G.F. Galaxy Corporation v. Johnson CA4/1 ( 2024 )


Menu:
  • Filed 2/26/24 G.F. Galaxy Corporation v. Johnson CA4/1
    NOT TO BE PUBLISHED IN OFFICIAL REPORTS
    California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
    publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
    or ordered published for purposes of rule 8.1115.
    COURT OF APPEAL, FOURTH APPELLATE DISTRICT
    DIVISION ONE
    STATE OF CALIFORNIA
    G.F. GALAXY CORPORATION,                                             D081492
    Plaintiff and Appellant,
    v.                                                          (Super. Ct. No. 37-2019-
    00009803-CU-CO-CTL)
    PHUOC LEE JOHNSON,
    Defendant and Respondent.
    APPEAL from an order of the Superior Court of San Diego County,
    Ronald F. Frazier, Judge. Reversed and remanded.
    Kitagawa & Ebert, James R. Ebert and Steven L. Krongold for Plaintiff
    and Appellant.
    Phuoc Lee Johnson, in pro. per.; Jabro Law Group and Dimetri Reyzin
    for Defendant and Respondent.
    INTRODUCTION
    Appellant G.F. Galaxy Corporation (Galaxy) appeals from an order
    granting with prejudice Phuoc Lee Johnson’s motion to tax postjudgment
    costs under Code of Civil Procedure section 685.070, subdivision (c).1
    Galaxy had secured a default judgment against Johnson in the instant
    action and sought by way of a second action to prevent Johnson from
    transferring assets that might otherwise be available to satisfy the judgment.
    While the second action remained pending, Galaxy filed a cost memorandum
    in this case pursuant to section 685.040. Therein, it requested the attorney
    fees and costs it incurred during the first two years of its efforts to enforce the
    judgment. The costs derived primarily from the second action. In response,
    Johnson filed a motion to tax costs seeking to strike the attorney fees and
    most of the postjudgment costs Galaxy sought.
    The trial court concluded that a judgment creditor may not claim
    attorney fees and costs incurred in a separate action before it has prevailed in
    that action. Because Galaxy’s second action remained ongoing, the trial court
    granted the motion to tax costs with prejudice, noting that Galaxy could “seek
    any potential fees or costs it may be entitled to in the Second Action.”
    Galaxy appealed, arguing that section 685.040 does not contain a
    “prevailing party” requirement. We agree and conclude the trial court
    abused its discretion in granting the motion to tax costs on this basis. We
    therefore reverse and remand the case for further proceedings consistent
    with this opinion.
    1    Statutory references are to the Code of Civil Procedure unless
    otherwise indicated.
    2
    FACTUAL AND PROCEDURAL BACKGROUND
    In August 2018, Galaxy sued Johnson and others for breach of contract
    and fraud. On October 29, 2019, the trial court entered a default judgment
    against Johnson and another party in the amount of $477,075.71, which
    included an award of attorney fees pursuant to contract. Thereafter, Galaxy
    recorded an abstract of judgment reflecting the default judgment amount
    with the San Diego County Recorder. Johnson did not pay the amount due
    under the judgment.
    In February 2020, Galaxy filed a second action against Johnson and
    others, alleging that Johnson quitclaimed his interest in real property to his
    spouse and recorded sham deeds of trust in an effort to avoid the lien in favor
    of Galaxy imposed by the abstract of judgment. Galaxy sought to cancel
    deeds of trust to two properties, quiet title to the same, and set aside the
    allegedly fraudulent transfer. In its second amended complaint, Galaxy
    clarified that it sought relief pursuant to the Uniform Voidable Transfer Act
    (Civ. Code, § 3439 et seq.) (UVTA).
    Meanwhile, another creditor, Franklin De Marco, Jr., recorded another
    abstract of judgment against Johnson with the San Diego County Recorder
    on September 27, 2021 (the De Marco Abstract). The De Marco Abstract
    created a judgment lien in the sum of $348,870.86.
    In April 2022, while the second action remained pending, Galaxy filed a
    memorandum of costs after judgment in the first action. Therein, Galaxy
    sought $257,910.50 for attorney fees incurred between May 1, 2020, and
    March 31, 2022, in prosecuting the second action. It also requested
    $18,733.22 in costs. In response, Johnson filed a motion to tax postjudgment
    costs and attorney fees. He argued Galaxy was required to have filed a
    noticed motion setting forth its entitlement to reasonable attorney fees, not
    3
    simply a memorandum of costs. Additionally, in requesting that the attorney
    fees and costs be stricken, he noted that “[t]here has been no judgment, no
    determination of prevailing party, and no award of attorney’s fees or costs
    [in] the Pending Case.”2 Galaxy disputed that a motion was required and
    that section 685.040 contained a “prevailing party” requirement.
    On December 16, 2022, the trial court held a hearing and then adopted
    its tentative ruling granting the motion to tax costs. The court rejected
    Johnson’s argument that Galaxy was required to claim attorney fees by way
    of a noticed motion, explaining that “the Code clearly allows [Galaxy] to claim
    attorney fees either by way of a costs memorandum or by noticed motion.
    (Code Civ. Proc., §§ 685.070(a)(6) & 685.080.)” However, the court concluded
    that “[n]one of the cases cited by [Galaxy] allowed the judgment creditor to
    claim attorney fees and costs incurred in a separate action before the
    separate action had been resolved in some way.” It further determined that,
    “even assuming the Second Action is an action to enforce the judgment
    rendered in this case (which the court does not determine at this time),
    [Galaxy] has not yet prevailed in the Second Action. As such, [Galaxy] is not
    entitled to claim those costs.” The court, therefore, struck the attorney fees
    and costs from Galaxy’s cost memorandum and made its order with prejudice,
    noting that Galaxy could “seek any potential fees or costs it may be entitled
    to in the Second Action.”
    DISCUSSION
    I.
    Johnson’s Motions on Appeal
    After Galaxy filed its opening appellate brief and Johnson responded,
    Johnson filed a motion requesting that we take judicial notice of subsequent
    2     In this instance, the term “Pending Case” referred to the second action.
    4
    filings in the case. He also moved to augment the record and dismiss the
    appeal. Galaxy opposed the motion to dismiss and request for judicial notice
    but did not object to Johnson’s request to augment the appellate record.
    Even if we were to take judicial notice of the requested documents and
    augment the record, Johnson’s motion does not persuade us that dismissal is
    warranted. Johnson asks us to consider evidence that, on June 28, 2023, he
    tendered a cashier’s check for $641,571.43 to Galaxy, which he contends fully
    satisfied the judgment in the first action. He represents that the check
    included postjudgment interest calculated through July 5, 2023, and was
    delivered with a letter demanding that Galaxy immediately file a full
    satisfaction of judgment. Galaxy accepted the check but did not provide an
    acknowledgement of full satisfaction of judgment or release its judgment lien.
    Instead, on June 30, 2023, it filed a partial satisfaction of judgment wherein
    it acknowledged receiving $641,571.43 but stated: “G.F. Galaxy Corporation
    filed a Memorandum of Costs After Judgment on April 27, 2022. Phuoc Lee
    Johnson filed a Motion to Tax Costs, which was granted by the court.
    G.F. Galaxy Corporation has appealed the Court’s ruling to seek $276,643.72
    in additional Attorney’s fees and costs, and the Appeal has not been decided.”
    In response, Johnson filed a motion to compel Galaxy to execute a full
    satisfaction of judgment. The trial court set a hearing on the motion for
    December 22, 2023.
    The thrust of Johnson’s argument is that because Galaxy accepted the
    payment, it is foreclosed from continuing to seek the attorney fees and costs it
    incurred in attempting to enforce the judgment. Additionally, Johnson
    contends that when Galaxy accepted the check, it also was required to accept
    the condition that the payment constituted full satisfaction of the judgment.
    5
    Johnson relies primarily on Gray1 CPB, LLC v. SCC Acquisitions, Inc.
    (2015) 
    233 Cal.App.4th 882
     (Gray1). In Gray1, the plaintiff obtained a large
    judgment against the defendants. (Id. at pp. 887–888.) Almost two years
    later, counsel for the defendants hand delivered to Gray1’s attorneys a
    cashier’s check for nearly $13 million and a letter. (Id. at p. 888.) The letter
    indicated that the cashier’s check covered the judgment, plus accumulated
    interest, that the judgment was fully satisfied, and that Gray1 must
    immediately file a full satisfaction of judgment. (Ibid.) Gray1’s counsel
    accepted the check but did not deposit it until after Gray1 filed a motion for
    postjudgment costs that included a request for more than $3.1 million in
    attorney fees incurred in attempting to enforce the judgment. (Ibid.)
    Thereafter, Gray1 filed an acknowledgment of partial satisfaction of
    judgment. (Ibid.) In response, the defendants filed a motion to compel Gray1
    to acknowledge its full satisfaction of the judgment. (Ibid.) The trial court
    denied Gray1’s motion for postjudgment costs as untimely and denied the
    defendants’ motion to compel, noting that “Gray1’s failure to file a timely
    acknowledgment of full satisfaction of judgment was not without just cause.”
    (Id. at p. 889.)
    Both sides appealed. (Gray1, 
    supra,
     233 Cal.App.4th at pp. 889, 898.)
    Although the reviewing court acknowledged there was no dispute that Gray1
    had the “right to timely seek reasonable attorney fees as costs in efforts to
    enforce its judgment,” it confirmed that “[t]o be timely, the motion must be
    made before the underlying judgment has been fully satisfied and within two
    years of the fees being incurred.” (Id. at p. 891.) The court concluded that
    Gray1’s acceptance, not the cashing, of the cashier’s check fully satisfied the
    judgment, making its subsequent motion untimely. (Id. at pp. 894–895.) As
    to the defendants’ motion, the court explained that the statute governing
    6
    satisfaction of judgments, section 724.050, makes the creditor liable for
    damages if the creditor fails without just cause to comply with the demand for
    timely acknowledgement of full satisfaction of the judgment. (Gray1, at
    p. 898; § 724.050, subd. (e).) Because the reviewing court concluded that,
    “[w]hether viewed under a substantial evidence test [citation] or for an abuse
    of discretion [citation], the trial court did not err in ruling on defendant’s
    motion,” it affirmed. (Gray1, at pp. 898–899.)
    In this case, Gray 1 is materially distinguishable on the question of
    whether Galaxy’s acceptance of Johnson’s check effectively terminated
    Galaxy’s right to pursue its enforcement fees and costs on appeal. Whereas
    Gray1 took possession of the check before filing its motion for fees, Galaxy
    had already filed its cost memorandum, and an appeal of the trial court’s
    ruling on the same, long before Johnson tendered payment of the judgment.
    Thus, Gray1 offers no support for the proposition that Galaxy’s right was
    extinguished upon acceptance of the check. Furthermore, nothing in Gray1
    or section 685.070, subdivision (b) requires the court to have ruled on the cost
    memorandum prior to satisfaction; they mandate only that the memorandum
    or motion be filed before the judgment is fully satisfied. (See Gray1, 
    supra,
    233 Cal.App.4th at p. 891; § 685.070, subd. (b) [“[b]efore the judgment is fully
    satisfied but not later than two years after the costs have been incurred, the
    judgment creditor claiming costs under this section shall file a memorandum
    of costs with the court clerk and serve a copy on the judgment debtor”].) This
    comports with the statute’s policy purpose of avoiding unfair surprise to the
    debtor. (See Conservatorship of McQueen (2014) 
    59 Cal.4th 602
    , 615
    (McQueen).) As the Supreme Court explained, “ ‘[T]he statutory purpose of
    requiring that the motion for enforcement costs be brought “before the
    judgment is satisfied in full” (§ 685.080, subd. (a)) is to avoid a situation
    7
    where a judgment debtor has paid off the entirety of what he [justifiably]
    believes to be his obligation in the entire case, only to be confronted later
    with a motion for yet more fees.’ ”3 (Ibid.) In the face of Galaxy’s pending
    appeal of the order taxing costs, Johnson could not justifiably claim to believe
    his obligation terminated.
    Nor are we persuaded that the appeal must be dismissed because
    Johnson conditioned acceptance of the check on Galaxy filing an
    acknowledgement of full satisfaction. Johnson’s primary support for this
    assertion is Civil Code section 3521, which provides that “[h]e who takes the
    benefit must bear the burden.” A traditional application of this maxim of
    jurisprudence is presented in Fanning v. Yoland Productions, Inc. (1957) 
    150 Cal.App.2d 444
    , a case cited by Johnson. There, a movie producer, Yoland,
    assigned its rights to an actor’s services to another movie producer, Cardinal,
    but, unbeknownst to the actor, retained the obligation to pay the actor’s
    guaranteed minimum rate. After neither company paid the actor’s fee and
    litigation commenced, the reviewing court concluded that the agreement
    between Cardinal and Yoland was not binding on the actor. (Id. at p. 451.)
    Therefore, the court held that because Cardinal accepted the benefits of the
    employment contract, under Civil Code section 3521, it must also bear the
    burdens of the contract and pay the actor’s guaranteed minimum rate.
    (Fanning, at pp. 451–452.)
    This case does not provide support for the strained application of Civil
    Code section 3521 Johnson proposes. Here, Johnson was not an innocent
    3      The McQueen court noted earlier in the opinion that fees and costs
    could be sought either via a motion pursuant to section 685.080 or a cost
    memorandum pursuant to section 685.070. (McQueen, supra, 59 Cal.4th at
    p. 607, fn. 4.) Because the time limit under both provisions is the same
    (see ibid.), the purpose of preventing unfair surprise logically applies to both.
    8
    third party to the agreement who performed what was required of him with
    the expectation of a certain outcome. Rather, Johnson knew the amount he
    paid did not constitute the full amount of the judgment Galaxy sought and
    that the appeal remained pending, but nonetheless apparently took a gamble
    on attempting to manufacture a scenario that would allow him to extricate
    himself from potential liability for hundreds of thousands of dollars in
    attorney fees and costs before final resolution of the appeal.
    We are further dissuaded from dismissing the case on this basis by the
    fact that Johnson filed a motion to compel Galaxy to execute a full
    satisfaction of judgment in the underlying action, which has not yet been
    heard on the merits. Thus, this dispute does not appear ripe for review. And
    while we do not decide the motion to compel, it bears noting that although
    Johnson earlier relied on Gray1, that case lends support for Galaxy on this
    point. In Gray1, the reviewing court agreed that Gray1’s failure to file a full
    satisfaction was not without just cause even though Gray1 had not filed a
    timely motion for costs. (Gray1, supra, 233 Cal.App.4th at pp. 888, 898–899.)
    The trial court would have greater justification for reaching the same
    conclusion here, where Galaxy did file a timely cost memorandum and the
    issue was on appeal.4
    4      Johnson also cites as grounds for dismissal the defenses of unclean
    hands, equitable estoppel, waiver, and accord and satisfaction. However,
    because he provides no authority demonstrating that we may rely on one or
    more of these defenses as grounds to dismiss a pending appeal, we do not
    address them. It is the appellant’s responsibility “to support claims of error
    with meaningful argument and citation to authority.” (Allen v. City of
    Sacramento (2015) 
    234 Cal.App.4th 41
    , 52; Cal. Rules of Court,
    rule 8.204(a)(1)(B).) “When legal argument with citation to authority is not
    furnished on a particular point, we may treat the point as forfeited and pass
    it without consideration.” (Allen, at p. 52.)
    9
    Accordingly, we deny Johnson’s motion to dismiss, motion to augment,
    and motion for judicial notice.
    II.
    Order Granting Johnson’s Motion to Tax Costs
    Turning to the issue on appeal, Galaxy argues the trial court erred in
    reading a “prevailing party” requirement into section 685.040 and then,
    based on this interpretation, finding the fee request premature. It also takes
    issue with the trial court’s conclusion that “[n]one of the cases cited by
    [Galaxy] allowed the judgment creditor to claim attorney fees and costs
    incurred in a separate action before the separate action had been resolved in
    some way,” because this was not the proposition for which Galaxy cited the
    referenced cases.5
    We generally apply the abuse of discretion standard of review when
    evaluating a ruling on a motion to tax costs or one addressing a motion for
    attorney fees. (Valenti v. City of San Diego (2023) 
    94 Cal.App.5th 218
    , 231.)
    Under the abuse of discretion standard, “ ‘[t]he trial court’s findings of fact
    are reviewed for substantial evidence, its conclusions of law are reviewed de
    novo, and its application of the law to the facts is reversible only if arbitrary
    and capricious.’ ” (Gaines v. Fidelity National Title Ins. Co. (2016) 
    62 Cal.4th 1081
    , 1100.) Thus, although Galaxy contends we must independently
    5      On this latter point, it is true the trial court distinguished authority
    Galaxy cited in support of a different legal point. In its opposition to the
    motion to tax costs, Galaxy relied on Cardinale v. Miller (2014) 
    222 Cal.App.4th 1020
     (Cardinale), Jaffe v. Pacelli (2008) 
    165 Cal.App.4th 927
    ,
    and Globalist Internet Technologies, Inc. v. Reda (2008) 
    167 Cal.App.4th 1267
    , for the proposition that “attorney fees and costs incurred in a
    separately filed fraudulent transfer action are recoverable and can be added
    to the original judgment.” While it did separately argue that postjudgment
    costs could be awarded absent a prevailing party finding, it did not cite to or
    rely upon these particular cases.
    10
    review the trial court’s ruling, we apply the de novo standard only to the trial
    court’s interpretation of the statute. We review the court’s application of the
    relevant statutes to the facts of the case for abuse of discretion. (Ibid.)
    We begin with the trial court’s interpretation of section 685.040.
    “ ‘In construing a statute, our task is to ascertain the intent of the
    Legislature so as to effectuate the purpose of the enactment. [Citation.] We
    look first to the words of the statute, which are the most reliable indications
    of the Legislature’s intent. [Citation.] We construe the words of a statute in
    context, and harmonize the various parts of an enactment by considering the
    provision at issue in the context of the statutory framework as a whole.’ ”
    (Kim v. Reins International California, Inc. (2020) 
    9 Cal.5th 73
    , 83.) “ ‘If the
    statutory language is unambiguous, then its plain meaning controls. If,
    however, the language supports more than one reasonable construction, then
    we may look to extrinsic aids, including the ostensible objects to be achieved
    and the legislative history.’ ” (Ibid.)
    As Galaxy points out, “In the construction of a statute or instrument,
    the office of the Judge is simply to ascertain and declare what is in terms or
    in substance contained therein, not to insert what has been omitted, or to omit
    what has been inserted; and where there are several provisions or
    particulars, such a construction is, if possible, to be adopted as will give effect
    to all.” (§ 1858, italics added; Vikco Ins. Services, Inc. v. Ohio Indemnity Co.
    (1999) 
    70 Cal.App.4th 55
    , 61.) “Thus, ‘ “ . . . ‘[i]n construing . . . statutory
    provisions a court is not authorized to insert qualifying provisions not
    included and may not rewrite the statute to conform to an assumed intention
    which does not appear from its language.’ ” ’ ” (Vikco, at p. 62.)
    On its face, section 685.040 does not require the judgment creditor to be
    the prevailing party. Section 685.040 provides only that “[t]he judgment
    11
    creditor is entitled to the reasonable and necessary costs of enforcing a
    judgment.” It does not include additional language specifying that such
    enforcement efforts must be concluded or successful. Nor does it contain
    language we find ambiguous relating to this issue such that resort to
    extrinsic evidence is necessary to determine the legislative intent. (See
    People v. Valencia (2017) 
    3 Cal.5th 347
    , 358.) To the contrary, under its plain
    language, without a prevailing party requirement, the statute harmonizes
    with subsequent sections (e.g., §§ 685.070 and 685.080) and does not contain
    any surplus terms. (See Valencia, at p. 357 [warning that “ ‘[a] construction
    making some words surplusage is to be avoided’ ”].) We see no reason why a
    court could not assess whether interim costs of enforcing a judgment are
    reasonable and necessary just as adeptly as it could evaluate final costs.
    Therefore, we conclude the Legislature did not intend section 685.040 to
    include a prevailing party requirement.
    Likewise, section 685.070 does not mandate that the creditor wait until
    successful resolution of an enforcement action before filing a cost
    memorandum. Instead, the latter section specifically requires the creditor to
    file its memorandum of costs “[b]efore the judgment is fully satisfied but not
    later than two years after the costs have been incurred.” (§ 685.070,
    subd. (b); c.f. David S. Karton, A Law Corp. v. Dougherty (2009) 
    171 Cal.App.4th 133
    , 147–148 [referring to a cost memorandum under
    section 685.070 that sought fees incurred throughout the four years before it
    was filed as “improper on its face”].) If we were to require the creditor to wait
    more than two years until it obtained a judgment in the enforcement case, it
    would waive its right to attorney fees for that time period under
    section 685.070. Such an interpretation, which incentivizes delay tactics by a
    12
    debtor who has already resisted paying a debt, cannot be the intent of the
    Legislature.
    Although not addressing this issue head on, numerous cases appear to
    adopt this interpretation and contemplate piecemeal filing of cost
    memorandums or motions before the judgment is satisfied or any separate
    enforcement efforts result in success. For example, in McQueen, our high
    court noted that “[i]f the creditor has reason to believe cash may imminently
    be tendered to pay the judgment, prudence counsels filing a motion or
    memorandum for the costs and fees accumulated to that point; if the
    judgment is not then satisfied, any costs or fees accruing later may be sought
    in a supplemental motion or memorandum.” (McQueen, 
    supra,
     59 Cal.4th at
    p. 615, italics added.) Likewise, in Lucky United Properties Investment,
    Inc. v. Lee (2010) 
    185 Cal.App.4th 125
    , 144–145, the First District explained
    that “[a] judgment creditor may have to file a number of separate cost bills
    and motions for fees, because the rights to such costs and fees arise at
    different times in the course of postjudgment proceedings, and those rights
    would be waived if recovery were not timely sought.” Finally, in Gray1, the
    court expressed that Gray1’s purported efforts to enforce its judgment in
    other jurisdictions was “not without sympathetic appeal” and said that
    “Gray1 could have made a motion or motions for postjudgment costs,
    including attorney fees, prior to defendants fully satisfying the judgment
    nearly two years after entry of the judgment.” (Gray1, supra, 233
    Cal.App.4th at p. 896, italics added.) None of these statements would have
    meaning if only one request was allowed after the creditor succeeded in
    enforcement efforts no matter how long they took.
    Arguably, the judgment creditor that waited until it successfully
    resolved an enforcement action would also waive recovery because success
    13
    likely would mean the debtor satisfied the judgment. As previously
    highlighted, a cost memorandum filed after the judgment is fully satisfied is
    barred. (§ 685.070, subd. (b).) Thus, the trial court’s logic would leave the
    creditor in the untenable position of having to quickly file its cost
    memorandum in the small window between when it obtained a judgment in
    the enforcement action and when the debtor complied with that judgment or
    be forever barred from recovering its fees and costs. And again, the creditor
    would still lose out on fees and costs in this scenario if it took more than two
    years to secure a judgment in the enforcement action.
    Allowing recovery of attorney fees and costs before the creditor prevails
    in the enforcement action also would not, as the trial court and Johnson seem
    to fear, provide the creditor with a blank check for unnecessary or excessive
    fees. Under section 685.040, the judgment creditor is only entitled to “the
    reasonable and necessary costs of enforcing a judgment,” so the amount of
    any interim award would still be subject to judicial review and discretion.
    (§ 685.040; § 685.070; Coastline JX Holdings LLC v. Bennett (2022) 
    80 Cal.App.5th 985
    , 1012–1013 (Coastline).)
    Accordingly, we conclude the trial court erred in construing
    section 685.040 as including a prevailing party provision.
    Because the trial court’s interpretation of the statute led it to grant
    Johnson’s motion to tax all the fees and costs with prejudice, without any
    assessment of whether the fees were reasonable and necessary to enforce the
    underlying judgment, we conclude the trial court abused its discretion. We
    further conclude the error was prejudicial. The court did not find that Galaxy
    was not entitled to fees in this case, just that he was not entitled to them
    before a prevailing party determination had been made. But because the
    14
    two-year statutory time limit has now run and the trial court made its order
    with prejudice, Galaxy cannot refile its cost memorandum in the first action.
    Additionally, while the error might be harmless if Galaxy could in fact
    recover its costs in the second action as the trial court proposed, Galaxy
    disputes this conclusion. Galaxy filed its second action under the UVTA.
    However, the UVTA does not itself entitle the prevailing party to attorney
    fees. (Civ. Code § 3439 et seq; Cardinale, 
    supra,
     222 Cal.App.4th at p. 1025.)
    Notably, Johnson does not dispute this argument in contending that any
    error by the trial court was harmless. Nor does he provide any authority
    indicating section 685.040 authorizes recovery of attorney fees in a separate
    enforcement action. And indeed, McQueen suggests the contrary, explaining:
    “Although incurred in a separate proceeding, the attorney fees plaintiff
    claims for prosecuting the fraudulent transfer action were expended in an
    effort to maintain assets in defendant’s hands for potential satisfaction of the
    judgment in this case. They therefore came within the scope of what could be
    claimed, in this case, under section 685.040. ‘Attorney fees incurred in one
    action may be considered necessary litigation costs in another.’ ” (McQueen,
    supra, 59 Cal.4th at pp. 612–613.) Further, “because section 685.040 is not
    itself a substantive fee-shifting statute. . . . [it] creates no independent
    authority for awarding attorney fees.” (Id. at p. 613.) We therefore conclude
    the error was prejudicial and warrants remand.6
    Although we conclude the trial court erred in finding section 685.040
    required Galaxy to prevail in the second action before being entitled to claim
    costs in this action, we express no opinion as to whether the attorney fees and
    costs claimed by Galaxy were reasonable and necessary to enforce the
    6    Because we reverse the decision on these grounds, we need not address
    Galaxy’s other grounds for asserting the error was prejudicial, including its
    argument regarding the De Marco Abstract.
    15
    judgment in this case. (§ 685.040; Coastline, supra, 80 Cal.App.5th at
    pp. 1012–1013.) We leave it to the trial court to make this determination on
    remand.
    On a final note, Johnson continues to argue that Galaxy was required
    to file a noticed fee motion. But the trial court rejected this argument, and
    Johnson did not challenge the ruling in a cross-appeal. Therefore, we will not
    address it here. (Preserve Poway v. City of Poway (2016) 
    245 Cal.App.4th 560
    , 585 [“ ‘To obtain affirmative relief by way of appeal, respondents must
    themselves file a notice of appeal and become cross-appellants’ ”].)
    DISPOSITION
    The order granting the motion to tax costs is reversed, and the matter
    remanded for further proceedings consistent with this opinion. Galaxy is
    entitled to its costs on appeal.
    HUFFMAN, Acting P. J.
    WE CONCUR:
    O’ROURKE, J.
    DATO, J.
    16
    

Document Info

Docket Number: D081492

Filed Date: 2/26/2024

Precedential Status: Non-Precedential

Modified Date: 2/26/2024