Court Reminds Us About Right 998 Calculus, Sustains Broad Fees Clause Applying To Torts, And POOF!s Another Substantial Fee Award To Another Defendant After Reversing A Without Leave Demurrer.
This next case is amazing in demonstrating how a relatively small loan of $100,000 can result in lots of attorney’s fees/expert fee recoupment to the winner in the sum of almost $210,000. It also demonstrates how another trial court winner, who received $34,841.66 in fees against the big winner, lost it on appeal when the Court of Appeal reversed a without leave demurrer ruling.
In Collins v. Manufactured Structures International, Inc., Case Nos. D056865/D057757 (4th Dist., Div. 1 Mar. 7, 2012) (unpublished), trustee of trust (creditor) eventually prevailed against a company which borrowed $210,000, also winning the substantial fees described in the first paragraph against company and an attorney alter ego owner. However, trustee lost a demurrer without leave on a fraud complaint, garnering a $34,841.66 fee award in favor of the winning defendant.
Mixed results on appeal.
Concrete mixer. Gatun Locks. 1910. Library of Congress.
Winning defendant saw his fee award go POOF! when the appellate court determined the fraud count should have survived the pleadings.
However, trustee did sustain the substantial attorney’s fees/expert witness fees against the business obligor and alter ego. Business defendant served a 998 offer on trustee of $125,000; however, once trustee’s preoffer costs of $66,096.19 were added to the offer, trustee did prevail under 998 after obtaining a damages award of $121,434.45–after all, the correct calculus is that the court must add the plaintiff’s preoffer costs to the judgment to determine if the 998 offer was beat. (Duale v. Mercedes-Benz USA, LLC, 148 Cal.App.4th 718, 725 n.3 (2007).) Defendant wanted the courts to add preoffer costs to the wrong side of the equation, namely, the offer, even if the offer is silent on fees/costs. Not so–wrong side of the equation.
The fees clause was very broad — applying “to any litigation” by the parties, so it was not limited to contract litigation such that the fraud and alter ego claims were subject to fee-shifting recoverability.
BLOG EXTRA–On a substantive issue, the appellate court did side with an unpublished federal court decision holding that a trust cannot suffer emotional distress such that the trustee cannot recover such damages. (See Caso v. Hartford Cas. Ins. Co., 2008 WL 1970024 n.9 (E.D. Cal. May 2, 2008).)