Parnala v. Plycon Transportation Group

Filed 10/30/07 Parnala v. Plycon Transportation Group CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

I. INTRODUCTION

Plaintiff and respondent Rita Parnala (Parnala) filed suit against defendant and appellant Plycon Transportation Group, Inc. (Plycon) and an individual employed by it,^[1] alleging sexual discrimination and harassment. Prior to the trial date, Plycon tendered an offer of compromise pursuant to Code of Civil Procedure section 998.^[2] The offer stated that Plycon would, to settle the case, pay Parnala $60,000 in exchange for a dismissal with prejudice. The offer was silent regarding the payment of attorney fees or costs. Parnala accepted the section 998 offer. After payment of the $60,000, Parnalas counsel filed a motion seeking both attorney fees and costs, a motion which, as modified in terms of amount, the trial court granted. Plycon then filed a motion pursuant to section 473 to set aside that award. The trial court denied the motion and Plycon appeals from that order. We agree with the trial court and affirm its order.

II. FACTUAL AND PROCEDURAL BACKGROUND

Parnalas original complaint was filed on December 13, 2004, and alleged five causes of action related to alleged sexual harassment and sexual discrimination in her employment at Plycons Hayward operation. After, presumably, discovery, the case was set for trial in July 2006.^[3] On March 31, Plycon served on Parnalas counsel an offer of compromise under section 998; the offer was filed with the court on April 6 and read: Pursuant to California Code Civ. Proc. 998, Plaintiff [sic] PLYCON TRANSPORTATION GROUP, INC. hereby offers to compromise the above-captioned matter, on the following terms: [] Defendant Plycon Transportation Group, Inc. to pay Plaintiff Rita L. Parnala the sum of $60,000.00 and, upon payment, Rita L. Parnala dismissing the entire action, with prejudice, against all parties. This offer must be accepted within thirty-five days from the date of mailing or, pursuant to C.C.P. 998, it will be deemed withdrawn.

Parnala accepted the offer by a pleading entitled Notice of Acceptance of Offer for Judgment Pursuant to Code of Civil Procedure Section 998 also filed on April 6. The text of that pleading read: You are hereby notified that Plaintiff Rita Parnala accepts defendant Plycon Transportation Group, Incorporateds Section 998 offer to allow judgment to be taken against it for the sum of sixty thousand ($60,000.00) dollars. [] You are further notified that plaintiff Rita Parnala this 6th day of April 2006, filed defendant Plycon Transportation Group, Inc.s section 998 offer with this proof of acceptance thereof with the clerk of the above-entitled court with a request that the clerk enter judgment in accordance with defendant Plycon Transportation Group, Inc.s offer.

Sometime in, apparently, the next few days, Parnalas counsel submitted a proposed order to the court entering judgment against Plycon pursuant to the accepted section 998 offer. On April 12, Judge Henry Needham of the superior court executed the Order Entering Judgment against Plycon and it was filed the same day and served by the court clerk the following day. On April 19, Parnalas counsel filed a Request for Dismissal of the action as to the individual defendant, Flores, and, on April 27, a cost bill totaling $1,564.

In the remaining days of April and much of May, the attorneys for the parties were engaged in various interchanges relating to exchanging a negotiable check in the amount of $60,000 and apparently achieved that goal about May 15. On that date, Plycons counsel sent a letter and settlement check to Parnalas counsel. The check was in the amount of $60,000 and was payable to both Parnala and her counsel; on it was the phrase Full and Final Release near the signature on the check. The letter from Plycons counsel enclosing the check recited that it was forwarded in full satisfaction of all amounts owed, arising out of the above-referenced matter. But the letter also protested the failure of Parnalas counsel to file a dismissal with prejudice of the action as, Plycons counsel asserted, was required by the original offer of compromise. In the course of so asserting, Plycons counsel twice noted that a judgment had already been entered in the case. Thus, at one point that counsel argued as to the proper interpretation of the extant judgment in the case and at another point threatened to institute proceedings to enforce the judgment, so that the case is dismissed if Parnalas counsel did not file a Request for Dismissal by May 29, 2006.

The $60,000 check was endorsed by both payees and deposited on May 17. Three weeks later, on June 8, Parnalas counsel filed a motion, with many attached exhibits, seeking attorney fees in the amount of $199,650 and costs in the amount of $1,454.^[4] Plycon, through its original counsel, opposed this motion, but in his opposition papers he again recognized the fact that the court had in fact entered a judgment in the action against it.

On July 5, the superior court issued a tentative ruling granting Parnalas motion for attorney fees, albeit in the reduced amount of $99,825, and costs in the amount of $1,564. A hearing was held the same day and, after oral argument by both sides, the court adhered to its tentative ruling.

On August 31, Plycon associated additional counsel and filed a motion pursuant to section 473 arguing, among other things, that the judgment entered on April 12 was void because inconsistent with the section 998 offer and acceptance. Among other things, the motion contended that (1) the April 12 judgment was void under section 473, subdivision (d), because it was inconsistent with the section 998 offer and (2) there was fault, mistake, surprise or excusable neglect on the part of Plycons original counsel, Mark Saltzman, thus mandating relief under section 473, subdivision (b).

Parnalas counsel opposed the section 473 motion and, after oral argument to the superior court (the Honorable Frank Roesch), that court denied the motion by a written order. Plycon filed a notice of appeal the following week.

III. DISCUSSION

The trial courts denial of the section 473 motion was entirely correct. The problem encountered by Plycon in this case, i.e., being hit with an unanticipated attorney fee award substantially greater than the section 998 settlement with the plaintiff, is a direct and obvious result of Plycons original counsel apparently being unaware of at least two clear rules of law and procedure applicable to section 998 offers and acceptances, namely: (1) the fact that a section 998 settlement offer by a defendant to the plaintiff is silent on the subject of the award of attorney fees does not mean that a superior court may not, after the acceptance of such a settlement offer, entertain a motion under an applicable statute to award such fees; and (2) a dismissal with prejudice by a plaintiff after his, her or its acceptance of a section 998 offer by the defendant is the legal equivalent to a judgment in favor of the plaintiff.

We will first discuss these two principles and then why Plycons section 473 motion lacked merit for other reasons.

A.

As this court has made clear at least twice, when litigation is concluded by a section 998 offer and acceptance that are silent regarding the award of attorney fees to the successful plaintiff, that plaintiff is, thereafter, free to move for such an award under any statute applicable to the cause or causes of action originally pled. (Lanyi v. Goldblum (1986) 177 Cal.App.3d 181, 185-188 (Lanyi); Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, 671-672 (Pazderka).) Other appellate courts have held to the same effect. (See, e.g., Premium Commercial Services Corp. v. National Bank of California (1999) 72 Cal.App.4th 1493, 1495-1497 (Premium); Ritzenthaler v. Fireside Thrift Co. (2001) 93 Cal.App.4th 986, 991 (Ritzenthaler). Indeed, appellant cites no authority to the contrary.

As noted in many of these precedents, this rule was also endorsed by our Supreme Court in a case involving a settlement not effected under section 998, but nonetheless final, a settlement in which the relevant documents were also silent regarding the award of attorney fees. In that case, Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 678 (Folsom), the court held that attorney fees are incidents to the cause [of action], properly awarded after entry of a stipulated judgment, unless expressly or by necessary implication excluded by the stipulation.^[5]

In short, if Plycon and its counsel wanted the settlement they offered Parnala pursuant to section 998 to constitute a total and complete settlement, i.e., defendable against any subsequent motion for attorney fees, they should have made that clear in their section 998 offer by a phrase such as: Each party shall bear their own costs and attorney fees.

B.

The other well-established point apparently overlooked by Plycon and its counsel was that, for two separate and distinct reasons, a final judgment was effected by the section 998 settlement offer and acceptance and the subsequent entry by the court of a formal judgment on April 12. The first reason this is so is the obvious one that the April 12 filing was expressly labeled an Order Entering Judgment and no motion was ever timely made by Plycon to set aside or amend the judgment so ordered. Indeed, Plycons original counsel referred to that filing as a judgment over ten times in subsequent pleadings and exhibits filed with the superior court.

The second reason this is so derives from the principle that a dismissal with prejudice filedor agreed to be filedby a plaintiff in an action is, for section 998 purposes, legally tantamount to a judgment in the action because it fully and finally disposes of the action. This was made clear in Goodstein v. Bank of San Pedro (1994) 27 Cal.App.4th 899 (Goodstein), a case in which a plaintiff in an action of slander of title and negligence rejected a section 998 offer of settlement by the defendant bank, an offer which, similarly to Plycons section 998 offer here, required the plaintiff to file a Request for Dismissal with prejudice on behalf of the Plaintiff in favor of the defendant bank. (Id. at p. 905.) After the plaintiff rejected this offer, the defendant successfully moved for a judgment of nonsuit and, thereafter, for expert witness fees and other costs, which the lower court granted. In affirming this grant, the appellate court rejected the plaintiff-appellants argument that the banks offer to compromise did not qualify as a section 998 offer because it failed to allow judgment to be taken against Bank. (Ibid.)

The appellate court explained: The distinctions set up by appellant are not tenable, and he offers no authority to support his argument, which is premised on the claim that a compromise settlement under Code of Civil Procedure section 998 can never include an agreement for a voluntary dismissal or release. Had Goodstein accepted the offer in this case, and had Bank performed pursuant to the terms of the offer, there would have been no impediment to Goodsteins execution of a request for dismissal and the clerks entry of it. Such a procedure would have resulted in a judgment . . . taken in accordance with the terms and conditions stated at that time in the offer. We perceive no impediment to that dismissal being part of the compromise settlement and judgment within the meaning of section 998. []  Judgment is defined in Code of Civil Procedure section 577 as the final determination of the rights of the parties in an action or proceeding. [A] valid compromise agreement has many attributes of a judgment, and in the absence of a showing of fraud or undue influence is decisive of the rights of the parties thereto and operates as a bar to the reopening of the original controversy. [Citation.] . . . [] The word judgment in Code of Civil Procedure section 998 indicates that the statute contemplates that an offer to compromise which is accepted will result in the final disposition of the underlying lawsuit; the statute does not indicate any intent to limit the terms of the compromise settlement or the type of final disposition. The acceptance of the instant compromise agreement calling for a voluntary dismissal with prejudice would have finally disposed of the complaint as effectively [citation] as one calling for entry of judgment in favor of plaintiff. [] In light of the foregoing, we conclude that the instant offer to compromise meets the requirements of subdivision (b) of Code of Civil Procedure section 998. (Goodstein, supra, 27 Cal.App.4th at pp. 905-906.)

Goodstein was expressly approved by this court in Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1264. And holding to the same effect as Goodstein is American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1055-1056 (American Airlines) and Berg v. Darden (2004) 120 Cal.App.4th 721, 729-730 (Berg).^[6]

Since the briefs in this case were filed, yet another of our sister courts has weighed in on both of the issues just discussed. In On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079 (Mazur), the court agreed with the holdings of both (1) Ritzenthaler, Lanyi and Rappenecker that when a section 998 offer is silent about attorneys fees and costs, it cannot reasonably be interpreted to exclude their recovery, (Mazur at p. 1054) and (2) Goodstein, American Airlines and Berg that a dismissal with prejudice is tantamount to a judgment and a final disposition of the case, and . . . therefore in accord with section 998. (Mazur at p. 1085.)

C.

In addition to these two principles whichboth separately and combined demolish its argument for reversal, Plycon is also wrong in its contentions that the trial court incorrectly denied its section 473 motion.

It contends that it was entitled to discretionary relief under section 473, subdivision (b), because its original counsel had a maximum authority of $60,000 to resolve this entire lawsuit and thus did not oppose entry of judgment in April 2006 because he believed, based on his discussions with PARNALAs counsel that the total settlement was for $60,000 . . . .

This argument borders on the specious. In the first place, our standard of review of a trial courts denial of relief under section 473, subdivision (b), is abuse of discretion. (See Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 257-258 (Zamora).) This court has made crystal clear that it is not an abuse of discretion for a superior court to deny section 473, subdivision (b), relief to a party whose counsel neglects to make clear that its section 998 compromise offer is specifically inclusive of any and all attorney fees and costs. (See Pazderka, supra, 62 Cal.App.4th at pp. 671-672; see also, to the same effect, Premium, supra, 72 Cal.App.4th at pp. 1495-1497.) Our Supreme Court implicitly approved the holdings of both Pazderka and Premium in Zamora, supra, 28 Cal.4th at pages 259-260. No more need be said on the section 473, subdivision (b), issue.

Plycon also argues that the April 12 judgment is void under section 473, subdivision (d), because such a judgment was not contemplated and in fact, was completely contradictory to the dismissal required by the [section 998] Offer. But, as the several authorities cited in part III, B, above make clear, a request under section 998 for entry of a dismissal with prejudice is tantamount to a request for entry of judgment. The superior courts April 2006 judgment is not in any way, manner, shape or form void under section 473, subdivision (d).

D.

Plycons final argument is that Commercial Code section 3311 mandates that the payment of the $60,000 to Parnala and her counsel constituted an accord and satisfaction of any liability it had to them, particularly in view of the FULL AND FINAL RELEASE language appearing near the signature of the $60,000 check that was transmitted to Parnalas counsel and subsequently endorsed by her and them and deposited. This argument fares no better than Plycons other contentions.

Commercial Code section 3311 appears in that part of the Uniform Commercial Code relating to Negotiable Instruments and, more particularly, in the chapter of that code dealing with the enforcement of such instruments. (See Com. Code,  3102, 3104 & 3311.) Although the $60,000 check tendered to Parnala and her lawyers by Plycon may well satisfy the definition of negotiable instrument set forth in those sections, this case is not about the enforcementor even the applicabilityof such statutes. Rather, it is about whether a party who tenders a section 998 offer of compromise that does not specify whether that offer includes or does not include attorney fees or costs may, after acceptance of that offer, also be liable for such fees and costs under statutes specifically authorizing the award of such fees and costs. As discussed above, the law on that subject is clear and conclusive, and also controlling over statutes governing negotiable instrument transactions.

IV. DISPOSITION

The order appealed from is affirmed.

_________________________

Haerle, Acting P.J.

We concur:

_________________________

Lambden, J.

_________________________

Richman, J.

Publication courtesy of California free legal advice.

Analysis and review provided by Carlsbad Property line attorney.

^[1]The individual defendant, one Briayan Flores, is not a party to this appeal.

^[2]All statutory references are to the Code of Civil Procedure, unless otherwise noted.

^[3]All subsequent dates mentioned are in 2006.

^[4]The amount of costs had, at least per Parnalas counsel, changed by the addition of the $40 fee for the filing of the motion for an award of attorney fees and the return to them of $150 previously deposited with the court clerk for jury fees.

^[5]In so holding, Folsom specifically relied on yet a third opinion of this court, Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 261-264, where we held that an offer and acceptance pursuant to section 998 which were silent on the subject of costs did not preclude the successful plaintiff from moving for allowable costs under section 1032.

^[6]Rather remarkably, in its briefs to us Plycon argues that Goodstein, American Airlines and Berg allsupport its position that there is a fundamental difference between a section 998 offer that calls for a dismissal with prejudice and one that expressly requires entry of judgment. This argument is totally wrong, as a simple perusal of those cases makes clear.