis pendens expungment motion (a mini-merit determination); (2) whether the lis pendens withdrawal was for reasons unrelated to the expungement motion merits (e.g., there was a settlement that achieved plaintiff’s objectives or the withdrawing party had financial difficulties); and (3) whether the imposition of fees against the nonmoving party would be just (general equitable factors). See Castro, supra, 116 Cal.App.4th at 1023.
This practical test for determining the prevailing party in a lis pendens withdrawal context gives considerable discretion to the trial judge. Although not stated in Castro, we believe that a determination on this issue would be reviewed under the abuse of discretion standard.
Incidentally, the Castros sought $116,657 in fees for bringing a second expungement motion—a very hefty sum. The trial court denied the request, reasoning that the lis pendens withdrawal effectively mooted the matter before a formal expungement ruling was made. The matter did not need to be realistically decided because the parties settled before the Castro decision was filed. Nevertheless, the Second District decided to resolve the issue in a published decision because it was a matter of continuing public interest—honoring the settlement between the parties, but still giving guidance to the public and the bar. This is a classic illustration of when a matter will still be adjudicated on appeal, even though the named parties come to a resolution that moots the writ proceeding.
(BLOG OBSERVATION—In discussing the prevailing party issue, Justice Çroskey observed that the defense goal usually is to “make the plaintiff go away with its tail between its legs….” Contributor Mike Hensley agrees that this is the correct read on the topic, because his dog Riffle usually wins the “prevailing party” contest in getting a walk at the end of a long day, with plaintiff Mike dragging his proverbial tail as Riffle joyously walks with uplifted tail through a nearby park.)