POOF!/Prevailing Party: $1.8 Million Interest, Costs, and Fee Award Goes POOF! When Appellate Court Trims Compensatory Award From $1.1 Million To $117,050

 

Prevailing Party Status Had To Be Redetermined After Reversal.

    Hot Rods, LLC v. Northrop Grumman Systems Corp., Case No. G049953 (4th Dist., Div. 3 Dec. 7, 2015) (published) shows how appellate practice is not for the faint of heart.  The reviewing court will review the case for legal errors and will reverse based on finding they exist.  That is what happened in this one.
   
    Here, a referee via stipulation entered a $1.1 million compensatory award and $1.8 million interest, costs, and fee award to plaintiff for environmental remediation issues under a purchase agreement.  The defense appealed, and was wise to do so.  On appeal, the compensatory award got slashed and the other award went POOF! in a 3-0 decision authored by Justice Moore.

    First of all, the appellate court did enforce a contractual provision that extrinsic evidence was not allowed in interpreting the purchase agreement, a clause not adhered to by the referee—with the appellate court disregarding extrinsic evidence in its further analysis of the issues.  The indemnity clause in the purchase agreement was found facially broad enough to cover first and third party claims.  However, the real rub was that no evidence supported the referee’s $1 million “loss of use” compensatory award, because all of the introduced evidence was probative only on “diminution in value of the property” recovery.  The only damages that held up on appeal were consequential ones adding up to $117,050.

    That severe of a haircut on the merits also meant that the prevailing party issue had to be revisited on the interest/costs/fee component—a large $1.8 million award went POOF! (for now).