Mesa Forest Products, Inc. v. St. Paul Mercury Insurance

This appeal presents the question of whether, in determining if a plaintiff in a contract action has obtained a “judgment” more favorable than an offer to compromise (Code Civ. Proc., § 998), the trial court should take into account the defendant’s postoffer payments on the debt. We answer that question in the affirmative.

Background

Plaintiff Mesa Forest Products, Inc., contracted with California IBA, Inc., a general contractor, to provide lumber for the construction of a public school in Santa Monica, California. St. Paul Mercury Insurance Company, a surety, issued a payment bond guaranteeing the payment of California IBA’s subcontractors and suppliers, such as Mesa. The payment bond included an attorneys’ fee provision stating that St. Paul would pay reasonable attorneys’ fees incurred in any suit brought upon the bond.

On July 9, 1996, Mesa filed this action against California IBA and St. Paul, among others, alleging that it was owed $122,205.24, which included the balance of the contract lumber invoices in the sum of approximately $62,690. In an attempt to resolve the dispute, the parties participated in a mandatory settlement conference and four voluntary…