Etcheson v. FCA US LLC
242 Cal. Rptr. 3d 35
| Cal. Ct. App. 5th | 2018Background
- Plaintiffs bought a new Chrysler Town & Country and, after persistent defects, sued under the Song‑Beverly Consumer Warranty Act (the Act) seeking repurchase, civil penalties, and fees.
- FCA admitted the vehicle qualified for repurchase after suit was filed and made an informal February 2015 proposal and a March 2015 section 998 offer that the trial court later found vague/invalid; plaintiffs declined.
- Litigation continued; in June 2016 FCA made a $65,000 998 offer and parties settled for $76,000 with plaintiffs designated prevailing parties.
- Plaintiffs sought $134,167.50 in fees (lodestar plus multiplier) and $5,059.05 in costs; the trial court initially tentatively approved a larger award but in final order cut fees to $2,636.90, refusing to compensate for work after March 13, 2015.
- Trial court reasoned plaintiffs unreasonably continued litigation after FCA’s early offers and effectively applied section 998 penalty logic; plaintiffs appealed.
- Court of Appeal reversed, holding the trial court erred by denying fees for post‑offer work because FCA’s early offers were invalid or insufficient and plaintiffs obtained a substantially better result.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was it an abuse of discretion to deny fees incurred after FCA's March 2015 offer? | Cutting off fees was improper because FCA's March offer was vague/invalid and plaintiffs had no duty to accept; they later recovered double that amount. | Plaintiffs unreasonably rejected a full restitution offer and incurred unnecessary fees; counsel pursued fees rather than resolution. | Reversed: trial court abused discretion by disallowing post‑March 2015 fees because FCA's offers were invalid/insufficient and plaintiffs' litigation was reasonable. |
| Could the court penalize plaintiffs under section 998 where the offer was invalid/vague? | No—an invalid or vague 998 offer cannot be used to bar recovery of post‑offer fees. | Section 998 discourages rejecting settlement offers; court may consider rejected offers when fees are disproportionate. | Held for plaintiffs: invalid or vague offers do not trigger 998 penalties; the trial court erred by effectively applying that penalty. |
| Was plaintiffs’ continued litigation unreasonable given available information and FCA’s access to contract data? | Plaintiffs were entitled to litigate willfulness and civil penalties; FCA had not admitted liability and had conditioned/limited offers. | Plaintiffs withheld information and failed to facilitate settlement, causing needless litigation and fees. | Held for plaintiffs: record does not support that plaintiffs alone obstructed settlement; pursuing willfulness and penalties was reasonable. |
| Should fees for litigating the fee motion itself be allowed? | Yes—reasonable fees for services in pursuing the motion are recoverable. | Implicitly argued overall request was excessive. | Held for plaintiffs: remand to award reasonable attorney fees including post‑offer work and fees for pursuing the fee motion. |
Key Cases Cited
- Goglin v. BMW of North America, LLC, 4 Cal.App.5th 462 (rejecting denial of fees where prelitigation offers contained extraneous unfavorable terms)
- McKenzie v. Ford Motor Co., 238 Cal.App.4th 695 (trial court abused discretion by excising fees incurred after an initial defective 998 offer)
- Harman v. City & County of San Francisco, 136 Cal.App.4th 1279 (court may consider settlement offers where there is extreme disproportionality between fees and recovery)
- Thayer v. Wells Fargo Bank, N.A., 92 Cal.App.4th 819 (fees must reflect necessity and usefulness; courts should not undercompensate public‑interest plaintiffs)
- Meister v. Regents of Univ. of Cal., 67 Cal.App.4th 437 (court may consider nonstatutory settlement offers in fee determinations where rejected offer exceeded ultimate recovery)
- 569 East County Boulevard LLC v. Backcountry Against the Dump, Inc., 6 Cal.App.5th 426 (appellate review standards for attorney fee awards and when a court's factual basis lacks evidentiary support)
- Hensley v. Eckerhart, 461 U.S. 424 (degree of success is the most critical factor in fee awards)