SAN JOSE, Calif. (Legal Newsline) - Lawyers whose client rejected a $160,000 settlement offer from BMW over an allegedly faulty car, only to accept the same amount two years later are not entitled to the windfall in fees they wanted.
California's Sixth Appellate District made that decision in late December and certified the ruling Jan. 23, finding Daniel Zhihui Chen's lawyers should only receive fees for the work they performed after the first settlement was rejected.
Taking the same settlement two years later was not a "more favorable judgment," the Sixth District said.
"The offer here was significant: $160,000 plus the opportunity to recovery attorney fees and costs," the ruling says. "We have already determined there was nothing about the offer that would prevent Chen from intelligently evaluating it. We see no abuse of discretion in finding Chen did not meet his burden to show the offer was made in bad faith."
All this means his lawyers at Strategic Legal Practices and the law Offices of Michael H. Rosenstein will only recover $53,509.51 instead of the $436,071.82 they sought. California's lemon law has drawn criticism as a vehicle for attorneys to cash in on claims, often reaping fees that greatly exceed what their client recovers.
For instance, last year the state Supreme Court affirmed an attorney fee award of nearly eight times what the client recovered.
In Chen's case, he sued BMW in 2016, then a year later offered him $160,000 and the chance for his lawyers to petition the Santa Clara Superior Court for fees, in exchange for the vehicle at issue.
His lawyers said the offer was vague and refused it. Two years later, they accepted nearly identical terms and argued it was a favorable result over the first offer.
The Sixth District said nothing was vague about the first offer and that if the lawyers had had questions, they could have asked at the time. It rejected the argument that the first offer needed a stipulation that Chen was the "prevailing party" and one that said BMW was buying the car back under the lemon law.
"But merely pointing out things the offer did not include does not render it ambiguous," the court ruled. "Not specifying the prevailing party or articulating how the vehicle would be classified after its return are technical details that would not prevent a reasonable person from evaluating the offer against the prospects of proceeding to trial."
Chen's lawyers were actually lucky to get what they got, the court said. The trial court had awarded fees accrued for 45 days after the first offer was made, even though state law precludes an award of fees after a valid offer.
BMW did not appeal that part of the Superior Court ruling.