Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles No. BC312164, Harold I. Cherness, Judge. (Retired judge of the Mun. Ct. for the Culver Jud. Dist., assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)
Proudfoot & Quach, Don A. Proudfoot, Jr. and Lan T. Quach for Plaintiffs and Appellants.
Hill, Farrer & Burrill and Scott L. Gilmore for Defendants and Respondents.
JOHNSON, J.
In March 2004, Plaintiffs Ronald Shaffer and his wife, Debbie Shaffer (the Shaffers) sued defendants Steven A. Sassoon and his wife, Julie A. Sassoon (the Sassoons), alleging that the Sassoons sold the Shaffers their single family residence without disclosing numerous material defects in the property. On May 2, 2007, a jury returned a special verdict in which they answered four questions on the negligence cause of action as follows: (1) Steven Sassoon or Julie Sassoon was negligent; (2) Steven Sassoon’s or Julie Sassoon’s negligence was a substantial factor in causing harm to Ron Shaffer or Debbie Shaffer; (3) Ron Shaffer’s or Debbie Shaffer’s total damages for future economic loss including further repairs were “$1413.12 + Permit Fees”; and (4) Neither Ron Shaffer nor Debbie Shaffer was negligent. On the question of whether Steven Sassoon or Julie Sassoon intentionally failed to disclose an important fact that Ron Shaffer or Debbie Shaffer did not know and could not reasonably have discovered, the jury also responded “no.”
The Shaffers sued several other individuals who are not involved in the instant appeal.
The Shaffers moved for a new trial and for partial judgment notwithstanding the verdict; the trial court denied the motions on December 13, 2007. The court subsequently ruled that the Sassoons were the prevailing party and awarded them $70,000 in attorney’s fees and $7,500 in costs. The court denied the Shaffers’ motion to set aside and vacate the judgment.
On appeal, the Shaffers contend: (1) the trial court erred in entering judgment on the jury’s ambiguous, incomplete special verdict finding damages in the amount of “$1413.12 + Permit Fees”; (2) the trial court abused its discretion in awarding costs, including attorney’s fees, to the Sassoons because they refused to mediate when requested to do so under the residential purchase agreement; (3) the trial court abused its discretion in awarding attorney’s fees under Code of Civil Procedure section 998 because the Shaffers obtained a more favorable recovery than the amount the Sassoons had offered to settle; and (4) the Sassoons’ section 998 offer was not susceptible to valuation because it reserved the Sassoons’ right to pursue their cross-claims against the Shaffers. We conclude the Shaffers forfeited their claim regarding the special verdict and affirm the judgment on this issue. We conclude the trial court did not abuse its discretion in finding the Shaffers had not established that the Sassoons ever received a request to mediate and affirm on this issue as well. As the Shaffers obtained a more favorable recovery than was offered in the section 998 offer, we reverse the trial court’s award of attorney’s fees. Finally, our conclusion that the Shaffers obtained the more favorable outcome obviates the need for us to reach the issue of the offer’s purported invalidity. On remand, the trial court shall determine the Shaffers’ costs on proper application and add this sum to the final judgment.
Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.
BACKGROUND
In April 2003, the Shaffers and the Sassoons entered into a standard-form Residential Purchase Agreement (the Agreement), under which the Shaffers agreed to purchase property located on Saddle Peak Court in Acton, California (the Saddle Peak residence) for the sum of $462,000.00. Among other things, the Agreement provides for an award of attorney fees as follows:
“In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller, except as provided in paragraph 17A.”
Paragraph 17 A of the Agreement provided:
“MEDIATION: Buyer and Seller agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action.... Mediation fees, if any, shall be divided equally among the parties involved. If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action. THIS MEDIATION PROVISION APPLIES WHETHER OR NOT THE ARBITRATION PROVISION IS INITIALED.” The Sassoons and the Shaffers initialed paragraph 17. The Agreement does not state how the parties were to give notice.
The Sassoons rented back the Saddle Peak residence for approximately six weeks following the close of escrow, after which the Shaffers took possession and moved in. During the rent back period, the Sassoons had work done on the septic system, notably installation of nearly 100 feet of new “leach lines.”
In January 2004, Ronald Shaffer wrote a letter to the Sassoons and their real estate agent, Hernando “Hurst” Velasco (Velasco). The letter was addressed to Velasco at an address in Stevenson Ranch and to the Sassoons in care of Velasco at SCV Realty Associates, Inc. in Newhall, California. The letter stated: “As you know, the home you sold us had water and mold problems which have forced us to live outside the home and incur substantial expenses to make the repairs, which are still ongoing. We have asked repeatedly for help and have been rebuffed. [¶] Would you please agree to mediate this case before a paid mediation service? This way, we may see each other’s position and possibly compromise and avoid a court case.” Steven Sassoon denied that they ever received the letter.
Approximately two weeks later, Ronald Shaffer wrote another letter to Velasco and the Sassoons at the same addresses used in the first letter. He stated: “We are sorry you did not accept our offer to mediate our dispute, this means we must use some legal process. The purchase contract includes a binding arbitration clause. We ask that you agree to proceed to binding arbitration under the terms of the contract. What I suggest is we use JAMS in Los Angeles, which is a group of retired judges with rules and meeting rooms for putting on arbitrations. They charge about $400 per hour for one or two days, we just split the charge initially, then the loser pays the whole amount. [¶] If you agree to use JAMS, or wish to propose another arbitration service, please do so by February 15, 2004, so we may proceed. If you do not respond, we will take this as a waiver of the right to utilize the binding arbitration process, and proceed with suit in L.A. Superior Court. Either way, we ask you to quit ignoring this situation and be fair with us.” Steven Sassoon denied receiving the letter.
The Shaffers filed suit in Los Angeles Superior Court on March 15, 2004 against the Sassoons, Velasco, and Charles Garcia (the inspector hired to perform a buyers’ inspection of the Saddle Peak residence, not a party to this appeal), asserting causes of action for negligence per se, negligence, and fraudulent concealment. The Shaffers alleged material defects as follows: “[A]. The septic system required repair and certification[;] B. Dangerous toxic mold infested two (2) bathrooms within the walls and under the linoleum floor[;] C. The sprinkler systems were not functional[; and] D. Yard had to be ripped up to repair the septic system.”
In February 2005, the Shaffers’ counsel wrote to the Sassoons’ counsel stating that the Shaffers had been trying to get the Sassoons to mediate and to inspect the property “for over one year now[,]” referring to the January 2004 letters and to a letter dated June 7, 2004. Counsel continued: “During at least 9 months of this time, they were represented by counsel who indicated that the Sassoons spurned mediation because in their view this was some sort of a shakedown. Plaintiffs thus will entertain any offer made by defendant, but cannot delay the process further with a record of hardboiled refusal to do anything and the arbitration return hearing set for April 14, 2005.”
The letter dated June 7, 2004, referred to in the February 23, 2005 correspondence is not a part of the record here.
On September 21, 2005, Velasco and the Sassoons filed a cross-complaint against the Shaffers, Garcia, and other defendants not involved here. The cross-complainants filed their First Amended Cross-Complaint against the same defendants on March 13, 2006, asserting six of the eight causes of action against the Shaffers. The Sassoons alleged, among other things, that any damages the Shaffers incurred resulted from their failure to conduct appropriate inspections.
On October 18, 2005, the Sassoons had served on the Shaffers the section 998 Offer. The section 998 Offer provided that the Sassoons would pay to the Shaffers $23,000.00 “in full satisfaction of all claims, damages, costs, expenses, attorneys’ fees, and/or interest in the underlying complaint[,]” and that the settling parties would “bear their own costs and attorneys’ fees as to all claims and/or damages claimed in the underlying complaint[.]” The Sassoons expressly reserved “[a]ll claims, damages, costs, expenses, attorneys’ fees, and/or interest claimed on all cross-claims....”
The jury trial began on April 23, 2007. The evidence at trial demonstrated that permits were required for certain items, including patio lights, the outdoor barbeque, and the outdoor sink, the furnace, and the changes made to the septic system.
On April 26, 2007, the trial court stated it had spent “approximately three hours with both attorneys in chambers, talking about jury instructions and special instructions that they had submitted.” The court added that another two hours of discussions took place on April 27, “[a]nd the attorneys have agreed to all the instructions that I will be giving to the jury.” The court asked counsel whether its statement was correct, and both confirmed that it was.
When the court instructed the jury on damages, it stated in relevant part:
“If you decide that the Shaffers have proven their claim against the Sassoons, you must also decide how much money will reasonably compensate the Shaffers, for harm. This compensation is called damages.
“The following are specific items of damages claimed by the Shaffers. One, amounts that the Shaffers reasonably spent on reliance on the Sassoons false reputation [sic] or failure to disclose a promise [sic], if those amounts [would] not otherwise have been spent in the purchase or acquisition of the property. And two, loss of use while remediating mold to the extent that the Sassoons false representations and failure to disclose a promise [sic] was a substantial factor in creating the loss of use. And three, reasonable future repairs, not yet completed.
“If you decide that Ronald Shaffer and Debbie Shaffer ha[ve] provided [sic] his and her claim against Steven A. Sassoon and Julie Sassoon, you must also decide how much money will reasonably compensate Ronald Shaffer and Debbie Shaffer for the harm. The amount of damages must include an award for all harm that Steven A. Sassoon and Julie Sassoon was a substantial factor in causing, even if the particular harm could not have been anticipated. Ronald Shaffer and Debbie Shaffer must prove the amount of his and her damages. However, Ronald Shaffer and Debbie Shaffer do not have to prove the exact amount of damages that will provide reasonable compensation for the harm. [¶]... [¶]
“You must not speculate or guess in awarding damages.... The following are specific items of damage claimed by Ronald Shaffer and Debbie Shaffer: economic and noneconomic damages. The following are the specific items, economic damages claimed by the Shaffers:... three, future repairs putting the property back as represented. [¶]... [¶]
“If Ronald Shaffer and Debbie Shaffer had a genuine desire to repair the property, for personal reasons, and if the costs of repair are reasonable, given the damage to the property, and the value after repair, then the costs of repair may be awarded, even if they exceed the property’s loss of value.” The special verdict form contained questions for the jury regarding the negligence and fraudulent concealment causes of action.
On May 2, 2007, the jury returned its special verdict. The four questions the jury answered on the negligence causes of action and the jury’s answers (in brackets), were as follows:
“1. Was Steven Sassoon or Julie Sassoon negligent? [Yes]
“2. Was Steven Sassoon or Julie Sassoon’s negligence a substantial factor in causing harm to Ron Shaffer or Debbie Shaffer? [Yes]
“3. What are Ron Shaffer or Debbie Shaffer’s total damages? Do not reduce the damages based on the fault, if any, of Ron Shaffer or Debbie Shaffer.
“a. Past economic loss, including expenses repairing undisclosed problems and loss of beneficial use [left blank]
“b. Future economic loss, including further repairs [$1413.12 + Permit Fees]
“c. Past economic loss, including physical pain/mental suffering [left blank]
“TOTAL [$1413.12 + Permit Fees]
“4. Was Ron Shaffer or Debbie Shaffer negligent? [No]” The jury answered “No” to the one question on the fraudulent concealment cause of action: “Did Steven Sassoon or Julie Sassoon intentionally fail to disclose an important fact that Ron Shaffer or Debbie Shaffer did not know and could not reasonably have discovered?”
The court polled the jury, then asked counsel whether there was any reason that the verdict could not be recorded at that time. Both counsel answered, “Not that I’m aware of, Your Honor.” The court thanked the jurors and discharged them. Neither counsel nor the court sought clarification of the jury’s verdict.
On May 11, 2007, the Shaffers filed a motion for partial or total judgment notwithstanding the verdict and a motion for a new trial on the ground that “the great weight of evidence, much of it uncontroverted, supported significant damages which the jury did not award....”
On June 1, 2007, the Sassoons filed a motion to determine the prevailing party and to fix the amount of attorney’s fees awardable as an item of costs. The Sassoons cited two grounds for the motion. First, the “action arose out of and/or was related to a written contract” that contained an attorney’s fees provision. Second, the Shaffers recovered less than the amount the Sassoons offered them in a section 998 offer to compromise, thus entitling the Sassoons to recover their attorney’s fees and costs. They also lodged a proposed Judgment on Special Verdict.
The Shaffers filed a motion to tax costs on July 2, 2007.
On October 5, 2007, Judge Brett C. Klein (not the trial judge) issued an Order Reserving Judgment for Further Consideration (Code Civ. Proc., § 664) stating: “Entry of judgment is reserved for further consideration, because the special verdict finding damages in the amount of ‘$1,413.12 + Permit fees’ cannot be embodied in a money judgment on the verdict without further consideration of the dollar amount of the ‘permit fees,’ and because the special finding that ‘Steven Sassoon or Julie Sassoon’ was negligent cannot be embodied in a money judgment without further consideration of which party or parties is or are liable for the negligence of ‘Steven Sassoon or Julie Sassoon.’ (See Code Civ. Proc., §§ 664, 665.)”
On November 8, 2007, Judge Harold I. Cherness (not the trial judge) heard argument on the term “permit fees,” asking whether the parties could agree on what they were. The Sassoons’ counsel represented that the trial court had told him in a chambers discussion to “‘[h]ave your client go to the building department. Find out what the permit fees were to put in an added heater,’ because that was the $1400 item. If you go through plaintiffs’ damages, or case, there was one item of $1400, added heater, that was evident the jury was saying needed to be replaced, and my client should pay for it and the permit fees. [¶] So somewhere in all my declarations that were submitted in connection with all this, we’ve explained that Mr. Sassoon went to the building department, found out what the permit fee was, $49.02 or something of that nature, and that would be the amount.” Counsel for the Shaffers said he did not recall the court ordering them to determine an amount of permit fees. The court requested additional briefing and continued the hearing.
It is unclear what declaration counsel was referring to. Our review has not revealed a declaration that matches this description.
At the hearing on the pending motions on December 13, 2007, the following colloquy occurred between the trial court and the Sassoons’ counsel regarding the basis for the $1,413.12 amount in the verdict form:
“THE COURT: It would have been helpful had there been a special verdict that would have told us just where they were going on this $1400.
“MR. ORR: Correct.
“THE COURT: But, unfortunately, they didn’t.
“MR. ORR: And both sides have attempted to use their own versions of what they think jurors told them afterwards; Mr. Washington for his purposes, myself for mine. And in our declaration I did indicate to you that that’s where I got the idea of the attic from, was talking to the jurors afterwards in the hallway. They said, ‘That’s what it was. They didn’t have a permit. That’s how we came up with the permit amount of another 50-some-odd dollars.’
“So I went through their expert’s report, found the items that exactly total up to the $1413. Yes, they are the attic. So I think it doesn’t take a rocket scientist to figure out that’s exactly what they did. They said it was the HVAC unit in the attic was the only thing they were going to hold the defendants responsible for. The rest of it, they heard testimony all over the place on it, and they didn’t meet the burden of proof.
Counsel appeared to be referring to a report by William Thomas, however, that document is not part of the record before us.
The trial court denied the motion for judgment notwithstanding the verdict. On the motion for a new trial, the court stated: “The jury in their infinite wisdom came back with this verdict of $1400-plus. There was enough direct testimony and conflicting testimony that I feel that I cannot say that it’s sufficient for me... to grant a new trial.” The court thus denied the motion for a new trial. The Sassoons’ counsel asked the court to decide what the jury meant by “+ Permit Fees.” The court did not rule at that time. The court continued the motions regarding attorney’s fees and costs.
On December 27, 2007, the court determined the Sassoons were the prevailing party for purposes of attorney’s fees and awarded them $70,000. With respect to costs, the court awarded just over half of what the Sassoons requested for expert fees, $5,500. The court also awarded $2,000 for deposition costs.
The Judgment After Special Verdict and Rulings on Post-Trial Motions was filed on January 9, 2008. The recitals stated the damages award for the Shaffers was “the sum of $1,413.12, plus permit fees (stipulated by the parties to be $48.20) for a total award of $1,461.32....”
The Shaffers filed a Motion to Set Aside and Vacate Judgment on February 22, 2008, on the grounds that it was not consistent with or supported by the special verdict or, alternatively, that “there was no stipulation or other basis for entry of the judgment actually entered.” The court denied the motion and allowed the judgment to stand.
This timely appeal followed.
DISCUSSION
1. The Special Verdict
The Shaffers contend the judgment on the negligence cause of action must be reversed because the special verdict is ambiguous and incomplete. They argue that the special verdict does not support the portion of the judgment providing that their damages are “$1,413.12, plus permit fees (stipulated by the parties to be $48.20) for a total award of $1,461.32....” because no stipulation existed and because nothing in the record clarifies or establishes what the jury meant by “plus permit fees.” The Sassoons maintain this Court need not reverse the judgment but should either “affirm the dollar value placed for the term ‘plus permit fees’ by the trial court in the judgment” or “independently interpret the verdict in a manner necessary to preserve it.” As the defect in the verdict was apparent on the face of the special verdict form, and the Shaffers failed to timely object, that is, before the jury was discharged, we conclude the Shaffers have forfeited this claim of error.
The Code of Civil Procedure defines the special verdict as “that by which the jury finds the facts only, leaving the judgment to the Court. The special verdict must present the conclusions of fact as established by the evidence, and not the evidence to prove them; and those conclusions of fact must be so presented as that nothing shall remain to the Court but to draw from them conclusions of law.” (§ 624.) “Unlike a general verdict that implies findings in favor of the prevailing party, a special verdict requires the jury to determine every controverted fact issue.” (Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2009) ¶ 17:5.1.)
Section 619 provides: “When the verdict is announced, if it is informal or insufficient, in not covering the issue submitted, it may be corrected by the jury under the advice of the Court, or the jury may be again sent out.” (§ 619.) “If the verdict is ambiguous the party adversely affected should request a more formal and certain verdict.” (Fernandez v. Consolidated Fisheries, Inc. (1953) 117 Cal.App.2d 254, 263 [“if the trial judge has any doubts on the subject, he may send the jury out, under proper instructions, to correct the informal or insufficient verdict.”].) “Where the discrepancy is identified before the jury is discharged, the court retains control of the jury and may, pursuant to section 619, use its power to correct the verdict before it becomes final.” (Mendoza v. Club Car, Inc. (2000) 81 Cal.App.4th 287, 303.) As the court stressed in Mendoza, “it is the court’s duty in such a case to attempt to remedy the situation.” (Ibid.) “If a verdict is not ‘hopelessly ambiguous,’ the court may ‘“interpret the verdict from its language considered in connection with the pleadings, evidence, and instructions.”’ [Citations.]” (Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1092 (Zagami).) “If the jury has been discharged and the verdict is ‘hopelessly ambiguous,’ the judgment must be reversed.” (Ibid., italics added.)
Unlike general verdicts, special verdicts receive no presumption in their favor. (Mendoza v. Club Car, Inc., supra, 81 Cal.App.4th at p. 303.) “Rather, a special verdict’s correctness must be analyzed as a matter of law.” (Ibid.; Zagami, supra, 160 Cal.App.4th at p. 1092 [“a special verdict’s correctness is analyzed as a matter of law and therefore subject to de novo review.”].)
The Shaffers did not claim any defect in the jury instructions or the formulation of the special verdict form at the time, nor do they make such arguments now. Most confounding, they failed to object to the special verdict before the jury was discharged.
Ambiguity
We find some merit in the Shaffers’ argument that nothing in the record explains or supports the jury’s special verdict on damages. The Sassoons respond that this Court “need not speculate about how the jury came up with this number” because, as they stated in their Supplemental Brief in Opposition to Motion for Judgment Notwithstanding Verdict and in Opposition to Motion for New Trial, filed on December 7, 2007 (well after the jury returned its special verdict on May 2, 2007), four items in the Shaffers’ expert’s report under the heading “Attic” added up to $1,413.12. The Sassoons failed to provide even a citation to the expert’s report, not to mention a copy of the report, leaving this Court with no alternative but to speculate about how the jury arrived at its damages award.
The ambiguity arises from the “+ Permit Fees” part of the damages award. The court discussed the phrase “+ Permit Fees” at a post trial hearing on November 8, 2007. The Sassoons’ counsel represented that the trial court “instructed us to agree upon what that amount would be, permit for some additional work. We went and did the research as to what the $1400 item was and the permits, which was a heater, and came back to the court and said, ‘Here’s the dollar amount. It’s about $49.’” Further, “[w]hatever that issue is, that can probably be very easily resolved in some kind of evidentiary hearing here, but certainly shouldn’t be a ground to upset the whole trial and cause everybody to go through two weeks of trial again and waste those judicial resources.”
Following the trial and the submission of post trial motions, the trial court took an indefinite leave of absence. Other bench officers continued to hear and adjudicate the post trial motions.
The Shaffers’ counsel disputed opposing counsel’s account: “I’m just going to say that I do not recall at all the judge ordering us to go find out what permit fees are. And it’s not in the record anywhere.... I directly contradict that the judge ordered us to go find out what permit fees. The judge could have sat the jury down and said, ‘Hey, go back in and tell us what this means.’ And that didn’t happen. So... that one, I disagree with.” As the Shaffers argued: “What this makes plain is that the $48.20 came not from the testimony or evidence at trial or from the jury at all, but from investigations after trial and discharge of the jury by defense counsel’s inadmissible... after trial discussions with the jury and defendant’s out of court, posttrial, unsworn, investigations stimulated by his counsel’s discussion with the jurors.”
The Sassoons offer several “alternatives” for us to consider in interpreting the jury’s “+ Permit Fees” language: affirm the dollar value from the (nonexistent) stipulation; determine an otherwise unsupported percentage and simply apply it to the $1,413.12 damages amount; arbitrarily insert the sum of $3,000 as the amount of “all possible permit fees claimed at trial”; or strike the reference to “+ Permit Fees” as surplusage. The very fact that such alternatives exist serves to bolster our concern that the phrase “+ Permit Fees” is “hopelessly ambiguous.” The problem for the Shaffers, though, is that they have forfeited the claim.
Forfeiture
As the California Supreme Court recently reiterated, “[t]he forfeiture rule generally applies in all civil and criminal proceedings. [Citations.] The rule is designed to advance efficiency and deter gamesmanship.” (Keener v. Jeld-Wen, Inc. (2009) 46 Cal.4th 247, 264 (Keener); see also People v. Scott (1994) 9 Cal.4th 331, 353 [by enforcing a forfeiture rule, courts “hope to reduce the number of errors committed in the first instance and preserve the judicial resources otherwise used to correct them”]; People v. Partida (2005) 37 Cal.4th 428, 434.) The Court added: “The requirement of an objection is premised upon the idea that a party should not sit on his or her hands, but instead must speak up and provide the court with an opportunity to address the alleged error at a time when it might be fixed.” (Keener, supra, 46 Cal.4th at p. 266.)
In Keener, the Supreme Court addressed what it dubbed the “Woodcock [v. Fontana Scaffolding & Equipment Co. (1968) 69 Cal.2d 452 (Woodcock)] exception.” The court declined to extend the “Woodcock exception” to the situation in which a party failed to object to the incomplete polling of a juror under section 618. (Keener, supra, 46 Cal.4th at p. 270, fn. 31.) Woodcock, the Court explained, had carved out a narrow exception to the forfeiture rule for “truly ambiguous” verdicts where “‘the failure to object was not the result of a desire to reap a “technical advantage” or engage in a “litigious strategy.”’” (Keener, supra, 46 Cal.4th at p. 269, italics omitted.) In Woodcock, the Court further observed, latent defects and the absence of gamesmanship operated to save an objection from waiver [forfeiture]. (Ibid.)
The Court in Keener described the ambiguity in Woodcock: “In Woodcock, a jury returned a verdict for the plaintiff, a worker who had been physically injured in the course of employment, in the sum of $13,000. Thereafter, on appeal, the parties contested an alleged ambiguity in the verdict. The defendant asserted that the $13,000 represented the entire amount of the plaintiff’s damages, and hence that sum was required to be reduced by the amount of workers’ compensation benefits received by the plaintiff. The plaintiff argued that the $13,000 sum already reflected an offset by the jury for the workers’ compensation payments. We upheld the defendants’ position, finding that, in light of the jury instructions, the verdict was not ambiguous, that it included workers’ compensation payments, and hence that the amount of the damages awarded was required to be reduced accordingly. (Woodcock, supra, 69 Cal.2d 452, 457–459.)” (Keener, supra, 46 Cal.4th at p. 269.)
Here, there was nothing “latent” about the ambiguity in the special verdict. Even if counsel did not spot the “+ Permit Fees” language immediately when the verdict was read, the trial court asked counsel whether there was any reason the verdict could not be recorded at that time – an opportune moment for counsel to determine whether to object. Our Supreme Court expressed in Keener its disinclination to, in effect, excuse a preventable mistake. We thus conclude the failure to object to the patent ambiguity of “+ Permit Fees” before the jury was discharged is a mistake that falls outside the parameters of the “Woodcock exception,” and the claim of error has been forfeited.
2. The Shaffers’ Request for Mediation
The Shaffers contend the award to the Sassoons of attorney’s fees and costs must be reversed because the Sassoons refused to mediate the dispute with the Shaffers, as required under the Agreement. The Shaffers argue they received no response to their written request, dated January 12, 2004, that the Sassoons mediate the dispute and received no response to their request, sent by letter dated January 26, 2004, that having refused to mediate, the Sassoons agree to arbitration of the matter. The Sassoons, for their part, deny ever receiving the letters.
On appeal, our task simply is to determine whether the trial court’s conclusions are supported by substantial evidence. “We do not reweigh the evidence or reassess the credibility of witnesses. [Citation.] ‘“We have no power to judge of the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom.” [Citations.]’” (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622–623.)
“Many written contracts include provisions requiring the parties to mediate before filing a lawsuit or arbitration proceeding, and conditioning recovery of attorney fees by a prevailing party on an attempt to mediate. The standard form residential purchase agreement used in California has a recently added clause providing that a prevailing party in litigation or arbitration who refused a request to mediate made before the commencement of such proceedings is barred from recovering attorney fees.” (Frei v. Davey (2004) 124 Cal.App.4th 1506, 1508.) Calling the case “a textbook example of why agreements for attorney fees conditioned on participation in mediation should be enforced[,]” the court of appeal concluded the evidence did not support the trial court’s finding that the Daveys had not refused to mediate. (Id. at p. 1512.) To the contrary, “the Daveys’ course of conduct constituted a refusal to respond to a clear and unequivocal request to mediate.” Furthermore, their excuses were unavailing. (Id. at p. 1514.)
Here, according to the standard form Agreement, the parties had agreed to mediate “any dispute or claim arising between them out of this Agreement....” The Agreement further provided that “refus[ing] to mediate after a request has been made” would disqualify a party from an award of attorney’s fees that would otherwise be awarded. The Shaffers were unable to satisfy the trial court that any request to mediate had ever been made to, and refused by, the Sassoons. As a result, the trial court's decision was fully supported by the evidence presented to it on this issue. There was no substantial evidence to the contrary.
The Shaffers contend only that they transmitted two letters “to Sassoons and their agent, Velasco, in January 2004.” The two letters to which the Shaffers refer were not sent to the Sassoons, but rather to their agent in the 2003 residential purchase transaction, Hernando Velasco. Steve Sassoon denied ever receiving the letters.
Sassoon purports to confirm that his wife Julie also did not receive either letter. The declaration contains no foundation for this assertion. No declaration from Julie Sassoon is in the record on appeal.
In Lange v. Schilling (2008) 163 Cal.App.4th 1412, the court of appeal reversed an award of attorney’s fees to the plaintiff, the putative prevailing party, for failure to comply with the demand for mediation provisions under paragraph 17A of the standard California residential property purchase agreement (the same provision at issue here). Plaintiff there maintained she could not locate the defendant prior to filing her complaint. The court observed that plaintiff was able to hire a private investigator to locate an address so that she could effect service of process, so plainly, it was possible to locate the defendant. The court of appeal confirmed that the contractual provision required strict compliance.
Generally, “a letter correctly addressed and properly mailed is presumed to have been received in the ordinary course of mail.” (Evid. Code, § 641; Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 421 [“As is true of most presumption affecting the burden of producing evidence, this one is an expression of common experience, one in which the presumed fact (receipt of that which was mailed) is so likely to be true that the law requires it to be assumed in the absence of contrary evidence.”].) The trial court here could reasonably have found that, faced with a denial of receipt of either letter, when the burden of producing evidence shifted to the Shaffers, they failed to carry that burden. Notably, the record contains no evidence to establish the letters were correctly addressed or properly mailed. In these circumstances, the trial court reasonably refused to make the unwarranted leap to the conclusion that the Sassoons had refused a request to mediate which they denied ever receiving. This case is readily distinguished from Frei v. Davey, supra, 124 Cal.App.4th at p. 1513 in which there was no dispute that Davey had received a demand for mediation. The court’s conclusion that Davey had rejected the request was supported by the evidence, contrary to the situation in the instant case. We reject the Shaffers’ contention.
3. The Shaffers Achieved a More Favorable Result Than the Amount Them in the Section 998 Offer
The Shaffers contend that in determining whether their recovery exceeded the amount the Sassoons offered in their section 998 offer of $23,000, the trial court was required to compare the amount of the judgment and the Shaffers’ preoffer costs, including attorney’s fees. The Shaffers argue the “undisputed pre-offer reasonable value of attorneys’ fees for Shaffers’ attorney was $31,787... which when added to the dollar portion of the verdict of $1,461.32, is substantially in excess of the 998 Offer of $23,000, including costs.”
Section 998 Offers
Section 998 provides that any party to an action “may serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time.” (§ 998, subd. (b).) An offer under section 998 “shall include a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted. Any acceptance of the offer, whether made on the document containing the offer or on a separated document of acceptance, shall be in writing and shall be signed by counsel for the accepting party or, if not represented by counsel, by the accepting party.” (Ibid.) Section 998 also provides that “[i]f an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer.” (§ 998, subd. (c)(1).)
“[A] section 998 offer must be made in good faith to be valid. [Citation.] Good faith requires that the pretrial offer of settlement be ‘realistically reasonable under the circumstances of the particular case.... [Citation.]’” (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1262.) A token or nominal offer made with no reasonable prospect of acceptance will not pass the good faith test. (Ibid.) “[T]he 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.” (Berg v. Darden (2004) 120 Cal.App.4th 721, 727.) “It is the very essence of section 998 that, to encourage both the making and the acceptance of reasonable settlement offers, a losing defendant whose settlement offer exceeds the judgment is treated for purposes of postoffer costs as if it were the prevailing party.” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1114.)
Comparing the Section 998 Offer to the Judgment
In determining whether a plaintiff has obtained a “‘more favorable judgment or award’” than the amount in the section 998 offer, courts consider the status of the litigation when the section 998 offer was outstanding. (Guerrero v. Rodan Termite Control, Inc. (2008) 163 Cal.App.4th 1435, 1441.) Preoffer costs are included in computing whether the judgment is more favorable than defendant’s section 998 offer. (Heritage Engineering Construction, Inc. v. City of Industry (1998) 65 Cal.App.4th 1435, 1441 [“When the defendant's offer includes costs, it is to be compared with the plaintiff's judgment plus preoffer costs including attorney's fees.”].) “[C]osts” includes attorney fees awarded to plaintiff by statute or contract. (Id. at pp. 1441–1442.)
Whether an offeree obtained a more favorable judgment is reviewed for an abuse of discretion. The question is whether the rejecting offeree (here, the Shaffers) obtained a judgment more favorable than the $23,000 offer. That question is one for the trial court’s discretion. (Linthicum v. Butterfield (2009) 175 Cal.App.4th 259, 270.) “The party offering the settlement bears the burden of demonstrating that a section 998 offer is valid, and the offer must be strictly construed in favor of the party subjected to its operation. [Citation.].” (Persson v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1170.)
The evidence before the trial court was that the Sassoons had made a section 998 offer of $23,000, including costs and attorney’s fees. At the time of the offer, the Shaffers’ costs, including fees, were over $31,000. Added to the verdict of $1,413.12, the sum exceeded the amount of the 998 offer. We conclude the trial court abused its discretion in finding that the Shaffers had not obtained a more favorable outcome than the amount of the section 998 offer and were subject to the mandatory penalties of section 998. We therefore reverse the award of attorney’s fees and costs.
Our conclusion that the Shaffers obtained a more favorable outcome than the amount offered in the section 998 offer obviates the need for us to reach the Shaffers’ contention that the offer was not susceptible to valuation.
DISPOSITION
The award of attorney’s fees to the Sassoons is reversed. Each side shall bear its own costs on appeal. In all other respects, the judgment is affirmed.
We concur: MALLANO, P. J., ROTHSCHILD, J.