Felczer v. Apple, Inc.

63 Cal.App.5th 406

277 Cal.Rptr.3d 727

Brandon FELCZER et al., Plaintiffs and Appellants,

v.APPLE, INC., Defendant and Respondent.

D077314

Court of Appeal, Fourth District, Division 1, California.

Filed April 23, 2021

As Modified May 24, 2021

Hogue & Belong, Jeffrey L. Hogue, Tyler J. Belong, San Diego, Marisol G. Jimenez; Law Office of Martin N. Buchanan and Martin N. Buchanan for Plaintiffs and Appellants.

Carothers DiSante & Freudenberger, Timothy M. Freudenberger, Irvine, Kent J. Sprinkle, San Diego, Robin E. Largent, and Teresa W. Ghali for Defendant and Respondent.

DATO, J.

This case presents a single question for our determination: in a civil case where the prevailing party is entitled to recover certain litigation expenses and attorney's fees from the losing party, when does postjudgment interest on an award of prejudgment costs begin to run? As we discuss below, accrual begins on the date of the judgment or order that establishes the right of a party to recover a particular cost item, even if the dollar amount has yet to be ascertained.

FACTUAL AND PROCEDURAL BACKGROUND¹

After five years of litigation that culminated in a lengthy combined jury and bench trial, plaintiffs representing a subclass of retail workers were awarded $2,000,000 in damages against defendant Apple Inc. (Apple) for violations of certain California wage-and-hour labor laws. The trial court memorialized this award in its September 2017 judgment, noting that costs would be determined at a later time.

Shortly after entry of the judgment plaintiffs filed a memorandum of costs, and several months later moved for attorney's fees under Code of Civil Procedure section 1021.5.² Apple opposed the award of attorney's fees and filed a motion to tax costs. In March 2018, the court granted the attorney's fee motion, awarding over $2,000,000 to class counsel. A month later it partially granted Apple's motion to tax costs, reducing the recoverable amount to about $440,000. These amounts for costs and attorney's fees were ultimately included in the judgment, but the court did not specify when interest on that portion of the judgment would start.

Both parties appealed. But after participating in this court's settlement program, they eventually came to an agreement that dismissed their respective appeals. The matter was remanded to the trial court for "further proceedings on a distribution plan and appropriate notice."

The trial court initially encouraged the parties to work together to determine the details of distribution, but an insurmountable controversy developed regarding the date on which interest for the attorney's fees and costs awarded to plaintiffs should begin to accrue. Apple maintained that interest should only begin when the amounts were made certain—March 2018 for the fees and April 2018 for the costs—whereas plaintiffs argued both should run from the date the judgment was entered, in September 2017.³ The court ultimately adopted Apple's position, entering an order that stated the interest would begin accruing on the dates the respective awards were quantified. In this appeal, plaintiffs ask us to find they are entitled to collect interest on fees and costs beginning on the date of the judgment, in September 2017.

DISCUSSION

Plaintiffs assert it is black letter law in California that fees and costs—although typically quantified at a later time—retroactively become a part of the judgment that follows a jury or bench trial, with interest accruing from the date the judgment is entered. In support of their position they rely primarily on Lucky United Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125, 110 Cal.Rptr.3d 159 ( Lucky ) and its progeny. Apple presses us to reject Lucky , arguing in large part that it erroneously interprets certain statutes governing postjudgment costs. As we will explain, the question is not as simple as whether we agree or disagree with Lucky. Indeed, the Lucky case does not even reach all aspects of the issue before us.

By statute in California, interest on a money judgment begins to accrue on the date the judgment is entered. But the precise meaning of "money judgment" in the context of a postjudgment award of costs and attorney's fees is not specifically addressed. Our reading of the relevant statutes, supported by federal caselaw addressing an analogous issue, suggests that independent monetary components of a judgment may constitute separate "money judgments" for the purpose of calculating postjudgment interest. In the case of prevailing parties seeking costs and/or fees, we ultimately conclude that interest begins to run on the date their right to those items is determined, even if the exact amount is ascertained at a later time.

A. Lucky and the Nunc Pro Tunc Power of the Court

We begin with an overview of Lucky. Although the conflict between the parties in that case started as a contract dispute, it led to a malicious prosecution claim and an ensuing anti-SLAPP motion. ( § 425.16.) After Lee, the original plaintiff's attorney, prevailed in his special motion to strike Lucky's malicious prosecution claim, he sought related attorney's fees and costs under section 425.16, subdivision (c). When the trial court denied him certain fees and costs and found Lucky had satisfied an order by tendering payment without any interest, Lee appealed. ( Lucky, supra , 185 Cal.App.4th at pp. 130–136, 110 Cal.Rptr.3d 159.)

We agree with the Lucky court that understanding "what exactly constitutes [a] judgment" is critical ( Lucky, supra , 185 Cal.App.4th at p. 136, 110 Cal.Rptr.3d 159 ), even if we do not accept Lucky' s implicit conclusion that the term has a fixed meaning in all contexts and for all purposes. Referencing various sections of the Enforcement of Judgments Law ( § 680.010 et seq. ),⁴ the Lucky opinion notes that "[t]he principal amount of a judgment is the amount of any damages awarded, plus any costs (including attorney fees) to which the prevailing party may be entitled, less any amounts paid by the judgment debtor. ( § 680.300.)" ( Lucky , at p. 137, 110 Cal.Rptr.3d 159.) Citing to section 685.010, it goes on to observe that "[p]ostjudgment interest accrues on the principal amount of the judgment at the rate of ten percent per annum." ( Lucky , at p. 137, 110 Cal.Rptr.3d 159.) Lucky ultimately concludes that "interest ordinarily begins to accrue on the prejudgment cost and attorney fees portion of the judgment as of the same time it begins to accrue on all other monetary portions of the judgment—upon entry of judgment." ( Id. at p. 138, 110 Cal.Rptr.3d 159.)

Apple attacks the specifics of the Lucky opinion's reasoning in support of its conclusion, in particular, its reference to section 680.300. As Apple correctly points out, the costs that section 680.300 mentions as being "added to the judgment pursuant to Section 685.090" are not the allowable prejudgment costs and attorney's fees at issue in this case. (See § 1033.5.) Rather, the "costs pursuant to this chapter" identified in subdivision (a) of section 685.090 are the costs incurred postjudgment to enforce the judgment. Neither section 680.300 nor section 685.090 address whether or to what extent prejudgment costs under section 1033.5 become part of the judgment.

On the other hand, the Lucky court's citation to section 680.300, even if off point, does not necessarily invalidate its conclusion that an award of prejudgment costs and/or attorney's fees becomes part of the judgment, at least for some purposes.⁵ Indeed, it would appear self-evident that if post judgment costs of enforcing the judgment are added to the judgment, then certainly pre judgment costs pursuant to section 1033.5 would be similarly treated. This logic seems to be confirmed by California Rules of Court, rule 3.1700(b)(4),⁶ which provides that once allowable costs have been determined, " ‘the clerk must immediately enter the costs on the judgment.’ " (See, e.g., Chodos v. Borman (2015) 239 Cal.App.4th 707, 714, 190 Cal.Rptr.3d 889 ( Chodos ); 9 Witkin & Epstein, Cal. Procedure (5th ed. 2008) Judgments, § 147.)

That the clerk enters the costs "on the judgment" strongly implies that the amount of the cost award becomes part of the judgment, at least to some extent. But it does not necessarily dictate when interest on that part of the judgment begins to accrue. Plaintiffs argue that it does. They rely on section 685.020, which provides that interest begins to accrue on a money judgment on the date the judgment was entered. ( § 685.020.) From plaintiffs' perspective, there was only one judgment, entered in September 2017, and the later-determined costs and fees accrue interest from that date because they were "legally and physically" integrated into it when the court directed the clerk to "add the fees and costs awards in handwriting" on the September judgment.

In support of this argument, they cite (among other authorities) Bankes v. Lucas (1992) 9 Cal.App.4th 365, 11 Cal.Rptr.2d 723 ( Bankes ) and Grant v. List & Lathrop (1992) 2 Cal.App.4th 993, 3 Cal.Rptr.2d 654 ( Grant ). Bankes explicitly treats the clerk's entry of a costs order as a nunc pro tunc correction of the judgment, stating, "Generally, when a judgment includes an award of costs and fees, the amount of the award is left blank for future determination." ( Bankes , at p. 369, 11 Cal.Rptr.2d 723.) "When the court's subsequent order setting the final amount is filed, the clerk enters the amounts on the judgment nunc pro tunc." ( Ibid. ) Grant makes a similar pronouncement, citing to the rule of court that preceded rule 3.1700(b)(4). ( Grant , at pp. 996–997, 3 Cal.Rptr.2d 654.)

But rule 3.1700(b)(4) simply states that "[a]fter the time has passed for a motion to strike or tax costs or for determination of that motion, the clerk must immediately enter the costs on the judgment." We do not read this rule as establishing that court clerks wield a formal nunc pro tunc power when they add costs to the judgment. More...