CCP Section 998, Costs, And Consumer Fee Shifting Statute: Fee Award To CLRA Settling Plaintiff Affirmed Upon Denial of Defense 473 Motion Relating To 998 Offer Containing No Language Dealing With Fees/Costs

Silent 998 Offer Came Back to Bite the Defense as Silence Proves Golden for Prevailing Party.

     Many of the decisions we examine have major object lessons for litigators to pay heed to. After all, we like to say that good case management skills are usually learned through mistakes. This next case illustrates this principle very aptly.

     Wilkinson v. South City Ford, Case Nos. A125299 et al. (1st Dist., Div. 1 Oct. 29, 2010) (unpublished) is a situation where a plaintiff sued on a variety of theories, including under a contract and the Consumers Legal Remedies Act--with there presumably being a fee shifting clause and with CLRA containing a fee shifting provision. After settlement negotiations produced nothing more than a huge gap in expectations, plaintiff accepted a $35,000.01 defense settlement offer under CCP § 998, one that was silent on fees and costs even though an insurance claims supervisor had told defense counsel that he wanted an offer under which both sides were to bear their own fees and costs. The gremlin in this saga is that a 998 offer silent on fees and costs means that the prevailing party is entitled to costs and allowable fees. (Engle v. Copenbarger & Copenbarger, LLP, 157 Cal.App.4th 165, 168 (2007).) 

The Tremeloes - Silence is Golden

Plaintiff moved for judgment based on the 998 offer, as well as fees and costs under Engle (predicated primarily on the CLRA fee shifting statutory provision of Civil Code section 1780(d)). Defendants moved under CCP § 473 for relief from default, arguing that his 998 offer had a “typographical” omission on the fee and costs issue and that drafting counsel had meant to say that both sides would bear their own costs/fees. The trial court denied the 473 motion, entered judgment in plaintiff’s favor to the tune of $35,000.01, and awarded plaintiff costs of $14,834.36 and attorney’s fees of $158,746.25. (Yep, that omission did result in quite a substantial costs/fees award.) Both sides appealed.

     The appellate court sent everyone home in line with what happened below.

     The 473 denial was sustained because the mistake in the 998 offer was substantive in nature, not just a clerical error, and not excusable. (Pazderka v. Caballeros Dimas Alang, Inc., 62 Cal.App.4th 658, 671 (1998); Premium Commercial Services Corp. v. National Bank of California, 72 Cal.App.4th 1493, 1495-1497 (1999).)

     The $14,834.36 costs award (out of a requested $16,328.95) was proper, because the general rule is that the trial judge has discretion to award nonprohibited costs under CCP § 1033.5, in his/her discretion, if the costs are reasonably necessary to the conduct of the litigation. That was the case for a majority of costs at issue.

     That brought the appellate court to the fee award. Plaintiff had requested $369,382.40 (inclusive of a 1.2 multiplier), but the trial judge denied a lot of pre-CLRA amendment costs and found a multiplier was inappropriate because plaintiff’s overall request was excessive in nature. The trial court awarded about 43% of plaintiff’s request. Defendant argued against entitlement, but plaintiff did prevail under the CLRA claim given the 998 offer acceptance. The defense tried to argue that plaintiff was precluded from fee recovery for failure to send out the presuit demand letter, but this was not prejudicial because (a) the presuit demand statute had nothing to do with attorney’s fees, and (b) plaintiff later on did send the necessary letter once damages were sought. Plaintiff’s argument that she was entitled to all fees did not resonate very well, because the trial judge has considerable discretion in pegging the amount of fees and denying multiplier requests--especially where the requests are excessive to begin with.