Consumer Statutes, Section 998: Plaintiff Winning Only $2,636.50 In Attorney’s Fees And Costs In Lemon Law Case Was Entitled To Reversal And Remand

Trial Judge Improperly Imposed CCP § 998 Sanctions When Offer Was Improper, Such That Cut-Off Fee Determination Was An Abuse of Discretion.

            In Etcheson v. FCA US LLC, Case No. D072793 (4^th Dist., Div. 1 Dec. 6, 2018) (unpublished), plaintiff brought a “lemon law” action relating to a $40,000 purchase of a 2010 Chrysler Town & Country vehicle. The defense made two CCP § 998 offers, the first of which was determined to be invalid and the second offer sweetening the deal somewhat. After some wrangling following the second 998 offers, the parties reached a deal under which the defense agreed to pay $76,000 for the vehicle, with plaintiff deemed the prevailing party for purposes of any future fees/cost recovery (given that the lemon law has a pro-plaintiff fee-shifting statute).

           Plaintiff moved for $89,445 in lodestar fees plus a positive 1.5 multiplier as well as over $5,000 in costs. Over defense objection, the trial judge issued an initial tentative decision awarding plaintiff $81,745 in fees and $5,059 in costs. However, after further arguments, the trial judge substantially reduced the tentative by awarding plaintiff a total of $2,636.90 in fees and costs ($2,095 in fees and $541.90 in costs). The rationale for the final award was that plaintiff should have shut down the litigation after the initial 998 offer which was somewhat in the ballpark although uncertain in nature.

            The 4/1 DCA reversed and remanded.

            The infirmity in the award was that the lower court incorporated the section 998 penalty into cutting off compensability for the lemon law prevailing party despite the fact that the offer was uncertain. This went against the pro-plaintiff nature of the lemon law fee-shifting statute, supported by the reasoning in cases such as McKenzie v. Ford Motor Co., 238 Cal.App.4^th 695 (2015) [4^th Dist., Div. 3] and Goglin v. BMW of No. America, LLC, 4 Cal.App.5^th 462 (2016) [4^th Dist., Div. 1]. “The import of both Goglin and McKenzie is that where a defendant's settlement offer contains unfavorable provisions or is otherwise invalid, as FCA's offers were here, it is not unreasonable for a plaintiff to reject that offer. (Goglin, supra, 4 Cal.App.5th at p. 471; McKenzie, supra, 238 Cal.App.4th at p. 708.)” (Slip Op., at p. 21.)