POOF!, Special Fee Shifting Statute: CCP § 1038 Fees/Costs Assessed Against Plaintiff And In Favor Of City In Dangerous Property Case Reversed As A Matter Of Law

Plaintiff’s Claim Was Colorable Such That “Reasonable Cause” Element Was Missing So As To Not Justify The Award.

            Cities gaining pre-trial victories in certain cases frequently move to recover some attorney’s fees and costs against a losing defendant under Code of Civil Procedure section 1038.  However, the governmental entity must prove that the plaintiff’s claim lacked reasonable cause (measured by an objective standard) or was not brought/prosecuted in good faith (with the good faith element not at issue in the case we next post on).  Also of salience, the reasonable cause component is reviewed de novo on appeal.  (Lee v. Dept. of Parks & Recreation, 38 Cal.App.5^th 206, 215 (2019).)

            The “reasonable cause” standard was not met by the governmental entity in Sheks Construction Co. v. City of South San Francisco, Case No. A163204 (1^st Dist., Div. 5 June 29, 2022) (unpublished).  Although plaintiff lost a dangerous condition of public property case before trial, nothing demonstrated that its claim was other than colorable (meaning it had potential merit).  Even though the lower court awarded fees and costs under section 1038, that award went POOF! on appeal upon a de novo review by the appellate court of 1038’s “reasonable cause” prong.