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Richard L. Wohlgemuth et al v. Caterpillar Inc

July 23, 2012

RICHARD L. WOHLGEMUTH ET AL., PLAINTIFFS AND RESPONDENTS,
v.
CATERPILLAR INC., DEFENDANT AND APPELLANT.



APPEAL from a judgment of the Superior Court of Fresno County. Jeffrey Y. Hamilton, Judge. (Super. Ct. No. 08CECG02485)

The opinion of the court was delivered by: Kane, J.

CERTIFIED FOR PARTIAL PUBLICATION*fn1

OPINION

Plaintiffs Richard L. Wohlgemuth and Gloria M. Wohlgemuth purchased a new motor home that had an engine manufactured and warranted by defendant Caterpillar Inc. Plaintiffs subsequently claimed the engine was defective and sued defendant under the Song-Beverly Consumer Warranty Act (Civ. Code,*fn2 § 1790 et seq.; Song-Beverly Act), alleging that defendant failed to repair the defects after a reasonable number of attempts. Shortly before trial, defendant made a Code of Civil Procedure section 998 offer to compromise. The offer provided that plaintiffs would be paid $50,000, in exchange for which plaintiffs would dismiss the action with prejudice and sign a release of all claims. The offer was silent as to attorney fees and costs. Plaintiffs filed a notice of acceptance of the offer, dismissed the action with prejudice and then moved to recover their attorney fees and costs under section 1794, subdivision (d) (section 1794(d)). Defendant opposed the motion, arguing that there was no formal judgment in plaintiffs' favor as a predicate for an attorney fee or cost award and that, in any event, defendant was the true prevailing party, not plaintiffs, since a dismissal had been entered. The trial court rejected defendant's arguments, found that plaintiffs prevailed, and awarded attorney fees and costs to plaintiffs. Defendant appeals from that order. We will affirm.

FACTS AND PROCEDURAL BACKGROUND

In 2002, plaintiffs purchased a new 2003 National RV*fn3 "Tradewinds" motor home. In 2008, plaintiffs filed this action under the Song-Beverly Act alleging that the motor home had been "in for repair an unreasonable number of times" due to "engine, power train, emissions control, and/or exhaust system" problems. The alleged defects led to "excessive fuel, oil or other particulates being emitted through the exhaust system and accumulating on the motor home and on any vehicle that is towed by the motor home." (Capitalization omitted.) Defendant had expressly warranted the engine and chassis portion of the motor home but defendant, and/or its authorized repair facility, was allegedly unable to repair the alleged defects after several attempts. Pursuant to the Song-Beverly Act, plaintiffs demanded that defendant and/or National RV*fn4 refund the purchase price or replace the motor home.*fn5 Defendant filed its answer in December 2008, denying plaintiffs' allegations and raising several affirmative defenses.

Trial was set for May 10, 2010. On April 30, 2010, defendant served on plaintiffs an "OFFER TO COMPROMISE UNDER CODE OF CIVIL PROCEDURE SECTION 998 BY DEFENDANT CATERPILLAR INC.," which stated as follows:

"Pursuant and subject to the provisions of Code of Civil Procedure § 998, defendant CATERPILLAR INC., without admitting liability, hereby offers to pay to plaintiffs RICHARD WOHLGEMUTH and GLORIA WOHLGEMUTH the total sum of Fifty Thousand Dollars ($50,000.00), in exchange for the dismissal with prejudice of the entire action and general release of all claims as to this defendant."

Four days later, on May 4, 2010, plaintiffs filed their "NOTICE OF ACCEPTANCE OF OFFER TO COMPROMISE PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 998" (Notice of Acceptance). The Notice of Acceptance declared that pursuant to Code of Civil Procedure section 998, plaintiffs "accept defendant['s] offer to pay to plaintiffs the sum of Fifty Thousand Dollars ($50,000.00) in exchange for dismissal with prejudice of the action, a copy of which is attached hereto." The next day, plaintiffs filed a "NOTICE OF SETTLEMENT OF ENTIRE CASE," informing the trial court that a settlement had been reached whereby a dismissal of the case was imminent. On May 6, 2010, plaintiffs filed a request for dismissal of the entire action, with prejudice, and the clerk entered the requested dismissal that same day.

On May 21, 2010, plaintiffs filed a motion for attorney fees and costs under the provisions of the Song-Beverly Act. Plaintiffs argued that in light of the practical result achieved by the settlement, they were the "prevailing" parties in the action. Plaintiffs stressed that where an accepted offer of compromise under Code of Civil Procedure section 998 is silent as to attorney fees and costs, as was the case here, the prevailing party is entitled to recover same if authorized by contract or statute. Plaintiffs asserted they were entitled to such attorney fees and costs under section 1794(d), which is the attorney fees/cost provision of the Song-Beverly Act.

On July 1, 2010, defendant filed opposition to the motion. Defendant argued that it was the prevailing party in the action, not plaintiffs, because it had obtained a dismissal with prejudice. Defendant argued further that plaintiffs could not recover attorney fees and costs under section 1794(d) because there was no "judgment" entered in plaintiffs' favor.

Plaintiffs' reply papers were filed on July 8, 2010. Attached to plaintiffs' reply declaration was a letter addressed to plaintiffs from defendant indicating that a replacement engine would cost about $21,000. Thus, according to plaintiffs, the $50,000 settlement would allow them to achieve the main objective of the lawsuit by getting the engine/exhaust problem fixed by replacing the old engine. Defendant objected to the introduction of this new evidence offered in a reply declaration.

The motion was heard on September 1, 2010. Following oral argument, the trial court took the matter under submission. On November 15, 2010, the trial court issued its written order granting plaintiffs' motion. It found plaintiffs to be the prevailing parties and awarded attorney fees to plaintiffs in the ...


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