Lucky United Properties Investments, Inc. v. Lee

The Recorder

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C.A. 1st
A132914

The First Appellate District affirmed in part and reversed in part postjudgment orders. In the published portion of its opinion, the court held that interest on an award of attorney’s fees and costs incurred postjudgment does not begin to accrue until the award is entered.

Following lengthy litigation, Albert Lee prevailed against Lucky United Properties Investments, Inc. The trial court awarded Lee attorney’s fees and costs incurred (1) prior to judgment, (2) during postjudgment enforcement efforts, and (3) on appeal. The court directed that interest was to accrue on the first two awards from the date of the original judgment. The court deemed its award of fees and costs incurred on appeal to constitute a separate judgment, with the result that interest on that award was to accrue from the date of the award only.

The court of appeal affirmed in part and reversed in part, holding that interest on any postjudgment award of attorney’s fees and costs shall accrue only from the date that the amount of the award is fixed.

Here, the trial court properly relied on the law of the case, as set forth in a prior appellate opinion in this matter, Lucky United Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125, in concluding that interest on Lee’s award of attorney’s fees and costs incurred prior to judgment was to accrue from the date of judgment. The Lucky judgment expressly held that interest on the award was to accrue from the date of entry of judgment.

The trial court erred, however, in reading Lucky to compel the conclusion that interest on awards of postjudgment fees and costs also ran from the date of entry of judgment. The court held that postjudgment interest on such awards runs from the date the fee award is entered, and not from the date of the original judgment.

First, the court found, the statutory scheme does not clearly provide that interest on awards of postjudgment costs and fees runs from the date of entry of judgment. Code Civ. Proc. §680.300 defines “principal amount of the judgment” to mean “the total amount of the judgment as entered or as last renewed, together with the costs thereafter added to the judgment ...” Section 685.090 in turn provides that “[c]osts are added to and become a part of the judgment ...” That the costs are incorporated into the judgment does not dictate that the awards accrue interest from the date of entry of judgment, the court found. Section 685.090(b)—which provides that “[t]he costs added to the judgment pursuant to this §are included in the principal amount of the judgment remaining unsatisfied”—suggests the contrary, that the cost award is added to the judgment as of the date of entry of the cost award. It would thus would logically start to accrue interest on that date.

Second, California case law affirms the principle that interest does not start to accrue until the date on which the amount owed is fixed or can be determined with certainty. This principle is consistent with a rule that allows interest to accrue on an award of postjudgment fees and costs only when the award is entered, rather than from entry of the original judgment. At the time of judgment, not only would the amount of the award be unknown, but the costs and fees would not yet even have been incurred.

Further, the court continued, 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. In both scenarios, the court found, it is the correct fixing of the amount of the award that triggers the accrual of interest.

Finally, turning to the trial court’s award of fees and costs incurred by Lee on appeal, the court found the trial court erred in designating this award as an independent judgment. Trial court awards of costs and fees incurred on appeal do not constitute separate judgments, the court held. Rather, they are incorporated into the original trial court judgment as are all other awards of costs and fees and, as with all other such awards, earn interest from the date the awards are entered.

The court accordingly affirmed in part and reversed in part the trial court’s orders.

Justuce Needham concurred, writing separately to clarify the application of the nunc pro tunc rule to the accrual of interest on on postjudgment awards of prejudgment costs.

 

 

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