61 Cal.App.5th 222
Cal. Ct. App.2021Background
- Varney Entertainment (Varney) sued Avon Plastics (Avon) for breach of contract; Varney later amended to add a §3344 claim for unauthorized commercial use of name/likeness.
- Avon served a CCP §998 offer to have judgment entered for Varney for $250,000 plus attorney fees/costs through the offer date (April 10, 2019).
- While that §998 offer remained pending, Avon tendered $191,626.03 and offered a stipulated judgment resolving only the contract claim, expressly designating Varney the prevailing party on that claim; Varney accepted and judgment was entered for that amount.
- The §3344 claim proceeded toward trial; on the first day of trial the court applied Tennessee law to the §3344 claim and excluded Varney’s expert; Varney then voluntarily dismissed the §3344 claim without prejudice and refiled in Tennessee.
- Avon moved for fees/costs under §3344 (as the alleged prevailing party on that claim) and under §998 (because Varney recovered less than Avon’s §998 offer); the trial court denied Avon’s motions and awarded Varney fees/costs on the contract claim. Avon appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Avon is entitled to attorney fees/costs under §3344 because Varney dismissed the §3344 claim | Varney: dismissal without prejudice precludes a finding that Avon prevailed on the §3344 claim; no merits resolution, so no fee award under §3344 | Avon: dismissal in its favor on that claim makes Avon the prevailing party entitled to fees under §3344 | Court: Affirmed trial court — voluntary dismissal without prejudice and ongoing litigation in another forum mean Avon was not the prevailing party under §3344; no abuse of discretion. |
| Whether Avon may recover fees/costs under CCP §998 because Varney obtained a judgment ($191,626.03) less than Avon’s pending §998 offer ($250,000) | Varney: Avon’s subsequent, inconsistent settlement tender (stipulated judgment on contract only) extinguished/revoked the earlier §998 offer | Avon: §998 offer remained open/unrevoked; Varney failed to obtain a more favorable judgment than the §998 offer and thus must pay Avon’s postoffer costs | Court: Affirmed trial court — Avon’s later offer (stipulated judgment on the contract claim with different and incompatible terms) extinguished the earlier §998 offer; §998 cost-shifting does not apply. |
Key Cases Cited
- Olive v. General Nutrition Centers, Inc., 30 Cal.App.5th 804 (prevailing-party analysis under §3344 considers practical success and litigation objectives)
- Gilbert v. National Enquirer, Inc., 55 Cal.App.4th 1273 (defendant not prevailing where claim voluntarily dismissed; §3344 fee awards discretionary)
- T. M. Cobb Co. v. Superior Court, 36 Cal.3d 273 (section 998 offers are revocable prior to acceptance)
- Martinez v. Brownco Constr. Co., 56 Cal.4th 1014 (contract principles may guide §998 offer/acceptance issues; avoid rules that foster gamesmanship)
- Wilson v. Wal-Mart Stores, Inc., 72 Cal.App.4th 382 (later §998 offers can extinguish earlier offers when applying cost-shifting)
- One Star, Inc. v. STAAR Surgical Co., 179 Cal.App.4th 1082 (withdrawn/defective §998 offers do not trigger §998 cost-shifting)
- Palmer v. Schindler Elevator Corp., 108 Cal.App.4th 154 (later offer can extinguish earlier §998 offer under contract principles)
- Distefano v. Hall, 263 Cal.App.2d 380 (successive offers and their effect on cost-shifting)