Section 998 Calculation of Preoffer Fees/Costs Sealed the Result.
Frontier Land Companies v. Jeld-Wen, Inc., Case No. C064351 (3d Dist. May 22, 2014) (unpublished) is a case involving contractual/indemnity claims by plaintiff residential home builder against defendant window/door subcontractor. At trial, plaintiff claimed damages of $245,066.82, but the defense countered damages were at best $7,309.99. Plaintiff was awarded $126,818.62 through a jury verdict, after rejecting a $137,000 defense CCP § 998 offer. Based on a fees clause in the parties’ contract, the lower court subsequently awarded fees of $327,553 to prevailing home builder, triggering an unsuccessful appeal of the fee award by defendant subcontractor.
Subcontractor first argued that its 998 “beat” the jury verdict, but that contention did not succeed because preoffer costs/fees of almost $177,000, when added to the jury verdict, resulted in a total sum of $303,591.77—which was well above the 998 offer. (Fundamental Investment etc. Realty Fund v. Gradow, 28 Cal.App.4th 966, 971-972 (1994); Stallman v. Bell, 235 Cal.App.3d 740, 750 (1991).)
Subcontractor then argued that the fee work for four subdivisions not the subject of a contract should not be compensable, but the lower court’s determination that this other noncontractual work was intertwined with/inseparable from contractual work meant no apportionment was necessary. (Erickson v. R.E.M. Concepts, Inc., 126 Cal.App.4th 1073, 1085 (2005).)
That left the remaining argument that the fees were excessive. The appellate court dashed subcontractor’s hope of a reversal by observing that the 2 ½ times fee award of the ultimate jury verdict “does not shock the conscience.” Beyond that, subcontractor’s own admissions in numerous extension requests before the appellate court did in its assertion that the case was fairly simple—the extension requests stated that the case was very complex and involved the interpretation/application of contractual and warranty principles. So, be careful what you say in routine case management statements and requests, because they might come back to haunt you!
Haunted: So haunted at moonlight, with bat and owl and ghostly moth. Elizabeth Shippen Greene Elliott, artist. 1902? Library of Congress.