You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


Filed 5/2/14
                            CERTIFIED FOR PUBLICATION

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              SIXTH APPELLATE DISTRICT

MAUREEN DESAULLES,                                    H038184
                                                     (Monterey County
        Plaintiff and Appellant,                      Super. Ct. No. M85528)

        v.

COMMUNITY HOSPITAL OF THE
MONTEREY PENINSULA,

        Defendant and Respondent.



                                   I. INTRODUCTION

        Dismissal of a civil complaint is said to be voluntary when requested by the
plaintiff and involuntary when ordered by the court. A dismissal may be partial, as in this
case, where plaintiff Maureen deSaulles (Employee) agreed to dismiss two of her seven
causes of action with prejudice in exchange for a payment of $23,500 from defendant
Community Hospital of the Monterey Peninsula (Employer). A civil judgment may also
be described as voluntary when entered by stipulation or involuntary when entered by the
court after either a judicial decision or a jury verdict.
        When an action ends in any of these ways, if the parties have not otherwise agreed
on who will pay the costs of litigation, one party may be deemed the prevailing party
entitled to mandatory costs. In this appeal by Employee challenging a costs award to
Employer, both sides claim entitlement to mandatory costs.
       Mandatory costs are governed by Code of Civil Procedure section 1032.1 As
revised in 1986 (Stats. 1986, ch. 377, §§ 5, 6, p. 1578), section 1032 states: “(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.” Section 1032, subdivision (a)(4)
(subdivision (a)(4)) provides a nonexclusive definition of “ ‘prevailing party,’ ” listing
four categories. Three of the categories apply only to defendants, namely “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.” (Subd. (a)(4).) Only one category ‒ “the party with a net
monetary recovery” ‒ is applicable to both defendants and plaintiffs.
       Employee characterizes Employer’s settlement payment to her as a net monetary
recovery, while Employer says that settlement payments must be disregarded under
Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175 (Chinn). Without
separately appealing, Employer contends that it is a defendant in whose favor a dismissal
was entered, and also contends that, as the judgment provides that Employee “recover
nothing,” it is a defendant against whom Employee recovered no relief.
       The trial court awarded costs of $12,731.92 to Employer in the exercise of its
discretion, as a trial court may do when costs are not mandatory. “When 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 … .” (Subd. (a)(4).)
       This appeal requires us to determine whether either party was entitled to
mandatory costs. As we will explain, the case ended in three stages without a trial on the
merits. Employer did not obtain a favorable dismissal of the action, but did obtain a


       1
           Unspecified section references are to the Code of Civil Procedure.



                                              2
judgment denying Employee relief. However, Employer obtained the judgment by
making a settlement payment that can be considered a net monetary recovery by
Employee. As section 1032 does not contemplate both sides prevailing, the trial court
exercised discretion in awarding costs. We will reverse the order awarding costs to
Employer and denying costs to Employee, determining that, since the parties’ settlement
was silent regarding costs, Employer’s payment of $23,500 triggered mandatory costs as
a “net monetary recovery” under the plain language of the statute.
                            II. PROCEDURAL HISTORY
       A. PREJUDGMENT PROCEEDINGS

       Employee was hired in February 2005 as a part-time patient business services
registrar. Employee began complaining about her work shift assignments to the
emergency room in June 2005. Employer placed Employee on a leave of absence in
January 2006 and terminated her employment in July 2006.
       In July 2007, Employee filed a complaint alleging that Employer had: (1) failed to
accommodate Employee’s physical disability or medical condition (susceptibility to
infection as a result of cancer); (2) retaliated against Employee for exercising her rights
under California’s Fair Employment and Housing Act; (3) breached implicit conditions
of an employment contract; (4) breached an implied covenant of good faith and fair
dealing; (5) negligently and (6) intentionally inflicted emotional distress; and (7)
wrongfully terminated Employee in violation of public policy.
       On August 1, 2008, the trial court entered a nine-page order ruling on Employer’s
alternative motions for summary judgment or summary adjudication. The court denied
summary judgment, but granted Employer’s motion for summary adjudication of the first
cause of action alleging a failure to accommodate. The trial court found triable factual
issues as to the remaining causes of action and denied summary adjudication of those
claims.


                                             3
       Based on the summary adjudication, Employer filed several in limine motions.
After hearing argument on September 2, 2008, the trial court orally granted motions in
limine numbered 1, 8, and 11, specifically precluding argument by Employee “that
[Employer] failed to accommodate [Employee’s] disability or to engage the interactive
process or that [Employee] was harassed, discriminated or retaliated against in
connection[] with any claims of failure to accommodate or failure to engage the
interactive process,” or “regarding [Employee’s] safety complaints, retaliation on union
issues … ” and excluding “evidence of discrimination or failure to accommodate or
retaliation claims against [Employer] based on failure to accommodate or engage in the
interactive process or make complaints about failure to accommodate or engage in the
interactive process.”
       At the conclusion of those rulings and before a jury panel was called, the parties
placed the following settlement on the record: “[I]n consideration for dismissal with
prejudice of the two claims of breach of contract and breach of covenant, Defendant will
pay Plaintiff within 10 days $23,500.” Defense counsel “will prepare a judgment on the
remaining claims which references the dismissal with prejudice and which preserves the
right of appeal of the rulings of this court on the remaining causes of action … .” “[T]he
parties will not file any motions or memoranda for costs or attorney fees[,] holding off
until the completion of the appeal … .”
       B. THE JUDGMENT AND POST-JUDGMENT COSTS CLAIMS

       On October 6, 2008, pursuant to the settlement, Employee filed a request for
dismissal with prejudice of the breach of contract and breach of covenant claims. On
January 6, 2009, the trial court entered an amended judgment which stated: “Having
considered the arguments, oral and written, of all the parties, the records and file herein,
and the pre-trial motions and oppositions thereto filed herein, and having granted
defendant’s Motion in Limine No. 1 to Preclude Any Argument That Defendant Failed to


                                              4
Accommodate Plaintiff’s Disability or to Engage in the Interactive Process, or That
Plaintiff Was Harassed, Discriminated or Retaliated Against in Connection Therewith,
the Court finds that plaintiff will be unable to introduce any evidence that would establish
plaintiff’s second cause of action for retaliation, her fifth and sixth causes of action for
intentional and negligent infliction of emotional distress, or her seventh cause of action
for wrongful termination in violation of public policy; and, [¶] The Court having
previously granted summary adjudication of Plaintiff’s first cause of action for failure to
accommodate; and, [¶] The parties having settled plaintiff’s third cause of action for
breach of implied in fact contract and fourth cause[] of action for breach of the covenant
of good faith and fair dealing, IT IS HEREBY ADJUDGED that, [¶] 1. Plaintiff recover
nothing from defendant; and [¶] 2. The Parties shall defer seeking any recovery of costs
and fees on this Judgment coming final after the time for all appeals.”
       Employee filed an appeal from the amended judgment, and this court affirmed the
judgment in an unpublished opinion filed on June 29, 2011.2
       After this court issued a remittitur, Employer filed a memorandum in the trial
court seeking costs of $11,918.87. Employee filed a memorandum seeking costs of
$14,839.71 and a motion to strike Employer’s memorandum, asserting that Employer was
not the prevailing party. Employer responded with a motion to strike Employee’s
memorandum, asserting that Employee was not the prevailing party. Each side filed
opposition to the other’s motion to tax costs.
       After a hearing, the trial court stated, “The Court believes it can exercise its
discretion in determining which party did prevail, and because [Employer] prevailed on
significant causes of action and thereafter entered into a settlement on the remaining

       2
         On our own motion we have taken judicial notice of the record in the previous
appeal. (DeSaulles v. Community Hospital of the Monterey Peninsula (June 29, 2011,
H033906) [nonpub. opn.].)



                                               5
costs, the Court finds that [Employer] is the prevailing party.”3 The trial court awarded
Employer costs of $12,731.92, which added $813.05 to the amount sought in Employer’s
memorandum for costs of the first appeal. The trial court denied Employee’s request for
costs.
                              III. STATUTORY SCHEME
         The California Supreme Court has summarized the statutory scheme for awarding
costs to the prevailing party. “Unless otherwise provided by statute, a ‘prevailing party’
is entitled to recover costs in any action or proceeding ‘as a matter of right.’ (§ 1032,
subd. (b); § 1033.5, subd. (a)(10)(A)-(C) [allowable costs under § 1032 include attorney
fees authorized by contract, statute, or law].) ‘Prevailing party’ for purposes of section
1032(a)(4) is defined as including: ‘[1] the party with a net monetary recovery, [2] a
defendant in whose favor a dismissal is entered, [3] a defendant where neither plaintiff
nor defendant obtains any relief, and [4] a defendant as against those plaintiffs who do
not recover any relief against that defendant.’ If a party recovers anything other than
monetary relief and in situations not specified above, a trial court shall determine the
prevailing party and use its discretion to determine the amount and allocation of costs, if
any. (Ibid.; Michell v. Olick (1996) 49 Cal.App.4th 1194, 1198 [prevailing party is
‘entitled to costs as a matter of right; the trial court has no discretion to order each party
to bear his or her own costs’].)” (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1333
(Goodman).)4

         3
          The trial court did not state it was exercising its discretion under Chinn, as
Employee claimed at oral argument.
       4
          Section 1032 states: “(a) As used in this section, unless the context clearly
requires otherwise: [¶] (1) ‘Complaint’ includes a cross-complaint. [¶] (2) ‘Defendant’
includes a cross-defendant or a person against whom a complaint is filed. [¶] (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
                                                                                  (Continued)


                                               6
       The parties agree that under the current statute, a trial court has no discretion to
deny costs completely when an award is mandatory, though it may exercise discretion
over the amount awarded. (Acosta v. SI Corp. (2005) 129 Cal.App.4th 1370, 1375-1376;
Michell v. Olick, supra, 49 Cal.App.4th 1194, 1197-1198; see Goodman, supra, 47 Cal.
4th 1327, 1338, fn. 4; Lincoln v. Schurgin (1995) 39 Cal.App.4th 100, 105 [costs
discretionary when no party qualifies for mandatory award].) Accordingly, in ruling on a
request for costs a trial court must determine whether an award is mandatory based on
one and only one party “prevailing” according to a statutory definition.
                                 IV. APPEALABILITY
       “[S]ince the question of appealability goes to our jurisdiction, we are dutybound to
consider it on our own motion.” (Olson v. Cory (1983) 35 Cal.3d 390, 398; Nguyen v.
Calhoun (2003) 105 Cal.App.4th 428, 436 (Nguyen).)
       Section 904.1, subdivision (a)(1) provides that a judgment is appealable if it is not
an interlocutory judgment. Subdivision (a)(2) provides that “an order made after a
judgment made appealable by paragraph (1)” is appealable.
       Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644 (Lakin) explained at
page 651, “Despite the inclusive language of Code of Civil Procedure section 904.1,
subdivision (b), not every postjudgment order that follows a final appealable judgment is



obtains any relief, and a defendant as against those plaintiffs who do not recover any
relief against that defendant. When 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.”



                                              7
appealable. To be appealable, a postjudgment order must satisfy two additional
requirements.” (Fn. omitted.) One requirement “is that the issues raised by the appeal
from the order must be different from those arising from an appeal from the judgment.”
(Lakin, supra, at p. 651.) The other requirement is the postjudgment order must “affect
the judgment or relate to its enforcement.” (Id. at p. 654.) The court explained that an
“order denying attorney fees is not preliminary to future proceedings and will not become
subject to appeal after a future judgment. Rather, it resembles the orders we have held
appealable. It affects the judgment or relates to its enforcement in that it finally
determines the rights of the parties arising from the judgment.” (Ibid.) In finding the
order before it appealable, Lakins found support in cases that had “expressly or impliedly
held appealable similar postjudgment orders concerning costs, interest, and attorney
fees,” including Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220
Cal.App.3d 35 (Praszker). (Lakins, supra, at p. 654.) The court in Praszker flatly stated,
“A postjudgment order which awards or denies costs or attorney’s fees is separately
appealable.” (Praszker, supra, at p. 46.)
       In Nguyen, supra, at page 436, this court stated, “Under the ‘one final judgment’
rule, an order or judgment that fails to dispose of all claims between the litigants is not
appealable under Code of Civil Procedure section 904.1, subdivision (a). ‘[A]n appeal
cannot be taken from a judgment that fails to complete the disposition of all the causes of
action between the parties even if the causes of action disposed of by the judgment have
been ordered to be tried separately, or may be characterized as “separate and
independent” from those remaining.’ (Morehart v. County of Santa Barbara (1994) 7
Cal.4th 725, 743 … .)”
       We requested supplemental briefing discussing the applicability of the final
judgment rule and the decision in City of Gardena v. Rikuo Corp. (2011) 192 Cal.App.4th
595 (Rikuo Corp.). Rikuo Corp. discussed the requirement that a final judgment must
completely dispose of the matter in controversy. The judgment in that case appeared to

                                              8
do so, as “the consent judgment expressly provide[d] that it was intended to resolve all of
the issues in controversy between the parties, including the manner in which disputes
over the cost of remediation would be resolved.” (Id. at p. 603.) In settling an eminent
domain case, the parties agreed that the trial court retained jurisdiction to apportion
expenses of remediating contaminated property. (Id at pp. 598‒599.) The property
owner later filed an appeal from a partial determination of expenses. The appellate court
determined that the order was not appealable as a postjudgment order. A postjudgment
order is appealable when it follows a judgment made appealable under section 904.1,
subdivision (a)(1). (Id. at p. 601.) However, the judgment was a consent judgment that
was not appealable. (Id. at pp. 600-601.)
       The appellate court concluded, alternatively, that even if the judgment was
appealable because it left open an unsettled issue of remediation expenses for the court to
determine, then the challenged order was not appealable because the judgment was not
yet final. “[E]ven after entry of those orders, there were issues remaining between the
parties concerning further costs of remediation and the entitlement to the remainder of the
deposit.” (Id. at p. 602.)
       Employer argues that Employee seeks recognition as prevailing on her contract
claims, which were resolved by settlement. Because Employee consented to dismiss
these two causes of action, “no appeal lies from a costs award based on a nonappealable
consent judgment.” Employer contends that in settling her contract claims, Employee
“settled all issues, including costs issues, concerning those claims.”
       Employee points out that Rikuo Corp. was distinguished by Ruiz v. California
State Automobile Association Inter-Insurance Bureau (2013) 222 Cal.App.4th 596 (Ruiz)
because the settlement agreement in Ruiz did not dispose of all issues, but “expressly left
open the amounts of the attorney fees and incentive payment, and provided that those
amounts would be set by the trial court, up to a specified maximum.” (Id. at p. 606.)
Ruiz concluded that Rikuo Corp. was distinguishable “where the Agreement expressly

                                              9
contemplated further court proceedings and a separate ruling on the attorney fee and
incentive payment issues … .” (Ibid.)
       We conclude that our situation is like Ruiz and not Rikuo Corp. Employee agreed
to dismiss her remaining two contract claims in exchange for a settlement payment in
order to facilitate an appeal of the court’s rulings on her remaining claims. The
settlement did not dispose of all of Employee’s claims. The settlement further
contemplated presentation of claims for costs and fees to the trial court upon conclusion
of the earlier appeal. We properly treated the original judgment as appealable and the
later order on competing costs claims is also appealable.
                                      V. ANALYSIS
       When a costs award or the amount of costs is not mandatory but discretionary, the
award is reviewed for an abuse of discretion. However, whether the undisputed facts
mandate a costs award is a question of law for de novo review. (Goodman, supra, 47
Cal.4th 1327, 1332; Kim v. Euromotors West/The Auto Gallery (2007) 149 Cal.App.4th
170, 176.)
       As both sides claim entitlement to mandatory costs, we first consider whether the
facts of the case fit squarely into any of the statutory definitions of “prevailing party.”
       A. EMPLOYEE’S ENTITLEMENT TO MANDATORY COSTS

       Employee argues on appeal that she is due mandatory costs because Employer’s
settlement payment of $23,500 qualifies as a “net monetary recovery.”
       1. DOES A PARTY PREVAIL WHEN AN ACTION IS SETTLED?

       Nothing in section 1032 indicates that there can be no prevailing party when an
action has been dismissed or a judgment entered based on full or partial settlement.
Section 1032 has no provision like that in Civil Code section 1717, subdivision (b)(2),
concerning an award of attorney fees provided for by contract: “Where an action has




                                              10
been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall
be no prevailing party for purposes of this section.”5
       Under the pre-1986 version of section 1032, case law established that a settling
party could be awarded costs even if the settlement agreement is silent as to costs. The
leading case is Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256
(Rappenecker), which concluded that plaintiffs could be awarded costs after obtaining
compromise judgments under section 998.6 The appellate court reasoned that a
compromise judgment still qualified as a judgment under former section 1032.
(Rappenecker, supra, at pp. 263-264.)
       In Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668 (Folsom),
the central question was whether a settlement agreement operated “as a merger and bar of
all preexisting claims, depriving the trial court of jurisdiction to award costs and statutory
attorney fees. (Code Civ. Proc., §§ 1032, 1021.5.)” (Folsom, supra, at p. 671; fn.


       5
           Subdivision (b)(2), added to Civil Code section 1717 in 1981 (Stats. 1981, ch.
888, § 1, p. 3399; Santisas v. Goodin (1998) 17 Cal.4th 599, 614), “codified the holding
of International Industries, Inc. v. Olen [(1978)] 21 Cal.3d 218 [Olen].” (Hsu v. Abbara
(1995) 9 Cal.4th 863, 873.) Olen, supra, 21 Cal.3d 218 rejected “any rule that permits a
defendant to automatically recover fees when the plaintiff has voluntarily dismissed
before trial” because there can be diverse reasons for a dismissal. (Id. at p. 224.)
“Although a plaintiff may voluntarily dismiss before trial because he learns that his
action is without merit, obviously other reasons may exist causing him to terminate the
action. For example, the defendant may grant plaintiff ‒ short of trial ‒ all or
substantially all relief sought, or the plaintiff may learn the defendant is insolvent,
rendering any judgment hollow … . Moreover, permitting recovery of attorney fees by
defendant in all cases of voluntary dismissal before trial would encourage plaintiffs to
maintain pointless litigation in moot cases or against insolvent defendants to avoid
liability for those fees.” (Ibid.)
        6
           The Legislature has made special provisions in section 998 to encourage
settlement by restricting costs recovery when an offer of compromise is unreasonably
rejected. Section 998 authorizes the making of a settlement offer by either side and
provides consequences for the rejection of such an offer.



                                             11
omitted.) Citing Rappenecker, Folsom stated that “costs are allowed, absent the parties’
express agreement to the contrary, following entry of a consent decree.” (Id. at p. 677.)
“Therefore, absent affirmative agreement of the parties to the contrary, the trial court
retains jurisdiction after the filing of a compromise agreement to entertain a cost bill.”
(Id. at p. 679.)7
         While these cases establish that costs can be awarded after a settlement that is
silent about costs, nothing in these cases discusses whether such costs are mandatory or
discretionary. Cases after the 1986 revision of section 1032 do not resolve whether a
settlement payment qualifies as a “net monetary recovery” for purposes of a mandatory
award.
         Section 1032, subdivision (c) authorizes parties to make their own agreements
regarding the responsibility for costs. By negative implication, when there is no
agreement on this topic, the other provisions of section 1032 for a costs award apply.
         2. IS “NET MONETARY RECOVERY” LIMITED TO RECOVERY BY JUDGMENT?

         The “net monetary recovery” definition of prevailing party was added in the 1986
revision of section 1032. “[F]ormer section 1032 provided that costs are allowed for
either a plaintiff or a defendant ‘upon a judgment in his favor’ in various specified
actions and, in other actions not specified, the trial court might award costs in its
discretion. (Former § 1032, subds. (a)-(c), as amended by Stats. 1957, ch. 1172, § 1, p.

         7
          In Folsom, supra, 32 Cal.3d 668, the settlement agreement did not require a
payment from the defendants to the plaintiff. Instead, it required government agencies
“to establish four transit systems.” (Id. at p. 671.) Folsom did determine that a party
could be regarded as “successful” and entitled to attorney fees under section 1021.5
(private attorney general theory) for enforcing an important public right by way of
settlement. (Id. at pp. 681-687.) However, it is established that the test for a “ ‘successful
party’ ” under section 1021.5 differs from the definition of a “ ‘prevailing party’ ” in
section 1032. (Ventas Finance I, LLC v. California Franchise Tax Bd. (2008) 165
Cal.App.4th 1207, 1234.)



                                              12
2464.)” (Goodman, supra, 47 Cal.4th 1327, 1335.) Although the former statute did not
expressly require a calculation of the net monetary recovery, case law has long required
assessing the “net result of the judgment” when a plaintiff and a defendant have each
recovered on claims against the other.
       Shelley v. Hart (1931) 112 Cal.App. 231 (Shelley) was the leading case holding
that the defendant was entitled to an award of costs when “[t]he net result of the
judgment” was “favorable to the defendant.” (Id. at p. 243.) In Shelley, the plaintiff sued
for breach of contract because a truck he purchased did not perform as promised, and the
defendant cross-complained for nonpayment of the purchase price. (Id. at pp. 237-238.)
The plaintiff was awarded $1,500, while the defendant was awarded $2,500, yielding a
net of $1,000 to the defendant, who was awarded costs on that basis. (Id. at p. 243.)8
       Does “net monetary recovery” include amounts received through settlement? We
have found no definitive authority, but we do find guidance in Goodman, supra, 47
Cal.4th 1327, which interpreted the 1986 amendment of section 1032 to determine the
continued viability of this court’s decision in Wakefield v. Bohlin (2006) 145 Cal.App.4th
963 (Wakefield), in which a plaintiff who obtained a trial award was regarded as
prevailing, even though the trial award was effectively reduced to zero due to offsetting
settlement payments from other defendants. In Goodman, home buyers sued for
construction defects and eventually obtained a trial award of $146,000 against the sellers,
but a zero net judgment due to $230,000 settlements received from the home builder and


       8
           The net result of the judgment test was extended to where neither side prevailed
at trial in Gerstein v. Smirl (1945) 70 Cal.App.2d 238, 240-241, and that opinion was
quoted with approval by Schrader v. Neville (1949) 34 Cal.2d 112, 115. McLarand,
Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450
reviewed the legislative history of the 1986 revision of section 1032 and found no
legislative intent to overturn Schrader or to change existing law. (Vasquez, supra, at p.
1455.)



                                            13
other defendants being credited against the trial award. The trial court concluded that the
home sellers were prevailing parties entitled to fees and costs. (Goodman, supra, at p.
1331.) The Court of Appeal agreed, as did the Supreme Court.
       In expressly disapproving of the majority opinion in Wakefield, the high court
reasoned: “ ‘The common meaning of the word “net” is “free from all charges or
deductions” or “to get possession of: GAIN [sic].” (Merriam-Webster’s Collegiate Dict.
(10th ed. 1993) p. 780 (Webster’s).) The word “monetary” obviously means “relating to
money.” (Webster’s, at p. 750.) The word “recover” means “to gain by legal process” or
“to obtain a final legal judgment in one’s favor.” (Webster’s, at p. 977.) Thus the
common meaning of the phrase “the party with a net monetary recovery” is the party who
gains money that is “free from . . . all deductions.” [¶] A plaintiff who obtains a verdict
against a defendant that is offset to zero by settlements with other defendants does not
gain any money free from deductions. Such a plaintiff gains nothing because the
deductions reduce the verdict to zero.’ (Wakefield, supra, 145 Cal.App.4th 963, 992 (dis.
opn. of Mihara, J.).)” (Goodman, supra, 47 Cal.4th 1327, 1333-1334.)
       The court noted that this interpretation is consistent with section 877. “Under
section 877, subdivision (a), a plaintiff’s settlement with a defendant serves to ‘reduce the
claims against’ the remaining codefendants. (§ 877, subd. (a), italics added; [citation].)
… Thus, any reduction for prior settlements is made before the entry of judgment.
[Citation.] … Accordingly, when a plaintiff’s prior settlement is more than the award
received at trial, the plaintiff ultimately recovers nothing. [Citation.] In other words, the
net recovery is zero.” (Goodman, supra, 47 Cal.4th at pp. 1334-1335; fn. omitted.)
       Goodman considered the legislative history of the 1986 revision and reasoned that
the replacement of the phrase “judgment in his favor” with “the party with a net monetary
recovery” was intended to reject the results of Ferraro v. Southern Cal. Gas Co. (1980)




                                             14
102 Cal.App.3d 33 (Ferraro) and Syverson v. Heitmann (1985) 171 Cal.App.3d 106
(Syverson).9 (Goodman, supra, 47 Cal.4th 1327, 1335-1337.) Goodman pointed out that
the history “did not refer to the definition of a ‘prevailing party.’ The legislative history
reveals instead that at the time current section 1032 was reenacted, the ‘existing statutes
d[id] not fully explain the concept of the “prevailing party,” ’ and that a ‘comprehensive
definition’ was necessary to ‘further eliminate confusion.’ (Rep. on Sen. Bill No. 654,
supra, at pp. 1, 3.)” (Goodman, supra, 47 Cal.4th at p. 1336.) “[W]hile section 1032’s
legislative history does not specifically address the precise question before us, it is
nonetheless consistent with the conclusion that the meaning of ‘net monetary recovery’ (§
1032(a)(4)) is not controlled by those cases construing the prior version of section 1032.”
(Id. at p. 1337; fn. omitted.)
       The conclusion of Goodman was that the plaintiff was not entitled to costs as a
matter of right, not that an award of costs to the plaintiff was precluded by the statute.
“Our holding today is simply that a plaintiff whose damage award is offset to zero by a
prior settlement does not categorically qualify as a prevailing party (‘the party with a net
monetary recovery’) as a matter of law.” (Goodman, supra, 47 Cal.4th 1327, 1338, fn.

       9
          Ferraro had held that a plaintiff may obtain a favorable judgment against a
nonsetttling defendant for costs purposes even though the final judgment is reduced to
zero by virtue of offsetting payments by settling defendants. In that case, a judgment of
zero dollars in damages was entered following a jury verdict of $91,081.12 in the
plaintiffs’ favor due to deductions for previous settlements. (Ferraro, supra, 102
Cal.App.3d at p. 37.) As against the nonsettling defendant, the plaintiffs “certainly were
the prevailing party in the lawsuit and the fact that the Gas Company did not have to
actually pay them any damages was due not to any deficiency in their case, but due to
circumstances not directly stemming from the issues regarding liability as litigated
between the parties.” (Id. at p. 52.)
        Ferraro was followed by Syverson, in which the court agreed with the plaintiff
“that, while he will not recover damages from defendant, he received a favorable verdict
with respect to liability, entitling him to costs.” (Syverson, supra, 171 Cal.App.3d at p.
112.)



                                              15
4.) Goodman treated a settlement payment as an offset against a monetary recovery in a
judgment, but did not discuss whether the payment itself qualified the plaintiff as a
prevailing party against the settling defendants.
       Our facts present legal issues not discussed in Goodman, but its analysis of the
phrase “net monetary recovery” is nevertheless helpful. The court’s interpretation is
broad enough to include obtaining an amount of money either by a favorable judgment or
otherwise by legal process.
       At oral argument, Employer disputed that a settlement payment is a recovery by
legal process. In the circumstances of this case, when the parties agreed on the day of
trial to settle two causes of action and stipulated to settlement “orally before the court” (§
664.6),10 we regard the settlement as accomplished through legal process. We need not
speculate about settlements in dissimilar circumstances.
       3. THE SETTLEMENT PAYMENT HERE QUALIFIES AS A NET MONETARY
            RECOVERY

       In this case, Employer’s settlement payment may be regarded as Employee’s net
monetary recovery, while Employer argues that it is due mandatory costs for obtaining a
partial dismissal in its favor in exchange for its payment and later a judgment denying
Employee any relief on the remaining causes of action. We agree with the Second
District Court of Appeal in Chinn, supra, 166 Cal.App.4th 175 that the Legislature can
not have intended to identify both parties as prevailing and due mandatory costs, as this
would lead to an unreasonable, if not absurd, result. (Id. at p. 188.) Two issues were


       10
           Section 664.6 provides: “If parties to pending litigation stipulate, in a writing
signed by the parties outside the presence of the court or orally before the court, for
settlement of the case, or part thereof, the court, upon motion, may enter judgment
pursuant to the terms of the settlement. If requested by the parties, the court may retain
jurisdiction over the parties to enforce the settlement until performance in full of the
terms of the settlement.”



                                              16
presented on appeal in Chinn after a tenant had dismissed with prejudice her tort claims
against the property manager and property owner of her apartment complex in exchange
for their settlement payment to her of $23,500.11 (Id. at p. 181.) One was whether the
trial court erred in denying the tenant attorney fees as the prevailing party under her lease.
The appellate court reversed and remanded for a determination “whether there is a
prevailing party for the purpose of an award of attorney fees based on a pragmatic
assessment of the extent to which [the plaintiff and defendant] realized their objectives
through the settlement.” (Id. at p. 193.)
       The other issue in Chinn, supra, 166 Cal.App.4th 175 was whether the trial court
erred in not awarding the tenant enough costs as the prevailing party. The appellate court
concluded that the defendants were actually the prevailing parties under section 1032 and
due a mandatory costs award. After observing the absurdity of awarding mandatory costs
to both sides, the court reasoned that it was not a situation other than as specified. “We
recognize that ‘in situations other than specified,’ the trial court has discretion to award
costs under section 1032. However, a net monetary recovery and a dismissal in the
defendant’s favor are not situations other than specified; they are both specified
situations. If the Legislature had intended more than one party to qualify as a prevailing
party under the mandatory cost award provision, it easily could have provided for the trial
court to exercise discretion to award costs in the event that more than one party qualified
as a prevailing party.” (Chinn, supra, at p. 189.)12


       11
          The settlement in Chinn was coincidentally the same amount as in our case.
       12
          In reaching this conclusion, Chinn, supra, 166 Cal.App.4th at page 189
disagreed with dictum in On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079
(Mazur). In a case that was remanded for other reasons, Mazur directed the trial court to
exercise its discretion to determine the prevailing party when “both parties achieved”
prevailing party status under section 1032, thus arguably falling “into the ‘situation other
than as specified’ category … .” (Id. at p. 1087.)



                                              17
       Chinn, supra, 166 Cal.App.4th 175 resolved the conflict by “[c]onstruing the term
‘net monetary recovery’ in context,” concluding that “the Legislature did not intend to
include settlement proceeds received by the plaintiff in exchange for a dismissal in favor
of the defendant. The definition of prevailing party provided in section 1032 requires the
court to award costs as a matter of right in specified situations. By precluding
consideration of settlement proceeds as a ‘net monetary recovery’ when a dismissal is
entered in favor of the defendant, only one party qualifies for a mandatory award of costs,
consistent with the prior law.” (Id. at p. 188.) The court concluded that the property
owner and management company, “as defendants with a dismissal entered in their favor,
were the prevailing parties for the purposes of an award of costs as a matter of right under
section 1032.” (Id. at p. 190.)
       As indicated, Chinn described its interpretation of the current version of section
1032 as a continuation of law existing under the earlier version of the statute. The court
stated, “The legislative history of Senate Bill No. 654 (1985-1986 Reg. Session) does not
indicate any change in the law to consider settlement proceeds or provide costs to a
plaintiff after a dismissal.” (Chinn, supra, 166 Cal.App.4th 175, 189.) After reviewing
some of the legislative history, the court reiterated, “Nothing in the background materials
accompanying the proposed amendment mentioned settlement proceeds or suggested the
definition of ‘prevailing party’ in section 1032 would change existing law to permit an
award of costs to a plaintiff following a dismissal.” (Id. at p. 190.)
       When presented with a situation similar to our case, Chinn reconciled the
competing claims by simply deeming settlement proceeds disqualified as a net monetary
recovery where a dismissal was also involved. While we agree that the Legislature did
not intend to identify opposing parties as both due mandatory costs, we cannot subscribe
to Chinn’s other reasoning.
       Employer relies on Chinn as requiring the trial court to discount the amount
Employee received from Employer by way of settlement. Employer contends, like the

                                             18
defendants in Chinn, it obtained a favorable dismissal. As we will explain, however, the
partial dismissal in this case does not establish Employer as a prevailing party. Our case
is factually distinguishable from Chinn. But more fundamentally, we disagree with
Chinn’s view that a settlement payment can never qualify as a net monetary recovery
under section 1032, subdivision (a)(4) when an action is dismissed. Contrary to
Employer’s argument, nothing in section 1032 requires a trial court to disregard a
settlement payment as a “net monetary recovery.”
       Chinn implied that prior law precluded a plaintiff’s recovery of costs following a
dismissal. This position overlooked the holding of Rappenecker, which upheld costs
awards to plaintiffs based on their recovery of settlement payments pursuant to
compromise judgments. We note, however, that Chinn did rely on Rappenecker among
other cases in reversing a denial of attorney fees to the plaintiff, concluding that the
plaintiff might be deemed a prevailing party for purposes of attorney fees. (Chinn, supra,
at pp. 184-185.)
       Two years after Chinn, Goodman observed that, while there is no clear indication
of the legislative intent regarding settlement payments, use of the phrase “net monetary
recovery” did reflect an intent to change the law regarding the impact of settlement
payments on a plaintiff’s net monetary recovery from a nonsetttling defendant. While
Goodman did not mention Chinn, we believe it implicitly rejected Chinn’s narrow
construction of “net monetary recovery” as not including settlement payments.
       When costs are sought under section 1032, subdivision (a)(4), a trial court must
determine whether one and only one party fits a statutory definition of prevailing party.
From Employee’s perspective, though one of her seven causes of action succumbed to a
partial summary judgment and four more causes of action were eliminated by motions in
limine, she was ultimately paid $23,500 to dismiss her remaining two causes of action on
the eve of trial. Although Employer obtained a dismissal for its payment, except for the
unpersuasive reasoning of Chinn, we see no reason why this settlement payment does not

                                              19
fall within Goodman’s interpretation of “net monetary recovery.” Accordingly, the trial
court should have recognized Employee as entitled to mandatory costs under the statutory
definition of “prevailing party.”
       B. EMPLOYER’S ENTITLEMENT TO MANDATORY COSTS

       1. DID EMPLOYER OBTAIN A FAVORABLE DISMISSAL?

       Employer has insisted in briefing and oral argument that it is due mandatory costs
as “a defendant in whose favor a dismissal is entered” (subd. (a)(4)) and that the
dispositions in this case are tantamount to a dismissal.
       Our review of the record discloses that the trial court never entered a judgment
expressly dismissing the action. Employee did file a dismissal with prejudice of the two
remaining causes of action after the trial court eliminated her other five causes of action
in two stages.13 On August 1, 2008, the trial court summarily adjudicated the failure to
accommodate cause of action and denied summary adjudication of the remaining causes
of action. That ruling did not purport to dismiss that cause of action. On September 2,
2008, the trial court granted motions in limine precluding evidence and argument




       13
            Voluntary dismissals are authorized by section 581 in the following situations.
       “(b) An action may be dismissed in any of the following instances:
               “(1) With or without prejudice, upon written request of the plaintiff to the
clerk, filed with papers in the case, or by oral or written request to the court at any time
before the actual commencement of trial, upon payment of the costs, if any.
                “(2) With or without prejudice, by any party upon the written consent of all
other parties.
         “… [¶]
         “(c) A plaintiff may dismiss his or her complaint, or any cause of action asserted
in it, in its entirety, or as to any defendant or defendants, with or without prejudice prior
to the actual commencement of trial.”



                                              20
concerning various claims, but the order sustaining the motions in limine did not purport
to dismiss the other four causes of action.14
       Section 581 lists a number of situations authorizing involuntary dismissal of an
action or cause of action, not including summary adjudication or a successful in limine
motion.15 In response to our request for supplemental briefing, Employer accurately

       14
            The granting of the motions in limine was tantamount to a summary
adjudication on the four causes of action for retaliation, intentional and negligent
infliction of emotional distress, and wrongful termination. (Cf. R & B Auto Center, Inc.
v. Farmers Group, Inc. (2006) 140 Cal.App.4th 327, 350.) This court has previously
cautioned against using in limine motions as a substitute for other dispositive motions
described in the Code of Civil Procedure. (Amtower v. Photon Dynamics, Inc. (2008)
158 Cal.App.4th 1582, 1593.) As noted in our prior opinion, Employee has not made an
issue of the procedure employed in this case. (DeSaulles v. Community Hospital of the
Monterey Peninsula, supra, p. 75, fn. 29.)
        15
            Section 581 provides for involuntary dismissals by the court in a number of
situations. The complaint may be dismissed when a demurrer is sustained without leave
to amend (§ 581, subd. (f)(1)), a complaint is not amended within the time allowed after
demurrer was sustained with leave to amend (§ 581, subd. (f)(2)), or a motion to strike
the entire complaint is granted (§ 581, subds. (f)(3), (4)).
        The complaint may be dismissed entirely or as to a defendant when the forum is
inconvenient (§§ 581, subd. (h), 418.10, subd. (a)(2)), the plaintiff has not advanced the
litigation within the time periods required by Chapter 1.5 (beginning with section
583.110) (§ 581, subd. (g)), or a party fails to appear for trial (§ 581, subd. (l)).
        Alternatively, the “ ‘action’ ” may be dismissed when the plaintiff has not
advanced the litigation within the time periods required by Chapter 1.5 (beginning with
section 583.110) (§ 581, subd. (b)(4)) or any party fails to appear for trial (§ 581, subds
(b)(3), (5)).
        Dismissal is mandatory in two cases. “(d) Except as otherwise provided in
subdivision (e), the court shall dismiss the complaint, or any cause of action asserted in it,
in its entirety or as to any defendant, with prejudice, when upon the trial and before the
final submission of the case, the plaintiff abandons it.
        “(e) After the actual commencement of trial, the court shall dismiss the complaint,
or any causes of action asserted in it, in its entirety or as to any defendants, with
prejudice, if the plaintiff requests a dismissal, unless all affected parties to the trial
consent to dismissal without prejudice or by order of the court dismissing the same
without prejudice on a showing of good cause.”



                                                21
points out that section 581 is not exclusive. A trial court’s “limited, inherent
discretionary power” to dismiss civil claims with prejudice is recognized in case law (see
Lyons v. Wickhorst (1986) 42 Cal.3d 911, 915, and cases there cited) and in section 581,
subdivision (m): “The provisions of this section shall not be deemed to be an exclusive
enumeration of the court’s power to dismiss an action or dismiss a complaint as to a
defendant.” (Stats. 1993, ch. 456, § 9, p. 2529.) We find nothing in the record reflecting
that the trial court exercised its inherent authority to dismiss this action. A ruling should
not be regarded as a dismissal unless it reflects an explicit or implicit intent to dismiss an
action or cause of action.
       Employer argues that the failure to label a judgment a dismissal is not
determinative, relying on Schisler v. Mitchell (1959) 174 Cal.App.2d 27, which held that
a judgment ordering the plaintiff to take nothing was appealable although the trial court
did not order a dismissal after sustaining a demurrer without leave to amend. (Id. at p.
29.)
       Here, a judgment was eventually entered providing that Employee “recover
nothing” from Employer. That judgment recited the earlier dispositions of the various
causes of action, beginning with the summary adjudication, then the sustaining of
motions in limine, and finally “[t]he parties having settled plaintiff’s third cause of action
for breach of implied in fact contract and fourth cause[] of action for breach of the
covenant of good faith and fair dealing … .” The judgment did not mention Employee’s
dismissal with prejudice or the settlement payment and reflects no intent to dismiss any
causes of action. Indeed, it appears intended to facilitate appellate review of the earlier
rulings, as it deferred requests for costs and fees until after the time for all appeals.
       Section 581d states in pertinent part: “A written dismissal of an action shall be
entered in the clerk’s register and is effective for all purposes when so entered. [¶] All
dismissals ordered by the court shall be in the form of a written order signed by the court
and filed in the action and those orders when so filed shall constitute judgments and be

                                               22
effective for all purposes … .” This statute may be only applicable to dismissals
specifically authorized by section 581 (Lavine v. Jessup (1957) 48 Cal.2d 611, 615-616)
(Lavine), but it suggests that the proper form of a dismissal is to order dismissal.
(Boonyarit v. Payless Shoesource, Inc. (2006) 145 Cal.App.4th 1188, 1192-1193
(Boonyarit).)16 Employer contends that the dismissal in this case was pursuant to the trial
court’s inherent authority and not pursuant to a particular provision in section 581.
       While Employee dismissed two causes of action in exchange for a settlement
payment, the trial court itself did not dismiss any causes of action. It makes sense to
mandate costs under subdivision (a)(4) only when a dismissal ends the action against a
defendant and not when a voluntary dismissal leaves the plaintiff with pending claims
against that defendant. Under the pre-1986 version of section 1032, courts had
determined that a plaintiff who obtained a favorable judgment was entitled to costs, even
if some of the plaintiff’s claims failed at trial or were withdrawn. (Sierra Water &
Mining Co. v. Wolff (1904) 144 Cal. 430, 433-434 [plaintiffs recovered only part of land
sought]; Western Concrete Structures Co. v. James I. Barnes Const. Co. (1962) 206
Cal.App.2d 1, 11 [judgment favored plaintiff though defendant defeated some causes of
action].) Fox v. Hale & Norcross Silver-Mining. Co. (1898) 122 Cal. 219 (Fox) stated
that “[t]he prevailing party is entitled to costs incurred by him[,] whether his recovery be
for the whole or a portion of his claim, or whether his claim be made up of one or several



       16
           Boonyarit, supra, 145 Cal.App.4th 1188 involved an ineffective request by the
plaintiff to dismiss six of 16 defendants in connection with filing an amended complaint.
Because the plaintiff improperly completed the dismissal form, it was rejected by the
court clerk. (Id. at p. 1190-1191.) Section 581, subdivision (c), authorizes a plaintiff to
request dismissal of defendants prior to the commencement of trial. The court relied on
section 581d for guidance as to the form of such a voluntary dismissal (Boonyarit, supra,
at p. 1192) without indicating that in cases not covered by section 581, section 581d is
inapplicable. (Lavine, supra, 48 Cal.2d 611, 616.)



                                             23
causes of action.” (Id. at p. 223.)17 At oral argument, Employer conceded that
subdivision (a)(4) does not mandate costs in the case of a partial dismissal when the
plaintiff retains live claims.
          The summary adjudication did not end the action in Employer’s favor. The
sustaining of in limine motions did not end the action in Employer’s favor, as two causes
of action remained for trial. The case ended without a trial on the merits because
Employee agreed to dismiss her remaining two causes of action, but the judgment entered
did not purport to dismiss the entire action. The judgment was intended by its terms to
preserve Employee’s right to appeal the court’s rulings on her other claims. Employee
did indeed appeal in an ultimately unsuccessful attempt to resurrect those causes of
action.
          Employee voluntarily dismissed two causes of action and a judgment was entered
on the remaining causes. Employer obtained at most a partial voluntary dismissal, which
we conclude did not, without more, trigger a mandatory costs award to Employer. In




          17
            We have not found authority under the former statute awarding costs to a
plaintiff who recovered damages at trial after the voluntary or involuntary dismissal of a
cause of action, but Fox comes very close. That plaintiff initially obtained a judgment
awarding $210,197.50 on a claim of overpaying the actual costs of milling ores and an
additional $789,618.00 on a claim of fraudulent milling. (Fox, supra, 122 Cal. at p. 220.)
An appeal resulted in a reversal of the award on the fraud claim and a retrial of that cause
of action, after which the plaintiff was awarded $417,683.00 on the second cause of
action. (Id. at p. 221.) A second appeal was taken, and after a hearing was held, the
plaintiff filed a release of all claims on the second cause of action and asked the
California Supreme Court to affirm the judgment on the first cause of action. (Ibid.) The
high court sustained the release, ordered the judgment modified, and rejected the
defendants’ contention that they were the prevailing parties on the withdrawn cause of
action in view of the rule that the plaintiff’s partial recovery made it the prevailing party.
(Id. at p. 223.) Fox did not involve a dismissal of a cause of action in the trial court, but
the plaintiff’s release of one cause of action was like a dismissal.



                                             24
contrast, the defendants in Chinn, supra, 166 Cal.App.4th 175 obtained a complete
dismissal of the plaintiff’s action in exchange for their settlement payment.
       2. DID EMPLOYEE RECOVER NO RELIEF AGAINST EMPLOYER?

       The amended judgment provides that “Plaintiff recover nothing from defendant.”
At least superficially this fits the category of “a defendant as against those plaintiffs who
do not recover any relief against that defendant,” and Employer so argues in its response
to our request for supplemental briefing.
       We observe that section 1032 distinguishes among different forms of relief. A
“net monetary recovery” is one form of relief mandating costs, but the statute also
contemplates nonmonetary relief. One issue in Friends of the Trails v. Blasius (2000) 78
Cal.App.4th 810 (Blasius) was whether the plaintiffs had recovered any type of relief.
They had “sought to quiet title to a public easement for recreational purposes” and “also
sought injunctive and declaratory relief.” (Id. at p. 819.) The defendants were property
owners and an irrigation district, which used a road easement over the property to
maintain a ditch. (Id. at p. 818.) The plaintiffs obtained a declaration by the trial court
that a public easement had been created (id. at pp. 819-820), but the judgment also stated,
“ ‘No relief is granted in favor of plaintiffs against [the irrigation district].’ ” (Id. at p.
820.) Nevertheless, the trial court awarded costs to the plaintiffs against the irrigation
district. (Ibid.)
       On appeal the irrigation district contended that it was the prevailing party under
section 1032, subdivision (a)(4), based on the judgment provision denying plaintiffs
relief. (Blasius, supra, 78 Cal.App.4th 810, 839.) The appellate court rejected the
argument, stating “the meaning of that recital is that the court was rejecting the
[plaintiffs’] request for affirmative relief against [the irrigation district], i.e., reiterating
the [irrigation district] easement or granting injunctive relief. Notwithstanding the
recital, in the circumstances of this case, the court could find that relief had been granted


                                                25
in favor of [the plaintiffs] against [the irrigation district] on the quiet title claim. (See
Code Civ. Proc., § 761.030, subd. (b) [‘If the defendant disclaims in the answer any
claim, or suffers judgment to be taken without answer, the plaintiff shall not recover
costs’]; see generally Hsu v. Abbara (1995) 9 Cal.4th 863, 877 [‘We agree that in
determining litigation success, courts should respect substance rather than form, and to
this extent should be guided by “equitable considerations.” For example, a party who is
denied direct relief on a claim may nonetheless be found to be a prevailing party [under
Civ. Code, § 1717] if it is clear that the party has otherwise achieved its main litigation
objective.’ (Original italics.).].) [¶] We conclude that the trial court did not err in
determining that this was a case where [plaintiffs] recovered ‘other than monetary relief’
as to [the irrigation district] and in awarding costs against [the irrigation district].”
(Blasius, supra, 78 Cal.App.4th 810, 839.)
       Employer, like the irrigation district in Blasius, contends it is due mandatory costs
based on the judgment provision that Employee shall “recover nothing.” Blasius
illustrates that a costs award should be based on all aspects of a lawsuit’s final disposition
rather than on an isolated phrase in the judgment. The judgment in this case provided
that Employee shall recover nothing and also recited that the parties had settled two of
the seven causes of action. But the judgment failed to mentioned that Employee was paid
$23,500 in exchange for dismissing those causes of action. This was not a case where
Employee recovered no relief. Employer does not qualify under this definition of
prevailing party.
       If Employer had qualified as a “prevailing party,” this case could be among the
“situations other than as specified” for purposes of awarding mandatory costs. (§ 1032,
subd. (a)(4).) However, because we conclude that Employer was not a prevailing party
under the statute, the case did not present the trial court with occasion to exercise
discretion to determine which party prevailed based on the merits of the case. When only
one party fits a “prevailing party” definition, section 1032 operates mechanically to

                                               26
mandate costs and does not afford the trial court discretion to decide the issue in light of
the circumstances, such as by discounting a nuisance settlement. Of course, parties can
avoid this mechanical approach by taking care to provide for costs in their settlements.
But it is not for this court to rewrite the statute to provide for discretion where it does not
now exist.
                                    VI. DISPOSITION
       The order awarding costs to Employer and denying costs to Employee is reversed.



                                            ____________________________________
                                            Grover, J.




WE CONCUR:




____________________________
Rushing, P.J.




____________________________
Márquez, J.




deSaulles v Community Hospital of the Monterey Peninsula
H038184




                                              27
Trial Court:                        Monterey County Superior Court
                                    Superior Court No. M85528




Trial Judge:                        Hon. Lydia Villarreal




Counsel for Plaintiff/Appellant:    Henry Joachim Josefsberg




Counsel for Defendant/Respondent:   Christopher Edward Panetta
                                    Fenton & Keller