However, Lower Court’s Across-the-Board Reduction Based On Number Of Jointly Represented Parties Had To Be Remanded To Determine Costs Justly Due To Prevailing Party For Routine Costs Purposes.
Charton v. Harkey, Case No. G050514 (4th Dist., Div. 3 May 24, 2016) (published), a 3-0 decision authored by Justice Aronson, arose from the fallout of the National Financing Lending/Point Center Financial lawsuit by investor plaintiffs against the corporate defendants, Dan Harkey, and his wife Diane Harkey. She was dismissed from the case based on an aiding and abetting claim even though a jury returned substantial compensatory and punitive damages against Point Center and Mr. Harkey. The same counsel represented the four defendants in the case, including Mrs. Harkey. Eventually, the lower court taxed 75% of Diane’s recoverable costs such that she only obtained 25%--$37,626.25 out of $150,504.99 eventually sought.
The 4/3 DCA reversed in part and remanded upon an appeal by plaintiff investors.
Although not disputing that Mrs. Harkey fell within one category of defendants entitled to routine costs (CCP § 1032(a)(4)) based on her dismissal from the suit), plaintiffs argued that she fell within the “unity of interest” exception allowing the court to deny Mrs. Harkey prevailing party status. (This exception formerly granted the trial court discretion to deny costs where several defendants unified in interest did not prevail and were not entitled to costs). The 4/3 DCA panel rejected the notion that the “unity in interest” exception was still viable after a 1986 Legislature repeal of former section 1032. It expressly found not controlling several intermediate appellate decisions which had adhered to this exception.
However, the appellate court did not like the mathematical 75% across-the-board reduction in costs to Mrs. Harkey based on the fact she was one of four defendants. Instead, the lower court was tasked on remand to really determine what costs were reasonably necessary to the litigation and reasonable in nature as to her defense, not applying just a mathematical scalpel rather than engaging in a more refined routine costs analysis.
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