Consumer Statutes: CCP § 1032 "Prevailing Party" Standard Does Not Have To Govern Fee Recovery Under CLRA or ASFA

Fourth District, Division 3 Rejects Kim's Reliance on § 1032 Standard.

     In a very interesting case arising out of Orange County litigation, our local Santa Ana appellate court has parted company with another appellate court as far as the "prevailing party" standard to use for fee entitlement purposes under the Consumer Legal Remedies Act (CLFA) or Automobile Sales Finance Act (ASFA).

     Plaintiffs filed an action against Family Honda in Orange County Superior Court over the type of navigation system installed in a white 2007 Odyssey Touring vehicle. On the date set for trial, the case settled in a way by which plaintiffs transferred to Family Honda their 2007 vehicle plus $3,780 in exchange for a black 2009 Odyssey Touring vehicle with a factory installed navigation system. (At one point, plaintiffs had wanted much more in settlement discussions, including that Family Honda pay them $30,000.) After substantial give and take in a mandatory settlement conference, this settlement described above was reached, with the settlement judge retaining jurisdiction to decide if there was a prevailing party and if fees should be awarded.

     Plaintiffs filed a motion seeking fees of $158,872 and costs of $6,474, with Family Honda opposing and filing its dueling fee motion seeking a recovery in the amount of $60,093.15.

     Guess what happened? The trial court declined to award attorney's fees, finding there was no prevailing party, but awarding $6,474 in costs to plaintiffs. Plaintiffs then appealed.

     The Fourth District, Division 3, in a 3-0 unpublished decision authored by Justice Moore, affirmed. The case is Winer v. Family Investment Co., Inc., Case No. G042009 (4^th Dist., Div. 3 Oct. 7, 2010) (unpublished).

     The central issue in the appeal was aptly titled "Costs Gets You Fees?" by Justice Moore. The appellate panel, after noting that neither the CLFA nor ASFA defined "prevailing party" for fee purposes, parted company with the approach taken in Kim v. Euromotors West/The Auto Gallery, 149 Cal.App.4^th 170, 181 (1997), which applied the CCP § 1032 "prevailing party" approach by analogy—a liberal approach given that the plaintiffs need only show they obtained a "net monetary recovery" on their CLRA claim. The Court of Appeal found that Kim's underlying authority for such an approach was not compelling, preferring the "pragmatic approach" endorsed instead by Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 150 (2006) which focuses on who prevailed on a practical level.

     There is also an interesting discussion of what can and cannot be used from settlement discussions at the fee hearing, with the appellate court basically determining that information used by the fee motion judge was reflected in the public record.

     The lower court did not err in concluding that there was no prevailing party in light of the "give and take" in which both sides came down from their initial positions. Fee denial affirmed.