Considering a Trial by Reference? Define Your Referee's Powers Carefully

Timothy Kowal, Esq.
  •  
December 16, 2020

Trial by reference will become very common, I suspect, as trial courts continue to limit their availability due to Covid. A key advantage over arbitration: preservation of the right of review via postjudgment motions and appeal. You may also give your referee authority to hear postjudgment motions and, if appropriate, to conduct a new trial.

But unless you are explicit in your reference motion, the trial court may not substitute its judgment for that of the referee; the referee may not decide postjudgment motions; and any new trial ordered by the court will be held by the court, not the referee. So holds the Second District, Division Three recently in Yu v. Superior Court, No. B304011 (D2d3 Oct. 27, 2020).

In Yu, a referee in a nonjudicial foreclosure action, appointed by general reference by agreement of the parties under Code of Civil Procedure sections 638 through 645.1, hit the bank with $2 million in damages at $5 million in punitives. On the bank's motion, the trial court declined to approve the award, and ordered a new trial instead.

On writ review, the Second District first looked to the parties' reference agreement, noting it did not provide for review of the referee's rulings.

The Court then turned to the statutes. Section 638 provides the ruling by a referee sitting by general reference "must stand as the decision of the court." Although section 644(a) provides that judgment "may be entered thereon," the Court held that that "cannot mean that the trial court has discretion whether to enter judgment." Instead, entry of judgment is a ministerial act that must be entered immediately by the clerk, or alternatively, by the judge. (Code Civ. Proc., § 664.) But entry of judgment is not discretionary. And while section 664 permits objections, such objection must be submitted to the referee, and before the ruling is filed.

The Court's legislative analysis turns up the same result: In the case of a general, consensual reference, the power to review the referee's ruling is solely through the postjudgment statutes and appeal. The court may not decline to enter judgment on the referee's final statement of decision.

The trial court did not err, however, in granting the bank's new-trial motion, or in setting that new trial before the trial court rather than the referee. Beware, however, that the Court looked to the parties' agreement that the referee decide all matters "in a trial" as support that postjudgment remedies, including a new trial, were not contemplated by the reference. Thus, the parties' right to trial by jury were restored.

If this is not your intent in considering a reference, be sure it is reflected in the proposed reference order you submit to the court. The cases support either approach, but you have to be explicit about it.

A writ issued directing the trial court to enter judgment on the referee's statement of decision, and then to order a new trial to be conducted by the trial court.

Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at tkowal@tvalaw.com or (714) 641-1232.