Section 998: Rejecting Offeree Which Rejects First And Second CCP § 998 Offers Is Entitled To Addition Of Pre-Offer Fees/Costs Up Through Date Of Second Offer To The Base Judgment

Any Other Conclusion Would Run Afoul Of Section 998’s Purpose To Encourage Settlement.

            Hersey v. Vopava, Case No. B287896 (2d Dist., Div. 8 Aug. 14, 2019) (published) involved a situation where a plaintiff tenant who vacated an apartment sued for inhabitability issues.  Defendant landlord made two CCP § 998 offers, one for $10,000 and one for $20,001, both of which were rejected.  Tenant was awarded $7,438 in damages, but the trial judge found landlord to prevail after refusing to add pre-offer costs to the damages for determining if tenant “beat” the 998 offers.  The lower court awarded landlord costs and fees totaling $30,483.55.

            The 2/8 DCA reversed.  It found that the trial court should have added plaintiff’s costs and attorney’s fees up to the time of the second 998 offer to determine the correct “net” judgment.  The appellate court found there was no reason to “freeze” plaintiff’s costs to those incurred only before the first offer.  “Accordingly, we hold that where an offeree achieves a judgment more favorable than a first offer, the determination of whether an offeree obtained a judgment more favorable than a second offer should include all costs reasonably incurred up to the date of the second offer.”  (Slip Op., at p. 12.)  The judgment was reversed and remanded to have the trial court recalculate plaintiff’s total judgment.  We would predict, once this is done, plaintiff is likely the one to prevail for fees/costs purposes—a total reversal of fortune!