The opinion
Filed 1/2/15; pub. order 1/29/15 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
RAND MACQUIDDY, B251752
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC488675)
v.
MERCEDES-BENZ USA, LLC,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County.
Michael L. Stern, Judge. Affirmed in part, reversed in part and remanded with directions.
Romano Stancroff and Mark Romano for Plaintiff and Appellant.
LeClairRyan and Peter M. Hart for Defendant and Respondent.
__________________________________
After experiencing problems with his Mercedes-Benz that required multiple repair
attempts, plaintiff Rand MacQuiddy filed suit against defendant Mercedes-Benz, LLC
(Mercedes-Benz) under the Song-Beverly Consumer Warranty Act (Civ. Code, §§ 1790,
et seq.; the Act) and the federal Magnuson-Moss Warranty Act (15 U.S.C. § 2301).
MacQuiddy sought a refund for the car and a civil penalty for the alleged willful violation
of the Act. In its answer to the complaint, Mercedes-Benz admitted it had not been able
to conform the car to the applicable warranties within the time frames set forth in the Act.
Mercedes-Benz also admitted it had not yet replaced the car or made restitution, but
asserted it would offer to reimburse MacQuiddy as required under the Act. MacQuiddy
subsequently rejected a statutory offer to compromise in which Mercedes-Benz offered to
repurchase the car for an amount consistent with the Act, and to pay MacQuiddy’s
attorney fees and costs incurred up to that point. Because Mercedes-Benz admitted
liability for failure to repurchase or replace the car under the Act, and the parties
stipulated to a restitution amount, trial proceeded only on MacQuiddy’s claim for a civil
penalty. A jury found Mercedes-Benz did not willfully fail to comply with the Act.
On appeal, MacQuiddy contends the trial court erred in denying his motion to
compel discovery responses and in granting a protective order that prevented him from
taking two “persons most knowledgeable” depositions. MacQuiddy further challenges
the trial court order denying his motion for attorney fees, denying in part his motion for
costs, and awarding Mercedes-Benz its costs. We reverse the trial court order’s order,
but otherwise affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In February 2010, MacQuiddy bought a 2010 Mercedes-Benz E550 C two-door
coupe. On one occasion in August 2011, he could not get the car to start. The same thing
happened on three separate occasions in November 2011, January 2012, and May 2012.
After each incident, MacQuiddy took the car to the W.I. Simonson dealership for repair.
In May 2012, the dealership kept the car for approximately 30 days.
2
During the May to June 2012 period when the car was in the shop, MacQuiddy
spoke with a service advisor at the dealership twice a week to “ascertain [the] status” of
the car, and to determine “if there was anything that [he] could do to help to try and move
things along.” MacQuiddy wanted his car back and was frustrated that the shop could not
find and solve the problem. Sometime between June 10th and 12th, MacQuiddy called
Mercedes-Benz customer assistance at the suggestion of the dealership. At trial,
MacQuiddy testified: “It was suggested to me by the dealership . . . that I
contact . . . Mercedes-Benz USA because they were still having . . . problems . . .
getting . . . feedback on . . . what the problem might be. And also that . . . it was now to
the point where there might be some form of . . . compensation that might be due.”
The customer service representative said he had the records of the service visits.
MacQuiddy asked if there was anything the representative could do to “escalate it to
where the technical team could get more involved with [the] car so [he] could get [his]
car back.” MacQuiddy testified as to the representative’s response: “He directed
me . . . back to W.I. Simonson and said that . . . further work . . . further follow-through
and contact should go through them and that they would make sure that the technical
team worked with the . . . people at the dealership.” According to MacQuiddy, the
representative said he understood and respected that MacQuiddy had experienced a lot of
trouble and there would be “some type of compensation through, but he did not say what
type.” MacQuiddy neither requested that Mercedes-Benz repurchase the car, nor
discussed a buyback with the representative. MacQuiddy testified the conversation ended
with MacQuiddy thanking the representative and the representative: “direct[ing] me
to . . . further conversations to go through the dealer.” MacQuiddy understood that he
would work with the service advisor at the dealership.
A day or two after the conversation, the dealership informed MacQuiddy his car
was ready to be picked up. The service advisor told MacQuiddy that Mercedes-Benz
would contact him. MacQuiddy did not hear from Mercedes-Benz again. He did not try
3
to contact the company. After approximately one month, he contacted a lawyer. 1
On July 20, 2012, MacQuiddy filed suit alleging claims under the Song-Beverly and
Magnuson-Moss Acts. MacQuiddy sought rescission of the purchase contract and
restitution of the money he had paid for the car, as well as a civil penalty of two times his
actual damages.
In late August 2012, Mercedes-Benz answered the complaint. In the answer, the
company admitted that it or its authorized repair facility was unable to conform
MacQuiddy’s car to the applicable express and implied warranties after a reasonable
number of attempts, or within 30 days. Mercedes-Benz further admitted it had “not yet
replaced the new motor vehicle or [made] restitution in accordance with the Act” but
stated it would “offer to reimburse Plaintiff under the Act, in an amount equal to the
actual price paid or payable by Plaintiff, including any charges for transportation and
manufacturer-installed options . . . and including any collateral charges such as sales tax,
license fees, registration fees, and other official fees, plus any incidental damages to
which Plaintiff is entitled, including but not limited to, reasonable repair, towing, and
rental car costs actually incurred by Plaintiff.” The answer admitted MacQuiddy was
entitled to revoke acceptance of the car under the Act and was entitled to reimbursement
of the price paid, “less that amount directly attributable to use by the Plaintiff prior to
discovery of the nonconformities.” The answer further admitted MacQuiddy was entitled
to the “aggregate amount of costs and expenses, including attorney’s fees, reasonably
incurred in connection with the commencement and prosecution of this action.”
1 At the May 2013 trial, MacQuiddy testified that since the car was returned to him
in June 2012, the problem starting the car had not reoccurred.
4
Section 998 Offer
In late September 2012, Mercedes-Benz served MacQuiddy with an offer to
compromise pursuant to Code of Civil Procedure section 998 (section 998). The offer
contained the following term: “Pursuant to California Code § 1793.2(d)(2), MBUSA
offers to repurchase Plaintiff’s 2008 [sic] Mercedes-Benz E550 (“E550”) . . . in an
undamaged condition, save normal wear and tear, for the amount of the vehicle down
payment, any and all payments made, and the amount of Plaintiff’s outstanding loan
obligation related to the purchase of the subject vehicle, if any, as well as any collateral
charges and incidental costs in accordance with Civil Code § 1793.2(d)(2)(B), less a
reasonable mileage offset in accordance with Civil Code § 1793.2(d)(2)(C), all to be
determined by court motion if the parties cannot agree.” The offer further provided
Mercedes-Benz would pay “Plaintiff’s recoverable court costs, expenses, and reasonably-
incurred attorney fees pursuant to Civil Code § 1794(d) to be determined by the Court by
way of a noticed motion.” The offer indicated the fee and cost amount would be
calculated as if MacQuiddy was found to have prevailed in a section 1794, subdivision
(d) action as of the date of the offer, except that Mercedes-Benz would not be liable for a
multiplier greater than 1.0 and MacQuiddy could “recover for fees and costs reasonably
and actually incurred in bringing such a fee/cost motion.”
MacQuiddy objected to the offer and did not accept it.
Discovery Issues
In November 2012, MacQuiddy moved to compel discovery responses from
Mercedes-Benz. The motion concerned 11 special interrogatories, 19 document requests,
and 13 requests for admissions. The discovery requests related to Mercedes-Benz’s
actions in MacQuiddy’s case, as well as Mercedes-Benz’s general practices and policies,
and the E550 C in general. For example, the requests included such topics as all
inspections of MacQuiddy’s car; all contacts Mercedes-Benz had with anyone regarding
the car; the dates the car was at an authorized repair facility; any request by MacQuiddy
for a repurchase or replacement of the car; and the reasons for any denial. MacQuiddy
also sought discovery of Mercedes-Benz’s policies or procedures since 2007 concerning
5
refunds or replacements under the Act; its procedures for handling customer complaints;
records of the same defect appearing in other cars of the same year, make, and model as
MacQuiddy’s car; and Mercedes-Benz’s warranty claims policy and procedure manuals
and related documents.
In addition to objecting to the discovery requests as overbroad, harassing,
argumentative, burdensome, and not in good faith, Mercedes-Benz objected: “MBUSA
has already admitted liability in this action and has agreed to repurchase Plaintiff’s
vehicle. Thus, MBUSA contends that Plaintiff has not propounded this discovery in
good faith and has propounded such discovery to harass MBUSA and its attorneys and to
cause unnecessary delay and needless increase in the cost of litigation.”
MacQuiddy also noticed the depositions of persons most qualified from Mercedes-
Benz and W.I. Simonson, with accompanying document demands. MacQuiddy sought to
depose the witnesses on topics such as Mercedes-Benz’s policies for responding to
consumer complaints regarding defective vehicles; MacQuiddy’s “requests for
repurchase” of his car; the company’s policies for complying with repurchase or
replacement demands under the Act; the repairs to the car; communications between
Mercedes-Benz and the dealership about the car; allegations of “customer abuse, misuse
or lack of information”; service bulletins or recalls related to MacQuiddy’s car; and
complaints by owners of the same car. Mercedes-Benz sought a protective order to
prevent the depositions. Mercedes-Benz argued that since it had admitted it failed to
comply with the Act, the depositions were unnecessary. Mercedes-Benz further argued
that to the extent MacQuiddy was seeking discovery to prove the failure to comply was
willful, the effort was improper because MacQuiddy was not entitled to a civil penalty as
a matter of law due to his failure to serve a notice demanding compliance with the Act.
The trial court denied MacQuiddy’s motion to compel and granted the protective
order. The record does not indicate MacQuiddy attempted any other discovery.
6
Trial and Judgment
At trial, the parties stipulated MacQuiddy was entitled to $68,948.07 under the Act
for repurchase of the car. Each side presented only one witness. MacQuiddy testified as
detailed above. A witness for Mercedes-Benz who was responsible for handling
customer repurchase or replacement requests under the Act testified he did not receive a
buyback demand from MacQuiddy before the suit was filed. He testified that after
receiving the suit, he determined Mercedes-Benz should repurchase the car. He also
testified that, had he been asked to evaluate MacQuiddy’s car before the suit was filed, he
would have recommended a repurchase. The only issue presented to the jury was
whether to impose a civil penalty against Mercedes-Benz for willfully failing to
repurchase or replace the car. After brief deliberations, the jury returned a special verdict
finding Mercedes-Benz did not willfully fail to repurchase or replace the car.2
The court entered a judgment on the special verdict. The judgment stated
MacQuiddy had lost his claim for a civil penalty, but included the following stipulated
language: “It is further ordered and adjudged that, by admission and stipulation of
Defendant . . . MacQuiddy is entitled to restitution in the amount of Sixty-Eight
Thousand Nine Hundred Forty-Eight and 07/100 ($68,948.07) Dollars in exchange for
return of the subject vehicle to Defendant . . . . The Court shall determine which party
has prevailed in this action and whether that party is entitled to costs and/or attorney fees
in separate proceedings.”
Attorney Fees and Costs
MacQuiddy subsequently filed a motion seeking $74,530 in attorney fees as the
prevailing party in the litigation. He contended he had secured a net monetary recovery,
thus he was the prevailing party and the Act mandated an award of attorney fees.
Mercedes-Benz opposed the motion, arguing the fees were not “reasonably incurred” to
2 The jury began deliberations at 11:46 a.m. It returned a verdict that afternoon,
after the noon recess, and before 2:50 p.m., when, after remarks from the trial court
thanking the jurors and a brief colloquy between the court and counsel, the transcript for
that day concluded.
7
litigate the civil penalty claim, and no fees should be awarded for work done after the
section 998 offer was made. Both sides moved for costs. They filed opposing motions to
tax costs.
The trial court awarded Mercedes-Benz costs, excluding attorney fees. The court
denied MacQuiddy’s motion for attorney fees. The court taxed all of MacQuiddy’s
requested costs except filing fees for the complaint and service of process costs.
MacQuiddy appealed from the judgment and the court’s attorney fee and costs
order.
DISCUSSION
I. The Song-Beverly Consumer Warranty Act
We begin with a brief summary of the relevant portions of the Act, commonly
known as the automobile “lemon law.” (Duale v. Mercedes-Benz USA, LLC (2007)
148 Cal.App.4th 718, 721.) Under Civil Code section 1793.2, subdivision (d)(2), “If the
manufacturer or its representative in this state is unable to service or repair a new motor
vehicle . . . to conform to the applicable express warranties after a reasonable number of
attempts, the manufacturer shall either promptly replace the new motor vehicle in
accordance with subparagraph (A) or promptly make restitution to the buyer in
accordance with subparagraph (B). However, the buyer shall be free to elect restitution
in lieu of replacement, and in no event shall the buyer be required by the manufacturer to
accept a replacement vehicle.”
With respect to restitution, Civil Code section 1793.2, subdivision (d)(2)(B)
provides: “In the case of restitution, the manufacturer shall make restitution in an amount
equal to the actual price paid or payable by the buyer, including any charges for
transportation and manufacturer-installed options, but excluding nonmanufacturer items
installed by a dealer or the buyer, and including any collateral charges such as sales tax,
license fees, registration fees, and other official fees, plus any incidental damages to
which the buyer is entitled under Section 1794, including, but not limited to, reasonable
repair, towing, and rental car costs actually incurred by the buyer.”
8
Civil Code section 1794, subdivision (a) authorizes a buyer of consumer goods to
bring an action for recovery of damages and other relief for the failure to comply with the
Act. Under section 1794, subdivision (c): “If the buyer establishes that the failure to
comply was willful, the judgment may include, in addition to the amounts recovered
under subdivision (a), a civil penalty which shall not exceed two times the amount of
actual damages.”3
II. MacQuiddy Has Not Established the Trial Court’s Discovery Rulings Were
Prejudicial
MacQuiddy contends the trial court erred in denying his motion to compel and in
granting the protective order preventing the two depositions he sought to take. According
to MacQuiddy, the result of these rulings was that he was unable to secure any pre-trial
discovery. We find no basis for reversing the judgment.
We review a trial court’s discovery orders for an abuse of discretion. “ ‘ “The trial
court’s determination will be set aside only when it has been demonstrated that there was
‘no legal justification’ for the order granting or denying the discovery in question.” ’
[Citation.]” (Lickter v. Lickter (2010) 189 Cal.App.4th 712, 740 (Lickter).) Moreover,
3 While section 1794, subdivisions (a) and (c) apply to any consumer goods under
the Act, section 1794, subdivision (e) concerns remedies specifically for the buyer of a
new motor vehicle. Under subdivision (e)(1), “if the buyer establishes a violation of
paragraph (2) of subdivision (d) of Section 1793.2, the buyer shall recover damages and
reasonable attorney’s fees and costs, and may recover a civil penalty of up to two times
the amount of damages.” However, there are exceptions. The manufacturer will not be
liable for the civil penalty if it maintains a “qualified third-party dispute resolution
process which substantially complies with Section 1793.22.” (§ 1794, subd. (e)(2).)
Further, under subdivision (e)(3): “After the occurrence of the events giving rise to the
presumption established in subdivision (b) of Section 1793.22, the buyer may serve upon
the manufacturer a written notice requesting that the manufacturer comply with
paragraph (2) of subdivision (d) of Section 1793.2. If the buyer fails to serve the notice,
the manufacturer shall not be liable for a civil penalty pursuant to this subdivision.”
Subdivision (e)(5) indicates that “if the buyer recovers a civil penalty under subdivision
(c), the buyer may not also recover a civil penalty under this subdivision for the same
violation.” MacQuiddy argues he only attempted to secure the civil penalty under section
1794, subdivision (c), which required a showing of willfulness, rather than under section
1794, subdivision (e)(1).
9
when a plaintiff does seek not writ review of the trial court’s discovery rulings and
instead appeals from the judgment, he or she must “show not only that the trial court
erred, but also that the error was prejudicial”; i.e., the plaintiff must show that it is
reasonably probable the ultimate outcome would have been more favorable to the
plaintiff had the trial court not erred in the discovery rulings. (Ibid, citing Cassim v.
Allstate Ins. Co. (2004) 33 Cal.4th 780, 800-802.)
Here, we need not decide if the trial court’s discovery rulings were an abuse of
discretion because, even assuming they were, MacQuiddy has failed to demonstrate it is
reasonably probable the outcome of the trial would have been more favorable to him had
the trial court granted his motion to compel, and allowed him to take the two depositions
he sought. (Conservatorship of Maria B. (2013) 218 Cal.App.4th 514, 532-533
[appellant bears burden to make affirmative showing the trial court committed error and
that error resulted in a miscarriage of justice].) The only contested issue was whether
Mercedes-Benz willfully failed to replace or repurchase MacQuiddy’s car. A significant
portion of the discovery MacQuiddy sought was only peripherally related to this issue,
such as requests for admission seeking to establish the basic elements of a violation of the
Act, and interrogatories and document requests regarding the dates of service, none of
which were contested. While requests regarding MacQuiddy’s contacts with Mercedes-
Benz or its authorized repair facility may have been more centrally relevant to the civil
penalty claim, MacQuiddy has not established he was prejudiced by the trial court’s
ruling in light of the fact that he also had personal knowledge of these contacts; he
testified at trial; and his testimony was uncontroverted.
Similarly, MacQuiddy has not shown he was prejudiced by the denial of discovery
regarding Mercedes-Benz’s failure to correct the defects in the car since that issue was
uncontested at trial, his testimony regarding the ongoing problems with the car was
uncontroverted, and also uncontroverted was his testimony that the Mercedes-Benz
customer service representative admitted he could see the record of service visits.
Although on appeal MacQuiddy asserts evidence responsive to his requests existed, such
as a document Mercedes-Benz sought to use at trial memorializing the Mercedes-Benz
10
contacts with MacQuiddy, the trial court ultimately excluded the document and
prohibited Mercedes-Benz from using the portions to which MacQuiddy objected.
The mere existence of the document does not establish MacQuiddy was prejudiced by his
inability to procure it before trial. He also argues courts have found relevant discovery
requests seeking a car manufacturer’s warranty policies and procedures, policies on
buyback requests, and other customer complaints. Yet he does not show that, in this
case, had the trial court compelled responses to his requests or denied the protective
order, it is reasonably probable the jury would have found Mercedes-Benz willfully failed
to repurchase or replace his car.
Indeed, the sum of MacQuiddy’s prejudice argument on appeal is that the
categories of information and documents he sought were relevant, and the discovery
requests may have turned up admissible evidence. This is insufficient. (Lickter, supra,
189 Cal.App.4th at p. 741.) “[T]he miscarriage of justice standard for reversal requires a
showing ‘that it is reasonably probable that a result more favorable to the appealing party
would have been reached in the absence of the error.’ [Citation.] ‘ “[A] ‘probability’ in
this context does not mean more likely than not, but merely a reasonable chance, more
than an abstract possibility.” [Citation.]’ [Citation.]” (Cellphone Termination Fee
Cases (2009) 180 Cal.App.4th 1110, 1126.) MacQuiddy has failed to show it is
reasonably probable the jury’s verdict would have been more favorable to him had the
trial court granted his motion to compel or denied the motion for a protective order.
(Carolina Casualty Ins. Co. v. L.M. Ross Law Group, LLP (2012) 212 Cal.App.4th 1181,
1197-1198.)
III. The Trial Court Did Not Abuse its Discretion in Determining MacQuiddy
was not a Prevailing Party for Purposes of Attorney Fees Under the Act
MacQuiddy challenges the trial court ruling denying him attorney fees and the
determination that he did not prevail under the Act. We find no error.
Under section 1794, subdivision (d), a buyer who prevails in an action brought
under the Act “shall be allowed by the court to recover as part of the judgment a sum
equal to the aggregate amount of costs and expenses, including attorney’s fees based on
11
actual time expended, determined by the court to have been reasonably incurred by the
buyer in connection with the commencement and prosecution of such action.”
The Act does not define “prevail.” MacQuiddy contends the trial court abused its
discretion because, despite losing the civil penalty claim, he secured a net monetary
recovery, and was therefore a prevailing party under Code of Civil Procedure section
1032 (section 1032), subdivision (a)(4). However, section 1032 is the general costs
statute. A prevailing party under section 1032 is not necessarily a prevailing party under
a separate attorney fee statute. (Foothill Properties v. Lyon/Copley Corona Associates
(1996) 46 Cal.App.4th 1542, 1554 (Foothill Properties).) As explained in Wohlgemuth
v. Caterpillar Inc. (2012) 207 Cal.App.4th 1252, regarding the Act: “[W]here (as here) a
fee-shifting statute is concerned, a number of Courts of Appeal have taken the approach
that attorney fees recovery is governed by the fee-shifting statute itself, rather than a rigid
adherence to Code of Civil Procedure section 1032. Under this analysis, if the particular
fee-shifting statute does not define prevailing party, then the trial court should simply
take a pragmatic approach to determine which party has prevailed. That is, the trial court
would determine which party succeeded on a practical level, by considering the extent to
which each party realized its litigation objectives. [Citations.] Section 1794(d) is
likewise a remedial fee-shifting statute, and thus the same practical approach to the issue
of prevailing party is applicable to section 1794(d).” (Wohlgemuth, supra, 207
Cal.App.4th at p. 1264.) Thus, that MacQuiddy obtained a net monetary recovery in the
action did not necessarily render him the prevailing party entitled to attorney fees under
section 1794, subdivision (d).4
4 Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139 (Reveles), disapproved
on other grounds by Gavaldon v. DaimlerChrysler Corp. (2004) 32 Cal.4th 1246, 1261
and Snukal v. Flightways Mfg., Inc. (2000) 23 Cal.4th 754, does not mandate a contrary
result. In Reveles, the court analyzed the plaintiff’s entitlement to costs as a prevailing
party under section 1032 (Reveles, at p. 1151), but separately considered his entitlement
to attorney fees as a prevailing party under Civil Code section 1717 (Reveles, at pp. 1151-
1158). Although the court also stated that because the Act did not define “prevailing
party,” it would use the general definition under section 1032, as explained above, other
12
We review the trial court’s prevailing party ruling for abuse of discretion.
(Wohlgemuth, at p. 1258.) “ ‘Because the “experienced trial judge is the best judge of the
value of professional services rendered in his court,” we will not disturb the trial court’s
decision unless convinced that it is clearly wrong, meaning that it is an abuse of
discretion. [Citations.] However, “ ‘[t]he scope of discretion always resides in the
particular law being applied, i.e., in the “legal principles governing the subject of [the]
action . . . .” Action that transgresses the confines of the applicable principles of law is
outside the scope of discretion and we call such action an “abuse” of discretion.’ ”
[Citations.]’ ” (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 148-
149 (Graciano).)
As noted above and further explained in Graciano, when “prevailing party” is
undefined by the statute, “ ‘ “a court may base its attorney fees decision on a pragmatic
definition of the extent to which each party has realized its litigation objectives, whether
by judgment, settlement or otherwise. [Citation.]” [Citation.] In assessing litigation
success, Hsu v. Abbara (1995) 9 Cal.4th 863, 877 . . . instructs: “[C]ourts should respect
substance rather than form, and to this extent should be guided by ‘equitable
considerations.’ For example, a party who is denied direct relief on a claim may
nonetheless be found to be a prevailing party if it is clear that the party has otherwise
achieved its main litigation objective.” [Citations.]’ [Citation.]” (Graciano, supra, at
pp. 150-151.)
In this case, while MacQuiddy secured repurchase of the car for a stipulated
amount of over $68,000, Mercedes-Benz’s liability for a repurchase amount, calculated
under the statute, was never contested. Mercedes-Benz admitted liability under the Act
in its answer to the complaint. Although the parties did not stipulate as to the amount of
restitution until the beginning of trial, the amount was not litigated. The only issue
cases have rejected this approach. (See McLarand, Vasquez & Partners, Inc. v. Downey
Savings & Loan Assn. (1991) 231 Cal.App.3d 1450, 1456 [“We emphatically reject the
contention that the prevailing party for the award of costs under section 1032 is
necessarily the prevailing party for the award of attorneys’ fees.”].)
13
litigated and tried was whether Mercedes-Benz was also liable for a civil penalty.
MacQuiddy lost on that issue. Using a pragmatic approach, and being guided by
equitable considerations, the trial court could conclude within the confines of the
applicable principles of law, that MacQuiddy was not a prevailing party because he did
not achieve his main litigation objective: obtaining a civil penalty.
National Computer Rental, Ltd. v. Bergen Brunswig Corp. (1976) 59 Cal.App.3d
58, is instructive. In National Computer, the plaintiff sued the defendant in a contract
action concerning an equipment lease. The plaintiff sought three items of recovery.
The defendant admitted the first two items – unpaid rent and taxes – but denied any
obligation for the third, a termination fee. Following a court trial, the plaintiff was denied
recovery for the termination fee, but was granted judgment for the unpaid rent and taxes.
The court determined the defendant was the prevailing party, and, pursuant to an attorney
fee provision in the contract and Civil Code section 1717, awarded the defendant attorney
fees. The reviewing court affirmed the prevailing party determination. The court
explained the defendant had tendered the unpaid rent in connection with a section 998
offer; the plaintiff rejected the tender because it sought the taxes and termination fee.
Because of the defendant’s admission, “[l]iability for the unpaid rent and the taxes was
never litigated at the trial, which proceeded only on the termination fee issue.” (Id. at
p. 63.) The court thus concluded: “Defendant prevailed on the only issue in the case; it is
the ‘prevailing party’ within the meaning of section 1717, even though plaintiff
nominally holds a judgment for an amount never disputed and never litigated.” (Ibid.)
Likewise, in this case MacQuiddy’s monetary judgment was for an amount never
disputed and on an issue never litigated because it was conceded. The trial court could
reasonably conclude that under the circumstances of this case, in which there was no
evidence MacQuiddy made a pre-litigation demand for repurchase of his car, Mercedes-
Benz immediately admitted liability for failure to replace or repurchase the car and
offered to do so, the amount of restitution was not contested, and the entire trial was
concerned with the civil penalty, MacQuiddy’s main litigation objective was to obtain a
civil penalty. The fight in this case was not about the repurchase of the car. (See Foothill
14
Properties, supra, 46 Cal.App.4th at pp. 1555-1556; Epstein v. Frank (1981)
125 Cal.App.3d 111, 124 [“It is not always the case however that the party in whose
favor the final judgment is entered will be deemed to be the prevailing party. For
example, the party who prevails on all of the issues which were actually litigated at the
trial will be deemed the prevailing party even though the judgment may be entered in
favor of the opposing party”].) The trial court did not abuse its discretion in determining
MacQuiddy did not prevail under the Act and therefore was not entitled to attorney fees.
IV. The Trial Court Erred in Finding the Mercedes-Benz Section 998 Offer Valid
MacQuiddy contends the trial court erred in denying a portion of his costs on the
grounds that Mercedes-Benz’s offer to compromise under section 998 was valid, and that
MacQuiddy failed to receive a judgment more favorable than the offer. We agree the
trial court erred in finding the section 998 offer valid.
Under section 998, “if the plaintiffs reject a defendant’s offer to compromise and
then fail to win a more favorable judgment, the plaintiffs cannot recover their postoffer
costs and must pay the costs the defendant incurred after the offer.” (Chen v.
Interinsurance Exchange of Automobile Club (2008) 164 Cal.App.4th 117, 124, fn.
omitted (Chen).) “We independently review whether respondent’s 998 settlement offer
was valid.” (Id. at p. 122.)
To be valid, an offer under section 998 may include nonmonetary terms and
conditions, but it must be unconditional. (Barella v. Exchange Bank (2000) 84
Cal.App.4th 793, 799.) “[F]rom the perspective of the offeree, the offer must be
sufficiently specific to permit the recipient meaningfully to evaluate it and make a
reasoned decision whether to accept it, or reject it and bear the risk he may have to
shoulder his opponent’s litigation costs and expenses. [Citation.] Thus, the offeree must
be able to clearly evaluate the worth of the extended offer.” (Berg v. Darden (2004) 120
Cal.App.4th 721, 727.)
15
We focus on one term in the section 998 offer as particularly undefined. Although
for the most part the section 998 offer simply offered to comply with the restitution
provision of the Act, it limited compliance to repurchase of the car, “in an undamaged
condition, save normal wear and tear.” This condition inserted uncertainty into the offer,
which otherwise tracked the language of the Act. Whether the car was in an “undamaged
condition” was not defined, nor was it clear what would happen if MacQuiddy accepted
the offer, but Mercedes-Benz subsequently concluded the car was “damaged” beyond
normal wear and tear. While the offer allowed that the amount, charges, and costs were
“all to be determined by court motion if the parties cannot agree,” everything besides the
condition of the car was at least minimally determined by the Act itself.
In addition, we fail to see how, following trial, the court could compare the value
of obtaining the repurchase of the car without regard to its condition to the offer requiring
that the car be “undamaged,” in order to determine whether MacQuiddy received a more
favorable judgment than the offer. Such an evaluation would require a factual
determination of whether the car was damaged, which was not an issue otherwise
relevant to the proceedings.
Because of the undefined and subjective nature of the term that Mercedes-Benz
would repurchase the “undamaged” car, we conclude the section 998 offer was at least
ambiguous, and was therefore not valid. (Chen, supra, 164 Cal.App.4th at p. 122.)
V. The Trial Court’s Costs Order Must Be Reversed
We conclude the trial court’s costs order must be reversed. Generally, a trial
court’s determination of costs is reviewed for abuse of discretion. (Goodman v. Lozano
(2010) 47 Cal.4th 1327, 1332.) However, where “the determination of whether costs
should be awarded is an issue of law on undisputed facts, we exercise de novo review.”
(City of Long Beach v. Stevedoring Services of America (2007) 157 Cal.App.4th 672,
678.)
16
Due to the invalidity of the offer, section 998 did not operate to cut off
MacQuiddy’s costs, nor did it entitle Mercedes-Benz to recoup its post-offer costs.5
Although the trial court granted Mercedes-Benz all of its litigation costs, we conclude
this was error.
Under section 1032, subdivision (b), “[e]xcept as otherwise expressly provided by
statute, a prevailing party is entitled as a matter of right to recover costs in any action or
proceeding.” Subdivision (a)(4) defines “prevailing party”: “ ‘Prevailing party’ includes
the party with a net monetary recovery, a defendant in whose favor a dismissal is entered,
a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as
against those plaintiffs who do not recover any relief against that defendant. When any
party recovers other than monetary relief and in situations other than as specified, the
‘prevailing party’ shall be as determined by the court, and under those circumstances, the
court, in its discretion, may allow costs or not and, if allowed may apportion costs
between the parties on the same or adverse sides pursuant to rules adopted under Section
1034.”
In this case, although the court found MacQuiddy did not prevail under section
1794, subdivision (d), he could still be deemed a prevailing party for purposes of section
1032. (See Agnew v. State Bd. of Equalization (2005) 134 Cal.App.4th 899, 912.)
The stipulated judgment awarded MacQuiddy a monetary payment in exchange for return
of the car. No dismissal was entered in favor of Mercedes-Benz. Although Mercedes-
Benz defeated the civil penalty claim, it had no independent claims and did not obtain
any affirmative “relief,” monetary or otherwise. (See Wolf v. Walt Disney Pictures &
Television (2008) 162 Cal.App.4th 1107, 1142-1143 [plaintiff received monetary
recovery, but defendant prevailed on declaratory relief claims in a cross-complaint;
remanded for trial court to exercise its discretion to determine prevailing party under
5 We note our conclusion that the section 998 offer was invalid does not affect our
conclusion that the trial court did not abuse its discretion in finding MacQuiddy was not
entitled to attorney fees. MacQuiddy was not entitled to attorney fees, irrespective of
section 998, because the court determined he did not prevail under the Act.
17
section 1032 (a)(4)].) We see no legal basis for a conclusion that Mercedes-Benz was a
“prevailing party” within the meaning of section 1032, subdivision (a)(4). (Chinn v.
KMR Property Management (2008) 166 Cal.App.4th 175, 189 [rejecting argument that
statute allows for more than one party to qualify as a prevailing party under the
mandatory cost award provision; Legislature could have, but did not, provide for trial
court to exercise discretion to award costs in the event more than one party qualified as a
prevailing party].)
Thus, MacQuiddy was entitled to his litigation costs, excluding attorney fees,
under section 1032.
DISPOSITION
The costs order is reversed and the trial court is directed to vacate its order
denying MacQuiddy costs, and awarding costs to Mercedes-Benz. On remand, the court
is to permit MacQuiddy to file a new Memorandum of Costs, and to recalculate such
costs without regard to Mercedes-Benz’s section 998 offer. In all other respects the
judgment, and the order denying attorney fees, are affirmed. Each party to bear its own
costs on appeal.
BIGELOW, P. J.
We concur:
RUBIN, J.
FLIER, J.
18
Filed 1/29/15
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
RAND MACQUIDDY, B251752
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC488675)
v.
ORDER CERTIFYING
MERCEDES-BENZ USA, LLC, PUBLICATION
Defendant and Respondent. (No Change in Judgment)
THE COURT*:
The opinion in the above entitled matter filed on January 2, 2015, was not certified
for publication in the Official Reports. For good cause it now appears that the opinion
should be published in the Official Reports and it is so ordered.
________________________________________________________________________
* BIGELOW, P. J. RUBIN, J. FLIER, J.