Hanna v. Mercedes-Benz USA, LLC
248 Cal. Rptr. 3d 654
| Cal. Ct. App. 5th | 2019Background
- Mary Hanna sued Mercedes‑Benz under the Song‑Beverly Consumer Warranty Act after numerous warranty repair attempts and Mercedes' refusal to repurchase the car; complaint sought damages, civil penalties, and fees.
- Mercedes served multiple CCP § 998 offers (Jan 2016 and Jan 2017 iterations); Hanna accepted a Jan 27, 2017 offer for $60,000 plus costs and attorney fees "based on actual time reasonably incurred" per Civ. Code § 1794(d).
- Hanna moved for $259,068.75 in attorney fees (lodestar $172,712.50 with 1.5 multiplier) and $15,547.07 in costs; included $2,137.86 for an initial vehicle inspection by expert Thomas Lepper.
- Trial court awarded $60,869 in fees, treating $45,869 as fees through Jan 21, 2016 and capping post‑Jan 21, 2016 fees at $15,000 based on its reading of Hanna’s retainer (40% of "excess" recovery), and disallowed Lepper’s $2,137.86 cost.
- Hanna appealed, arguing the court should have applied the lodestar method to the entire fee period (including post‑Jan 21, 2016) and that Lepper’s inspection cost was recoverable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hanna was entitled to recover reasonable attorney fees for work after the Jan 2016 §998 offer | Hanna: Yes; post‑Jan 2016 work produced a materially better settlement and was reasonably incurred | Mercedes: No; Hanna unreasonably rejected Jan 2016 offer and should not recover post‑offer fees | Court: Hanna entitled to recover reasonable post‑offer fees; rejecting unfavorable offer is not unreasonable; findings supported by evidence |
| Proper method to calculate attorney fees under Civ. Code §1794(d) | Hanna: Lodestar (actual hours × reasonable hourly rate), adjusted as appropriate | Mercedes: Trial court has discretion; may limit or deny fees; court relied on retainer to cap fees | Court: Trial court erred by using retainer percentage to cap post‑Jan 21, 2016 fees; must begin with lodestar and then adjust |
| Whether a fee award may be tied to a percentage of the plaintiff’s recovery | Hanna: Fees must be based on lodestar, not recovery percentage | Mercedes: Retainer permitted a 40% share of "additional damages" and court properly applied it | Court: Fee awards under Song‑Beverly must start with lodestar; tying fees to plaintiff’s recovery is improper |
| Recoverability of $2,137.86 paid to initial expert (Lepper) | Hanna: Inspection cost was reasonably and necessarily incurred before total loss and is recoverable | Mercedes: Cost unnecessary because Lepper was replaced and his work was not used | Court: Trial court did not abuse discretion in disallowing Lepper cost; substantial evidence supported that it was not reasonably incurred |
Key Cases Cited
- Goodstein v. Bank of San Pedro, 27 Cal.App.4th 899 (1994) (an accepted §998 offer requiring dismissal with prejudice may satisfy judgment/offer requirements)
- Ketchum v. Moses, 24 Cal.4th 1122 (2001) (lodestar method and adjustments govern attorney fee awards)
- Chavez v. City of Los Angeles, 47 Cal.4th 970 (2010) (lodestar calculation explained as starting point)
- Etcheson v. FCA US LLC, 30 Cal.App.5th 831 (2018) (Song‑Beverly requires award based on actual time reasonably expended; court must review reasonableness)
- Warren v. Kia Motors America, Inc., 30 Cal.App.5th 24 (2018) (court should not tie Song‑Beverly fee awards to plaintiff’s recovery)
- Goglin v. BMW of North America, LLC, 4 Cal.App.5th 462 (2016) (rejecting unfavorable prelitigation offers can be reasonable; post‑offer fees may be recoverable)
- Levy v. Toyota Motor Sales, U.S.A., Inc., 4 Cal.App.4th 807 (1992) (criticized awards based solely on percentage recovery rather than lodestar)
- Nightingale v. Hyundai Motor America, 31 Cal.App.4th 99 (1994) (contingency fee arrangements do not displace statutory lodestar analysis)
- Robertson v. Fleetwood Travel Trailers of California, Inc., 144 Cal.App.4th 785 (2006) (Song‑Beverly attorney fee awards must be based on lodestar)