Filed 5/12/22 SwiftAir v. Row 44 CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

SWIFTAIR, LLC,

Plaintiff and Appellant,

v.

ROW 44, INC. et al.,

Defendants and Respondents.

 B306166

 (Los Angeles County

 Super. Ct. No. SC122964)

APPEAL from orders of the Superior Court of Los Angeles 

County. Elaine W. Mandel, Judge. Affirmed.

Holmgren Johnson: Mitchell Madden and Dennis M. 

Holmgren; Shamoun & Norman and Stephen R. Tittle, Jr., for 

Plaintiff and Appellant.

Sheppard, Mullin, Richter & Hampton, Martin D. Katz, 

and Dylan J. Price for Defendant and Respondent Row 44, Inc.

Hawxhurst Harris, Gerald E. Hawxhurst, David S. Harris 

and Patrick B. Nichols; Hawxhurst, Gerald E. Hawxhurst and 
2

Patrick B. Nichols; Davis S. Harris and David S. Harris for 

Defendant and Respondent Southwest Airlines Co.

INTRODUCTION

SwiftAir, LLC appeals from the trial court’s orders granting 

motions by Southwest Airlines Co. and Row 44, Inc. for attorneys’ 

fees and costs. SwiftAir argues the court erred in ruling 

Southwest and Row 44 were entitled to attorneys’ fees as 

prevailing parties under the relevant contracts. SwiftAir also 

argues that, because Southwest’s offer to compromise under Code 

of Civil Procedure section 998 was unreasonable,1 the trial court 

erred in awarding Southwest $209,886.89 in fees for experts not 

ordered by the court. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. SwiftAir Develops a Software Platform That 

Southwest Decides Not To License

As we described in SwiftAir, LLC v. Southwest Airlines Co.

(2022) 77 Cal.App.5th 46 (SwiftAir I), in 2010 SwiftAir was 

developing a software platform that would allow passengers to 

make inflight purchases of coupons and vouchers the passengers

could use at restaurants and other businesses in their destination 

cities. Later that year Southwest expressed an interest in 

evaluating the software platform for use on its flights.

In August 2011 SwiftAir and Southwest entered into a 

contract titled “Beta Test Agreement,” with Southwest agreeing

1 Undesignated statutory references are to the Code of Civil 

Procedure.
3

to evaluate SwiftAir’s software platform by testing it for eight 

weeks on some of Southwest’s WiFi-enabled aircraft, to report to 

SwiftAir during the testing period on the software’s performance, 

and to notify SwiftAir within 30 days after the testing period 

ended whether Southwest intended to use the software “on an 

extended basis.” The agreement also stated that, in the event 

Southwest decided to continue using the software platform, 

Southwest and SwiftAir would “enter into good faith discussions 

prior to the termination of the Initial Term [of testing] to 

negotiate a full license agreement.” The parties subsequently

amended the Beta Test Agreement to extend the testing period to 

24 weeks. Installing the software platform on Southwest’s planes 

also required SwiftAir to enter into agreements with Row 44, the 

company that operated Southwest’s inflight WiFi service. 

(SwiftAir I, supra, 77 Cal.App.5th at p. 50.)

At the end of the testing period, Southwest had not decided

whether to license SwiftAir’s software platform, but Southwest

continued “‘to work toward some arrangement whereby the 

SwiftAir product would be refined and deployed ultimately to 

Southwest planes.’” Ultimately, Southwest decided not to license 

SwiftAir’s software platform. (SwiftAir I, supra, 77 Cal.App.5th 

at p. 50.)

B. SwiftAir Sues Southwest and Row 44, Loses, and 

Appeals 

In August 2014 SwiftAir filed this action against Southwest 

and Row 44.

2 In the operative first amended complaint SwiftAir 

2 Row 44 reports that, as a result of bankruptcy proceedings 

discussed below, “substantially all” of its assets have been sold to 
4

asserted 12 causes of action against both defendants, including 

for breach of contract and the covenant of good faith and fair 

dealing, quantum meruit, and interference with contractual 

relations and prospective economic advantage. (SwiftAir I, 

supra, 77 Cal.App.5th at p. 51.) The trial court sustained a 

demurrer by Row 44 to four of the causes of action against it

without leave to amend. Southwest and Row 44 then each filed a 

motion for summary judgment or, in the alternative, summary 

adjudication, arguing, among other things, the federal Airline 

Deregulation Act (49 U.S.C. § 41713(b)(1)) (ADA) preempted most 

of SwiftAir’s remaining causes of action. Row 44 also moved for 

summary adjudication on SwiftAir’s claims that Row 44 

committed various distinct breaches of agreements between 

Row 44 and SwiftAir, as alleged in SwiftAir’s first cause of action.

The trial court ruled the ADA preempted all of SwiftAir’s

remaining causes of action except for the first (against both 

defendants) for breach of contract (which included a claim for 

breach of the covenant of good faith and fair dealing). The court

therefore granted motions by Southwest and Row 44 for 

“GEE Acquisition Holdings Corp. and its designees, which 

included Row 44’s rights of recovery against SwiftAir in 

connection with the trial court’s post-judgment award of 

attorneys’ fees and costs.” Because there has been no motion to 

substitute another entity in the action, however, this appeal may

continue in the name of Row 44. (See § 368.5 [“An action or 

proceeding does not abate by the transfer of an interest in the 

action or proceeding or by any other transfer of an interest. The 

action or proceeding may be continued in the name of the original 

party, or the court may allow the person to whom the transfer is 

made to be substituted in the action or proceeding.”].)
5

summary adjudication on all other remaining causes of action. In 

addition, on the breach of contract cause of action against Row 

44, the court summarily adjudicated in favor of Row 44 some, but 

not all, of the alleged “separate and distinct breaches.” Finally, 

on a motion by Southwest for reconsideration, the court also 

granted summary adjudication on that portion of the first cause 

of action against Southwest that alleged breach of the covenant of 

good faith and fair dealing.

At this point, what remained of SwiftAir’s lone breach of 

contract cause of action against Southwest were claims based on

two alleged breaches. First, SwiftAir alleged Southwest breached 

the Beta Test Agreement by not entering into good-faith 

discussions to negotiate a full licensing agreement and by not 

timely removing SwiftAir’s software platform from Southwest’s 

planes after the testing period. Second, SwiftAir alleged 

Southwest breached an implied-in-fact agreement requiring it to 

install SwiftAir’s software platform on “WiFi-enabled aircraft 

flying into 11 of Southwest’s top destinations, with more cities 

added throughout the term” of the Beta Test Agreement.

Southwest now served SwiftAir with an offer to 

compromise under section 998. In exchange for SwiftAir’s 

voluntary dismissal with prejudice of all claims against 

Southwest, Southwest offered to pay SwiftAir $50,000 and to 

agree that SwiftAir and Southwest would each bear its attorneys’ 

and expert fees, costs, and expenses. In an accompanying letter, 

Southwest wrote that it believed “this offer is more than 

reasonable in light of the Court’s recent summary judgment 

rulings . . . . As you have previously acknowledged, SwiftAir does 

not have damages related to . . . the Beta Test Agreement . . . . 

Further, SwiftAir’s expert report . . . fails to identify any damages 
6

related to” agreements between Southwest and SwiftAir. 

SwiftAir did not respond to the offer to compromise.

The parties tried SwiftAir’s remaining causes of action to a 

jury. Finding that Southwest breached the Beta Test Agreement,

but that the breach did not harm SwiftAir, the jury awarded

SwiftAir no damages for the breach. Finding SwiftAir did not

substantially perform its obligations under the implied-in-fact 

agreement with Southwest and was not excused from doing so, 

the jury found Southwest was not liable for any breach of that 

agreement. The jury found Row 44 was not liable on the cause of 

action against it.

SwiftAir filed motions for judgment notwithstanding the 

verdict and for a new trial, contending that, because the jury 

found Southwest breached the Beta Test Agreement, the jury

should have awarded SwiftAir $878,000 in damages “for the 

monies SwiftAir [spent] developing” its software platform. The 

trial court denied these motions, and SwiftAir appealed from the 

judgment.

C. The Trial Court Grants Motions by Southwest and 

Row 44 for Attorneys’ Fees, and SwiftAir Files This 

Appeal

Meanwhile, citing attorneys’ fees provisions in their 

agreements with SwiftAir, Southwest and Row 44 each filed a 

postjudgment motion for attorneys’ fees and costs as a prevailing 

party in the action. Southwest also contended it was entitled to 

attorneys’ fees and costs because SwiftAir failed to achieve a 

more favorable result than the one Southwest proposed in its 

section 998 offer to compromise.
7

Concluding Southwest and Row 44 were prevailing parties, 

the trial court granted their motions. The court awarded 

Southwest $1,501,988.80 in attorneys’ fees and $309,362.40 in 

costs. The court denied a motion by SwiftAir to strike from 

Southwest’s memorandum of costs $209,886.89 in expert fees, 

ruling Southwest was entitled to recover those fees under 

section 998. The court awarded Row 44 $2,216,117.50 in 

attorneys’ fees and $57,830.44 in costs. SwiftAir timely appealed 

the orders granting the motions. That’s this appeal. 

D. In the Appeal from the Judgment, We Dismiss Row 44 

and Affirm the Judgment in Favor of Southwest

And again meanwhile, with SwiftAir’s two appeals pending, 

Row 44 and various affiliates filed for bankruptcy under 

Chapter 11 of the United States Bankruptcy Code, which 

resulted in stays of both appeals. After the bankruptcy court 

confirmed a plan, Row 44 asked this court to dismiss it from 

SwiftAir’s appeal from the judgment (but not from this appeal). 

Pointing out that SwiftAir had not filed a proof of claim in the 

bankruptcy proceeding, Row 44 argued the bankruptcy plan and 

confirmation order barred SwiftAir from pursuing any claims 

against Row 44, including the claims asserted in this action.

After receiving opposition from SwiftAir, we granted Row 44’s 

request and dismissed Row 44 from the appeal from the 

judgment. The Supreme Court denied SwiftAir’s petition for 

review.

SwiftAir’s appeal from the judgment in favor of Southwest, 

however, proceeded. SwiftAir contended the trial court erred in 

granting Southwest’s motion for summary adjudication because 

the ADA did not preempt any of SwiftAir’s causes of action and in 
8

denying SwiftAir’s motions for judgment notwithstanding the 

verdict and for a new trial because the jury should have awarded

$878,000 in damages on SwiftAir’s breach of contract cause of 

action against Southwest. We rejected those contentions and 

affirmed the judgment. (SwiftAir I, supra, 77 Cal.App.5th at 

p. 59.)

DISCUSSION

A. The Trial Court Did Not Err in Granting Southwest’s 

Motion for Attorneys’ Fees

SwiftAir argues that in granting Southwest’s motion for 

attorneys’ fees the trial court erred in two respects. First,

SwiftAir argues the court erred in ruling Southwest was a 

prevailing party because that ruling rested on the orders SwiftAir 

challenged in its appeal from the judgment: the orders granting 

Southwest’s motion for summary adjudication and denying 

SwiftAir’s motions for judgment notwithstanding the verdict and 

for a new trial. In that appeal, however, we concluded the trial 

court did not err. Therefore, the court did not err in ruling

Southwest was a prevailing party. 

Second, SwiftAir argues the trial court erred by awarding 

Southwest $209,886.89 in expert witness fees. SwiftAir argues

Southwest was not entitled to recover those costs under 

section 998 because the experts were not ordered by the court 

and because Southwest’s offer to compromise was not 

reasonable.3 This argument is meritless.

3 “Fees of experts not ordered by the court are not ordinarily 

recoverable as costs to a prevailing party, unless expressly 
9

“Section 998 allows for any party in a civil suit to serve a 

settlement offer to any other party before the commencement of 

trial. Section 998, subdivision (c)(1) 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. In addition, . . . the court . . . , in 

its discretion, may require the plaintiff to pay a reasonable sum 

to cover costs of the services of expert witnesses . . . actually 

incurred and reasonably necessary in . . . preparation for trial or 

arbitration . . . of the case by the defendant.’”

4 (Adams v. Ford 

Motor Co. (2011) 199 Cal.App.4th 1475, 1482-1483 (Adams); see 

id. at p. 1483 [section 998, subdivision (c), “gives the trial court 

discretion to award a prevailing defendant the costs of expert 

witnesses whether incurred before or after the settlement offer”].) 

The “purpose of section 998 is to encourage the settlement 

of litigation without trial,” and to effectuate that purpose, courts 

have read a “good faith requirement” into the statute. (Adams, 

supra, 199 Cal.App.4th at p. 1483.) Thus, “[o]nly settlement 

offers made in good faith are effective under section 998.” 

(Covert v. FCA USA, LLC (2022) 73 Cal.App.5th 821, 833 

(Covert).) Good faith “requires that the settlement offer be 

authorized by law.” (Holman v. Altana Pharma US, Inc. (2010) 

186 Cal.App.4th 262, 278; see §§ 1032, subd. (b), 1033.5, 

subd. (b)(1).)

4 Section 998, subdivision (c)(1), thus provides an exception 

to the general rule that fees of experts not ordered by the court 

are not allowable as costs. (See Covert v. FCA USA, LLC (2022) 

73 Cal.App.5th 821, 832; Holman v. Altana Pharma US, Inc.

(2010) 186 Cal.App.4th 262, 278.)
10

‘realistically reasonable under the circumstances of the particular 

case.’ [Citation.] The offer must therefore ‘carry with it some 

reasonable prospect of acceptance.’” (Adams, at p. 1483.)

“‘Whether a section 998 offer has a reasonable prospect of 

acceptance is a function of two considerations, both to be 

evaluated in light of the circumstances “‘at the time of the offer’” 

and “‘not by virtue of hindsight.’” [Citations.] First, was the 998 

offer within the “range of reasonably possible results” at trial, 

considering all of the information the offeror knew or reasonably 

should have known? [Citation.] Second, did the offeror know 

that the offeree had sufficient information, based on what the 

offeree knew or reasonably should have known, to assess whether 

the “offer [was] a reasonable one,” such that the offeree had a 

“fair opportunity to intelligently evaluate the offer”?’” (Covert, 

supra, 73 Cal.App.5th at p. 834.) 

“‘Although the party making a 998 offer generally has the 

burden of showing that [the] offer is valid [citations],[5]it is the 

998 offeree who bears the burden of showing that an otherwise 

valid 998 offer was not made in good faith.’” (Covert, supra, 

73 Cal.App.5th at p. 834; see id. at p. 833 [“Once the offeror 

shows the section 998 offer is valid, the burden shifts to the 

offeree to show the offer was not made in good faith.”].) 

“‘“‘Where . . . the offeror obtains a judgment more favorable than 

its offer, the judgment constitutes prima facie evidence showing 

the offer was reasonable and the offeror is eligible for costs as 

5 To be valid, an offer to compromise under section 998 must, 

for example, “‘“be sufficiently specific to allow the recipient to 

evaluate the worth of the offer and make a reasoned decision 

whether to accept the offer.”’” (Covert, supra, 73 Cal.App.5th at 

p. 833.) 
11

specified in section 998.’”’” (Id. at pp. 833-834; see Adams, supra, 

199 Cal.App.4th at p. 1484.) “‘“Whether a section 998 offer was 

reasonable and made in good faith is a matter left to the sound 

discretion of the trial court, and will not be reversed on appeal 

except for a clear abuse of discretion.”’” (Covert, at p. 834; see

Adams, at p. 1484 [“An appellate court may reverse the trial 

court’s determination only if the court finds that in light of all the 

evidence viewed most favorably in support of the trial court, no 

judge could have reasonably reached a similar result.”].)

The trial court did not abuse its discretion in finding 

(implicitly) Southwest made a reasonable, good faith offer to 

compromise. That the judgment Southwest obtained—of zero 

liability and the entitlement to recover, as a prevailing party, its 

attorneys’ fees and costs—was more favorable than its offer—of 

$50,000 and a waiver of fees and costs—is prima facie evidence 

the offer was reasonable. (See Bates v. Presbyterian 

Intercommunity Hospital, Inc. (2012) 204 Cal.App.4th 210, 221

[dismissal resulting in zero liability for the respondent 

“established the prima facie reasonableness of the section 998 

offer”].)

SwiftAir did not rebut that evidence. Citing Wear v. 

Calderon (1981) 121 Cal.App.3d 818 for the proposition that a

“plaintiff may not reasonably be expected to accept a token or 

nominal offer from any defendant exposed to [substantial]

liability unless it is absolutely clear that no reasonable possibility 

exists that the defendant will be held liable” (id. at p. 821), 

SwiftAir argues it could not reasonably be expected to accept

Southwest’s offer because it was merely a token offer and there 

was a reasonable possibility Southwest would be held liable, as 
12

demonstrated by the jury’s finding Southwest breached the Beta 

Test Agreement.

But Southwest’s offer was not token. $50,000 was not a 

nominal offer, even relative to the $878,000 SwiftAir insists 

Southwest owed (but the jury found it did not owe) for breaching 

the Beta Test Agreement. (Compare Najah v. Scottsdale Ins. Co. 

(2014) 230 Cal.App.4th 125, 145 [where the evidence at the time 

of the section 998 offer supported the plaintiff’s claim for 

damages in excess of $500,000, the trial court did not abuse its 

discretion in concluding the defendant’s offer of $30,000 was 

reasonable, “given the reasonable possibility that liability did not 

exist”] with Wear v. Calderon, supra, 121 Cal.App.3d at pp. 819-

820 [section 998 offer to settle for $1 was a token offer] and

Pineda v. Los Angeles Turf Club, Inc. (1980) 112 Cal.App.3d 53, 

62-63 [where the plaintiff sought $10 million in damages, the 

trial court did not abuse its discretion in finding a section 998 

offer of $2,500 was not reasonable].) And Southwest’s proposal to 

bear its fees and costs added significant value to the offer. (See

Adams, supra, 199 Cal.App.4th at p. 1485 [“a section 998 offer 

has value beyond the monetary award provided if it also includes 

a waiver of costs”]; Jones v. Dumrichob (1998) 63 Cal.App.4th 

1258, 1264 [section 998 offer that included a waiver of costs but 

no monetary award was reasonable because it “carried a 

significant value to” the offerees-appellants: “if accepted, it would 

have eliminated appellants’ exposure to the very costs which are 

the subject of this appeal”].) 
13

B. The Trial Court Did Not Err in Granting Row 44’s 

Motion for Attorneys’ Fees

SwiftAir contends the trial court erred in granting Row 44’s 

motion for attorneys’ fees because that order “was based upon 

erroneous judgments [sic] in Row 44’s favor.” More specifically, 

SwiftAir argues the trial court’s ruling Row 44 was a prevailing 

party rested on the court’s supposedly erroneous order granting 

Row 44’s motion for summary adjudication. SwiftAir argues the 

latter order was erroneous because the ADA did not preempt any 

of its causes of action against Row 44 and because, in ruling on 

issues relating to but not disposing of the entire cause of action 

for breach of contract, the court violated section 437c, 

subdivision (f)(1).

As discussed, however, over SwiftAir’s objection we 

dismissed Row 44 from SwiftAir’s appeal from the judgment, 

which “amounts to an affirmance of the judgment.”6 (Estate of 

6 SwiftAir did not file a proof of claim in Row 44’s bankruptcy 

proceeding or seek relief from the resulting automatic stay, and it 

has not persuasively addressed Row 44’s assertion these were 

SwiftAir’s “only proper avenue[s] to attack the Underlying 

Judgment.” (See 11 U.S.C. §§ 101(10) [defining “creditor” as an 

“entity that has a claim against the debtor that arose at the time 

of or before” the filing of the bankruptcy petition], 101(5) 

[defining “claim” as “right to payment, whether or not such right 

is reduced to judgment, liquidated, unliquidated, fixed, 

contingent, matured, unmatured, disputed, undisputed, legal, 

equitable, secured, or unsecured”]; In re Maxus Energy 

Corporation (Bankr. D.Del., 2022) 706 __B.R. ___, ___ [2022 

WL 840996, p. 9] [“if a creditor has a claim, whether that claim 

be disputed, contingent, or unliquidated, it must file a proof of 

claim”].) Without citing any legal authority, SwiftAir suggests it 
14

Basso (1947) 79 Cal.App.2d 758, 760; see In re Jasmon O. (1994) 

8 Cal.4th 398, 413 [“Normally the involuntary dismissal of an 

appeal leaves the judgment intact.”]; County of Sacramento v. 

Rawat (2021) 65 Cal.App.5th 858, 869 [“In general, the 

unqualified dismissal of an appeal leaves the trial court’s 

judgment or order standing, as if no appeal had been taken from

it.”]; City of Santa Paula v. Narula (2003) 114 Cal.App.4th 485, 

492 [“An ‘involuntary dismissal of an appeal operates as an 

affirmance of the judgment below.’”].) Therefore, SwiftAir can no 

longer challenge the merits of the judgment in favor of Row 44.

(See Conservatorship of Ribal (2019) 31 Cal.App.5th 519, 526 [on 

appeal from a postjudgment order awarding attorneys’ fees after 

the previous appeal resulted in affirmance of the judgment, the 

appellant could not challenge the merits of the judgment];

Narula, at p. 488 [on appeal from a postjudgment order awarding 

attorneys’ fees, the appellants were “barred . . . from challenging 

the validity of prior judgments”].) Because that is SwiftAir’s only 

could not file a proof of claim because “it had already been 

judicially determined [i.e., by the trial court in this case] that 

SwiftAir had no claim.” But this suggestion ignores both the 

Bankruptcy Code’s definition of “claim” and the fact that, because 

SwiftAir had appealed from the judgment, its causes of action 

against Row 44 in this case were not yet final. (See Archdale v. 

American Internat. Specialty Lines Ins. Co. (2007) 

154 Cal.App.4th 449, 479 [“‘[A] judgment does not become final so 

long as the action in which it was rendered is pending and an 

action is deemed pending until it is finally determined on appeal 

or until the time for appeal has passed. The determination of the 

issue in the case is held in abeyance until the appeal is finally 

decided by an appellate court and the appeal operates to “‘keep 

alive the case . . . as it existed before the judgment was 

rendered.’”’”].) 
15

ground for challenging the trial court’s order granting Row 44’s 

motion for attorneys’ fees, SwiftAir has failed to demonstrate 

error. 

DISPOSITION

The motion by Row 44 to dismiss the appeal is denied. The 

trial court’s orders granting the motions by Southwest and 

Row 44 for attorneys’ fees and costs are affirmed. Southwest and 

Row 44 are to recover their costs in this appeal. 

SEGAL, J.

We concur:

PERLUSS, P. J.

FEUER, J.