Section 998: Subaru’s 998 Offer Was Reasonable And Made In Good Faith, Such That Plaintiff Properly Only Awarded Pre-offer Costs And Subaru Was Properly Awarded Post-offer Costs

Plaintiff’s Appeal Of Order Staying Fee Motion To Determine 998 Offer Validity Was Non-appealable, But Validity Of The Offer Means That No Post-Offer Fees Are Due to Plaintiff On Remand (Likely).

            Smalley v. Subaru of America, Inc., Case Nos. G059904/G060441 (4^th Dist., Div. 3 December 13, 2022) (unpublished) is complementary of our July 5, 2022 post on Shakouri v. Tesla Motors, where defendant car manufacturers made nicely-crafted CCP § 998 offers in Song-Beverly Act cases so as to cut off post-offer costs and fees to the plaintiffs who did not accept the offers.

            In Smalley, Subaru made a CCP § 998 offer to plaintiff for $35,001, plus plaintiff’s election to accept $10,000 for his pre-offer costs/fees, or for plaintiff’s costs/fees to be determined by the Court, in return for a dismissal of the action and return of the vehicle to Subaru.  Plaintiff did not accept the offer, and he did not beat the offer at trial—only awarded a total recovery of $27,555.74 by the jury. The lower court found the 998 offer to be valid, awarding plaintiff $1,351.17 in pre-offer costs and Subaru $16,684.92 in post-offer costs.  The trial judge stayed plaintiff’s motion for fees based on plaintiff’s appeal of the costs/fees orders which put the validity of the 998 offer at issue, with plaintiff also appealing the stay order.

            The 4/3 DCA, in an opinion authored by Justice Motoike, affirmed the costs/fees order and dismissed the appeal of the stay order.

            The appellate court determined that the offer was certain enough to allow evaluation of the offer’s worth by plaintiff.  There was no requirement that the 998 offer have language saying that plaintiff was the prevailing party.  The 998 offer was reasonable even under plaintiff’s argument that it did not allow for his pre-offer fees of $11,508.17—rather, plaintiff could have accepted $45,000 or $35,001 plus fees and costs to be awarded by the court, the total of the jury award plus the post-offer fees still falling short of the 998 offer terms. 

            The appeal of the stay order was a non-appealable order, such that it was dismissed even though the matter will go back for a determination of plaintiff’s fees—we assume post-offer fees, which will likely be denied.