Result Sustained Although Plaintiff Did Not Beat 998 Offer Based on Cross-Complaint Offset, Because Cross-Complaint Had Not Yet Been Filed.
Atlas Constr. Supply v. American General Constructors, Case No. B232368 (2d Dist., Div. 3 Dec. 19, 2012) (unpublished) is an interesting decision showing how a plaintiff can beat out a defense claim of having prevailed under a CCP § 998 offer directed only against plaintiff’s complaint, with the defense being reminded that these pretrial offers need to be fashioned carefully to resolve the entire dispute–especially given that offsets arising out of a cross-complaint could alter the result completely and allow the defense to claim prevailing party status.
In this one, plaintiff equipment supplier filed suit against defendant contractor, which cross-complained. Plaintiff eventually won a net judgment of $5,743.45 (although alleging damages of $100,916.08), but the rub was this: plaintiff won $68,410.35 on its complaint, but the trial court entered the smaller net judgment based on reducing the recovery by $62,666.80 in delay damages arising under defendant’s cross-complaint.
Defendant had served a 998 offer of $65,000 on plaintiff, and defendant was miffed when the trial court failed to declare it the prevailing party based on the 998 offer.
The lower court’s determination was correct. Reason? A careful reading of the 998 offer showed it was only directed to plaintiff’s complaint, and plaintiff did exceed the 998 offer by a little over $3,400. (The defense 998 offer talked about plaintiff’s action, but did not make it clear, that the entire case, cross-complaint included, was involved, and could not do so under the circumstance we now reveal.) The result was driven even more crucially by the fact that the cross-complaint had not even been filed at the time of the 998 offer, so that the lower court’s construction about the offer applying only to the complaint was hard to argue against. (Westamerica Bank v. MBG Industries, Inc., 158 Cal.App.4th 109, 135, 143-144 (2007).)
However, there is a practice pointer to all of this for defendants–if you want to make sure a cross-complaint offset is at play in the 998 offers, fashion it so that this offset must be considered in the “end result” equation after the litigation dust settles.