Code of Civil Procedure (CCP) Section 874.040 – Court Apportionment of Costs
Code of Civil Procedure section 874.040 dictates how the court is to apportion the “costs” of partition identified in section 874.010. Under the statute, the costs can be split according to ownership, or the court can use its inherent equitable powers to come up with something else, with the particular circumstances of the case being key to its decision.
Code of Civil Procedure section 874.040 states:
Except as otherwise provided in this article, the court shall apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable.What is an Example?
“Shawn” and “Julie” are siblings who inherit property from their parents. Even though they own equal shares, Shawn treats the home as his own, and refuses to allow Julie onto the property. Fed up with being denied the benefits of the home, Julie sues for partition.
As part of this process, Julie procures a title report before the Complaint is filed. Later, when the Court allows the partition by sale to proceed, a partition referee is hired to prepare the home for listing on the open market. The referee also contracts with a contractor to fix up the roof so that the home will get a better sales price.
Eventually, the home is sold. Pursuant to section 874.010, half of Julie’s attorneys fees must be paid out of Shawn’s shares of the proceeds. Julie is also entitled to be reimbursed for half the cost of the title report. Additionally, the fees for the referee and the contractor come out of both parties’ shares of the sales proceeds.
All of the above are considered “costs” of partition under section 874.010. And costs are to be evenly split by the parties to a partition action under section 874.040, unless the court comes to some other equitable arrangement. As such, Julie must be reimbursed from the sales proceeds.
Law Revision Commission Comments (CCP § 874.040)
Section 874.040 supersedes the first portion of former Section 796. It applies the principle stated in the former section to cases where the property is sold as well as to those where it is divided. The general rule stated in Section 874.040 is qualified by Section 874.050.
Although normally the costs of partition are apportioned in proportion to the interests of the parties, there may be cases in which some other arrangement will be equitable. Where litigation for the common benefit arises among only some of the parties, or where the interests of the parties in all items, lots, or parcels of property are not identical, the court may segregate the costs of partition to the extent practicable and apportion a part among particular parties only. See former Section 796 (last sentence).Assembly Committee Comment
As is the case for many of the partition statutes, section 874.040 does not include an “official” Assembly Committee Comment from the California Legislature. But this is the norm. And that’s because the Legislature endorsed an overall adoption of the Law Revision Commission suggestions when it passed the new partition statutes in 1976.
In fact, the introduction to Assembly Bill 1671 (the bill that contained the new partition laws) states that the Revision Commission’s recommendations “reflect the intent of the Assembly Committee… in approving the various provisions of Assembly Bill 1671.” This demonstrates that the intent of the Legislature was essentially in line with that of the Revision Commission.
As to the comment and statute, section 874.040 can be treated as a companion of sorts to section 874.010. Recall that under section 874.010, there are certain “costs” of partition, which include attorneys’ fees among other items. Section 874.040 clarifies how these costs are to be split among the parties.
That said, for such a short statute, there is actually a split on how these provisions are supposed to be applied.
In Finney v. Gomez (2003) 111 Cal.App.4th 527, Finney sued Gomez for partition. Gomez didn’t respond, and so Finney sought and obtained a default judgment. At the prove-up hearing after the sale, though, the trial court awarded 100 percent of the attorney’s fees to Finney. In other words, Gomez would have to pay for all of Finney’s fees.
On appeal, the Court reversed this decision. In so doing, it noted that “Section 874.040 has been consistently interpreted as giving courts only two options in apportioning the costs and fees of a partition action. The court may apportion the fees and costs based on the parties’ respective interests in the property, or it may apportion the costs and fees based on some other equitable apportionment.” (Id., at 545.)
Nine years later, however, the Second District declined to follow Finney. In Lin v. Jeng (2012) 203 Cal.App.4th 1008, a husband and wife filed for partition against one of the wife’s siblings. However, the plaintiffs were intentionally hiding the ball, and failed to name or join any of the other siblings who had valid property interests in the subject property.
After trial, the court determined that the plaintiffs were not 85% owners as they had claimed, but more like 45 percent owners. When it came to dividing fees, however, the court refused to award the plaintiffs any of their attorneys’ fees from the sales proceeds.
On appeal, the Court upheld this ruling. Discussing section 874.040 and Finney, the Court stated: “There is no ambiguity in the language of section 874.040. It simply states that the trial court must apportion the costs incurred in a partition action based upon either the parties' interests in the property, or equitable considerations. The statute's broad language does not limit the trial court's equitable discretion, and we decline to follow Finney by doing so.” (Id. at 1025.)
On the whole, most courts are likely to follow Lin instead of Finney, given that Lin is the more recent of the cases. In addition, Lin confirms what most trial courts already seek to do: act according to equity. Even though courts can apportion costs in accordance with ownership, they may choose not under the right circumstances, and Lin is the perfect example.
There, the plaintiffs controlled title to the property in order to prevent the wife’s siblings from obtaining their interests, despite their mother’s desire that all of the siblings share in the property. In addition, the plaintiffs were well aware that they were not entitled to an 85 percent share and that all of the siblings owned interests in varying amounts. Moreover, even though wife knew that all of the siblings shared in the property, she failed to name them in the complaint, thus requiring them to file a complaint in intervention. (Id., at 1026.)
Such blatant “bad behavior” is a sure-fire way to wind up with no entitlement to attorneys’ fees whatsoever.Contact Us
Here at Underwood Law Firm, our knowledgeable attorneys are here to help navigate the complex web of case law and statutes surrounding partitions. If you are thinking of filing a partition, are already in the midst of a partition suit, or just have any questions, please do not hesitate to reach out to our office.