County of Los Angeles v. Financial Casualty & Surety Inc. CA2/1

Filed 7/24/15 County of Los Angeles v. Financial Casualty & Surety Inc. CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
COUNTY OF LOS ANGELES, B254010
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. SJ3716)
v.
FINANCIAL CASUALTY & SURETY, ORDER MODIFYING OPINION
INC., AND DENYING PETITION FOR
REHEARING
Defendant and Appellant.
THE COURT:
It is ordered that the opinion filed herein on June 26, 2015, be modified in the
following manners:
The last sentence that begins at the bottom of page 2 and continues to page 3 is
deleted (“According to the court, an interest award was not equitable under the
circumstances because the County had demanded payment of the judgment pursuant to
Penal Code section 1306, which under subdivision (f) provides a two-year limitation
from entry of judgment for enforcement.”). That sentence is replaced with the following:
“According to the court, an interest award was not equitable under the circumstances
because the County had demanded payment of the judgment pursuant to Penal Code
section 1306.”
On page 4, the first full sentence beginning with “Although the County demanded
payment . . .” is deleted and replaced with the following two sentences: “Although the
County demanded payment of the judgment pursuant to Penal Code section 1306, which
under subdivision (e) provides time periods for collection and enforcement of a judgment
on a forfeited bond and under subdivision (f) gives the County two years from entry of
judgment for enforcement, payment of interest fulfills the purpose of Code of Civil
Procedure section 908 to return Financial to the position it occupied before enforcement
of the judgment that we reversed on appeal. The County’s collection of the judgment
pursuant to Penal Code section 1306 does not provide a reasoned basis for denying
interest as restitution under Code of Civil Procedure section 908.”
This modification does not constitute a change in the judgment.
The petition for rehearing is denied.
NOT TO BE PUBLISHED.
______________________________________________________________________
ROTHSCHILD, P. J. CHANEY, J. JOHNSON, J.
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Filed 6/26/15 County of Los Angeles v. Financial Casualty & Surety CA2/1 (unmodified version)
NOT TO BE PUBLISHED IN THE 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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
COUNTY OF LOS ANGELES, B254010
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. SJ3716)
v.
FINANCIAL CASUALTY & SURETY,
INC.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los Angeles County. Lia R.
Martin, Judge. Order denying interest reversed and remanded with directions.
______
John M. Rorabaugh for Defendant and Appellant.
Mark J. Saladino, County Counsel, Ruben Baeza, Jr., Assistant County Counsel,
and Joanne Nielsen, Principal Deputy County Counsel, for Plaintiff and Respondent.
______
Financial Casualty & Surety, Inc. (Financial) appeals from that portion of
an order in which the trial court denied interest on its motion for restitution pursuant to
Code of Civil Procedure section 908. Financial contends that the court abused its
discretion in denying interest. We agree and thus reverse and remand the matter with
directions.
FACTUAL AND PROCEDURAL BACKGROUND
On June 11, 2011, Financial posted a $100,000 bond for the release of criminal
defendant Luciano Villa. When Villa failed to appear in court on June 24, bail was
forfeited. Financial moved to vacate the forfeiture and exonerate the bond on the ground
that Villa had been deported on June 13 and thus, under Penal Code section 1305,
subdivision (d), was “permanently unable to appear in the court.” Based on a finding of
“unclean hands,” the trial court (Hon. Mark A. Young) denied Financial’s motion and
entered judgment on the forfeited bond. Financial appealed. On April 10, 2012, during
the pendency of the appeal, Financial paid the judgment, which totaled $101,493.29,
including court costs and interest, to the County of Los Angeles (County).
We reversed the judgment, concluding that the trial court had applied an incorrect
legal standard to deny Financial’s motion. (County of Los Angeles v. Financial Casualty
& Surety, Inc. (2013) 216 Cal. App. 4th 1192, 1195-1196.) Because relief from the
forfeiture of bail under Penal Code section 1306 is neither discretionary nor dependent
on “‘clean hands,’” we held that exoneration is mandatory so long as the defendant’s
absence is “‘without the connivance of the bail,’” and no evidence existed that Financial
had connived in Villa’s absence. (Ibid.) Our remittitur issued on August 1, 2013.
On October 3, Financial moved under Code of Civil Procedure section 908 for
restitution, including interest on the money it had paid the County. The County opposed
Financial’s request for interest. On December 11, the trial court (Hon. Lia R. Martin)
entered an order awarding restitution in the amount paid, $101,493.29, but denying
interest. According to the court, an interest award was not equitable under the
circumstances because the County had demanded payment of the judgment pursuant to
Penal Code section 1306, which under subdivision (f) provides a two-year limitation
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from entry of judgment for enforcement. On December 17, the County paid Financial
$101,493.29. Financial appealed from that portion of the order denying interest.
DISCUSSION
Code of Civil Procedure section 908 provides that, upon reversal or modification
of a judgment, “the reviewing court may direct that the parties be returned so far as
possible to the positions they occupied before the enforcement of or execution on the
judgment or order. In doing so, the reviewing court may order restitution on reasonable
terms and conditions of all property and rights lost by the erroneous judgment or
order. . . . ” “[A] trial court whose order or judgment has been reversed on appeal has
inherent authority to afford similar relief. [Citations.]” (Gunderson v. Wall (2011)
196 Cal. App. 4th 1060, 1065 (Gunderson).)
“‘The fundamental rule guiding the court [in awarding restitution under Code of
Civil Procedure section 908] [i]s, so far as possible, to place the parties in as favorable
a position as they could have been in had the judgment[] not been enforced pending
appeal.’ [Citation.]” (Gunderson, supra, 196 Cal.App.4th at p. 1065.) An interest award
routinely is part of restitution following the reversal of a money judgment unless such
an award would be inequitable under the circumstances. (Textron Financial Corp. v.
National Union Fire Ins. Co. (2004) 118 Cal. App. 4th 1061, 1085 (Textron), disapproved
on other grounds in Zhang v. Superior Court (2013) 57 Cal. 4th 364, 377-379.) Courts
“generally reason[] that []payment of interest is appropriate because a plaintiff who
collects his judgment pending appeal assumes the risk that it may have to repay the
award, along with interest, if the defendant prevails in that appeal. [Citations.]”
(Gunderson, at pp. 1066-1067.) The decision whether to award interest as restitution is a
question of “judicial discretion in determining what equity require[s].” (Stockton
Theatres, Inc. v. Palermo (1953) 121 Cal. App. 2d 616, 632; see also Textron, at p. 1085.)
Denying interest here did not place Financial “‘in as favorable a position as [it]
could have been in had the judgment[] not been enforced pending appeal.’” (Gunderson,
supra, 196 Cal.App.4th at p. 1065.) Financial lost the time value of its money between
the time it paid the judgment to the County and the date the County returned its money
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after our reversal of the judgment. Although the County demanded payment of the
judgment pursuant to Penal Code section 1306, which under subdivision (f) gives it
two years from entry of judgment for enforcement, payment of interest fulfills the
purpose of Code of Civil Procedure section 908 to return Financial to the position it
occupied before enforcement of the judgment that we reversed on appeal. No evidence
exists that Financial acted inequitably in postjudgment proceedings to render the denial
of interest an appropriate act of discretion. (See Gunderson, supra, 196 Cal.App.4th
at pp. 1067-1068 [denial of interest affirmed because defendant who ultimately
paid judgment pending appeal engaged in inequitable postjudgment conduct that
caused plaintiff to incur substantial costs in enforcing the judgment].) Under these
circumstances, an award of interest as restitution is appropriate pursuant to Code of Civil
Procedure section 908. (Textron, supra, 118 Cal.App.4th at pp. 1085-1086 [interest
awarded as restitution when defendant had paid judgment based on plaintiff’s threat
to execute on it and no evidence existed that defendant had acted inequitably in
postjudgment proceedings].) We, therefore, reverse the denial of interest and remand the
matter for the trial court to determine a reasonable interest rate and award interest from
the date Financial paid the judgment (April 10, 2012) through the date the County
returned the money (December 17, 2013).1
1
We note that interest rates are, and have been, low. (See, e.g.,
Department of the Treasury, Resource Center, Daily Treasury Yield Curve Rates
[treasury yield curve rate on 10-year
United States treasury bond 2.19 percent as of June 1, 2015].) Although Financial
asks for interest at a rate of 10 percent per annum pursuant to Civil Code sections 3287
and 3289, those provisions do not govern a restitution award under Code of Civil
Procedure section 908. In addition, Financial has not demonstrated that an interest rate of
10 percent would be the appropriate interest rate to restore it to as favorable a position as
it could have been in had the judgment not been enforced pending appeal.
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DISPOSITION
The order insofar as the trial court denied interest is reversed and remanded with
directions. On remand, the court shall determine a reasonable interest rate to restore
Financial to its former position and award Financial that interest on the amount of
$101,493.29 from April 10, 2012 through December 17, 2013. Financial is entitled to
recover its costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J.
We concur:
CHANEY, J.
JOHNSON, J.
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