Westamerica Bank v. Mbg Industries, Inc.

INTRODUCTION

Plaintiff and appellant Westamerica Bank filed an amended complaint against defendants and respondents Michelle Ross and MBG Industries, Inc., for breach of contract when respondents defaulted on a $300,000 line of credit. Respondents filed a cross-complaint against appellant, alleged appellant refused to renew or extend the line of credit because of gender discrimination against Ms. Ross, and raised causes of action based on state and federal antidiscrimination laws. Respondents extended a pretrial offer to compromise pursuant to Code of Civil Procedure section 998, only as to the allegations of appellant’s amended complaint on the money owed on the defaulted note, and not on the gender discrimination issues raised by their cross-complaint. As we will explain, section 998 “is a cost-shifting statute which encourages the settlement of actions, by penalizing parties who fail to accept reasonable pretrial settlement offers. A plaintiff who refuses a reasonable pretrial settlement offer and subsequently fails to obtain a ‘more favorable judgment’ is penalized by a loss of prevailing party costs and an award of costs in the defendant’s favor.” (Heritage…