Court Could Not Find Case On Point, So It Was Guided By Statutory Purpose Of Section 998.
In Hersey v. Vopava, B287896 (2nd Dist. Div. 8 Aug. 14, 2019) (Stratton, Grimes, Wiley), the Court holds, "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."
The background was a landlord-tenant dispute between tenant Hersey and landlord Vopava. The landlord made a $10,000 section 998 offer, followed by a $20,001 offer right before trial. The tenant rejected both offers, went to trial, and recovered $7,438. Concluding that the landlord's offers were reasonable and in good faith, and that the landlord's offer was better than the tenant's recovery, the Court awarded post-initial offer costs, which included attorney's fees, and amounted to $30,483.55. The tenant appealed.
The trial court erred by not taking tenant's pre-first offer costs into consideration, which when added to the damages award, added up to $12,369.75, beating the landlord's initial $10,000 offer. And because the trial court failed to take into account costs that the tenant incurred between the time of the initial offer, and the time of the second offer, a remand is necessary to determine if the second offer of $20,001 was reasonable and in good faith.
COMMENT: The Court explained that, while it could not find the same fact pattern in another case, its decision was guided by the principle that "the appropriate analytic framework for all multiple offer scenarios is to determine which rule will effectuate the statutory purposes of section 998." And it concluded that, "[i]t would not further the purpose of section 998, or be consistent with its statutory implementation to punish an offeree who beats an offeror's first offer by freezing her costs at the date of that low first offer."
So now the trial court needs to determine whether the tenant beat the second offer. However, even if the tenant does not beat the second offer, the landlord's recovery will be limited to fees and costs incurred after the second offer --a recovery that would include the fees and costs incurred in trial.
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