De Anza Santa Cruz Mobile Estates Homeowners Ass'n v. De Anza Santa Cruz Mobile Estates

Because of our disposition reversing the judgment, we also reverse the postjudgment order awarding attorney’s fees.

Background

De Anza Santa Cruz Mobile Estates is a mobilehome park located within the City of Santa Cruz. Plaintiff and respondent is De Anza Santa Cruz Mobile Estates Homeowners Association (the Association), an association of approximately 200 mobilehome owners who rent space at the park. Defendants and appellants are De Anza Santa Cruz Mobile Estates et al. (De Anza), and Manufactured Home Communities, Inc., et al. (MHC), two successive groups of owners of the park (collectively referred to as De Anza/MHC).

Prior to August of 1993, the park residents paid a fixed monthly rent to the park owners that included the cost of water provided to the rented spaces. Water was furnished to the park by the City of Santa Cruz Municipal Water Department (the Water Department), which billed the park owners. Regardless of individual usage, each mobilehome owner paid a pro rata share of the park’s water bill as part of the monthly space rental.

In 1990, section 798.41 was added to the Civil Code statutes known as the Mobilehome Residency Law (Civ. Code, § 798 et seq., or hereafter sometimes MRL). Section 798.41 was intended to address the concerns of park owners who were experiencing rising costs of utilities but were unable to pass the costs along to their tenants in the rent without running afoul of local rent control ordinances. The statute thus provides a means for billing utilities separately from pure rent. However, in order to protect park residents from an overall increase in rent as a result of the separate billing, the statute further provides that a park owner who begins billing utilities separately must at the same time reduce the rent by an amount equal to the separate charges. Thereafter if utility costs go up, the resident absorbs the increase.

Section 798.41 provides that a park owner “may elect to bill a homeowner separately for utility service fees and charges assessed by the utility” and that such fees and charges “shall not be deemed to be included in the rent charged . . .” for purposes of local rent control ordinances. However, the owner who so elects must, “at the time of the initial separate billing,” simultaneously reduce the base rent “by an amount equal to the fees and charges separately billed.” (§ 798.41, subd. (a).)

The separate meters were installed, and in August of 1993 the park owners began the separate billing for submetered water service. The rental notice sent to the residents for August of 1993 reflected that each resident’s base monthly rent had been reduced by $6.30, the average monthly water charge per space over the preceding year. The separate water bill consisted of three components: the charge for the actual use of water at each space at the standard rate charged by the Water Department; a “ready-to-serve” charge of $7.80 for each space, which is what the Water Department would charge to furnish direct service to a separate residence; and a 7 percent “City Tax” on the entire bill. The separate billing amounted to over twice as much as the residents had been paying for water and thus over twice as much as the corresponding rent reduction. Because the park owners now collected more from the residents in water charges than they paid to the Water Department, the use of the separate billing resulted in additional income to the owners.

The park residents informed the managers in writing that they objected to the new charges, on the basis that the new charges were greater than the corresponding reduction in rent and were thus in violation of both Civil Code section 798.41 and also the local rent control ordinance, Santa Cruz Municipal Code section 22.01.060. The residents’ claim reached Barry McCabe, president of De Anza Assets, a management company that managed 30 to 40 different properties in addition to the De Anza Santa Cruz park. McCabe responded by letter in October of 1993. He stated that he believed De Anza was acting “appropriately and within the law” in charging the same rates as the local utility would charge, as provided in Public Utilities Code section 2705.5. He further stated that De Anza had “every intention of operating fairly, reasonably and within applicable law” and that if De Anza had “inadvertently” violated any provision of law, it would make the necessary corrections.

In a subsequent exchange of letters, the representative of the Association, Herbert Rossman, informed McCabe that the residents believed De Anza’s separate billing was a clear violation of section 798.41. Rossman stated that he hoped the parties could reach an amicable resolution but that the residents were prepared to seek legal redress. He reminded McCabe that section

On November 23, 1993, the Association, represented by counsel, and Herbert Rossman in propria persona, filed an action in superior court, seeking an injunction and damages. They alleged that by adding monthly charges for water service in excess of the amount of the rent reduction and in excess of the actual cost of the service to De Anza, De Anza had in effect raised the rent and had thus violated both section 798.41 and local rent control ordinances. The Association and Rossman sought to enjoin De Anza from imposing and collecting the new charges, and they sought damages in the amount of a refund of excess charges and the statutory penalty of $500 for each willful violation pursuant to Civil Code section 798.86.

Two successive demurrers to the complaint were sustained in part on the basis that the Association and Rossman had not exhausted their administrative remedies by submitting the matter to the city planning department pursuant to the procedure provided in local rent control ordinances. Plaintiffs’ amended complaints added tort causes of action. Their third amended complaint was filed on November 15, 1994. By this time, De Anza had sold the property to MHC and MHC was added as a defendant. In addition to the alleged violations of Civil Code section 798.41, plaintiffs included causes of action for intentional misrepresentation, negligent misrepresentation and concealment. They alleged that De Anza made false representations to the residents and concealed facts from them regarding the amounts charged on the water bills, and that De Anza induced the residents to pay the false charges, knowing they were improper. Plaintiffs sought compensatory damages and punitive damages in the amount of $10 million. Defendants again filed a demurrer to this complaint.

On January 17, 1995, the trial court sustained defendants’ demurrer to the third amended complaint without leave to amend as to the plaintiff Rossman on the ground that Rossman, as well as other residents of the park who had opted to be governed by local rent control law, must first exhaust their

The matter was heard by a city hearing officer on June 20, 1995. In his “Findings and Decision,” the hearing officer found that the imposition of the “ready-to-serve” charge, and the City Tax, over and above amounts De Anza was actually charged by the Water Department, went beyond the scope and purpose of section 798.41 and “allow[ed] a windfall de facto rent increase to De Anza which circumvents the statute.” He determined that the only charges authorized by section 798.41 were the cost of actual water usage, plus a pro rata share of the ready-to-serve charge paid by the park owners to the Water Department, plus tax on those amounts. All other charges, which the hearing officer found amounted to $7.38 per tenant per month, were “unauthorized and disallowed.” The hearing officer ordered the park owners to refund all excess charges collected since August of 1993, immediately discontinue billing of the excess charges, and bill only for “actual and permitted amounts under Section 798.41 of the Civil Code in the manner provided.” In addition, the hearing officer specifically rejected De Anza’s arguments that the Public Utilities Commission had exclusive jurisdiction over utilities rates.

The park owners requested that the hearing officer reconsider his decision because, among other things, his calculation of the refund had failed to recognize that they paid for water at a higher rate than the rate the residents were charged under the new billing. Since the hearing officer determined that they could only pass through their actual costs of water to the submetered residents on a pro rata basis, the park owners argued that they must be allowed to charge the residents at the rate that they paid the Water Department. Otherwise, they would be paying more for water than they could collect from their submetered residents. The hearing officer denied the request for reconsideration.

On September 27, 1995, the park owners filed a petition for a writ of mandate in superior court, seeking to overturn the decision of the city’s hearing officer for abuse of discretion. After briefing and a hearing, the court entered judgment denying the petition on July 26, 1996, finding that “there was no prejudicial abuse of discretion, and that the findings of the Hearing Officer are supported by substantial evidence in light of the entire record.” De Anza/MHC appealed this judgment.

Appeals No. H015876 and No. H016191

On appeal from the trial court’s judgment denying the writ of mandate, we reviewed the city’s decision under the relevant standards of review to determine whether the city had proceeded in excess of its jurisdiction and whether there was any prejudicial abuse of discretion. (Code Civ. Proc., § 1094.5, subd. (b).) We concluded that De Anza’s separate billings, to the extent that they included new charges that were not tied to actual costs or to any increase in the rate charged by the local utility company, were unlawful under Civil Code section 798.41. The only allowable charges under the statute were the actual cost of the water, the resident’s pro rata share of the park owners’ ready-to-serve charge, and tax on those amounts. We therefore found that the hearing officer had correctly interpreted the law and we upheld the city’s decision ordering excess charges to be refunded to the park residents. However, we found that the hearing officer’s calculation of the refund at $7.38 per space per month failed to take into account the fact that the park owners were billed by the Water Department at a higher rate for water usage than they charged the residents in the separate billings. We found that this variance in rates must be taken into account in order to pass through actual costs in compliance with Civil Code section 798.41. We therefore reversed the judgment and directed that the trial court issue a writ ordering the city to modify its decision with respect to the amount of the refund owed by the park owners to the park residents.

Our opinion in case No. H015876 addressed two further issues raised by the park owners: first that sections 2705.5 and 739.5 of the Public Utilities Code took precedence over section 798.41 of the Civil Code and required that they charge each tenant the same amounts as if the tenant were receiving water directly from the local water company; and second that the city’s hearing officer exceeded his jurisdiction by determining what the park owners could charge the residents for water, since rate setting is the exclusive province of the Public Utilities Commission (PUC). We rejected both of these arguments.

As to section 2705.5 of the Public Utilities Code, we found that so long as the park owners passed through their actual water costs to the park residents

In appeal case No. H016191, which we considered together with case No. H015876, we found that the Association would be entitled to attorney’s fees as the prevailing party under Civil Code section 798.85. However, because we reversed the judgment in the case-in-chief, we also reversed the trial court’s postjudgment order awarding attorney’s fees. We directed the trial court on remand to reconsider the issue of attorney’s fees and to determine which party, if any, was the prevailing party for purposes of attorney’s fees under Civil Code section 798.85.

Our opinion in case No. H015876 and case No. H016191 was filed March 20, 1998. De Anza/MHC’s petition for rehearing in this court and petition for review in the Supreme Court were both denied.

Appeals No. H019543 and No. H019402

Following the filing of our opinion in case No. H015876 and case No. H016191, the matter was resubmitted to the city’s hearing officer, who issued modified findings on April 16, 1998. He found that no further evidence was needed to recalculate the amount of the refund, as the park owners had made a calculation of the refund that was agreed to by the residents, and the refund had already been tendered and accepted in March of 1997. Accordingly, the hearing officer found that the park owners were deemed to have satisfied the refund requirement as previously ordered. The hearing officer further found that the Association was the prevailing party on the only contested issue, whether the park owners’ separate billing complied with section 798.41.

Following the issuance of the remittiturs by this court in case No. H015876 and case No. H016191, the Association filed a motion for attorney’s fees in superior court. De Anza and MHC opposed the motion and filed their own motion, contending that they were the prevailing parties. On September 11, 1998, the court issued orders readopting its previous judgment entered July 26, 1996. The court then determined that the Association was the prevailing party and was entitled to an award of attorney’s fees pursuant to Civil Code section 798.85. The court awarded the Association attorney’s fees in the amount of $101,000.

De Anza/MHC appealed from the attorney’s fee award and from the readopted judgment of the court. However, in those appeals, which we

We rejected the park owners’ claim. As we had previously held, the hearing officer’s decision interpreting Civil Code section 798.41 and local rent control ordinances “[did] not purport to authorize rate setting or intrude into the regulatory sphere of the PUC.” This holding was law of the case. The intervening Oil, we found, did not have the effect of “altering controlling law in this case or depriving this court or the superior court of jurisdiction.” Under Public Utilities Code section 2705.5, a mobilehome park operator who provides submetered water to park residents at actual costs is not a public utility and is thus not subject to regulatory policies of the PUC. Furthermore, the park residents were specifically authorized by the Legislature to maintain an action against the park owner to enforce compliance with the Mobilehome Residency Law, including Civil Code section 798.41. We found that this action “does not concern any issues of rate setting policies and procedures and defendants in our case are not regulated utilities. The issue in our case is not what rates may be charged but rather how existing rent and utilities charges may be separately billed pursuant to Civil Code section 798.41 without resulting in an overall increase in rent.” We concluded therefore that the PUC investigation did not have the effect of preempting this action.

We affirmed the readopted judgment and the order awarding attorney’s fees. Our opinion in case No. HO19543 and case No. HO19402 was filed July 5, 2000. During the pendency of those appeals, the underlying case between the Association and the park owners had proceeded to trial and had resulted in a jury verdict for punitive damages against the park owners in the amount of $6 million.

The Jury Trial

Our opinion in case No. H015876 in March of 1998 had upheld the decision of city’s hearing officer finding that the park owners had violated

Issues

On appeal De Anza and MHC argue first that the judgment and postjudgment order awarding attorney’s fees must be reversed because the PUC investigation initiated in December of 1998 preempted the superior court’s jurisdiction. On the merits they argue that punitive damages were not available for a violation of Civil Code section 798.41, which was the only basis for liability at trial. They contend that the statutory penalty authorized in Civil Code section 798.86 was intended to provide the exclusive penalty for violations of the provisions of the Mobilehome Residency Law. De Anza and MHC next claim that the jury’s punitive damages award rested on prohibited grounds because it penalized them for taking and vigorously pursuing an arguable position in a novel and complex area of law, and because evidence of so-called hardball tactics during the course of the litigation cannot support a claim that they were guilty of oppression, fraud or malice in the conduct which gave rise to the lawsuit. Next De Anza and MHC argue that if we find punitive damages were appropriate in this case, the punitive damages award here was grossly excessive as a matter of law and should either be reversed for a new trial or reduced by this court. Finally, they argue that the $700,000 attorney fee award must be reversed because issues relating to the violation of the MRL had already been decided before the trial commenced; thus the Association did not prevail in an “action arising out of the provisions [of the MRL],” within the meaning of Civil Code section 798.85.

Preemption

The question whether the PUC preempted jurisdiction in this case was decided in our opinion in case No. H019543, which we filed after the final briefing in the present appeal. We concluded in that opinion that the PUC’s initiation of an investigation into rates, charges and practices of water

Availability of Punitive Damages in an Action Based Solely on a Violation of the Mobilehome Residency Law

De Anza and MHC argue that the punitive damages judgment cannot stand because it was based only on the cause of action for statutory violations and a plaintiff suing to enforce a provision of the Mobilehome Residency Law is limited to the damages expressly provided by the statute. In addition to actual damages, Civil Code section 798.86 authorizes a penalty of up to $500 for each “willful violation” of the provisions of the Mobilehome Residency Law. Civil Code section 798.85 further authorizes an award of attorney’s fees and costs to the prevailing party.

The Association, on the other hand, contends that punitive damages are available in connection with a violation of the MRL by virtue of the general provisions of Civil Code section 3294. That section provides that “[i]n an action for breach of an obligation not arising from contract,” where the plaintiff proves by clear and convincing evidence that the defendant has acted with “oppression, fraud, or malice,” plaintiff may recover, in addition to actual damages, damages “for the sake of example and by way of punishing the defendant.” De Anza/MHC’s violations of section 798.41, the Association argues, amounted to oppressive, fraudulent, and malicious conduct within the meaning of Civil Code section 3294, and therefore warranted an award of punitive damages, notwithstanding the statutory penalty provided in Civil Code section 798.86.

We turn first to a threshold issue. The Association contends that De Anza/MHC did not raise the claim at trial that punitive damages are not available for a violation of the MRL, and thus cannot raise it for the first time on appeal. (Cushman v. Cushman (1960) 178 Cal.App.2d 492 , 498 [ 3 Cal.Rptr. 24 ].) We agree that this claim was not squarely presented to the court at trial. However, we decide to reach the merits here for several

Two further factors support our decision to consider the merits of this issue. First, as the Supreme Court stated in Hale v. Morgan, supra, 22 Cal.3d at page 394, “even if the issue had not been properly presented to the trial court, we may nonetheless examine the validity of the statute under which penalties herein have been assessed. We have held that a litigant may raise for the first time on appeal a pure question of law which is presented by undisputed facts.” (See also B & P Development Corp. v. City of Saratoga (1986) 185 Cal.App.3d 949 , 959 [ 230 Cal.Rptr. 192 ].) Further, the issue presented here involves an important question of continuing public interest. In Resolution Trust Corp. v. Winslow (1992) 9 Cal.App.4th 1799 , 1810 [ 12 Cal.Rptr.2d 510 ], this court observed that appellate courts will consider matters raised for the first time on appeal where “the public interest or public policy is involved.” Here, the issue whether Civil Code section 798.86 was intended to provide the exclusive penalty for a violation of the provisions of the Mobilehome Residency Law, thus precluding an award of punitive damages for a statutory violation, meets both of these criteria. (See also Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1 , 6 [ 74 Cal.Rptr.2d 248 , 954 P.2d 511 ].) We therefore proceed to the merits.

We start by setting forth in full the text of Civil Code section 798.86 as it read at the time of the conduct herein: “In the event a homeowner or former homeowner of a park is the prevailing party in a civil action against the management to enforce his or her rights under the provisions of this chapter, the homeowner, in addition to damages afforded by law, may, in the discretion of the court, be awarded an amount not to exceed five

In 1997, when Assembly Bill No. 591 increased the statutory amount of the penalty to $2,000, the legislative history indicates no change in the term “damages afforded by law.” Indeed several documents in the legislative history of Assembly Bill No. 591 show the Legislature continued to understand this term to mean “actual damages.” (See Assem. Com. on Judiciary, Analysis of Assem. Bill No. 591 (1997-1998 Reg. Sess.) May 14, 1997; Sen. Judiciary Com., Analysis of Assem. Bill No. 591 (1997-1998 Reg. Sess.) June 17, 1997; Sen. Rules Com., Off. of Sen. Floor Analyses, Rep. on Assem. Bill No. 591 Rep., June 25, 1997; Special Memorandum from Legis. Counsel’s Dig., June 16, 1997.) We find no mention whatsoever of punitive damages in the legislative history of section 798.86, and no indication that the lawmakers contemplated that the phrase “damages afforded by law” would include punitive damages.

The history of the statute reflects the recognition by the Legislature that mobilehome owners are deserving of “unique protection” under the law. (Civ. Code, § 798.55, subd. (a); Greening v. Johnson (1997) 53 Cal.App.4th 1223 , 1226 [ 62 Cal.Rptr.2d 214 ].) Many mobilehome owners have a limited or fixed income and cannot afford protracted litigation. Further, it was assumed that actual damages for violations of the Mobilehome Residency Law would generally be small. The statute endeavored to respond to these circumstances by authorizing the court in its discretion to award the mobile-home owner who is successful in pursuing a civil or small claims action

These rules tend to support the interpretation that the Legislature intended the statutory penalty set forth in Civil Code section 798.86 to be the exclusive penalty in a suit to enforce the provisions of the MRL. Further, such an interpretation comports with due process. First, it gives the park owner fair notice of the penalty available for particular conduct. (See, e.g., BMW of North America, Inc. v. Gore (1996) 517 U.S. 559 , 574 [ 116 S.Ct. 1589 , 1598, 134 L.Ed.2d 809 ] [“Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him [or her] to punishment but also of the severity of the penalty that a State may impose.”].) Second, it avoids the possibility of double penalties for the same conduct. (Troensegaard v. Silvercrest Industries, Inc., supra, 175 Cal.App.3d at p. 227 [“ ‘A defendant has a due process right to be protected against unlimited multiple punishment for the same act’ ”].)

Case law discussing the remedies available under similar penalty statutes also supports an interpretation of Civil Code section 798.86 to preclude an award of punitive damages in a cause of action for a statutory violation. In general the rules developed from these cases are as follows. Where a statute creates new rights and obligations not previously existing in the common law, the express statutory remedy is deemed to be the exclusive remedy available for statutory violations, unless it is inadequate. (Turnbull & Turnbull v. ARA Transportation, Inc. (1990) 219 Cal.App.3d 811 [ 268 Cal.Rptr. 856 ], disapproved on another ground in Rojo v. Kliger (1990) 52 Cal.3d 65 [ 276 Cal.Rptr. 130 , 801 P.2d 373 ]; Strauss v. A. L. Randall Co. (1983) 144 Cal.App.3d 514 [ 194 Cal.Rptr. 520 ]; Palo Alto-Menlo Park Yellow Cab Co. v. Santa Clara Transit Dist. (1976) 65 Cal.App.3d 121 , 131 [ 135 Cal.Rptr. 192 ].) A plaintiff may plead and prove a common law tort based on the same conduct, and thus may recover punitive damages on a showing under Civil Code section 3294 that the tortious conduct was characterized by “oppression, fraud, or malice.” (Marshall v. Brown, supra, 141 Cal.App.3d 408 , 418; Clauson v. Superior Court, supra, 67 Cal.App.4th 1253 .) However, a plaintiff cannot recover both punitive damages and statutory penalties, as this would constitute a prohibited double penalty for the same act. (Troensegaard v. Silvercrest Industries, Inc., supra, 175 Cal.App.3d atp. 227; Baker v. Ramirez (1987) 190 Cal.App.3d 1123 , 1138 [ 235 Cal.Rptr. 857 ].) Thus a plaintiff must make an election between the two theories of recovery. (Troensegaard

In Troensegaard v. Silvercrest Industries, Inc., supra, 175 Cal.App.3d 218 (Troensegaard), the plaintiff brought suit against a mobilehome manufacturer for breach of warranty under a consumer protection statute (the Song-Beverly Act), and for products liability and fraudulent concealment. The Song-Beverly Act provided for a civil penalty of up to two times the amount of actual damages, plus costs and attorney’s fees, where failure to comply with the statute was found to be “willful.” (Civ. Code, § 1794, subd. (c).) The plaintiff sought compensatory damages, the statutory penalty and also punitive damages. A jury found in favor of the plaintiff and awarded $90,000 in compensatory damages, $55,000 in punitive damages, and $90,000 for the willful violation of the statute. The trial court then awarded the costs and attorney’s fees authorized by the statute.

On appeal, the court in Troensegaard found that there was evidence to support the jury’s finding of liability for intentional concealment and the requisite oppression, fraud, or malice to support an award of punitive damages. The court further found that the evidence supported a finding of willful conduct in order to justify the statutory penalty. However, the court found that awards of both the statutory penalties and punitive damages constituted double punishment for substantially the same conduct. Overlapping damage awards, the court found “ ‘violate that sense of “fundamental fairness” which lies at the heart of constitutional due process.’ ” (Troensegaard, supra, 175 Cal.App.3d at p. 227, quoting In re No. Dist. of Cal. “Dalkon Shield” IUD Products (N.D.Cal. 1981) 526 F.Supp. 887 , 899, vacated on other grounds in In re Northern Dist. of Cal., Dalkon Shield, etc. (9th Cir. 1982) 693 F.2d 847 .) Addressing the relationship between the statutory penalty provided in Civil Code section 1794 and the general punitive damages provisions in Civil Code section 3294, the court found that if the Legislature “had . . . intended a double recovery of punitive and penal damages for the same willful, oppressive, malicious, and oppressive [>z'c] acts, it would in some appropriate manner have said so.” (Troensegaard, supra, 175 Cal.App.3d at p. 228.) The court concluded that by electing to receive the statutory penalty, which was in this case more than the punitive damages, the plaintiff had effectively waived punitive damages under Civil Code section 3294.

The Court of Appeal in Turnbull reversed the judgment and remanded for a new trial on damages. The court recognized that “[wjhere a statutory penalty is imposed for a wrongful act, it does not preclude recovery of punitive damages in a tort action where the necessary malice or oppression is shown.” (Turnbull, supra, 219 Cal.App.3d at p. 826, italics added, citing Greenberg v. Western Turf Assn. (1903) 140 Cal. 357 , 363 [ 73 P. 1050 ].) If the statutory penalty and the punitive damages have the same purpose, however, “plaintiff cannot obtain a double recovery and must elect to have judgment entered in an amount which reflects either the statutory trebling or the compensatory and punitive damages.” (Turnbull, supra, 219 Cal.App.3d at p. 826.)

The court in Turnbull drew a distinction between statutes providing a cause of action for violation of a recognized right and statutes that create a new right not recognized in the common law. As to the former, “all forms of relief granted to civil litigants generally, including appropriate punitive damages, are available unless a contrary legislative intent appears.” (Turn-bull, supra, 219 Cal.App.3d at p. 826; see also Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211 , 216 [ 185 Cal.Rptr. 270 , 649 P.2d 912 ].) As to the latter group, the court said “when a new right, not existing at common law, is created by statute and a statutory remedy for the infringement thereof is provided, such remedy is exclusive of all others unless the statutory remedy is inadequate.” (Turnbull, supra, 219 Cal.App.3d at pp. 826-827; accord, Strauss v. A. L. Randall Co., supra, 144 Cal.App.3d 514 , 518; Palo Alto-Menlo Park Yellow Cab Co. v. Santa Clara Transit Dist., supra, 65 Cal.App.3d 121 , 131.)

Applying these rules, the Turnbull court found that the rights created under the Unfair Practices Act were new rights not formerly existing at

A survey of cases from other jurisdictions indicates that the same general rules regarding the availability of statutory penalties and punitive damages apply in other states and in federal courts. A plaintiff may proceed on a cause of action for violation of a specific statute and a cause of action in tort based on the same conduct, and may recover either the penalties authorized by the statute or punitive damages on the tort claim, but not both. (See cases collected in Annot., Plaintiff’s Rights to Punitive or Multiple Damages When Cause of Action Renders Both Available (1992) 2 A.L.R.5th 449 .)

We have found no persuasive authority for the proposition that plaintiff is allowed to recover punitive damages based solely on a statutory violation where the statute expressly provides for a penalty that is punitive in nature. Respondent argues that Greenberg v. Western Turf Assn., supra, 140 Cal. 357 (Greenberg) is such a case. We believe Greenberg is distinguishable. In Greenberg, the court addressed the purpose and effect of a $100 penalty for refusing to admit a person to a racetrack. The penalty in Greenberg was more in the nature of a fine, to be imposed “in any and in every case” simply for a violation of the law without regard to defendant’s motive or the effect on the plaintiff. (Id. at p. 364.) The Supreme Court found that punitive damages “for the personal indignity and wrong” suffered by plaintiff were awardable in addition to the statutory penalty as the punitive damages were for a different purpose. (Ibid.) Greenberg does not negate the general rule developed in recent cases that if the statutory penalties and punitive damages have the same purpose, to punish conduct that is willful or oppressive, plaintiff cannot obtain a double recovery. (See Turnbull, supra, 219 Cal.App.3d at p. 826, citing Greenberg, supra, 140 Cal. 357 ; Marshall v. Brown, supra, 141 Cal.App.3d at pp. 418-419, also citing Greenberg, supra, 140 Cal. 357 .)

Based on the foregoing authorities and the rules of statutory construction discussed herein, we conclude that a plaintiff who proceeds solely on a cause

Although our holding dispenses with the need to decide De Anza/MHC’s further claims on appeal, we have concerns about the basis for the jury’s punitive damages award here, and we will therefore discuss this claim in order to provide guidance in the event of a retrial.

Legal Basis for the Punitive Damages Award

The Association’s theory of the case for punitive damages at trial was that De Anza/MHC acted with the requisite oppression, fraud, or malice, by collecting unlawful charges under the guise of separating rent and utilities, in order to circumvent rent control and generate income. Further, De Anza/MHC continued to impose and collect the improper charges for 41 months in blatant disregard of the law and the rights of the residents, even though De Anza/MHC knew or reasonably should have known that the charges were unlawful. The Association argued that during this litigation De Anza and MHC persisted in their unreasonable position that the charges were lawful under Civil Code section 798.41 and Public Utilities Code section 2705.5, and ignored or challenged rulings against them by the city hearing officer and by the court. And as further evidence of De Anza/MHC’s malicious and oppressive conduct, they engaged during the litigation in unconscionable tactics of intimidation, harassment and delay in an effort to discourage the residents from pursuing their lawsuit so that De Anza/MHC could continue to take illegal profits.

De Anza and MHC claim that punitive damages cannot be imposed on the basis that they took a defensible legal position as to the purpose and effect of a new statute and that they acted in accordance with their interpretation of the law, even though their position was eventually rejected by the courts. They characterize this action as simply a legal dispute, and they argue that the question whether their interpretation of the statute was unreasonable is a matter for a court, not a jury, to decide. They claim they imposed the new charges in a good faith belief that the charges were lawful and were in fact required under Public Utilities Code section 2705.5, and that they were entitled to vigorously defend their position throughout the lawsuit. Punitive damages, they contend, cannot be predicated on such conduct.

We disagree with De Anza/MHC’s view that this lawsuit involved only a legal dispute. We believe the jury could evaluate De Anza/MHC’s conduct and the facts in this case to determine whether the elements of the tort claims

A substantial portion of the Association’s case at trial centered around accusations that the park owners continued to urge their position on the interpretation of Civil Code section 798.41 and Public Utilities Code section 2705.5 through the courts and before the PUC, conduct that counsel for the Association condemned in closing argument as “filing motions and doing appeals.” Counsel exhorted the jurors to remember that De Anza and MHC were the ones who were “always appealing” and who, when they lost in the courts “ran over to the PUC.” Considerable trial time was taken up with an examination of the merits of various demurrers and motions. During argument counsel for the Association stressed that De Anza/MHC “filed four demurrers” and that they “continued to ask for a stay” pending their appeal. And De Anza/MHC, it was suggested, would, if not stopped, “file more motions against these folks to seek more remedies.”

In addition to stressing that the De Anza/MHC defendants were “always appealing” or “go[ing] to another forum,” the Association relied on evidence that De Anza/MHC employed “hardball” tactics designed to intimidate and discourage the Association from pursuing the lawsuit so that De Anza/MHC could continue to take illegal profits. Evidence was introduced that at an early hearing in this matter, David Spangenberg, the attorney for De Anza, confronted Rossman in the hallway of the courthouse and told Rossman he would “destroy” the homeowners association. Spangenberg warned Rossman and the attorney for the Association that they were “playing with fire” and he threatened to run up massive attorney’s fees that they would have to pay. Spangenberg informed the Association’s attorney several times, in strong language, that he was going to play “hardball” in this litigation. He predicted that the Association would be unable to withstand the pressure and that the residents, most of whom were retirees or elderly persons with fixed incomes, would be liable for large amounts of attorney’s fees and would be at risk of losing their homes. Rossman and the Association’s attorney, as well as other residents in the park, understood these statements as threats.

During argument, counsel for the Association summarized examples of De Anza/MHC’s litigation tactics and argued that “there was hardball played as part of this tactic.” He explained that in order to award punitive damages the jurors were to “look at the reprehensibility of the conduct” and that “[t]he strong-arm tactics that were used were reprehensible.” Counsel spoke of the threats and intimidation by counsel for De Anza/MHC and told the jurors it was up to them “to determine if the standard is ‘hardball’ in this community.”

In Palmer v. Ted Stevens Honda, Inc., supra, 193 Cal.App.3d 530 (Palmer), this court reversed a punitive damages award, holding that the trial court had committed reversible error in admitting evidence of defendant’s litigation tactics “to prove bad faith, lack of probable cause, malice or oppression.”

This court further found in Palmer that “[o]ne significant defect in such evidence is that it holds the client responsible for the attorney’s litigation strategy. While much of what an attorney does in litigation is contractually binding on the client [citation], where it is tortious the client is not vicariously liable merely for retaining the attorney who is an independent contractor. [Citations.] The client is insulated from tort liability for the attorney’s litigation conduct on his [or her] behalf where ‘[t]here is no showing ... of ratification or any other act by [the client] endorsing or approving the attorney’s actions.’ ” (Palmer, supra, 193 Cal.App.3d at p. 539.)

“Another problem with the admission of such evidence is that it fails ‘to consider or accord any weight to the right of a defendant to defend itself.’ [Citation.]” (Palmer, supra, 193 Cal.App.3d at p. 540.) A defendant will be disabled from mounting a vigorous defense if litigation tactics are used as further evidence of bad faith. “Litigation,” this court stated, “is governed by a different set of rules. It is for the law-and-motion judge and not the jury to assess whether a party should be penalized for bad faith discovery positions.” (Ibid.)

We acknowledge the distinction made by the Association that the underlying bad faith conduct in this case allegedly continued during part of the litigation, until De Anza/MHC stopped imposing the unlawful charges and refunded the excess amounts in early 1997. Nonetheless we believe Palmer sets forth the generally accepted rule of law that the manner in which a defendant conducts its defense cannot be the basis for tort liability. By endorsing this rule, we do not by any means intend to condone the conduct that attorney Spangenberg termed the “hardball” tactics in this case. We do not believe, however, that the jury is in the best position to assess what is permissible zealous advocacy and what crosses the line, and thereby to impose the tort sanction of punitive damages based on a defendant’s litigation conduct. Courts and the Legislature have developed sanction and disciplinary procedures to address such conduct. And established precedent in this state has consistently held that resorting to tort remedies is not the proper means to correct misconduct arising during litigation. (See, e.g., Silberg v. Anderson (1990) 50 Cal.3d 205 [ 266 Cal.Rptr. 638 , 786 P.2d 365 ]; Rubin v. Green (1993) 4 Cal.4th 1187 [ 17 Cal.Rptr.2d 828 , 847 P.2d 1044 ];