California Petitioner’s Attorneys Not Liable for Costs Incurred by Petitioner’s Unsuccessful Suit

The California Court of Appeal for the Fourth District, Division One has held that the attorneys representing a petitioner in an injury suit were not liable for defense costs despite the suit not being maintained with reasonable cause.

Alberto Daniel Saucedo Suarez was injured when the fuel tank of the van he had been riding in exploded while being refueled at a station owned by the City of Corona (“City”). Suarez filed suit in the trial court against the City, alleging a dangerous conditions and seeking damages. The court eventually granted summary judgment in the City’s favor and ordered Suarez and his attorney (“counsel”) to pay defense costs and fees to the City. Suarez and counsel appealed, with counsel specifically arguing that the costs assessed against them were contrary to state law. On August 29, 2014, the appellate court agreed, reversing the trial court’s award as it applied to counsel.

As a passenger in a van in 2008, Suarez was injured when the van’s compressed natural gas (CNG) tank exploded while being refueled at of the City’s filling stations.

In April 2009, Suarez filed suit against the city and other defendants in the Superior Court of Riverside County, accusing the City of a dangerous condition on public property. Through subsequent investigations and testing, the CNG tank was found to have ruptured “as a result of exposure to sulfuric acid from contents carried in the…van.”

In November 2009, the City agreed to waive costs if Suarez dismissed the suit. He ignored the offer and sought additional discovery. Between December 2009 and April 2010, the City released its investigative reports to Suarez, including those on the CNG system and dispenser. No prior incidents with either had been reported. In early 2011, the City once again gave Suarez an opportunity to dismiss the suit, citing that the evidence did not support a dangerous condition and that Suarez and counsel had left the suit idle for some time. Suarez refused to dismiss the suit and also declined the City’s request to otherwise demonstrate its liability. The City threatened to file a motion for summary judgment in May 2011.

The superior court granted the City’s motion for summary judgment and the City subsequently moved for $135,904.67 in defense costs under section 1038 of the Code of Civil Procedures. The City argued that the suit had not been litigated with reasonable cause. Suarez and counsel disagreed, claiming that they had filed the suit in good faith. They also raised objections, among others, that the costs were excessive and had been sought before the superior court had entered the order granting summary judgment.

Around March 2012, after two hearings by a commissioner and her order granting costs, and the superior court’s order granting summary judgment, the superior court held that it did “not find it proper to award fees from the onset of the case, plaintiff did complete discovery as of April 2010, and evidence did not support moving [the suit] forward” after that date. The City was therefore awarded $102,296.20 in fees and $3,753.85 in costs, ordered by the commissioner to be paid jointly and severally by Suarez and counsel, each of whom appealed, with counsel asserting that the award should not be against them.

The appellate court determined that section 1038 provides in part that “[i]f the court should determine that the proceeding was not brought in good faith and with reasonable cause…the court shall render judgment in favor of [the opposing] party in the amount of all reasonable and necessary defense costs, “which, according to the appellate court, also “encompasses both the initial filing of an action and its continued maintenance.” The appellate court nevertheless held that section 1038 did not mention nor authorize the “imposition of defense costs against a party’s counsel.”

The appellants also claimed that (1) the commissioner did not have jurisdiction to impose the award, (2) that the award had been improper because the suit had been maintained with reasonable cause, (3) that the costs and fees were not reasonable and necessarily incurred. and (4) the award violated the plaintiff and his attorney’s right to due process.

The appellate court rejected each argument. First recognizing state law that a “motion for costs must be heard by the same judge who heard the dispositive motion,” if that judge is available, the courts secondly recognized that “parties may stipulate to the jurisdiction of a court commissioner.” Because no objections had been raised to the commissioner’s hearings, despite the judge’s availability, the commissioner had jurisdiction.

Next, concluding that the suit was maintained without reasonable cause, the appellate court pointed out that as of April 2010, [t]he City’s information did not reveal the presence of a dangerous condition and that the “[a]ppellants made no effort to move the case forward for approximately one year. “ The appellate court further upheld the trial court’s determination of the reasonableness and necessity of the award as the City provided detailed information of its costs incurred.

Finally, finding that the violation of counsel’s due process rights was moot, the appellate court turned to Suarez’s claim. He argued that he had not had adequate notice of the motion for costs as it should have been heard simultaneously with the summary judgment motion. The court found no violation where Suarez opposed the motion for costs over two hearings and “never asserted in the trial court that he did not have adequate notice.”

Thus, the appellate court reversed the order of costs against counsel but affirmed the trial court’s other holdings. See: Suarez v. City of Corona, 229 Cal. App. 4th 325 (Cal. App. 4th Dist. 2014).

Subscribe today

Already a subscriber? Login

Related legal case