Plaintiffs Richard L. Wohlgemuth and Gloria M. Wohlgemuth purchased a new motor home that had an engine manufactured and warranted by defendant Caterpillar Inc. Plaintiffs subsequently claimed the engine was defective and sued defendant under the Song-Beverly Consumer Warranty Act (Civ. Code,
FACTS AND PROCEDURAL BACKGROUND
In 2002, plaintiffs purchased a new 2003 National RV
Trial was set for May 10, 2010. On April 30, 2010, defendant served on plaintiffs an “Offer To Compromisе Under Code Of Civil Procedure Section 998 By Defendant Caterpillar Inc.,” which stated as follows: “Pursuant and subject to the provisions of Code of Civil Procedure § 998, defendant Caterpillar Inc., without admitting liability, hereby offers to pay to plaintiffs Richard Wohlgemuth and Gloria Wohlgemuth the total sum of Fifty Thousand Dollars ($50,000.00), in exchange for the dismissal with prejudice of the entire action and general release of all claims as to this defendant.”
Four days later, on May 4, 2010, plaintiffs filed their “Notice Of Acceptance Of Offer To Compromise Pursuant To Code Of Civil Procedure Section 998” (Notice of Acceptance). The Notice of Acceptance declared that pursuant to Code of Civil Procedure section 998, plaintiffs “accept defendants] offer to pay to plaintiffs the sum of Fifty Thousand Dollars ($50,000.00) in exchange for dismissal with prejudice of the action, a copy of which is attached hereto.” The next day, plaintiffs filed a “Notice Of Settlement Of Entire Case,” informing the trial court that a settlement had been reached whereby a dismissal of the case was imminent. On May 6, 2010, plaintiffs filed a request for dismissal of the entire action, with prejudice, and the clerk entered the requested dismissal that same day.
On May 21, 2010, plaintiffs filed a motion for attorney fees and costs under the provisions of the Song-Beverly Act. Plaintiffs argued that in light of the practical result achieved by the settlement, they were the “prevailing” parties in the action. Plaintiffs stressed that where an accepted offer of compromise under Code of Civil Procedure section 998 is silent as to attorney fees and costs, as was the case here, the prevailing party is entitled to recover same if authorized by contract or statute. Plaintiffs asserted they were entitled to such attorney fees and costs under section 1794(d), which is the attorney fees/costs provision of the Song-Beverly Act.
On July 1, 2010, defendant filed opposition to the motion. Defendant argued that it was the prevailing party in the action, not plaintiffs, because it had obtained a dismissal with prejudice. Defendant argued further that plaintiffs could not recover attorney fees and costs under section 1794(d) because there was no “judgment” entered in plaintiffs’ favor.
Plaintiffs’ reply papers were filed on July 8, 2010. Attached to plaintiffs’ reply declaration was a letter addressed to plaintiffs from defendant indiсating
The motion was heard on September 1, 2010. Following oral argument, the trial court took the matter under submission. On November 15, 2010, the trial court issued its written order grаnting plaintiffs’ motion. It found plaintiffs to be the prevailing parties and awarded attorney fees to plaintiffs in the amount of $117,625 and costs in the amount of $7,737.08. Defendant’s appeal followed.
DISCUSSION
I. Standard of Review
“Generally, the trial court’s determination of the prevailing party for purposes of awarding attorney fees is an exercise of discretion, which should not be disturbed on appeal absent a clear showing of abuse of discretion. [Citation.] But the determination of the legal basis for an attorney fee award is subject to independent review. [Citation.] In such a case, the issue involves the application of the law to undisputed facts. [Citation.]” (Kim v. Euromotors West/The Auto Gallery (2007)
Here, defendant contends on appeal that the trial court erred in awarding attorney fees and costs because, allegedly (1) plaintiffs cannot be prevailing parties under section 1794(d) since the action was dismissed and no judgment was entered in plaintiffs’ favor and (2) plaintiffs did not meet their burden of showing they were in fact the prevailing parties. In addition, defendant raises a new argument on appeal that (3) the offer to compromise under Code of Civil Procedure section 998 was never unconditionally accepted by plaintiffs. Since the first issue involves the applicable legal standard, we apply de novo review. The second issue entails our review of whether the trial court abused its discretion in determining under the circumstances that plaintiffs prevailed in the action. Finally, as explained below, we decline to reach the third issue since it was not raised in the trial court and both sides assumed that there was a valid acceptance of the settlement offer.
The trial court found that plaintiffs were the prevailing parties based on their acceptance of the Code of Civil Procedure section 998 offer to compromise whereby, in exchange for defendant’s promise to pay plaintiffs the sum of $50,000, plaintiffs voluntarily dismissed the action. On appeal, defendant challenges the trial court’s conclusion that plaintiffs were prevailing parties. Bеfore we address defendant’s arguments on that particular issue, we note as the trial court did that “[w]here a [Code of Civil Procedure] section 998 offer is silent on costs and fees, the prevailing party is entitled to costs and, if authorized by statute or contract, [attorney] fees.” (Engle v. Copenbarger & Copenbarger, LLP (2007)
We now turn to the crux of the matter—whether the trial court could appropriately conclude that plaintiffs were the prevailing parties. Defendant’s legal arguments are essentially that (1) to be a prevailing party under section 1794(d) there had to be a formal judgment entered in plaintiffs’ favor and (2) a dismissal with prejudice necessarily means defendant was the prevailing party. We address these arguments in turn.
A. “Judgment” in Section 1794(d)
Defendant first argues that plaintiffs could not be the prevailing parties under section 1794(d) since no formal judgment was entered in plaintiffs’ favor. Defendant insists that its position is supported by a literal reading of section 1794(d), which states that a buyer who prevails in an action under the Song-Beverly Act is entitled to recovery of attorney fees and costs “as part of the judgment.”
In Goodstein, supra,
In reaching this conclusion, we follow established rules of statutory interpretation: “ ‘The goal of statutory construction is to ascertain and effectuate the intent of the Legislature. [Citation.] Often, the words of the statute provide the most reliable indication of legislative intent. [Citation.] However, when the statutory language is itself ambiguous, we must examine the context in which the language apрears, adopting the construction that best harmonizes the statute internally and with related statutes. [Citation.] “ ‘When the language is susceptible of more than one reasonable interpretation ... we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a pаrt.’ ” [Citation.]’ ” (Vitug v. Alameda Point Storage, Inc. (2010)
We begin with the fact that section 1794(d) is fundamentally a costs and attorney fees statute. In light of that context, the reference in sectiоn 1794(d) to a prevailing buyer’s right to recover costs and attorney fees “as part of the judgment (italics added) would appear to merely reflect the basic principle of law that such cost items are awarded as an incident of a judgment. (Berti v. Santa Barbara Beach Properties (2006)
Moreover, interpreting the term “judgment” in section 1794(d) to have sufficient latitude to include litigation outcomes such as the one before us more fully accords with the remedial purpose of the Song-Beverly Act. “If the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute’s purpose . . . .” (Coalition of Concerned Communities, Inc. v. City of Los Angeles (2004)
B. Prevailing Party Where-Plaintiffs Dismissed Action
Defendant’s second argument is that plaintiffs cannot be the prevailing party as a matter of law because a dismissal with prejudice was entered
As these cases demonstrate, the fact that plaintiffs dismissed the action does not mean that they were necessarily precluded from being deemed the prevailing parties in the litigation.
III., IV.
The order of the trial court is affirmed. Costs on appeal are awarded to plaintiffs.
Hill, P. J., and Levy, J., concurred.
Notes
Unless otherwise indicated, all further statutory references are to the Civil Code.
National RV Holdings, Inc., doing business as National RV, was the manufacturer of the finished product, including the coach portion of the motor home.
National RV was initially nаmed as a codefendant, but was dismissed by plaintiffs in November 2009.
Plaintiffs’ complaint alleged the purchase price for the motor home was $183,299.40. This amount included finance charges; the listed purchase price in the parties’ contract was actually $144,990.
Section 1794(d) states: “If the buyer prevails in an action under this section, the buyer shall be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses, including attorney’s fees based on actual time expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.”
Code of Civil Procedure section 998, subdivision (b), also states the offer shall include “the terms and conditions of the judgment,” and if accepted, the judge “shall enter judgment accordingly.” (Italics added.)
Code of Civil Procedure section 581d provides that a dismissal order constitutes a judgment.
This interpretation also harmonizes with the purpose of Code of Civil Procedure section 998 to encourage settlement. As the Supreme Court commented in Murillo v. Fleetwood Enterprises, Inc., supra,
Reveles v. Toyota by the Bay, supra,
Of course, parties are free to expressly waive attorney fees and costs as part of a compromise agreement. But allowing a defendant tо thwart an otherwise successful consumer’s remedy under section 1794(d) by means of a compromise agreement silent on attorney fees and costs—merely because the means used to finally terminate the action was a dismissal rather than a formal judgment—would likely become a trap for the unwary consumer and a potential means of evading statutory compliance. (Jiagbogu v. Mercedes-Benz USA (2004)
This practical approach has also been adopted to determine the prevailing party for purposes of awarding attorney fees in a pretrial voluntary dismissal case asserting tort claims when the contractual term “prevailing party” was undefined. (Santisas v. Goodin (1998)
See footnote, ante, page 1252.
