Section 998: 4/1 DCA, Relying On Its Zavala Decision Under Review By The California Supreme Court, Reverses A Lower Court’s Failure To Independently Evaluate Whether A Lump-Sum § 998 Offer Served To Shift Costs And Fees In A Lemon Law Suit

The Result Was That Car Manufacturer’s Request For Costs Had To Be Revisited And The $200,000 Fee Award To Plaintiffs Had To Be Reevaluated.

               In Zavala v. Hyundai Motor America, 107 Cal.App.5^th 458, 463 (2024), rev. granted, No. S289000 (March 19, 2025), the 4/1 DCA concluded that CCP § 998 offers may include simultaneous, independent options the offeree can select from and that both options had to be evaluated for section 998 fee/cost shifting purposes.

               Zavala was upfront and put into consideration, again, in Maqueda v. Kia Motors America, Inc., Case No. D083298 (4^th Dist., Div. 1 Aug. 14, 2025) (unpublished).  There, in a lemon law case, car manufacturer Kia sent a 998 offer to plaintiffs with independent options:  a $25,000 lump-sum cash payment or a statutory option to recover certain category of expenses subject to proof.  Plaintiffs did not accept either option, but they only won $16,471.66 from a jury.  The lower court determined that the statutory option was not specific enough, so it granted Plaintiffs’ motion to tax Kia’s costs memorandum and also awarded Plaintiff just over $200,000 in lemon law attorney’s fees.

               Those results were reversed on appeal by the 4/1 DCA.  The 4/1 DCA panel saw no reason to veer from Zavala, despite several technical arguments advanced by plaintiffs.  So, the matter had to be remanded to determine post-offer costs allowable to Kia and to determine what fees were allowable to plaintiffs.