Obtaining and Challenging Appellate Cost Awards

When the Court of Appeal issues a decision, the parties' first question, understandably, is "did I win?" But when the initial excitement dies down, there is another question to consider: Can I recover my costs?

Appellate costs can be a big ticket item. A recent published decision involved a successful appellant's $2.6 million cost bill, $950,000 of which was disputed. Given these potentially high stakes, it is worth knowing who is entitled to costs on appeal, which costs are recoverable, and how to avoid forfeiting the right to appeal an appellate cost ruling.

California Rule of Court 8.278 provides that a prevailing party is generally entitled to recover its costs on appeal. The prevailing party is obvious if the Court of Appeal dismisses an appeal, or if it reverses or affirms in full. If the court instead reverses or modifies only part of the judgment, however, its opinion must specify who prevailed. And in any appeal, "in the interests of justice," the Court of Appeal can override the default by awarding costs as it deems proper.

Rule 8.278 also specifies which appellate costs are recoverable. Not surprisingly, the list includes filing fees; record preparation costs; the costs of producing additional evidence on appeal; the costs to notarize, serve, mail, and file the record, briefs, and other papers; and the cost to reproduce briefs.

There is one other recoverable cost that parties may not think about in advance, but that can dwarf all the others: The cost of staying enforcement of a judgment pending appeal. To stay enforcement of a money judgment, for example, the appellant must post a bond or deposit cash equal to one-and-a-half times the judgment (or double the judgment, if the appellant uses a personal surety rather than an admitted surety insurer). The bond premiums, or interest on a loan for the deposit, can amount to hundreds of thousand of dollars. And those costs are recoverable on appeal unless the trial court determines the bond or deposit was unnecessary. (California Rule of Court 8.278(d); Cooper v. Westbrook Torrey Hills (2000) 81 Cal.App.4th 1294.)

The procedure for claiming costs is straightforward. When the Court of Appeal opinion becomes final, the clerk issues a remittitur. A party entitled to appellate costs then has 40 days to file a verified memorandum of costs in the Superior Court. The other party may move to strike or tax the claimed costs. (California Rule of Court 8.278(c).)

A party dissatisfied with the resulting cost award can challenge it in the Court of Appeal. If the cost award relates to a decision affirming the judgment on appeal, it is immediately appealable as a post-judgment order. (Code of Civil Procedure Section 904.1(a)(2); Citizens Against Rent Control v. City of Berkeley (1986) 181 Cal.App.3d 213, 223.) But if the cost award follows a decision reversing the judgment and ordering a new trial, the route to challenging it is less clear: The Courts of Appeal disagree on whether such a cost award is appealable immediately, or can only be challenged on appeal from the judgment in the new trial.

The 2nd District Court of Appeal, Division Five, has held that an appellate cost award following a reversal for new trial is not immediately appealable. Barnes v. Litton Systems Inc. (1994) 28 Cal.App.4th 681. Barnes relied on the rule that to be appealable as a post-judgment order, the order must not be preliminary to future proceedings or subject to appeal after a future judgment. It reasoned that the cost award was interlocutory because there was no new judgment on the merits yet. It therefore dismissed the appeal as premature. It noted, however, that there were two other routes to appellate review: The appellant could have sought immediate review through a petition for writ of mandate, or could seek review after the new trial, as part of an appeal from the resulting judgment.

Barnes observed that the cost award also was not appealable under the collateral order doctrine. The collateral order doctrine is an exception to the general rule that interlocutory rulings are not appealable. It provides that an interlocutory order is appealable if it is a final judgment against a party on a distinct issue, and if it directs the payment of money or the performance of an act. (Sjoberg v. Hastorf (1948) 33 Cal.2d 116, 119.) Barnes concluded that the cost appeal did not qualify because the appellant was seeking an award of more money, not challenging an order that he pay money.

Now the 4th District Court of Appeal, Division Two has reached the opposite conclusion on identical facts. Krikorian Premiere Theaters LLC v. Westminster Central LLC, 2011 DJDAR 4362, (March 24). Expressly disagreeing with Barnes, it held that an appellate cost order following a reversal and remand for a new trial is an appealable post-judgment order. It reasoned that the cost order followed a final judgment - the final judgment on appeal - and was not preliminary to any other judgment, because it would be unaffected by the new trial. The order therefore met the criteria for an appealable post-judgment order.

Krikorian also held that the cost order was appealable under the collateral order doctrine. The cost determination was independent of any other issue that might still arise in the case. And, again disagreeing with Barnes, Krikorian concluded that an order deciding a motion to tax costs is effectively an order for the payment of money to which the collateral order doctrine applies.

The bottom line is that Barnes and Krikorian counsel contradictory approaches to challenging appellate costs awarded in connection with a reversal for new trial: Krikorian requires an immediate appeal, while Barnes would dismiss an immediate appeal as premature.

Choosing the correct approach is critical, since a party who fails to timely appeal from an appealable order forever forfeits the right to challenge it. Until the Supreme Court weighs in, the most prudent route is to file both a notice of appeal and a petition for a writ of mandate, which would permit the Court of Appeal to consider the merits of his challenge despite the lack of an appealable order.