Everyone Prevails. Now Go Home.

Macquiddy v. Mercedes-Benz USA, LLC, No B251752 (D2d8 Jan 29, 2015) 

This is a Song-Beverly Warranty Act case about a lemon Mercedes. Mercedes refused to replace the car after numerous failed attempts to repair it. When plaintiff brought suit, however, Mercedes admitted liability in its answer and the parties stipulated as to what the appropriate restitution would be. Mercedes then made a Code of Civil Procedure § 998 offer for the full value of the restriction, plus costs and fees, but plaintiff decided to roll the dice to try to win a statutory penalty, which is available only when the defendant’s violation is proven willful. The jury found no willfulness and thus no penalty was awarded. Based on that verdict, the trial court found that plaintiff could not recover statutory attorneys’ fees because he was not a “prevailing party,” and that costs (not including fees) were awardable to Mercedes. Plaintiff appealed the fee and cost decisions, as well as a related discovery order.

On the discovery issue, the trial court denied a motion to compel and granted a protective order over a bunch of discovery propounded by plaintiff, on the grounds that it was essentially irrelevant because liability wasn’t contested. The court here ducks the question of whether the discovery may have proven relevant to the disputed question of willfulness. Instead, it holds that when a plaintiff challenges a discovery ruling on an appeal of final judgment (as opposed to taking a writ), Art. 6 § 13 of the California Constitution and § 475 require him to substantiate that he was prejudiced by the denial of discovery. Here, plaintiff failed to establish how, had the trial court permitted the discovery, there was a reasonable chance that it would have resulted in a different outcome, so the appeal fails on this issue.

On the attorneys’ fee issue, the Song-Beverly Act affords attorney’s fees to a prevailing plaintiff. See Civil Code § 1794(d). Prevailing party is not defined. Although § 1032, the costs statute—which permits awards of fees when awardable as costs—defines a prevailing party as someone who secures a net monetary recovery, § 1794(d) does not adopt that definition.  The court—citing authority to the effect that when prevailing party is undefined, an assessment should turn on pragmatic considerations—holds that plaintiff did not prevail in this case. Although he secured a net monetary recovery, he did so over only the part of the case that was essentially uncontested. Because the plaintiff did not obtain his main litigation objective—the penalty award—the trial court did not abuse its discretion in finding that he was not the prevailing party.

The Court holds, however, that the § 998 offer was invalid because it was too uncertain. Although the amount offered was clear, the offer was conditioned on the car being returned in an “undamaged condition, save normal wear and tear.” Because that condition was undefined and essentially subjective, the offer was insufficiently certain to be enforceable. And because the § 998 ruling is reversed, the trial court also erred in awarding Mercedes its costs under § 1032. With the § 998 offer invalid, costs are to be awarded to the prevailing party based on the normal statutory standard. As noted, that standard deems the party that receives a net monetary recovery to have prevailed. Here, that was plaintiff.

Reversed and remanded, in part.