Prevailing On “Water Rates Not Set Pursuant To Law” Issue Drove The Conclusion.
Without going into a detailed discussion of the prolonged dispute between the parties, San Diego County Water Authority v. Metropolitan Water Dist. of Southern California, Case No. A162168 (1st Dist., Div. 3 Mar. 17, 2022) (unpublished) shows that a “prevailing party” determination under Civil Code section 1717 focuses on the importance of litigation objectives rather than some collateral losses along the way.
Briefly put, plaintiff won an initial judgment that defendant’s water rates charged under an exchange agreement, which had a contractual fees clause, were legally noncompliant and awarded a $234 million judgment to plaintiff. The lower court then awarded about $9 million in contractual attorney’s fees to plaintiff, but only for phase one work of a two-phased trial. In a prior appeal, the appellate court reversed some issue findings on the water rates, but it did affirm that the rates were noncompliant in certain areas. It also determined that contractual fees should be awarded for both phases of the trial. On remand, plaintiff obtained a $44 million judgment on the contract plus ancillary declaratory relief as to rate noncompliance. Because the judgment benefited plaintiff, its ratepayers, and others in the defendant’s service area, the lower court determined plaintiff was the prevailing party for fees and costs. (The amount of the fees award is not described, but the requested costs were $326,918.34—so the fee award had to be substantial.)
The 1/3 DCA affirmed the fees and costs awards. The water rate adjudication did fall within the exchange agreement such that contractual fee entitlement was clear. Plaintiff did prevail based on winning some important water rate challenges benefiting both themselves and others. Costs were properly awarded because they are expressly allowed under section 1717, such that no separate routine costs analysis under CCP § 1032 needed to be engaged in.
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