DeSaulles v. Community Hospital of the Monterey Peninsula: Supreme Court will Decide Right to Recover Costs after Settlement

In DeSaulles v. Community Hospital of the Monterey Peninsula (2014) 225 Cal.App.4th 1427 (available here), the Court of Appeal held that when an employer pays an employee in settlement, the employee obtains a "net monetary recovery" from the employer and is the prevailing party in the action. As such, where the settlement agreement is silent as to the recovery of costs, the employee is entitled to recover his or her costs as a matter of right. The employer is not entitled to recover its costs in this situation, even though it obtained a judgment denying the plaintiff any relief, which ordinarily would make the defendant the prevailing party.

The California Supreme Court granted review on July 23, 2014. The Court's web site lists the issue presented as follows:

When plaintiff dismissed her action in exchange for the defendant's payment of a monetary settlement, was she the prevailing party for purposes of an award of costs under Code of Civil Procedure section 1032, subdivision (a)(4), because she was "the party with a net monetary recovery," or was defendant the prevailing party because it was "a defendant in whose favor a dismissal is entered"?

DeSaulles is case number S219236, and the Court's web site for it is here. As always, you can sign up for automatic notices regarding the proceedings on the case web site. Or you can watch this space. I'll post the result once it comes down.