23 Cal. App. 5th 614
Cal. Ct. App. 5th2018Background
- Prince and Fleming merged their agency with Sherman and Parent to form Invensure in 2004; parties agreed post-merger to a "disparity note" paying Prince and Fleming additional annual amounts for six years.
- Invensure made partial payments (totaling about $409,000 to Prince) but a principal shortfall remained; Prince later sought separation and founded a competing firm, ERM.
- Prince sued Invensure (breach of contract -- disparity note; book account; account stated) in 2013; Invensure cross‑complained against Prince and ERM for claims including unauthorized computer access, trade secret misappropriation, Penal Code §502, and breach of fiduciary duty.
- After a five‑week jury trial, verdict awarded Prince $647,706.48; Invensure prevailed on its cross‑complaint claims (judgment: Invensure took nothing on cross‑complaint).
- Postjudgment, Prince sought costs including substantial expert fees and sought attorney fees under Penal Code §502; Invensure moved to tax costs. Prince had served two §998 offer‑to‑compromise forms (Jan 24, 2014 for $400,000; Mar 11, 2014 for $500,000 limited to the complaint).
- The trial court partially taxed costs (disallowing most expert fees) and denied Prince’s §502 attorney fees; appellate court found the January §998 offer valid and remanded expert fee allocation, and reversed denial of §502 attorney fees (deciding the §502 claim shared a common core of facts with other claims so fees are recoverable).
Issues
| Issue | Plaintiff's Argument (Prince) | Defendant's Argument (Invensure) | Held |
|---|---|---|---|
| Validity and scope of January 24, 2014 §998 offer | Offer intended to settle the entire action (dispose of cross‑complaint and complaint); counsel’s clarification confirmed scope | Offer ambiguous on its face and limited to Prince as plaintiff; not authorized to bind cross‑defendant ERM | Court of Appeal: §998 offer valid as covering entire action; clarification resolved ambiguity; remanded to determine expert fees due under §998 |
| Whether plaintiff may recover expert witness fees after rejecting §998 | The §998 plaintiff is entitled to recover postoffer expert costs per §998(d) where defendant failed to obtain a more favorable judgment | §998 offers were ambiguous/limited; therefore expert fees should be disallowed or limited | Court found January offer valid; remanded for trial court to reconsider expert fee award in light of that ruling |
| Recoverability of attorney fees under Penal Code §502 | Prince sought fees under §502 (statutory fee provision) for prevailing on related claims | Trial court: §502 fees and cross‑complaint claims could not be apportioned; denied fees | Court of Appeal: reversed—claims in cross‑complaint related to a common core of facts so apportionment not required; remanded for award of §502 fees |
| Trial court’s discretion on taxing costs and postjudgment orders | Prince argued trial court erred in excluding most expert costs and denying §502 fees | Invensure defended tax and denial rulings | Court reversed and remanded both postjudgment orders for further proceedings consistent with opinion |
Key Cases Cited
- Westamerica Bank v. MBG Industries, Inc., 158 Cal.App.4th 109 (2007) (§998 purpose: encourage settlement and permit cost‑shifting including expert fees)
- Ignacio v. Caracciolo, 2 Cal.App.5th 81 (2016) (party offering §998 bears burden to prove offer valid; ambiguities construed against proponent)
- Garcia v. Hyster Co., 28 Cal.App.4th 724 (1994) (strict construction principles for §998 offers)
- Menees v. Andrews, 122 Cal.App.4th 1540 (2004) (rejects interpretations of §998 that allow gamesmanship)
- Berg v. Darden, 120 Cal.App.4th 721 (2004) (offeree may clarify ambiguous §998 offer with offeror during acceptance period)