87 Cal.App.5th 957
Cal. Ct. App.2022Background
- Chen sued BMW of North America alleging breach of warranty, violations of the Song‑Beverly Act and the CLRA based on engine defects in a 2011 BMW; he sought damages, restitution, statutory penalties, and injunctive relief.
- About one year into litigation (June 2017) BMW served a Code of Civil Procedure §998 offer: $160,000 payment, plaintiff to return the vehicle with clear title, and BMW would pay plaintiff’s reasonable attorney fees and costs as determined by the court following a noticed motion; the $160,000 was exclusive of recoverable costs/fees accrued as of the offer date.
- Chen declined the §998 offer, his counsel contending it was vague; litigation continued and the parties settled on the day of trial on terms essentially identical to the §998 offer (same $160,000, vehicle return, fees/costs to be determined by court).
- Chen moved for prevailing‑party attorney fees of $436,071.82; the trial court awarded only $53,509.51, counting fees and costs through July 2017 (45 days after the §998 offer).
- The trial court held BMW’s §998 offer valid and concluded Chen did not obtain a more favorable result; Chen appealed the fee ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was BMW’s §998 offer sufficiently definite (not fatally vague)? | Chen: Offer was vague/ambiguous—did not expressly label him prevailing party, did not state lemon‑law buyback treatment, and was silent on recovery of "expenses" and the time period for fee recovery. | BMW: Offer complied with §998—written, allowed judgment to be taken on stated terms ($160,000, return car, fees/costs via court motion); silence on details did not prevent valuation. | Court held the offer was valid and sufficiently specific for Chen to evaluate and accept. |
| Did Chen obtain a more favorable result entitling him to post‑offer fees and costs? | Chen: Settlement explicitly mentioned recovery of expenses and (implicitly) allowed minimal post‑offer fees needed to obtain judgment, so it was more favorable than the offer. | BMW: Settlement mirrored the §998 offer; it provided no greater benefit and deferred fee determination to the court just as the offer did. | Court held the settlement was not more favorable; Chen was not entitled to fees incurred after the §998 offer. (Trial court’s award including 45 post‑offer days was left intact because BMW did not cross‑appeal.) |
Key Cases Cited
- Sanford v. Rasnick, 246 Cal.App.4th 1121 (Cal. Ct. App. 2016) (standard of review for validity of §998 offer is de novo)
- Sangster v. Paetkau, 68 Cal.App.4th 151 (Cal. Ct. App. 1998) (independent review principles when appellate court reviews questions of law)
- Scott Co. v. Blount, Inc., 20 Cal.4th 1103 (Cal. 1999) (purpose of §998: promote early settlement and penalize nonacceptance that yields no better result)
- Khosravan v. Chevron Corp., 66 Cal.App.5th 288 (Cal. Ct. App. 2021) (§998 offer must be specific enough to allow plaintiff to determine its value)
- Covert v. FCA USA, LLC, 73 Cal.App.5th 821 (Cal. Ct. App. 2022) (technical omissions in a §998 offer do not necessarily render it ambiguous)
- Timed Out LLC v. 13359 Corp., 21 Cal.App.5th 933 (Cal. Ct. App. 2018) (silence in a §998 offer about certain postjudgment cost items does not waive recoverable expenses)
- Licudine v. Cedars‑Sinai Medical Center, 30 Cal.App.5th 918 (Cal. Ct. App. 2019) (burden on nonaccepting party to show §998 offer was not made in good faith)
- D’Amico v. Board of Medical Examiners, 11 Cal.3d 1 (Cal. 1974) (an appellate court affirms correct rulings regardless of the trial court's stated reasoning)