Fourth District, Division One Does Just That In Consumer Legal Remedies Act/Song-Beverly Act Case.
The Song-Beverly Act, Civil Code section 1790 et seq., is a legislatively-crafted scheme to protect consumers buying certain personal goods from defects and providing replacement/repair directives under certain conditions. Section 1794(d) of the Song-Beverly Act provides for an award of attorney’s fees to a prevailing plaintiff. Similarly, Civil Code section 1780(d) of the Consumer Legal Remedies Act (Civil Code section 1750 et seq.—the CLRA), also provides that a prevailing plaintiff is entitled to an award of fees. (CROSS REFERENCE—We explored the CLRA fee-shifting principles previously in our June 3, 2008 post.) What happens when a plaintiff prevails, obtains a substantial verdict, obtains a fee award based on a 998 offer, but then suffers a reversal of large components of the damage award? The next case provides the answer, which is that the fee award is likely to be reversed and remanded to see if the plaintiff “beats” the 998 offer upon a damages retrial.
In Brown v. Edgewater Powerboats, LLC, Case No. D051018 (4th Dist., Div. 1 June 24, 2008) (unpublished), plaintiff bought a boat manufactured by defendant for $58,872.79. After requesting a purchase price refund because the boat kept taking on water, plaintiff filed suit against the defendant Manufacturer and the Manufacturer’s dealer under various consumer statutes, including the CLRA and the Song-Beverly Act. Manufacturer made a $10,000 998 offer, which was apparently rejected by plaintiff. Dealer settled out with plaintiff for $150,000 and assignment of its cross-claims against manufacturer, $90,000 of the settlement being allocated to plaintiff’s loss of use of the boat. This was found to be a good faith settlement. Following a special jury verdict on all the claims, the trial court eliminated duplicative amounts and awarded $357,000 to plaintiff as a “merits” judgment (also giving credit for $100,00 of the settlement with Dealer). The trial court found Manufacturer was liable for almost $306,000 in fees and almost $38,500 in statutory costs under the CLRA and Song-Beverly Act fee-shifting provisions. No multiplier was granted, but the trial court did reduce the fee/cost award by the amounts allocated to these categories in the Dealer settlement, which netted a fee award of almost $266,000 and a cost award of almost $28,500.
Manufacturer appealed, winning a reversal of the jury’s award of $108,000 for loss of use of the boat and for a statutory penalty of $240,500 under the Song-Beverly Act. The Fourth District, Division One remanded the matter for a retrial on damages.
What impact did this have on the fee/cost award? It also resulted in a reversal and remand on this award. The appellate court reasoned that because of the offsets available from plaintiff’s settlement with Dealer, “it is possible that the amount to be recovered by [plaintiff] upon retrial could be less than [Manufacturer’s] $10,000 offer to compromise, and that [plaintiff] will thus not be entitled to the $28,460.99 in costs and $265,935 in attorney fees awarded by the trial court.” (Slip Opn., at pp. 20-21.)
(BLOG ENDING OBSERVATION—Because of the mandatory entitlement nature of the consumer-oriented fee-shifting provisions, defendants need to carefully weigh requests for repairs/refunds given the substantial merits judgments and mandatory fee awards that can be awarded in CLRA and Song-Beverly Act cases—devastating end results that are certainly in line with our Mission Statement: fee awards frequently are the proverbial tail that wags the dog in litigation.)