Although Not Winning Everything, Plaintiff Did Obtain Significant Declaratory Relief So As To Be Deemed The Prevailing Party.
In Hot Rods, LLC v. Northrop Grumman Corp., Case No. G054432 (4th Dist., Div. 3 Dec. 5, 2018) (unpublished), the case involved environmental contamination of a property in Anaheim that was sold by defendant to certain buyers, who transferred their interest to plaintiff. Originally, plaintiff won $1.116 million in damages plus almost $2.1 million in costs based upon a referee’s recommendation on both contract and tort claims. However, the bulk of the damages award was reversed on appeal, with the appellate court determining only $117,050 of the original damages award could be upheld. This reversal also required a “restudy” of the fee award. On remand, the referee performed a new analysis of the fee request, finding that nearly $1.345 million was a reasonable fee award, computed as 60% of fees for trial, post-trial work, the appeal, and “fees on fees” activities. Defendant predictably appealed.
The fee award was affirmed.
The Purchase and Sale Agreement fees clause was broad, with the defense having to concede it covered all of plaintiff’s claims. So, the appeal really dwindled down to a focus on whether the “prevailing party” determination by the referee was proper. It was.
Although agreeing that plaintiff did not achieve a complete victory based on its prior “shaving” of compensatory damages, it was not contestable that it did win a substantial declaratory relief victory—the environmental indemnity applied both to first-party and third-party claims—as against defendant. As the Court of Appeal put it, “Indeed, given [the defense] position that the indemnity clause only applied to third party claims, the declaratory relief judgment is the whole ball game.” (Slip Op., p. 12.) The whole record showed plaintiff, with mixed results, left it to the lower court to decide who prevailed—plaintiff got the “call,” one which was subject to a deferential abuse of discretion standard which could not be hurdled in this one by the defense.
Justice Moore was the author of this 3-0 decision.
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