McKenzie v. Ford Motor Co.

Filed 6/12/15; pub. order 7/10/15 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
JAMES McKENZIE,
Plaintiff and Appellant, G049772
v. (Super. Ct. No. 30-2012-00573060)
FORD MOTOR COMPANY et al., OPINION
Defendants and Respondents.
Appeal from an order of the Superior Court of Orange County, David T.
McEachen, Judge. Reversed and remanded.
Anderson Law Firm and Martin W. Anderson for Plaintiff and Appellant.
Sanders Roberts & Jewett, Reginald Roberts, Jr.; Snell & Wilmer, Mary-
Christine Sungaila and Jenny Hua for Defendants and Respondents.
* * *
James McKenzie appeals from the trial court’s order awarding him only
$28,350 of the nearly $48,000 in attorney fees he sought in this case, following the
parties’ settlement of McKenzie’s claim under the automobile “lemon law” provisions of
the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.). He contends the
court abused its discretion by awarding him none of the attorney fees he incurred
following Ford’s initial offer to compromise in April 2013, even though the case did not
settle until months later.
The trial court refused to award McKenzie any of the attorney fees incurred
in the wake of Ford’s initial offer because it viewed the compromise offer ultimately
accepted by McKenzie as essentially identical to the offer he had initially rejected –
distinguished only by his “demand that [he] be allowed to file [a fee] motion.” The court
concluded the entire 42 hours billed by McKenzie’s counsel in the wake of Ford’s initial
offer amounted to “plaintiff’s counsel exaggerating the amount of their fees to increase
their prized fees.” In short, the court concluded McKenzie unreasonably delayed
settlement for the sole purpose of ginning up his fee award. As further support for that
determination, the court also found that after receipt of Ford’s initial offer, McKenzie’s
two attorneys billed for “many” hours of duplicative work, which the court deemed
unreasonable.
We reverse. The trial court’s comparative assessment of Ford’s two
settlement offers was erroneous as a matter of law. Even Ford concedes its initial
settlement offer incorporated numerous extraneous provisions – including broad releases
of both Ford and nonparties, an illegal confidentiality clause characterized as “material”
to the settlement, and what amounted to an opt-out provision in Ford’s favor – all of
which were excised from the offer McKenzie later accepted. These differences are
significant, and thus McKenzie’s rejection of the initial offer was reasonable, requiring
his counsel to continue working on the case. Moreover, contrary to the court’s belief,
both of Ford’s compromise offers had the same attorney fee provision, allowing
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McKenzie the option of either accepting $15,000 in full payment of his reasonable fees
and costs, or filing a motion to obtain an award of fees in a higher amount. Given that
McKenzie had already incurred over $28,000 in fees and costs by the time of Ford’s
initial offer – almost twice what Ford was offering to pay without a motion – it was not
unreasonable for him to opt for pursuing that fee motion. And the fees reasonably
incurred in pursuing the fee motion were properly includable in McKenzie’s attorney fees
award.
The trial court’s erroneous comparison of Ford’s initial compromise offer
with the offer McKenzie later accepted fatally undermines its conclusion that the entire
amount of hours billed by McKenzie’s counsel in the wake of that initial offer was
unjustified. The court’s additional finding, that McKenzie’s two attorneys also engaged
in instances of duplicative billing after Ford’s initial offer, does not support a complete
denial of fees for that period. Consequently, we remand the matter to the trial court with
directions to reconsider the fee award.
FACTS
McKenzie filed his complaint in May 2012, alleging causes of action
arising out of his purchase of a defective Ford Fiesta automobile in July 2011.
McKenzie’s complaint prayed for damages and restitution of approximately $23,000,
civil penalties equal to two times his damages for each violation of his warranty, an order
enjoining Ford from engaging in any act or practice constituting a violation of Business
and Professions Code section 17531, and an award of attorney fees and costs.
McKenzie was represented in the lawsuit by two separate attorneys, Martin W. Anderson
of the Anderson Law Firm, and Jeffrey Kane of the Law Office of Jeffrey Kane.
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Ford filed its answer in July 2012, and it subsequently responded to
McKenzie’s written discovery, which was completed in August 2012. In November
2012, a jury trial was scheduled for June 2013.
In January 2013, Ford substituted new counsel into the case, and on April
24, 2013, Ford moved ex parte for an order continuing the trial so that it would have
additional time to conduct its own discovery. McKenzie opposed the motion on the basis
Ford had the opportunity to conduct discovery, but failed to do so in a timely manner.
McKenzie claimed that having completed his own discovery, he was ready to proceed to
trial as scheduled. The trial date was continued for two months, to September 2013.
The day after trial was continued, Ford served an offer to compromise
McKenzie’s claim, pursuant to Code of Civil Procedure section 998 (section 998). The
financial provisions of the offer were that Ford would repurchase McKenzie’s automobile
for the sum of $25,000 and would either pay McKenzie $15,000 in attorney fees, or agree
that McKenzie could move the court for an award of reasonable attorney fees in some
other amount. However, Ford’s offer was explicitly based on the following factual
premises: that “[e]very concern presented by [McKenzie to Ford] was repaired within a
reasonable number of repair attempts. The vehicle did not meet the statutory
presumption for reasonable number of repair attempts. The vehicle did not meet the
statutory presumption for reasonable number of repair attempts when [McKenzie] called
Ford requesting a repurchase. Much of [McKenzie’s] attorneys’ fees were incurred
unreasonably and unnecessarily [and] Ford contends that [McKenzie] has no viable
claims against it in this action.”
Moreover, the offer expressly required McKenzie to “execute a release of
all claims and causes of action arising out of any breach of implied warranty or breach of
express warranty for the subject vehicle.” However, because no specific release was
appended to the offer, McKenzie’s counsel asked Ford’s counsel for a copy of Ford’s
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proposed release to review before deciding whether to accept the offer. After several
more requests, Ford provided the proposed release approximately two weeks later.
The release provided by Ford amounted to a full-blown settlement
agreement containing in excess of six single-spaced pages. Among other things, it
included provisions requiring that McKenzie waive any and all claims in “as broad [a
manner] as can possibly be created.” By its terms, this release included claims both
known and unknown – and even those claims “not yet accrued” or which McKenzie
“may ever obtain” in the future – against not only Ford, but also against any dealerships
involved in selling or servicing the automobile. The agreement also required McKenzie
to effectively warrant the condition of the vehicle at the time it was surrendered to Ford,
and to have the vehicle repaired at his own expense if deemed not “in acceptable
condition.” And it allowed Ford to declare the agreement “null and void” if it rejected
the vehicle’s condition. Finally, the agreement required McKenzie to refrain from
disclosing the content of the settlement to anyone, including “newspapers, members of
the press or legal reporting services, consumer organizations, owner or prospective
owners of vehicles distributed by Ford Motor Company, experts, consultants, attorney,
government agencies, governmental entities or elected representatives.” This
confidentiality provision was expressly characterized as a “material part of this
Agreement.” Such confidentiality provisions are explicitly prohibited by Civil Code
section 1793.26, subdivision (a)(2).
McKenzie countered Ford’s proposed settlement with his own formal
section 998 offer: to allow judgment to be entered in his favor for $25,000.01 (one penny
more than Ford had offered), plus reasonable attorney fees and court costs to be
determined by the court, in exchange for which McKenzie would return the automobile to
Ford with clear title. Following that offer, McKenzie’s counsel emphasized to Ford’s
counsel that McKenzie was anxious to put the matter to rest, and was willing to settle the
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matter on essentially the same financial terms Ford had proposed, but without the added
release language. Ford allowed McKenzie’s offer to lapse without response.
Approximately two months later, Ford proposed a new section 998
compromise which was essentially identical to McKenzie’s lapsed offer (although it
knocked the payment back down to $25,000 – deleting McKenzie’s one cent increase).
Ford’s proposal was devoid of any reference to the provisions of its earlier six-page
release document and required only that McKenzie return his defective automobile with
clear title in exchange for the money. Ford’s new offer once again proposed to pay
McKenzie $15,000 in attorney fees and costs, but again preserved his right to instead file
a motion for an award of reasonable fees and costs in a different amount. McKenzie
accepted that offer promptly, and judgment was thereafter entered thereon in September
2013.
McKenzie filed a cost memorandum seeking routine litigation costs, plus
fees to be decided by motion. And in November 2013, he filed a motion seeking an order
awarding him $47,491.25 in attorney fees and other costs totaling $808.83. The motion
was supported by declarations, billing records, and prior court orders documenting large
attorney fee awards to counsel in similar cases.
The 42 hours billed by McKenzie’s attorneys in the period following Ford’s
initial offer included time spent reviewing and communicating with Ford’s counsel about
the initial offer and its perceived deficiencies, preparing McKenzie’s counter offer, and
processing the details of the settlement when it was reached. Among other things,
attorney Kane billed 2.5 hours to attend the “vehicle surrender” called for in the
settlement agreement. And attorney Anderson billed .4 hours for preparing the
memorandum of costs, 3.5 hours for preparing the motion for fees, and estimated an
additional 4 hours to draft and file a reply brief, plus 2.5 hours to appear at the hearing.
Kane also estimated he would spend 4 hours to “review opposition, prepare reply and
supporting declarations, and appear at hearing on motion for fees and costs.”
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Ford opposed the fee motion, claiming the amount sought by McKenzie
was unreasonable for a “standard ‘lemon law’ case.” Ford focused on the time period
after it made the initial section 998 offer to compromise, arguing that “[a]fter learning of
Ford’s willingness to buy back the vehicle [in April 2013], Plaintiff’s two attorneys ran
up approximately 42 additional billable hours before agreeing to a buy back of the
vehicle with a fee motion for this Court to decide reasonable attorney’s fees.” Ford
pointed out that by contrast, its own attorneys had billed only a combined 21.2 hours
from January 2013 (when they substituted into the case) through the completion of
settlement – albeit without including the time spent opposing McKenzie’s fee motion.
Specifically, Ford claimed that after its initial offer to repurchase
McKenzie’s vehicle, his attorneys had a heightened incentive to inflate their fees,
“knowing their likelihood of recovering fees given the repurchase offer were extremely
high.”
Ford also asserted that the billing reports provided by McKenzie’s counsel
demonstrated they had unreasonably staffed the case with “two lead attorneys, and both
attorneys billed for work that could have been performed by one.” It pointed out
instances in the billing statements where it appeared McKenzie’s two lead counsel (with
billing rates of $475 per hour each) had billed time for the same basic task – such as
reviewing an email from Ford’s counsel, or reviewing an amended vehicle inspection
notice – in the wake of Ford’s initial settlement offer. These instances added up to two
hours of duplicated time. In light of this duplicative effort between the attorneys, Ford
requested the court award McKenzie’s counsel compensation for only half of the number
of hours claimed for the period following Ford’s initial offer – cutting the compensable
time from 42 hours to 21 hours.
In a reply brief, McKenzie contended the initial compromise offer made by
Ford was legally invalid as a section 998 offer because it required him to release claims
and parties not involved in his lawsuit, and incorporated an illegal confidentiality
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provision. It was also unacceptable because it would have obligated McKenzie to pay for
repairs to the vehicle as demanded by Ford, and gave Ford the right to rescind if he did
not. Additionally, McKenzie’s counsel defended staffing the case with two lead
attorneys, explaining that each had a different expertise – “Mr. Anderson specializes in
legal research and writing, while Mr. Kane has expertise in automobiles and automotive
repair.” They did not dispute there was some duplication of effort, but asserted the
amount was small, and argued it had been more than offset by the efficiency inherent in
allowing each attorney to focus on his distinct area of expertise.
The court granted McKenzie’s fee request, but reduced the amount of fees
from the $48,300 requested to $28,350. 08 – the exact amount it determined McKenzie
had incurred before service of Ford’s initial offer to compromise, which was served one
year after the case was filed: “Until 4/25/13, plaintiff’s counsel billed only $28,350.08.
Then, after [Ford’s offer to compromise] was sent plaintiff’s counsel racked up another
$19,950 between 4/25/13 and 11/7/13.”
The court made clear it believed the settlement offer accepted by McKenzie
was indistinguishable from the initial offer made by Ford in April 2013 – other than that
it would allow him to file a motion for attorney fees: “Defendant, after a year of
litigation offered to buy the car back for [$25,000,] more than what plaintiff paid and
reasonable fees of $15,000.” “Plaintiff initially rejected this offer but eventually
accepted the offer with the stipulation that plaintiff be allowed to submit this motion for
attorneys fees.” Moreover, “[a]fter rejecting the offer in April 2013, plaintiff’s counsel
then billed another 42 hours before accepting the offer with the demand that plaintiff be
allowed to file this motion. [¶] This conduct amounts to unnecessary overbilling.” The
court concluded that “the 42 hours billed after the [initial offer to compromise] was
served in April 2013, appear to be plaintiff’s counsel exaggerating the amount of their
fees to increase their prized fees.”
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And as further support for its ruling, the court noted that “many of the 42
hours that were billed after the [initial offer to compromise] was double billing by both
Mr. Anderson and Mr. Kane for many of the same tasks, such as both of them reviewing
the same email from defendant’s counsel or both reviewing drafts of documents coming
from their office, or both of them billing for preparing the same email. None of this work
should have been done by both partners [and] it is unreasonable to charge a client – or
opposing party for duplication of tasks.”
DISCUSSION
1. Background Law and Standard of Review
Civil Code section 1794, subdivision (a) states: “Any buyer of consumer
goods who is damaged by a failure to comply with any obligation under this chapter or
under an implied or express warranty or service contract may bring an action for the
recovery of damages and other legal and equitable relief.” And subdivision (d) of that
statute provides: “If the buyer prevails in an action under this section, the buyer 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 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 plain wording of the statute requires the trial court to base the fee
award upon actual time expended on the case, as long as such fees are reasonably
incurred—both from the standpoint of time spent and the amount charged. . . . ‘It
requires the trial court to make an initial determination of the actual time expended; and
then to ascertain whether under all the circumstances of the case the amount of actual
time expended and the monetary charge being made for the time expended are
reasonable. These circumstances may include, but are not limited to, factors such as the
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complexity of the case and procedural demands, the skill exhibited and the results
achieved. If the time expended or the monetary charge being made for the time expended
are not reasonable under all the circumstances, then the court must take this into account
and award attorney fees in a lesser amount.’ [The] prevailing party has the burden of
showing that the fees incurred were reasonably necessary to the conduct of the litigation,
and were reasonable in amount.” (Robertson v. Fleetwood Travel Trailers of California,
Inc. (2006) 144 Cal.App.4th 785, 817-818.)
The fees incurred in preparing a motion for fees are properly includable in
the award. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133 [“an attorney fee award
should ordinarily include compensation for all the hours reasonably spent, including
those relating solely to the fee”].)
We apply an abuse of discretion standard when reviewing a trial court order
awarding attorney fees. (City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 784)
“‘Trial judges are entrusted with this discretionary determination because they are in the
best position to assess the value of the professional services rendered in their courts.’”
(Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 882.)
Hence, the fee award ‘“will not be disturbed unless the appellate court is convinced that it
is clearly wrong.”’ (Serrano v. Priest (1977) 20 Cal.3d 25, 49.) Indulging all inferences
in favor of the trial court’s order, as we are required to do, we presume the trial court’s
attorney fees award is correct, and “[w]hen the trial court substantially reduces a fee or
cost request, we infer the court has determined the request was inflated.” (Christian
Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1323.)
2. The Award in This Case
On appeal, McKenzie argues the court abused its discretion when it
excluded from its award the entirety of fees McKenzie incurred after Ford’s initial offer
to compromise. He points out that contrary to the trial court’s apparent belief, Ford’s
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initial offer was not effectively the same as the offer he later accepted, and claims he
acted reasonably in rejecting it because it required him to acknowledge that his claims
against Ford lacked merit, to enter into overly broad releases in favor of both Ford and
third parties, to repay for repair of his vehicle in accordance with Ford’s demands upon
surrender, and to adhere to an illegal confidentiality provision. And because his rejection
of Ford’s initial offer was reasonable, McKenzie claims his continued accrual of attorney
fees in the wake of that offer was also reasonable, and thus compensable, as a matter of
law.
Ford counters by first emphasizing our obligation to indulge all inferences
in favor of the trial court’s ruling, and pointing out the trial court is not required to
explain in detail the basis of its fee decision. Ford urges us to construe the court’s
reduction of McKenzie’s fee as reflecting an assessment of the usual lodestar factors
considered in determining fee amounts – e.g., the complexity of the case, the expertise of
McKenzie’s counsel, and the early stage at which the case was settled – and a resulting
determination that $28,350.08 was simply an overall “reasonable” fee for the work
performed.
However, while we could certainly do that in the absence of any specific
analysis provided by the trial court, we cannot ignore the court’s reasoning when detailed
in the order. In this case, the court was quite explicit in explaining the basis for reducing
McKenzie’s fees – rather than imposing a general reduction on the fees requested from
the outset, on the basis the rates charged by McKenzie’s counsel were too high or the
overall time claimed was unreasonable given the complexity of the case, the court
characterized its reduction as “based on redaction of fees for duplicated and unnecessary
services and billing performed after defendant’s service of its CCP Section 998 offer.”
(Italics added.) The court awarded McKenzie 100 percent of the fees he requested for the
period before Ford’s initial offer, but found the entirety of “the subsequent billing was
unreasonable” and excised that specific portion of the fees from McKenzie’s award.
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When the court states its reasons explicitly, we cannot infer its exercise of discretion
rested on a wholly different basis.
And when we examine the court’s actual reasoning, we conclude its
decision to deny McKenzie any fees for the period following Ford’s initial compromise
offer was an abuse of discretion. The court’s decision was grounded on its view that the
settlement offer ultimately accepted by McKenzie was essentially identical to the offer he
had initially rejected – distinguished only by his “demand that [he] be allowed to file a
[fee] motion.” Thus, the court believed McKenzie acted unreasonably in rejecting that
first offer, and that he did so for the purpose of “exaggerating . . . fees.” Ford contends
that decision was proper, citing Meister v. Regents of the University of California (1998)
67 Cal.App.4th 437, a case it describes as holding “the trial court could consider the fact
that a party continued to litigate the matter after a reasonable, informal settlement offer
had been made” as a basis for “‘cut[ting] off attorney’s fees’ as of the date of the
settlement offer.”
But as McKenzie points out, Ford’s initial section 998 offer was quite
different than the one he ultimately accepted, containing several provisions which
rendered it effectively unacceptable – all of which were excised from Ford’s second
offer.
Even Ford concedes its initial settlement offer incorporated numerous
extraneous provisions. As Ford describes it, “the [initial] offer stated that Ford admitted
no liability, McKenzie had no viable claims, and his attorneys had incurred unreasonable
and unnecessary fees. . . . The proposed release, which Ford sent to McKenzie on May 9,
had its own set of provisions, including provisions that waived McKenzie’s claims under
Civil Code [section] 1542 . . . and required confidentiality.” Moreover, Ford
acknowledges that although its second offer “contained the same financial terms as
Ford’s first offer,” it “eliminated the non-financial terms.” (Italics added.)
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Ford suggests, however, that these extraneous provisions were of no
particular significance because they were either legally meaningless or unenforceable,
and thus McKenzie’s refusal to accept the first offer incorporating them was
unreasonable. For example, while Ford acknowledges that the confidentiality provision
incorporated into its first offer was expressly prohibited by statute (see Civ. Code,
§ 1793.26, subd. (a)(2)), it claims that very illegality meant McKenzie should have just
ignored the clause. The argument is disingenuous, at best.
What Ford does not acknowledge is that it expressly designated this
prohibited confidentiality clause as a “material” provision of its proposed settlement.
Whether the illegality of such a provision would result in its severance from the rest of
the agreement, or would instead render the entire agreement invalid, is unclear. (See
Keene v. Harling (1964) 61 Cal.2d 318, 320-321 [“‘Whether a contract is entire or
separable depends upon its language and subject matter, and this question is one of
construction to be determined by the court according to the intention of the parties. If the
contract is divisible, the first part may stand, although the latter is illegal’”].) Thus, at a
minimum, by inserting this “material” confidentiality provision into its proposed
settlement, Ford instilled uncertainty about the consequences of disregarding its terms.
And such uncertainty would clearly favor Ford’s interests, as it would naturally inhibit a
plaintiff such as McKenzie from disclosing the terms of his settlement, as he might
otherwise be inclined to. Only a plaintiff who was willing to adhere to the provisions of
the “material” confidentiality clause would feel entirely comfortable entering into as
settlement agreement which incorporates it. McKenzie’s insistence that the illegal clause
be removed was reasonable as a matter of law.
Moreover, Ford does not even address the significance of the other
nonfinancial provisions incorporated into its initial offer, including its requirement that
McKenzie execute a breathtakingly broad release. This proposed release required
McKenzie to release not only the specific claims asserted against Ford in this case, but
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also all other “known and unknown” claims, claims that have “not yet accrued” and any
claims he “may ever obtain” that relate in any way to the “[s]ubject [v]ehicle.” Arguably,
this language – which was characterized as being “as broad as can possibly be created” –
would anticipatorily release Ford from any damage claims arising out of injures
McKenzie later sustained if the brakes on his vehicle had failed while he was enroute to
surrender it in accordance with the settlement terms. Not only that, but the release would
also have extended to the “selling and servicing dealerships” who were not even parties
to the case, from any such claims. As McKenzie points out, a section 998 offer requiring
the release of claims and parties not involved in the litigation is invalid as a means of
shifting litigation expenses because “it would be hard enough for a trial court to place a
value on a condition requiring the plaintiff to dismiss a single specific lawsuit she had
already filed against the defendant in another court. But when the condition mandates
surrender of an array of potential lawsuits against not only the defendant but two other
parties the task becomes impossible.” (Valentino V. Elliott Sav-On Gas, Inc. (1988) 201
Cal.App.3d 692, 700.) By the same token, it would be impossible for the trial court in
this case to place a value on the unidentified claims McKenzie might have pursued
against the nonparty dealerships that happen to have sold and serviced his defective
vehicle. Thus, the court could not presume McKenzie acted unreasonably by refusing to
accept a settlement from Ford which obligated him to release those claims as well.
All of the extraneous nonfinancial terms incorporated into Ford’s initial
section 998 offer were excised from Ford’s second section 998 offer. That latter offer
obligated McKenzie to do nothing more than dismiss the lawsuit and surrender his
vehicle to Ford, in exchange for its payment of $25,000. McKenzie promptly accepted
that offer – which differed by only one cent from the similarly stripped-down offer he had
served on Ford two months earlier, and which Ford had allowed to lapse without
response. Under these circumstances it is difficult to fault McKenzie for any delay in
reaching a settlement.
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Further, contrary to the court’s belief, there was no difference between the
attorney fee provisions contained in Ford’s two offers. Even Ford agrees its two offers
had identical attorney fee provisions: “As with the first offer, [it] allowed McKenzie to
elect to receive $15,000 for attorneys’ fees and costs or have the court determine the
reasonable amount.” (Italics added.) Thus, there is no basis for inferring McKenzie
rejected the first offer solely based on a “demand that [he] be allowed to file a [fee]
motion.” Nor can it be inferred that McKenzie acted unreasonably by choosing to pursue
a fee motion rather than accepting the $15,000 lump sum option included in both of
Ford’s section 998 offers. As we have already stated, McKenzie had already incurred
over $28,000 in fees by the time Ford served its first offer – nearly twice the amount Ford
was offering to pay without a motion – and the court awarded McKenzie that entire
amount in response to the motion. Consequently, the reasonably fees incurred by
McKenzie in pursuing its fees should have been included in the award.
Finally, we reject Ford’s attempt to magnify the fairly minimal evidence
that McKenzie’s two attorneys duplicated each other’s work in the wake of Ford’s initial
998 offer, as a basis for denying those fees altogether. Ford acknowledges that its
argument to the trial court had focused solely on alleged duplication of time in the period
after Ford made its initial offer, because Ford’s argument was that McKenzie’s counsel
had a particular incentive to engage in such conduct once Ford offered to repurchase the
vehicle, as it meant a fee award had become virtually assured. And in that argument,
Ford actually identified only 2 hours of such duplicative time during that post-offer
period. But Ford now argues that because the trial court had McKenzie’s counsels’ entire
billing records before it, any alleged instances of duplication occurring prior to the offer
would also be relevant in assessing the issue. We disagree. The trial court’s finding of
duplication was expressly confined to the 42 hours billed by McKenzie’s counsel after
the offer of compromise. The content of billing prior to that time played no part in that
analysis.
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The trial court’s decision to award no fees in the wake of Ford’s initial
section 998 offer to compromise amounted to an abuse of discretion in the circumstances
of this case. Given the extraneous and improper nonfinancial terms incorporated into the
“release,” Ford included in that proposed compromise McKenzie acted reasonably in
rejecting it. And McKenzie’s prompt service of a counteroffer with essentially identical
financial terms, but stripped of the extraneous provisions, reflected his willingness to
complete a settlement. If anything, it was Ford’s conduct in allowing McKenzie’s offer
to lapse, and then later serving its own second offer with essentially identical stripped-
down terms – which McKenzie immediately accepted – that delayed the settlement in this
case. We consequently reverse the court’s fee award, and remand this case with
directions to reconsider the amount of fees to be awarded to McKenzie for the period
following Ford’s initial section 998 offer.
3. The Other Litigation Costs
McKenzie also argues the court erred by failing to include in its award any
of the other litigation costs he claimed. Ford argues there was no error because the
$28,350.08 the court awarded “necessarily includes an award of costs.” Not necessarily.
In fact, the trial court’s order expressly states it is granting McKenzie’s “motion for
Attorneys’ Fees . . . at the reduced amount of $28,350.08.” (Italics added.) It makes no
reference to the other costs claimed. On the other hand, as Ford points out, the amount
awarded by the court, which ends in 8 cents, is difficult to reconcile with a pure fee
award and can much more easily be understood if we presume the other costs sought by
McKenzie were also included.
Because we are reversing the award and remanding to the trial court for
recalculation of the fees awardable to McKenzie for the period following service of
Ford’s section 998 offer, we direct the trial court to also clarify whether its original award
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was intended to encompass the other costs sought by McKenzie and if it was not, to make
an additional award of such costs.
DISPOSITION
The order is reversed and the case is remanded to the trial court with
directions to (1) award McKenzie reasonable attorney fees for the period following
service of Ford’s initial section 998 offer, including reasonable fees incurred in pursuing
his motion for fees; and (2) clarify whether its original award was intended to encompass
the other recoverable costs sought by McKenzie and if it was not, to make an additional
award of such costs. McKenzie is to recover his costs on appeal.
RYLAARSDAM, J.
WE CONCUR:
O’LEARY, P. J.
BEDSWORTH, J.
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Filed 7/10/15
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
JAMES McKENZIE,
Plaintiff and Appellant, G049772
v. (Super. Ct. No. 30-2012-00573060)
FORD MOTOR COMPANY et al., ORDER CERTIFYING OPINION
FOR PUBLICATION
Defendants and Respondents.
Plaintiff and Appellant James McKenzie, Law Office of Michael E.
Lindsey, and Law Offices of Larry R. Hoddick have submitted requests that our opinion
filed on June 12, 2015, be certified for publication. It appears that our opinion meets the
standards set forth in California Rules of Court, rule 8.1105(c). The request is
GRANTED. The opinion is ordered published in the Official Reports.
RYLAARSDAM, J.
WE CONCUR:
O’LEARY, P. J.
BEDSWORTH, J.
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