Consumer Statutes: 2/2 DCA Reverses 50% Reduction Of Requested Lodestar Fees To Prevailing Lemon Law Plaintiff Based On Plaintiff’s Rejection Of Informal Settlement Offer

Defense Should Have Served A CCP §998 Offer As A Mechanism To Curb Requested Fees.

            Plaintiff prevailed in a Song-Beverly Act auto case by accepting a settlement offer for $72,000 plus allowing the lower court to determine prevailing party fees to plaintiff.  (The settlement amount was almost twice the amount of the car.)  Earlier, the defense had made an informal settlement offer for less (but to repurchase the car), which was not accepted by plaintiff.  Plaintiff moved for fees of $76,718 (which included a .25-.35 positive multiplier), but the lower court only awarded $38,359 (half of the request) based on its perception plaintiff had been unreasonable in rejecting the first informal offer.

            The 2/2 DCA reversed in Sabag v. FCA US LLC, Case No. B290072 (2d Dist., Div. 2 July 16, 2019) (unpublished).

            The fee-shifting provision, Civil Code section 1794(d), requires a mandatory award to a prevailing car buyer based on an attorney’s actual time expended, as long as it is reasonable.  Nothing in the statute contains a penalty for rejecting a settlement offer; rather, the way to shift the playing field differently is for the defense to make a valid CCP § 998 offer.  This situation was distinguishable from other cases where a plaintiff’s fees were reduced for rejecting a settlement offer and then recovering much less than the rejected offer.  Rather, a similar result reached in Etcheson v. FCA US LLC, 30 Cal.App.5th 831, 840, 843 (2018) [discussed in our December 6, 2018 post] was found persuasive.  Requiring a trial court to determine if an informal settlement offer was in good faith would inject too much subjectivity into the process, which “could put pressure on plaintiffs and their counsel to settle for less than they believe the case is worth for fear that otherwise their attorney fees would be in jeopardy.”  So, the lesson from this one is for the defense to formulate a sound section 998 offer in an attempt to cut down on lemon law fee recovery to a suing auto buyer.

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