Judge: Daniel S. Murphy, Case: 19STCV42416, Date: 2023-04-26 Tentative Ruling

Case Number: 19STCV42416    Hearing Date: April 26, 2023    Dept: 32

BACKGROUND

            On November 25, 2019, Plaintiff Rossy Ardon filed this lemon law action against Defendant Toyota Motor Sales USA, Inc., alleging violations of the Song-Beverly Act. The lawsuit stems from Plaintiff’s purchase of a 2018 Toyota Highlander. On January 27, 2023, the jury returned a verdict in favor of Plaintiff for breach of implied warranty, awarding $45,514.15 in damages.

            Although Plaintiff prevailed at trial, Defendant seeks to recover its costs incurred after Plaintiff rejected its Section 998 offer. Tracking the language of the Song-Beverly Act, Defendant offered to pay restitution equal to the actual price paid or payable by Plaintiff (with certain exclusions) plus incidental damages. (Guillot Decl., Ex. A.) Based on information at the time, Defendant estimated this amount to be $40,234.01. (Ibid.) The offer provides that the estimate is subject to adjustment based on proof and that the calculation would be determined by the Court if the parties could not agree. (Ibid.)

            On March 17, 2023, Plaintiff filed the instant motion to tax costs, arguing that she obtained a more favorable result at trial because $45k is more than $40k, and arguing alternatively that the offer was invalid. Defendant argues that the terms of the offer were sufficiently clear even without a precise calculation and contends that the $40k estimate is nonbinding.

LEGAL STANDARD

The statutory scheme for cost recovery establishes three categories of trial preparation expenses: (1) one category allowable as a matter of right to the prevailing party (Code Civ. Proc., § 1033.5, subd. (a)); (2) one category disallowable unless expressly authorized elsewhere by law (Id., § 1033.5, subd. (b)); and (3) one category allowable or disallowable in the court’s discretion (Id., § 1033.5, subd. (c)(4)). Even where costs are deemed allowable, such costs are only recoverable to the extent that they are (1) reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation and (2) reasonable in amount. (Id., § 1033.5, subd. (c)(2)-(3).)

Costs may also be cut off or imposed on the prevailing party based on a statutory offer of compromise. “If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer.” (Code Civ. Proc., § 998(c)(1).)

DISCUSSION

            “To be valid, an offer under Code of Civil Procedure section 998 may include nonmonetary terms and conditions, but it must be unconditional. The offer must be sufficiently specific to allow the recipient to meaningfully evaluate it and make a reasoned decision whether to accept it. Further, the offeree must be able to clearly evaluate the worth of the offer.” (Duff v. Jaguar Land Rover North America, LLC (2022) 74 Cal.App.5th 491, 499, internal citations omitted.) The offer in Duff did not meet this standard because it offered “a moving target” between $28k and some higher amount based on proof. (Id. at p. 500.) Although the plaintiff’s nominal recovery of $1 at trial was clearly lower than the offer’s minimum of $28k, “we do not evaluate the validity of a statutory offer to compromise after trial concludes. Rather, we must evaluate the offer at the time the offeree receives it and determine whether he or she is able to clearly evaluate the worth of the offer.” (Ibid.) At the time of the offer, “it [was] not clear, by the terms of the statutory offer that the amount was greater than what Jaguar was offering to pay.” (Ibid.)

            Similarly, Defendant’s offer in this case also presents a moving target between $40k and some higher amount based on proof. (See Guillot Decl., Ex. A.) Defendant argues that its precise recitation of Civil Code section 1793.2(d)(2)(B), coupled with the provision that the amount was to be determined by the Court if the parties could not agree, “makes it practically impossible for plaintiff to claim that she was unsure of the amounts that were being offered to her.” (Opp. 4:23-28.) Defendant claims that “[t]his is precisely the methodology that was approved by the court in MacQuiddy v. Mercedes Benz USA, LLC (2015) 233 Cal.App.4th1036, 1050.” (Ibid.)

            However, MacQuiddy did not address the validity of an offer whose amount is subject to change based on proof. In MacQuiddy, the court “focus[ed] on one term in the section 998 offer as particularly undefined.” (MacQuiddy, supra, 233 Cal.App.4th at p. 1050.) That one term provided that Plaintiff must return the car in an “undamaged” condition. (Ibid.) The court found this term to be undefined and subjective, therefore invalidating the offer. (Ibid.) No other part of the offer was put at issue in MacQuiddy. Duff is more on point and more recent.  

            Defendant cannot argue after the fact that its offer was worth more than the $45k awarded at trial. (See Duff, supra, 74 Cal.App.5th at p. 500 [offer evaluated at the time it was made].) The reality remains that the only amount listed in the offer was $40k. To the extent that the offer provided for a higher amount subject to proof, it presented “a moving target” that did not sufficiently allow Plaintiff to evaluate the value of the offer. (Ibid.) Defendant argues that Plaintiff possessed the proof necessary to establish a higher amount. However, this does not mean that whatever amount Plaintiff proposed would have been unconditionally accepted as the value of the offer. It was not clear, at the time of the offer, what amount besides $40k Defendant was willing to pay. Even if Plaintiff presented proof that her restitution was more than $40k, there is no guarantee that it would have been greater than $45k.

            If Defendant’s 998 offer was valid, it only unambiguously offered $40k. No other amount was suggested or negotiated. Defendant cannot argue only after trial that the offer was for over $45k. (See Licudine v. Cedars-Sinai Medical Center (2019) 30 Cal.App.5th 918, 924 [offer cannot be evaluated “by virtue of hindsight”].)  

CONCLUSION

            Plaintiff’s motion to tax costs is GRANTED. Defendant’s memorandum of costs is stricken in its entirety.