Settlement Offer Referencing Costs Includes Attorney Fees

Posted on August 3, 2011 by David J. McMahon

 

In Martinez v. Los Angeles County Metropolitan Transportation Authority, 2011 DJDAR 7417 (2011), the California Court of Appeal for the Second District held that when a plaintiff accepts a defendant’s settlement offer under Code of Civil Procedure Section 998, and that offer states that each side will bear its own costs, attorney fees are precluded as a matter of law.

The plaintiff filed suit against the Metropolitan Transportation Authority (MTA). The plaintiff alleged damages as one of the MTA drivers refused to allow the plaintiff to ride the bus with her service animal.

The MTA initiated settlement pursuant to Code of Civil Procedure Section 998. 

The “998 offer” stated that each side would bear their own “costs.” The plaintiff accepted the offer. 

Several weeks later she filed a motion for attorney fees, contending that the settlement offer did not preclude her from recovering statutory attorney fees. The plaintiff argued that the MTA’s offer only referred to “costs” and did not mention “attorney fees.” The MTA argued that the term “costs” implicitly included attorney fees under the statute. The trial court denied the plaintiff’s motion. The judge ruled that statutory attorney fees were an item of cost under CCP Section 1033.5, therefore implicitly included in the 998 offer.

The Court of Appeal affirmed the trial court’s decision. 

The appellate court noted that a party who accepts a Section 998 offer is entitled to costs and attorney fees unless they are excluded. The court also observed that pursuant to CCP Section 1033.5(a)(10) provides that attorney fees are allowable “costs” when authorized by contract or statute. 

The court of appeal noted that the offer in this case specifically excluded “costs” but did not mention attorney fees. Therefore, unless it expressly stated otherwise, an offer under Section 998 that excludes “costs” also excludes attorney fees. Therefore, the trial court’s denial of attorney fees was proper.

 

Family Law Judge Properly Grants Substantial Sanctions Against Party Whose Misconduct Increased Litigation Costs

Posted on August 2, 2011 by David J. McMahon

In Marriage of Davenport, 2011 DJDAR 6386 (2011), the California Court of Appeal for the First District rendered an important decision reiterating the policies established by the California Family Code relating to the alleged misconduct of one of the family law litigants.

The parties were married for more than 40 years. During that timeframe, they accumulated significant marital assets and had three daughters. The parties separated in 1990, and in 2006, the wife filed a petition for dissolution of the marriage.

In 2008, after substantial litigation activities took place, the wife filed a motion under Family Code Section 271 seeking $933,794 in sanctions and attorney fees. The accompanying papers included a 52‑page declaration from her attorney, which attached 1,250 pages of exhibits. The judge who heard the motion later concluded that the declaration inappropriately asserted hearsay, improper arguments, opinion, and conclusions.

The husband responded with a sanctions request of his own. 

After the hearing, the judge denied the wife’s request and granted the husband’s, awarding him $100,000 in sanctions and $304,387 in attorney fees. In granting the husband’s request, the judge explained that counsel for the wife engaged in inappropriate conduct which significantly increased the cost of the litigation. The wife appealed the trial court’s rulings.

The Court of Appeal affirmed, noting that Family Code Section 271 provides that the court may award attorney fees where a litigant’s conduct frustrates the policies of the Family Court. Such sanctions are within the trial court’s discretion.

The court of appeal concluded that the trial judge correctly determined that the wife’s attorney increased the cost of litigation, violated the mediation privilege, and mistreated opposing counsel. The court of appeal stated that there was substantial evidence to support the trial court’s decision.