Code Details

Code of Civil Procedure – CCP
PART 2. OF CIVIL ACTIONS [307 – 1062.34] ( Part 2 enacted 1872. )
TITLE 14. OF MISCELLANEOUS PROVISIONS [989 – 1062.34] ( Title 14 enacted 1872. )

CHAPTER 6. Of Costs [1021 – 1038] ( Chapter 6 enacted 1872. )

Exact Statute Text

(a) As used in this section, unless the context clearly requires otherwise:

(1) “Complaint” includes a cross-complaint.

(2) “Defendant” includes a cross-defendant, a person against whom a complaint is filed, or a party who files an answer in intervention.

(3) “Plaintiff” includes a cross-complainant or a party who files a complaint in intervention.

(4) “Prevailing party” includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the “prevailing party” shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.

(b) Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.

(c) Nothing in this section shall prohibit parties from stipulating to alternative procedures for awarding costs in the litigation pursuant to rules adopted under Section 1034.

(Amended by Stats. 2017, Ch. 131, Sec. 2. (AB 1693) Effective January 1, 2018.)

Code of Civil Procedure § 1032 Summary

California Code of Civil Procedure § 1032 establishes the fundamental right for a “prevailing party” to recover their litigation costs in a civil lawsuit. This statute defines key terms like “complaint,” “defendant,” and “plaintiff” to include various parties involved in a legal action, such as those filing cross-complaints or intervening. Most importantly, it clearly defines “prevailing party.” Generally, a prevailing party is someone who achieves a net monetary recovery, a defendant who gets the case dismissed in their favor, or a defendant against whom a plaintiff recovers nothing. In cases where the outcome is not a simple monetary win or loss, or involves non-monetary relief, the court has the discretion to determine who the prevailing party is and whether to allow or apportion costs. Unless another specific statute dictates otherwise, the prevailing party is automatically entitled to recover their costs. The statute also permits parties to agree to different procedures for awarding costs through a stipulation.

Purpose of Code of Civil Procedure § 1032

The legislative purpose behind Code of Civil Procedure § 1032 is to ensure fairness and efficiency in the judicial system by compensating the successful party for the necessary expenses incurred during litigation. By establishing a default rule that the “winner” of a lawsuit can recover their costs, the statute aims to:

1. Promote Justice: It prevents the prevailing party from being financially penalized for successfully pursuing or defending their legal rights. Litigation involves significant expenses beyond attorney fees, and this statute helps make the winning party “whole” regarding these out-of-pocket costs.
2. Deter Frivolous Litigation: The knowledge that one might be liable for the opposing party’s costs if unsuccessful can encourage parties to carefully evaluate the merits of their claims or defenses before proceeding to trial, thereby discouraging unwarranted lawsuits.
3. Encourage Settlement: The potential recovery or liability for costs acts as a factor in settlement negotiations, pushing parties towards reasonable compromises rather than prolonged litigation.
4. Provide Clarity and Predictability: By clearly defining “prevailing party” and establishing a “right to recover costs,” the statute provides a predictable framework for litigants, making it easier for them and their attorneys to assess the financial implications of a lawsuit’s outcome.

Real-World Example of Code of Civil Procedure § 1032

Imagine Sarah was severely injured in a car accident caused by David’s negligence. Sarah files a personal injury lawsuit against David, seeking compensation for her medical bills, lost wages, and pain and suffering.

During the course of the litigation, Sarah incurs several “costs,” such as:

• Filing fees for her complaint
• Fees to serve the summons and complaint on David
• Deposition transcript costs for David and various witnesses (doctors, police officers)
• Witness fees for her expert medical witness
• Costs for obtaining medical records

After a lengthy trial, the jury finds David fully responsible for the accident and awards Sarah $150,000 in damages. Since Sarah achieved a “net monetary recovery,” she is the “prevailing party” under Code of Civil Procedure § 1032(a)(4).

As the prevailing party, Sarah is entitled “as a matter of right” to recover her litigation costs from David, as stipulated by Code of Civil Procedure § 1032(b). Her attorney would then prepare a “memorandum of costs” detailing all the allowable expenses incurred, and the court would add these costs to the judgment amount David owes Sarah. For example, if Sarah’s recoverable costs amounted to $10,000, David would be ordered to pay her $160,000 in total ($150,000 in damages plus $10,000 in costs). This statute ensures that Sarah isn’t left out-of-pocket for the necessary expenses she incurred to prove her case.

Related Statutes

Several other California statutes are closely related to Code of Civil Procedure § 1032, providing further details on the types of costs, procedures for claiming them, and specific circumstances that might affect cost recovery:

• CCP § 1033: This section outlines the procedures for the prevailing party to claim costs after a judgment is entered, typically by filing a “memorandum of costs.” It also details what types of costs are generally allowable.
• CCP § 1034: This statute sets forth the rules for claiming and determining costs, including the timelines for filing a memorandum of costs and the process for challenging or taxing costs.
• CCP § 998: This crucial statute, often referred to as an “offer to compromise,” allows either party to make a formal settlement offer. If a party rejects a CCP § 998 offer and fails to obtain a more favorable judgment at trial, significant cost-shifting penalties can apply, potentially overriding the general cost recovery rules of CCP § 1032. This includes the possibility of the offeree being responsible for the offeror’s expert witness fees.
• CCP § 1021: This section establishes the general rule that, except as provided by statute, attorney’s fees are not recoverable as costs. However, it also clarifies that parties can agree by contract to allow for attorney’s fees, and some specific statutes also provide for attorney’s fee recovery.
• CCP § 1038: This statute allows a defendant who successfully obtains a summary judgment, judgment of nonsuit, or directed verdict to recover defense costs if the plaintiff pursued the action without reasonable cause and in bad faith.

Case Law Interpreting Code of Civil Procedure § 1032

Code of Civil Procedure § 1032 has been the subject of extensive judicial interpretation, particularly concerning the definition of “prevailing party” in various litigation contexts. Here are a few notable cases:

• Hsu v. Abbara (1995) 9 Cal.4th 863: This landmark California Supreme Court case clarified the trial court’s discretion in determining the “prevailing party” when neither party achieves a simple “net monetary recovery” or “dismissal.” The court held that where a party obtains “other than monetary relief” or in situations “other than as specified” in the statute, the trial court has broad discretion to determine who the prevailing party is, considering the litigation’s totality and which party achieved its main litigation objectives. Link to Google Scholar: [Hsu v. Abbara](https://scholar.google.com/scholar_case?case=8644487739506692887)
• Santisas v. Goodin (1998) 17 Cal.4th 599: This Supreme Court case addressed the recovery of costs (and attorney fees, if provided for by contract) when a case is voluntarily dismissed by the plaintiff. The court determined that a defendant in whose favor a dismissal is entered is a prevailing party under CCP § 1032(a)(4), even if the dismissal is voluntary. Link to Google Scholar: [Santisas v. Goodin](https://scholar.google.com/scholar_case?case=17565402095208453406)
• Goodman v. Lozano (2010) 47 Cal.4th 1327: This Supreme Court decision further elaborated on when a defendant is considered a “prevailing party.” The court affirmed that a defendant who avoids all liability, either through dismissal or by having no relief obtained against them, is a prevailing party under CCP § 1032(a)(4). Link to Google Scholar: [Goodman v. Lozano](https://scholar.google.com/scholar_case?case=10757913346452243767)
• Sears v. B. R. G. of California (2005) 129 Cal.App.4th 413: This Court of Appeal case illustrates the application of “prevailing party” where neither party obtains a net monetary recovery. In such instances, the court has discretion to determine the prevailing party by looking at who succeeded on a practical level in achieving their main litigation objectives. Link to Google Scholar: [Sears v. B. R. G. of California](https://scholar.google.com/scholar_case?case=12555543026330368140)

Why Code of Civil Procedure § 1032 Matters in Personal Injury Litigation

Code of Civil Procedure § 1032 is a cornerstone of personal injury litigation in California, profoundly impacting the strategy, economics, and ultimate outcome of cases for both plaintiffs and defendants.

For personal injury plaintiffs, this statute provides a crucial financial safety net. Litigation, even for meritorious claims, is expensive. Filing fees, deposition costs, expert witness fees (especially for medical experts), and other discovery expenses can quickly add up. CCP § 1032 ensures that if a plaintiff successfully recovers damages, they are entitled to be reimbursed for these necessary out-of-pocket costs, reducing the overall financial burden of seeking justice. This can be a significant incentive for plaintiffs to pursue their claims, knowing that their “win” will encompass not just the awarded damages but also the recovery of their litigation expenses.

For defendants in personal injury cases, CCP § 1032 offers a measure of protection against frivolous or weak lawsuits. If a defendant successfully fends off a claim – by securing a dismissal, winning at trial with the plaintiff recovering nothing, or achieving a verdict where the plaintiff is awarded no relief against them – they become the prevailing party and can recover their own litigation costs from the plaintiff. This potential liability for costs can act as a deterrent for plaintiffs considering filing unmeritorious claims and encourages realistic settlement negotiations.

Furthermore, the interplay of CCP § 1032 with other statutes, particularly CCP § 998 (offers to compromise), creates critical strategic considerations. A defendant might make a CCP § 998 offer early in a personal injury case. If the plaintiff rejects that offer and then fails to obtain a more favorable judgment at trial, they could not only lose their right to recover their own post-offer costs but also be liable for the defendant’s post-offer costs, including expensive expert witness fees. Conversely, a plaintiff’s CCP § 998 offer can similarly pressure a defendant.

In essence, Code of Civil Procedure § 1032 is a powerful tool that shapes negotiation strategies, influences decisions to proceed to trial, and directly impacts the financial outcome for all parties in a California personal injury lawsuit. Both clients and their attorneys must understand its implications to make informed decisions throughout the litigation process.