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SCI California Funeral Services, Inc. v. Five Bridges Foundation, 2/14/12

In an action arising from the sale of the assets of a cemetery, the Superior Court of San Mateo County, California found defendant seller liable for breach of contract because of its failure to deliver an easement giving plaintiff purchaser signage rights on nearby property, and awarded $1.7 million in damages, which was less than the purchaser sought, and denied the purchaser’s request for attorney fees. The parties brought cross-appeals. The court of appeals held that, in determining damages under Civ. Code, ? 3300, the trial court properly considered how much the owner of the servient property would likely have paid for the buyer to relinquish the easement. Freed from the restrictions of the easement, the servient property would have been adaptable to more profitable commercial use, making the easement uniquely valuable to the owner of the servient property. Both the unique value and the potential uses of the unencumbered property were proper factors to consider in determining what the owner of the servient property might have paid the purchaser for reconveyance of the easement. The court also held that the purchaser should have been awarded attorney fees under Code Civ. Proc., ? 998, subd. (d), even though it was not the prevailing party for purposes of Civ. Code, ? 1717 because its recovery was greater than its rejected settlement offer. The costs referred to in ? 998 included attorney fees when authorized by contract; expert witness fees were not the sole item of costs available to a plaintiff that recovered a judgment exceeding its pretrial settlement offer. The court affirmed the judgment, but reversed the attorney fee order to the extent it denied an award of post offer attorney fees under Code Civ. Proc., ? 998, subd. (d), and remanded the matter for further proceedings.