Tennen v. Finstad

Filed 8/6/08 Tennen v. Finstad CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from an order of the Superior Court of Los Angeles County. Joseph R. Kalin, Judge. Reversed and remanded with directions.

Law Office of Joseph M. Kar and Joseph M. Kar for Plaintiffs and Appellants.

No appearance for Defendant and Respondent.

____________________

Appellants[1]challenge a trial court order denying their motion for attorney fees and costs. They contend that the trial court erred in its application of Code of Civil Procedure section 998,[2]Civil Code section 1717, and Civil Code section 1942.5.

We agree with appellants argument regarding section 998. Because appellants obtained a more favorable result than the one set forth in their section 998 offer to compromise, they are entitled to recover their postoffer attorney fees and costs. ( 998, subd. (c).) Accordingly, we reverse the trial court order denying appellants motion for attorney fees and costs and remand the issue of the reasonable amount of appellants postoffer attorney fees and costs to the trial court for determination.

All remaining arguments are moot.

FACTUAL AND PROCEDURAL BACKGROUND

This litigation arises out of a landlord-tenant dispute between appellants, the former and new owners, and their tenants, Michael R. Finstad (Finstad) and Mohsen Roshanaei (Roshanaei). Appellants and Finstad were parties to a written lease agreement, which contains an attorney fee provision.

Before trial, Roshanaei settled and dismissed all of his claims against appellants. While Finstad settled with the former property owners, he did not settle with appellants. Thus, the dispute between Finstad and appellants was scheduled for trial.

Prior to trial, on July 27, 2006, appellants served Finstad with a statutory offer to compromise, pursuant to section 998, for $15,001. That offer was allowed to expire.

The case then proceeded to trial. Following trial, Finstad was awarded $2,475, only against CDI Management, Inc., and only on his claim for violation of Civil Code section 1940.2.

On April 17, 2007, appellants moved for attorney fees and costs, pursuant to sections 998 and 1021, as well as Civil Code sections 1717 and 1942.5, in the amount of $103,167.40 (attorney fees) and $24,742.33 (costs). Finstad opposed the motion.

After taking the matter under submission, the trial court denied appellants motion for attorney fees and costs. The trial court determined that in order to award attorney fees and costs, it was required to declare a prevailing party. Here, there was no prevailing party. The judgment yielded mixed results, and no clear determination as to who was the prevailing party in the litigation. Neither side obtained the results sought after and each side was partially successful in defending against the claims brought by the other side. Thus, appellants were not entitled to recover attorney fees or costs.

Judgment was entered, and appellants timely appeal ensued.

DISCUSSION

I. Standard of review

Statutory construction is a question of law that we review de novo. (Barner v. Leeds (2000) 24 Cal.4th 676, 683.)

II. The trial court erred in concluding that appellants were required to be prevailing parties in order to recover attorney fees and costs pursuant to section 998

Not less than 10 days prior to commencement of trial . . . any party may serve an offer in writing upon any other party to the action to allow judgment to be taken. ( 998, subd. (b).) 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 defendants costs from the time of the offer. ( 998, subd. (c)(1).) Those costs may include attorney fees. ( 998, subd. (a); Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1112 (Scott).)

Here, appellants made a section 998 offer to Finstad, and Finstad did not accept it. Following trial, Finstad failed to obtain a more favorable judgmenthe received only $2,475, only against CDI Management, Inc., and only on one cause of action. It follows that appellants are entitled to all postoffer costs and attorney fees.

As appellants correctly point out in their opening brief, the trial court erred in concluding that it was necessary for [it] to determine which side [was] the prevailing party. It is the very essence of section 998 that, to encourage both the making and the acceptance of reasonable settlement offers, a losing defendant whose settlement offer exceeds the judgment is treated for purposes of postoffer costs as if it were the prevailing party. To require a defendant to show that it is a prevailing party in order for it to be entitled under section 998 to any category of costs, . . . is to misunderstand section 998. When the defendant seeks costs on the basis of the first sentence of subdivision (c) of section 998, the defendant by definition is not the prevailing party and is not entitled to any category of costs on that basis. Under section 998, the defendants entitlement to costs derives not from its status as a prevailing party but from the plaintiffs failure to accept a reasonable settlement offer. (Scott, supra, 20 Cal.4th at p. 1114.) Moreover, awarding a defendant its postoffer attorney fees as well as its other costs accords with the intended function of section 998. (Id. at p. 1116.)

Pursuant to the foregoing, appellants are the prevailing parties based upon Finstads failure to accept a reasonable settlement offer. They are entitled to recover postoffer attorney fees and costs.

The next question is the amount of fees and costs to which appellants are entitled. In his opposition to appellants motion, Finstad did not challenge the reasonableness of the attorney fees and costs requested. Likewise, because the trial court determined (albeit erroneously) that neither side was entitled to attorney fees, it too did not make any determination regarding the reasonableness of the fee and cost request. Upon remand, the trial court should set the amount of reasonable postoffer attorney fees and costs.

All remaining arguments are moot.

DISPOSITION

The order of the trial court is reversed and remanded with directions to enter a new order granting appellants motion and setting the reasonable amount of attorney fees and costs. Appellants are entitled to costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

_____________________, J.

ASHMANN-GERST

We concur:

_____________________, Acting P. J. _____________________, J.

DOI TODD CHAVEZ

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[1] Appellants include Harold Tennen, The Harold and Roberta Tennen Family Trust, and CDI Management, Inc.

[2] All further statutory references are to the Code of Civil Procedure unless otherwise indicated.