The parties before us have been embroiled in litigation in one form or another for over a decade.
The current battle is over the proper method of calculation of interest owed on the various fee and cost awards. More specifically, the question is the date on which interest begins to accrue on postjudgment awards of fees and costs. We addressed this issue in part in a prior appeal. (Lucky, supra, 185 Cal.App.4th at pp. 136-139.) Since we find our prior ruling in Lucky to be binding law of the case, we have no occasion here to revisit that holding. Lucky did not, however, expressly address when interest starts to accrue on awards for costs and fees incurred postjudgment. On remand, the trial court ruled that, under Lucky, all postjudgment awards of costs and fees that were incurred in the trial court (whether prejudgment or postjudgment) start to accrue interest on the date of entry of underlying judgment, but awards of costs and fees that were incurred on appeal constitute independent judgments and thus start to accrue interest on the dates of the awards themselves. Both sides disagree with the trial court's approach. In the published portion of our opinion, we conclude that interest on awards of fees and costs incurred postjudgment starts to accrue on the date of entry of the awards themselves. Applying this rule, in the unpublished portion of this opinion, we recalculate
The competing claims grew out of a lawsuit originally filed in 1999, involving a dispute over the purchase of real property in San Francisco.
In August 2007, Albert Lee sought an award of the costs and attorney fees he incurred in connection with his successful anti-SLAPP motion. His related July cost memorandum for $415 was uncontested and granted by operation of law. In a November 6, 2007 order, the court awarded Lee $26,407.50 ($25,500 in attorney fees and $907.50 in additional costs) as the prevailing party on the anti-SLAPP motion pursuant to section 425.16, subdivision (c) (hereafter section 425.16(c)). (Lucky, supra, 185 Cal.App.4th at p. 131 & fn. 2.) Lucky appealed from the November 6, 2007 order. (See Shih v. Lee, supra, A120203.)
On November 13, 2007, Lee prepared and recorded an abstract of judgment and filed notices of judgment lien. The next day (Nov. 14), he filed a cost memorandum to recover $424 in enforcement costs for these activities. Lucky did not file a motion to tax these costs, which were thus awarded by operation of law. Much later, in a February 6, 2009 order, the trial court determined that $335 of this $424 award should have been disallowed. The court granted Lucky a $335 offset against the cost and fee awards the court made in the February 6, 2009 order. (Lucky, supra, 185 Cal.App.4th at pp. 131-136 & fn. 6, 145-146.)
On December 31, 2007, Lucky mailed to Lee a $26,819.90 check as payment for the November 6, 2007 award plus interest. Lee accepted the payment, but asserted it was insufficient to fully satisfy the judgment because it did not include the $424 cost award. (Lucky, supra, 185 Cal.App.4th at p. 132.)
On June 16, 2008, we dismissed Lucky's appeal (No. A119134) from the order that granted Lee's motion to strike. Our remittitur stated that Lee was to recover costs on appeal. Lee filed a $587.20 cost memorandum claiming these costs and the trial court denied Lucky's motion to tax. (Lucky, supra, 185 Cal.App.4th at p. 132.) Lucky paid the $587.20 cost award in August. Lee sought additional costs and fees incurred on appeal No. A119134 pursuant to section 425.16(c). In an August 20, 2008 order, the court awarded $33,830 in response to this motion. (Lucky, at pp. 132-133.)
On August 21, 2008, Lucky mailed Lee a check for $33,830, which was "tendered in full and complete satisfaction of that award and may not be used for any other purpose or applied to any other account. By accepting that check, you will acknowledge full and complete satisfaction of the award." Lee disputed the sufficiency of the payment, but deposited the check. (Lucky, supra, 185 Cal.App.4th at p. 133.)
On August 25, 2008, we affirmed the November 6, 2007 order in appeal No. A120203. Our remittitur indicated that Lee was entitled to costs on appeal. On or about October 28, 2008, Lee filed a $400.68 cost memorandum claiming these costs and the court denied Lucky's motion to tax. (Lucky, supra, 185 Cal.App.4th at pp. 133-134.) Lucky paid the $400.68 cost award in December.
On November 13, 2008, Lucky sent Lee a "Demand for Acknowledgement Of Satisfaction Of Judgment" pursuant to section 724.050, which identified
On December 2, 2008, Lee filed a comprehensive cost and fee motion, which inter alia sought fees for enforcing the November 6, 2007 order, fees incurred in appeal No. A120203, fees incurred in opposing Lucky's motion to tax October 28, 2008 cost memorandum, and fees and costs in preparing the December 2 motion itself. (Lucky, supra, 185 Cal.App.4th at pp. 134-135.)
In a February 6, 2009 order, the court granted Lucky's motion for entry of full satisfaction of judgment, imposed a $100 penalty on Lee for failing to acknowledge satisfaction of judgment, and awarded Lucky $9,510 in attorney fees and costs for prevailing on the motion (see §§ 724.050, 724.080). The court also ruled on Lee's December 2, 2008 cost and fee motion as will be further discussed post. Lee's appeal of the February 6, 2009 order was decided in Lucky. (See Lucky, supra, 185 Cal.App.4th at pp. 135-136.)
Before addressing the specific issues raised in Lee's current appeal, we reiterate our discussion in Lucky of several governing principles concerning judgments, costs, attorney fees, and interest — all of which played a significant role in the most recent proceedings on remand and bear directly on the instant appeal.
"`A judgment is the final determination of the rights of the parties in an action or proceeding.' (§ 577.) There may be, in some circumstances, judgments for or against one or more of several plaintiffs or defendants in a single case (§ 578), but there is always one judgment that determines the rights of any one particular party or parties (Lucky) vis-à-vis another party on the other side of the pleadings (Lee).
"In the matter before us, there is no document in the record entitled `Judgment.' However, the order granting Lee's anti-SLAPP motion to strike states: `The Cross-Complaint For Damages For Malicious Prosecution is
"We also note that the order of dismissal does not specifically provide that Lee shall recover attorney fees and costs. This recitation is unnecessary, however, since attorney fees and costs are awarded to the prevailing party on an anti-SLAPP motion to strike as a matter of law, pursuant to section [425.16(c)]. (See also §§ 1032, 1033.5.)
"The 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.) Postjudgment interest accrues on the principal amount of the judgment at the rate of 10 percent per annum. (§ 685.010.) How the costs are added to the judgment, and how interest is calculated, turns on the manner in which those costs were imposed or the purpose for which the costs were incurred.
"Prejudgment Costs to Prevailing Party. As a general rule, the prevailing party may recover certain statutory costs incurred in the litigation up to and including entry of judgment. (§§ 1032, 1033.5.) These costs may include attorney fees, if authorized by contract, statute (such as the anti-SLAPP statute) or law. (§ 1033.5, subd. (a)(10).) Most costs are obtained by filing a cost memorandum, although attorney fees require a separate noticed motion. (§ 1033.5, subd. (c); Cal. Rules of Court, rule 3.1702.)[
"Interest at the rate of 10 percent per annum accrues on the unpaid principal amount of the judgment (§ 685.010), including the amount of the cost award and attorney fees award (§ 680.300), as of the date of judgment entry (§ 685.020, subd. (a)). Therefore, interest ordinarily begins to accrue on the prejudgment cost and attorney fees portion of the judgment as of the same
"Postjudgment Enforcement Costs. In addition to attorney fees and costs imposed as a result of prevailing in the action, postjudgment costs of enforcing the judgment may also be recovered. Some costs, such as fees incurred in regard to abstracts of judgment or notice of judgment liens, may be claimed as a matter of right under section 685.070. Other enforcement expenses incurred by a judgment creditor are recoverable if, upon noticed motion, the court determines they were reasonable and necessary costs of enforcing a judgment. (§ 685.040; see Ketchum v. Moses (2001) 24 Cal.4th 1122, 1141 & fn. 6 [104 Cal.Rptr.2d 377, 17 P.3d 735] (Ketchum) [attorney fees incurred in regard to previous award of fees under anti-SLAPP statute are recoverable under § 685.040]; Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, 22-23 [45 Cal.Rptr.3d 633] ... [expenses of enforcing anti-SLAPP attorney fees award are recoverable under § 685.040].)
"When postjudgment enforcement costs are allowed, they become part of the principal amount of the judgment. (§§ 685.070, subd. (d), 685.090, subd. (a); David S. Karton, A Law Corp. v. Dougherty (2009) 171 Cal.App.4th 133, 147 [89 Cal.Rptr.3d 506]....) Therefore, interest accrues upon those costs at the rate of 10 percent per annum. (§ 685.010, subd. (a).)
"Appellate Court Order of Costs on Appeal. If an appeal is taken from the judgment, the party prevailing in the Court of Appeal is usually entitled to costs on appeal. ([Rule] 8.278.) The award of costs is included in the remittitur, although the amount of the award is determined in the trial court. ([Rule] 8.278(b)(1), (c).) These costs, however, are not added to the trial court judgment, but constitute a separate judgment. (Los Angeles Unified School Dist. v. Wilshire Center Marketplace (2001) 89 Cal.App.4th 1413, 1419 [108 Cal.Rptr.2d 691] (Los Angeles Unified School Dist.); see ... rule 8.278(b)(1), (c)(3).) Interest thereon begins to run from the date of the entry of the trial court's award. (See Dalzell v. Kelly (1952) 115 Cal.App.2d 60, 62-63 [251 P.2d 343] [costs awarded on appeal by appellate court bear interest from the date of taxing costs or expiration of time for taxing].)
"Trial Court Order of Costs on Appeal. A party may also obtain an award of costs, including attorney fees, if it has successfully defended on appeal the trial court's grant of its anti-SLAPP motion to strike. (Wilkerson v. Sullivan (2002) 99 Cal.App.4th 443, 448 [121 Cal.Rptr.2d 275]; Evans v. Unkow
"Payment on a judgment is allocated first to accrued interest on the principal amount, and then to the principal. (Big Bear Properties, Inc. v. Gherman [(1979)] 95 Cal.App.3d [908,] 915 [157 Cal.Rptr. 443] ...; see § 695.220.)" (Lucky, supra, 185 Cal.App.4th at pp. 136-139, fn. omitted.)
In Lucky, we first reversed the trial court's denial of Lee's December 2, 2008 request for attorney fees incurred in enforcing the November 6, 2007 order. (Lucky, supra, 185 Cal.App.4th at pp. 131, 140.) The trial court had denied the enforcement fees because they were not sought before satisfaction of judgment as required by section 685.080, subdivision (a). (Lucky, at p. 141.) The trial court apparently relied on the fact that in December 2007, long before Lee filed his December 2, 2008 motion, Lucky paid Lee $26,819.90 toward the November 6, 2007 award of $26,407.50. (Id. at pp. 132, 134-135, 141; § 685.080, subd. (a).) We held that the relevant "judgment" was the June 26, 2007 dismissal of Lucky's cross-complaint against Lee as augmented by all subsequent cost and fee awards, which were incorporated into the judgment under the principles we had set forth earlier in our opinion. (Lucky, at pp. 142-145.) As of December 2007, when Lucky made the $26,819.90 payment, the judgment totaled $27,246.50 without accrued interest ($415 + $26,407.50 + $424). (Lucky, at pp. 141-142.) Lucky's December 2007 payment did not satisfy this amount. (Id. at p. 142.) Therefore, Lee's motion "was not barred by the time limits of section 685.080." (Lucky, at p. 142.) We reversed the trial court's denial of Lee's $2,100 fee request for enforcing the November 6 award. (Id. at p. 152.)
Third, we reversed the trial court's order acknowledging Lucky's satisfaction of judgment, as well as the associated imposition of a statutory penalty and award of fees and costs against Lee. (Lucky, supra, 185 Cal.App.4th at pp. 147-152.) Accepting for purposes of argument that Lucky's motion properly sought an order acknowledging satisfaction of the August 20, 2008 award alone (separate from the rest of the judgment), we still reversed because (a) Lucky's August 21 payment did not satisfy that award in full because it did not include accrued interest (id. at p. 148, fn. 13) and (b) Lee's acceptance of the payment did not effect an accord and satisfaction (id. at pp. 148-151). We reversed the order granting Lucky's motion for acknowledgment of satisfaction of judgment, reversed the imposition of the statutory penalty and the award of fees and costs, and "remanded for a determination of the amount of attorney fees and costs Lee may recover from Lucky, as the prevailing party" on the motion in light of our rulings. (Id. at p. 151.)
Fourth, we noted that "the trial court awarded Lee $4,860 out of the $22,303.75 Lee had requested for attorney fees and costs incurred in connection with his December 2008 motion, `in view of the limited success of [the] motion.' Because we reverse the court's order as set forth herein, we remand for the further purpose of the trial court's reconsideration of the attorney fees and costs that Lee should recover in connection with his December 2008 motion." (Lucky, supra, 185 Cal.App.4th at p. 151.)
Finally, we awarded Lee his costs on appeal and remanded the matter "for further proceedings as set forth in this opinion and consistent with applicable law. (E.g., [§ 425.16(c)].)" (Lucky, supra, 185 Cal.App.4th at p. 152.)
The remittitur from Lucky, supra, 185 Cal.App.4th 125 issued on August 31, 2010, and was filed in the trial court on September 1. On September 1, Lee filed a memorandum of $2,747.69 in costs on appeal and a separate $275 cost memorandum.
On September 15, Lucky paid these cost bills with interest. On October 12, 2010, Lee filed a motion for "entry of order in compliance with court of
On February 1, 2011, Lucky mailed Lee a check for $64,108.80 with a cover letter stating, "Enclosed is full and complete payment of $64,073.70 pursuant to the Order, dated January 31, 2011, plus $35.10 for two (2) days of interest at 10% per annum." Lee returned the check with a letter stating, "On its face, this check is conditioned with the legally-operative statements: `This is full and complete payment of this order dated January 31, 2011....' [¶] As you are aware, the conditions you have placed on my client's cashing of this check are improper.... [Y]ou are (again) illegally attempting to target payments to specific orders. [¶] Any and all payments must be unconditional."
On February 1, 2011, Lee filed another motion for new costs and fees, apparently for work performed between October 1, 2010, and December 21, 2010, and for anticipated work to litigate the February 1, 2011 motion. He also requested $844.99 in additional costs. On March 24, 2011, the court awarded $3,555 in response to this motion.
On February 11, 2011, Lee sent Lucky a settlement offer. He calculated the total amount of fee and cost awards to date, excluding appellate court awards of costs on appeal, and calculated interest on the total retroactive to the date of the original judgment, June 26, 2007, after crediting Lucky's payments to date. He contended the amount then due was $131,422.39 and offered to settle the litigation for $111,422.39.
On March 28, 2011, Lucky tendered Lee $3,559.85 as payment of the $3,555 awarded on March 24 plus interest "in full and complete payment" of the March 24 award, and argued that this tender plus the February 1 tender together constituted full satisfaction of judgment. Lee rejected the tender on April 4 because it was conditional and because it did not satisfy the judgment.
In March and April 2011, Lee took several steps to collect on his judgment. He applied for an order directing Shih to appear for a judgment debtor's examination; the order issued on March 3 and noticed an examination for March 30. On March 22, Lucky filed a motion to quash the judgment debtor's examination "subpoena" or, in the alternative, a motion "for a determination of the remaining amount owed by judgment debtor." Lucky specifically asked the court to resolve the parties' dispute about how to calculate interest on the prior awards consistent with this court opinion in Lucky, supra, 185 Cal.App.4th 125. On March 28, Lee moved to compel responses to interrogatories that were served on Lucky in December 2007. On April 4, Lee moved "for an order compelling [Lucky] to unconditionally pay the undisputed amount owed to [Lee] and for the sheriff to take the money and deliver it to [Lee] if [Lucky] does not comply." On April 11, the clerk of the court issued a writ of execution for $108,597.55 plus $29.75 in daily interest. Lucky filed a motion to quash the writ of execution. On or about May 4, 2011, Lucky apparently filed an ex parte "motion to stay seizure of funds held by the Woo Family 2000 Trust at the Shanghai Commercial Bank until amount owed is determined by the court."
In the meantime, on March 28, 2011, Lee filed a "memorandum of costs after judgment, acknowledgment of credit, and declaration of accrued interest." He claimed $15,434 in new fees and costs that were incurred in February and March. Lucky moved to tax costs. In a June 2, 2011 order, the court granted the motion, explaining, "The costs were not reasonably incurred as Lee began enforcement no more than a few days after the last cycle of fee awards and as Lucky is willing to pay the full amount due once the dispute over interest is resolved."
On July 26, 2011, the court issued its calculation of interest and its decision on the amount Lucky still owed to Lee. The court applied Lucky's statement that awards of prejudgment costs and fees are incorporated into the judgment and earn interest from the date of entry of the judgment. (Lucky, supra, 185 Cal.App.4th at pp. 137-138.) The court then noted that Lucky stated that awards of postjudgment costs and fees incurred in the trial court in enforcing the judgment are also incorporated into the judgment and accrue 10 percent annual interest. (Id. at p. 138.) While Lucky did not explicitly state that interest on such awards accrues from the date of entry of judgment, the court concluded that "the best reading of Lucky" was that it did so. "While this has the counter-intuitive effect of requiring [Lucky] to pay interest accruing on fees and costs during a time in which they had not yet been incurred by Lee, this court is required to follow its best understanding of the Court of Appeal's holdings in Lucky."
Regarding awards of costs and fees that were incurred on appeal, the court first noted Lucky's statements that an appellate court award of costs constitutes a separate judgment even though the amount of the award is determined on remand in the trial court, and the award accrues interest from the court rules on a motion to tax costs or upon expiration of the time to tax costs. (Lucky, supra, 185 Cal.App.4th at p. 138.) The court then noted that Lucky declined to decide whether a trial court award of costs or fees incurred on appeal pursuant to section 425.16(c) or other statutory authority constituted a separate judgment or was incorporated into the original judgment. (185 Cal.App.4th at p. 139.) The court ruled that such awards "constitute separate judgments and accrue interest on the date they are given." The court commented, "This approach has the advantage of avoiding the inequitable result of interest accruing on an obligation before it is incurred, which would be the case if costs and fees on appeal related all the way back to the date of the original judgment."
The trial court identified six separate judgments in the case: (1) the June 26, 2007 dismissal of Lucky's cross-complaint against Lee; (2) an August 18, 2008 appellate award of costs in appeal No. A119134; (3) an August 20, 2008 award of section 425.16(c) costs and fees incurred in appeal No. A119134;
On August 2, 2011, Lee filed this appeal challenging the court's June 2 and July 26 orders. Lucky filed a cross-appeal from the July 26 order. On about August 1, Lucky sent Lee a $4,185.35 payment, consisting of $3,614.81 (the difference between $77,850.20 and $74,235.39) and $570.54 in interest for 30 days to "allow time for the $74,235.39 to be released by the Clerk of the Court."
Rather than address the issues raised in the appeal and cross-appeal separately, we will address issues raised in both as they logically arise in our review of the appealed orders.
We now turn to the crux of this appeal: the question of when interest starts to accrue on cost and fee awards that are entered postjudgment. Lee argues that Lucky compels the conclusion that, with the exception of appellate court awards of costs on appeal, all postjudgment cost and fee awards (regardless of whether the fees were incurred before or after judgment) accrue interest from the date of entry of the original judgment. He argues the trial court erred by treating trial court awards of costs and fees incurred on appeal as separate judgments and calculating interest on those awards from the dates the awards were entered. He also faults the trial court for allocating various cost and fee awards to multiple judgments. Lucky urges us to disapprove our statement in Lucky that awards of prejudgment costs and fees accrue interest retroactive to the date of entry of judgment and language in Lucky which, he contends, implies that the same rule applies to awards of postjudgment costs and fees. Lucky argues a consistent rule that cost and fee awards accrue interest from the dates of the awards themselves would both be more just — avoiding the accrual of interest on cost and fee awards before the costs and fees had even been incurred — and more practical to apply. Lucky criticizes the trial court for awarding any retroactive interest and for adopting a methodology that required allocation of cost and fee awards to multiple judgments. We conclude that Lucky's proposed approach for postjudgment trial court awards of costs and fees incurred after judgment is the correct one and reject any inconsistent reading of Lucky.
Second, principles that govern awards of interest on judgments under this state's law support a rule that interest on postjudgment awards of costs and fees incurred after judgment starts to accrue on the date of entry of the awards.
This principle and rule are also consistent with case law addressing the effect of appellate court changes to cost and fee awards: a judgment that has been modified on appeal accrues interest from the original date of entry of the judgment, but a judgment that has been reversed on appeal accrues interest from the date of entry of a new judgment following remand. (See Stockton Theatres, Inc. v. Palermo (1961) 55 Cal.2d 439, 442-443 [11 Cal.Rptr. 580, 360 P.2d 76] (Stockton Theatres); Snapp v. State Farm Fire & Cas. Co.(1964) 60 Cal.2d 816, 817-820 [36 Cal.Rptr. 612, 388 P.2d 884] (Snapp).) "It is not the form of the order on the first appeal that controls, but the substance of that order." (Snapp, at p. 821.) In Stockton Theatres, the Supreme Court explained that a true reversal occurred when, in a prior appeal, it reversed a trial court order disallowing a surety bond as an item of costs and instructed the trial court to hold a hearing on the need for the bond and to award the costs if it found the bond was necessary. (Stockton Theatres, at p. 443.) In contrast, when the Supreme Court later reversed the trial court's finding on remand that the bond was unnecessary, a modification occurred: "[A]s a matter of law, the evidence demonstrated that the expenditure was necessary, and ... the [trial] court should have allowed this item of costs. The legal effect of this [appellate court ruling] was to make the [trial court order on remand] state what it should have stated on [the] date [of the order on remand]. In a very real sense, in legal effect, it ... determined that, after showing necessity, plaintiff was entitled to this award as of [the date of the order on remand]." (Stockton Theatres, at p. 443.) In Snapp, the Court of Appeal reversed a trial court order that an insurer was liable only for $8,168.25 in damage that occurred during the policy period. The appellate court concluded the insurer was also liable for damages that occurred later but were caused by factors operative during the policy period. (Snapp, at pp. 817-818.) "Since the [trial court] findings were explicit that the damage occurring after the termination date exceeded $25,000 [(the policy limit)], and
The June 2, 2011 orders are all affirmed. The July 26, 2011 order is reversed. On remand, the court shall enter an order stating that as of July 26, 2011, the principal amount of the judgment remaining unsatisfied was $69,227.90 and accrued interest remaining unsatisfied was $2,014.52 for a total of $71,242.42, with no additional interest accruing on these amounts thereafter. The court shall conduct further proceedings as necessary consistent with the views expressed in this opinion. Each party shall bear its own costs on appeal.
Simons, Acting P. J., concurred.
I agree with the judgment of the majority in this case, as well as its conclusion that Lucky United Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125 [110 Cal.Rptr.3d 159] (Lucky) is law of the case as to the date that interest begins to accrue on a postjudgment award of costs and fees that were incurred before the judgment. I write only to set forth the basis for the rule we summarized in an abbreviated fashion in Lucky, to avoid any misapprehension that it is inconsistent with our ruling today.
In Lucky, we explained that the principal amount of a judgment consists of the damages awarded plus costs (including attorney fees). (Lucky, supra, 185 Cal.App.4th at p. 137; Code Civ. Proc., § 680.300.)
We next stated the following: "Interest at the rate of 10 percent per annum accrues on the unpaid principal amount of the judgment (§ 685.010), including the amount of the cost award and attorney fees award (§ 680.300), as of the date of judgment entry (§ 685.020, subd. (a)). Therefore, 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. [Citation.]" (Lucky, supra, 185 Cal.App.4th at pp. 137-138, italics added.)
Our conclusion that interest commences on postjudgment awards of prejudgment costs flowed naturally from the principle in Bankes that "the clerk enters the amounts [awarded for prejudgment costs] on the judgment nunc pro tunc." (Bankes, supra, 9 Cal.App.4th at p. 369, italics added.) Since the amount of the costs is entered nunc pro tunc, as a matter of law the costs' entry date, and the date of their addition to the principal amount of the judgment, is deemed to be the date of the original judgment entry. And, as a matter of law, interest begins to accrue on the judgment (including the amount of the added cost award) from the date of judgment entry. (See § 685.020.)
Bankes's nunc pro tunc rule has been recognized by other California appellate courts, including Grant v. List & Lathrop (1992) 2 Cal.App.4th 993, 996-997 [3 Cal.Rptr.2d 654] [citing the predecessor rule to Cal. Rules of
Application of the nunc pro tunc rule to establish the commencement date for the accrual of interest on awards for prejudgment costs also makes good sense and wise policy. By the time of the entry of a judgment allowing costs (including fees, by its language or operation of law), not only has the court determined who has prevailed in the action and whether a party has the right to recover costs, but all of the prejudgment costs have already been incurred. It is only due to procedural requisites — requiring a postjudgment application or motion — that the amount is not ascertained at the time of judgment, when the right to recover costs is vested. To compensate the prevailing party for the time value of the sums it has incurred but not been reimbursed — which of course is the whole purpose in awarding interest — interest should begin to accrue on postjudgment awards of prejudgment costs as of the date of judgment entry, when the right to recover costs is first established in the prevailing party. The nunc pro tunc rule thus preserves the "legitimate fruits of the litigation which would otherwise be lost to the prevailing party," because otherwise the prevailing party would lose the time value of the amounts it had spent on costs as of the date of judgment entry. (Mather v. Mather (1943) 22 Cal.2d 713, 719 [140 P.2d 808] [stating general basis for orders entering judgment nunc pro tunc]; see Gouskos v. Aptos Village Garage, Inc. (2001) 94 Cal.App.4th 754, 764-765 [114 Cal.Rptr.2d 558] [attorney fee order ascertaining the amount of attorney fees and costs would relate back to the judgment if the language of the judgment could be construed to grant the right to attorney fees].)
Nor is the nunc pro tunc rule trumped by the sentiment, expressed in regard to prejudgment interest, that a party should not begin to be liable for interest until he knows the amount of the principal. (See Chesapeake Industries, Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 906 [197 Cal.Rptr. 348].) Prejudgment interest is part of the calculation of damages, is thus concerned with fault, and is addressed by Civil Code section 3287; by contrast, postjudgment interest is an amount that accrues on the judgment as a matter of law, due solely to the passage of time, and is addressed by the Code of Civil Procedure. The two are distinct. (See § 685.110.) Postjudgment interest is not a penalty imposed on a judgment debtor for refusing to pay a sum after learning its precise amount, but compensation for the time value of the judgment creditor's money from the date that the creditor is deemed to have the right to it.
For purposes of a postjudgment award of enforcement costs and attorney fees incurred after judgment, however, the nunc pro tunc rule should not
In sum, under section 685.090, subdivision (a), "[c]osts are added to and become a part of the judgment ...[¶] ... [u]pon the filing of an order allowing the costs pursuant to this chapter" and are "included in the principal amount of the judgment remaining unsatisfied"; this addition to the judgment and inclusion in the principal is nunc pro tunc to the date of the judgment for costs incurred before judgment, and as of the date of the cost order for costs incurred after judgment.
I concur.