Second 998 Offer Limited To Contractual Claim Extinguished Prior 998 Offer Which Was Broader.
Our Santa Ana Court of Appeal, in Varney Entertainment Group, Inc. v. Avon Plastics, Inc., Case No. G058903 (4th Dist., Div. 3 Feb. 23, 2021) (published), got to entertain some interesting fee issues under the California’s commercial name/likeness statute and under Code of Civil Procedure section 998 where different offers were made by the defense.
In this one, plaintiff filed a simple complaint for breach of contract, but later filed a first amended complaint to assert an unauthorized use of name/likeness under Civil Code section 3344, with the latter containing a fee shifting statute. (There was a fee shifting basis under the contract, as well.) The 3344 claim was added shortly before trial, with the trial judge indicating that the claim was governed by Tennessee law such that plaintiff dismissed it without prejudice, electing to pursue the claim in Tennessee. The defense had much earlier served an initial 998 offer for $250,000, plus costs and fees. However, the defense then sent a letter to plaintiff indicating it was going to settle the contract claim for $191,626.03 with the caveat that plaintiff would be the prevailing party on the contract claim—an offer which was accepted way before there was a resolution of the 3344 claim.
Well, you can imagine what happened. Both sides moved for fees! Plaintiff wanted $271,244 in fees, while defendant wanted $242,808 in fees. The trial court awarded nothing to the defense, but awarded $125,000 in attorney’s fees to plaintiff, triggering a defense appeal.
The 4/3 DCA, in an opinion authored by Justice Goethals, affirmed.
The defense motion for fees based on the 3343 claim dismissal was found unpersuasive. Plaintiff dismissed that claim without prejudice and pursued it in Tennessee, such that no prevailing party could be determined on it until the out-of-state action was resolved. Besides that, no authority was cited to allow a 3344 fee award where it based only on a voluntary dismissal without prejudice.
So, what about plaintiff’s fees award? That got everyone into the weeds of the initial 998 offer and second settlement offer which was accepted. The precise issue was whether a later offer to enter into a stipulated judgment on the contract issue extinguished an earlier 998 offer covering all causes of action? The answer was yes, it did. The DCA was convinced that any different result would result in “gotcha” litigation, where a party quite clearly signaled an intent to settle with specificity on a partial basis. So, the $125,000 award stood up on appeal.
BLOG OBSERVATION—This case gives rise to interesting drafting considerations for 998 offers and subsequent settlement negotiations. We would hazard to guess that litigants have to be careful on crafting revocability language, although it might be difficult to do as far as salvaging the preservation of prior 998 offers once a settlement, even if partial, is accepted and consummated. However, precise stipulated judgment language by the defense, to the contrary, might have led to a different result. Interesting case for everyone to consider!
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