Thursday, August 15, 2019
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C.A. Clarifies How to Determine If Recovery Exceeds §998 Offer
Stratton Says Plaintiff’s Pre-Offer Costs Up to Time of Final Offer Must Be Added to Damage Award
By a MetNews Staff Writer
The Court of Appeal held yesterday, in a case of first impression, that where a defendant makes a statutory offer of compromise which is spurned, then makes a higher offer which is also rejected, the court must include the plaintiff’s prejudgment costs up to the time of the second offer in determining whether the plaintiff netted more than the sum for which the defendant proposed to settle.
Justice Maria E. Stratton of this district’s Div. Eight wrote the opinion which reverses a postjudgment award of costs by Los Angeles Superior Court Judge Ross Klein in favor of the defendant, landlord Stephen Vopava.
In a dispute with a former tenant, Vopava first made an offer, pursuant to Code of Civil Procedure §998, to settle for $10,000, exclusive of fees and costs. Plaintiff Alice Hersey turned that offer down.
Vopava later upped his statutory offer to $20,001, again not including fees and costs. Hersey again declined to settle.
At trial, damages were set at $7,438.
Klein awarded Vopava $30,483.55—29,983.55 in costs and $500 in attorney fees, pursuant to a fee-shifting provision in the lease—based on his impression that the award was compelled by §998 because the judgment was lower than an offer. Hersey appealed.
Stratton’s Opinion
“Appellant contends the trial court erred in failing to add her pre-offer costs to the damages award for purposes of determining whether she received a judgment more favorable than the offers within the meaning of section 998,” Stratton wrote “We agree, reverse the trial court’s amended judgment incorporating the order, and remand to the trial court for a determination of the amount of appellant’s reasonable costs.”
The issue that then loomed was the effect of §998(c)(2)(A) which provides: “In determining whether the plaintiff obtains a more favorable judgment, the court or arbitrator shall exclude the postoffer costs.”
Costs up to the time of the first offer were $4,431.75 which, if added, along with the $500 attorney-fee award, to the $7,438 damage award, the total would less than the $20,000 offer—specifically, $12,369.75. If, however, costs between the time of the first offer and the second were included, they would come to $12,252.30 which, added to the damages and $500 in attorney fees, would amount to $20,190.30.
Explains Conclusion
Pre-offer costs up to the time of the $20,000 must be included, Stratton said, explaining:
“Although we have found no published cases considering the factual scenario present in this case, the Supreme Court has made clear that the appropriate analytic framework for all multiple offer scenarios is to determine which rule will effectuate the statutory purposes of section 998….
“Fundamentally, section 998’s policy is to encourage settlement….It would not further the purpose of section 998, or be consistent with its statutory implementation, to punish an offeree who beats an offeror’s first offer by freezing her costs at the date of that low first offer. It likewise would not further the purpose of section 998, or be consistent with its statutory implementation, to reward an offeror who makes a low first offer by freezing the offeree’s costs at the date of that low offer. Accordingly, we hold that where an offeree achieves a judgment more favorable than a first offer, the determination of whether an offeree obtained a judgment more favorable than a second offer should include all costs reasonably incurred up to the date of the second offer.”
Instructions on Remand
The jurist declared:
“On remand, if the trial court finds appellant is not entitled to all her costs and as a result did not recover a judgment more favorable than respondent’s second offer, the trial court should consider anew whether respondent’s second offer was reasonable and in good faith. If the court finds it was, the court must recalculate the costs to be awarded to respondent and include only those costs incurred after the second offer.”
The case is Hersey v. Vopava, B287896.
Long Beach attorney Jonathan D. Winters represented Hersey and for Plaintiff and Harry A. Safarian and Christina S. Karayan of The Safarian Firm in Glendale acted for Vopava.
Copyright 2019, Metropolitan News Company