Source: https://www.calattorneysfees.com/cases_section_998/
Timestamp: 2019-04-25 16:03:22+00:00

Document:
Those Factors Are: (1) How Far Into The Litigation Was The Offer Made; (2) Information Available To the Offeree Prior To The Offer’s Expiration; and (3) Whether The Offeree Informed Offeror That It Lacked Sufficient Information To Evaluate, And The Offeror’s Response.
We have posted many times on CCP § 998 offers, which can shift significant prejudgment interest, fees, costs if such offers are made in good faith (an implied important limiting requirement).
In Licudine v. Cedars-Sinai Med. Center, Case No. B286350 (2d Dist., Div. 2 Jan. 3, 2019) (published), the focus on whether a section 998 offer was made in good faith really did matter—otherwise, plaintiff was entitled to $2.335 million in prejudgment interest under a hefty medical mal jury verdict of $5,594,557 where the defense rejected an early-on section 998 offer for $249,999.99. The trial and appellate courts found that the 998 offer was not made in good faith. In doing so, the 2/2 DCA found three factors were especially pertinent in evaluating whether the offer was made in good faith: (1) how far into the litigation the 998 offer was made; (2) the information available to the offeree prior to the 998 offer’s expiration (such as voluntary exchanges of information or pre-existing relationships between the parties); and (3) whether the offeree let the offeror know it lacked sufficient information to evaluate the offer, and how the offeror responded. Here, the offer was made 19 days after plaintiff filed a “bare bones” complaint; the hospital needed more discovery information to evaluate the offer; and the defense requested more information. So, the hospital avoided a big chunk of prejudgment interest.
Trial Judge Improperly Imposed CCP § 998 Sanctions When Offer Was Improper, Such That Cut-Off Fee Determination Was An Abuse of Discretion.
In Etcheson v. FCA US LLC, Case No. D072793 (4th Dist., Div. 1 Dec. 6, 2018) (unpublished), plaintiff brought a “lemon law” action relating to a $40,000 purchase of a 2010 Chrysler Town & Country vehicle. The defense made two CCP § 998 offers, the first of which was determined to be invalid and the second offer sweetening the deal somewhat. After some wrangling following the second 998 offers, the parties reached a deal under which the defense agreed to pay $76,000 for the vehicle, with plaintiff deemed the prevailing party for purposes of any future fees/cost recovery (given that the lemon law has a pro-plaintiff fee-shifting statute).
Plaintiff moved for $89,445 in lodestar fees plus a positive 1.5 multiplier as well as over $5,000 in costs. Over defense objection, the trial judge issued an initial tentative decision awarding plaintiff $81,745 in fees and $5,059 in costs. However, after further arguments, the trial judge substantially reduced the tentative by awarding plaintiff a total of $2,636.90 in fees and costs ($2,095 in fees and $541.90 in costs). The rationale for the final award was that plaintiff should have shut down the litigation after the initial 998 offer which was somewhat in the ballpark although uncertain in nature.
The 4/1 DCA reversed and remanded.
Panel Agrees With Reasoning In Arave Opinion So Holding.
Effective January 1, 2019, the Legislature has determined that plaintiffs in FEHA cases found to be nonfrivolous in nature do not face fee, costs, or expert witness fee exposure under the FEHA shifting statute or even under CCP § 998 after rejection of a 998 offer which is not beaten at trial. With respect to pre-2019 cases, there is a split of opinion on the topic among the intermediary appellate courts, with Holman v. Altara Pharma US, Inc., 186 Cal.App.4th 462 (2010) holding section 998 does allow for costs-shifting in nonfrivolous FEHA cases and with Arave v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 19 Cal.App.5th 525 (2018) holding it does not allow for costs-shifting in this situation.
The 2/8 DCA, in Huerta v. Kava Holdings, Inc., Case Nos. B277164/B281303 (2d Dist., Div. 8 Nov. 14, 2018) (partially published; costs discussion published), has now weighed in. It has found Arave persuasive, reversing a $50,000 defense award of costs/expert witnesses against plaintiff in a nonfrivolous FEHA case. It also found that the result was consonant with the Legislature’s upcoming amendment which takes effect in 2019.
Judge Kim Dunning, an Orange County Superior Court judge sitting by assignment, authored the 3-0 opinion.
Case Illustrates The Potent Impact Of A Successful CCP § 998 Offer.
Malabed-Verona v. Hollaway, Case No. B278154 (2d Dist., Div. 4 Oct. 30, 2018) (unpublished) is a situation where a car accident plaintiff won $10,000 after a jury trial, but also after rejecting a close-to-trial defense offer of $30,000. The trial judge awarded the defense $20,620.53 in costs under 998’s costs-shifting provision, resulting in a net judgment to the defendant of $9,179.83 (after crediting the $10,000 won by plaintiff).
Plaintiff, not happy, appealed. No change in result.
The 998 offer was certain in nature. It could contain, as it did, a condition to release unknown claims relating to the accident claims pled in the lawsuit. (Ignacio v. Caracciolo, 2 Cal.App.5th 81, 89 (2016).) With respect to whether it was a good faith offer, it was given that (1) the $30,000 offer exceeded the $10,000 jury verdict such it was prima facie evidence of reasonableness; (2) the offer was made close to trial such that plaintiff had plenty of time to evaluate it; and (3) plaintiff did not produce meaningful evidence of loss of income such that her assertions of inflated damages did not alter the analysis about the offer being made in good faith.
Adequate Record Is A Necessity.
In Monoarfa v. Djie, Case No. B279593 (2d Dist., Div. 4 Oct. 24, 2018) (unpublished), the trial judge denied a CCP § 473(b) discretionary motion to vacate a ruling based on the CCP § 998 offer not containing a material term The result was affirmed because no reporter’s transcript was provided—reminding everyone an adequate record is required, including hiring a private (but superior court reporter on the certified list) to report hearings, and most especially on discretionary rulings. Sorry it has come to this, litigators, but financial constraints require you are diligent in hiring YOUR OWN court reporters for important hearings. Only a sign of the times (no disrespect intended anywhere).
Court Itself Calls For Legislature To Clarify How The Pre/Post-Offer Mechanism Operates—Likely, A Good Thing, If It Happens!
Our local Santa Ana Court of Appeal, in a very thoughtful opinion authored by Justice Ikola, has taken on a vexing issue—how pre-offer/post-offer fees/costs get allocated in CCP § 998 offers for purposes of future proceedings after a jury verdict comes out with a result in a 998 offer silent on fees and costs. The close to ending paragraph may summarize it all, “Having reached this disposition, we nonetheless believe the bench and bar would be well served if the Legislature amended section 998 to clarify how costs and fees should be addressed in a 998 offer.” Pay attention, lawyers and legislators—this observation has merit given some of the prolix law in the 998 area. Now to the specifics of this particular opinion.
In Martinez v. Eatlite One, Inc., Case No. G055096 (4th Dist., Div. 3 Oct. 3, 2018) (published), plaintiff sued defendant for employment discrimination and other claims, with a jury awarding her $11,490 in damages. Earlier, defendant made a 998 offer in the amount of $12,001, which was silent on how fees and costs would be allocated before the jury verdict and with plaintiff never responding to the offer. Dueling costs motions transpired, and plaintiff filed a motion for attorney’s fees. The lower court awarded plaintiff a little over $4,000 in costs and $60,000 in pre- and post-offer fees to plaintiff. In getting to this result, the lower court added plaintiff’s pre-offer fees and costs to the jury’s award and compared the total to the $12,001 offer, which easily showed an outstripping of the 998 offer given that the offer was silent as to fees and costs.
Not so fast, said the 4/3 DCA panel.
The problem here, according to the reviewing court, was that the lower court should have done parity—comparing the jury’s award plus plaintiff’s pre-offer fees/costs with the amount of the 998 offer plus plaintiff’s pre-offer costs/fees for purposes of determining whether the jury award was a “more favorable judgment.” When this math was done, plaintiff did not obtain a more favorable judgment, such that the lower court on remand had to award only pre-offer fees/costs to plaintiff, post-offer costs to defendant, and any expert witness fees the court determines to discretionarily award to defendant.
We bet this decision will get a lot of attention, but let’s see what happens!
Case Holds That Unallocated 998 Offer to Multiple Plaintiffs in Hybrid Wrongful Death, Strict Liability, And Negligence Action Was Invalid.
On August 24, 2018, we posted on Williams v. The Pep Boys Manny Moe & Jack of California, Case No. A146060 (1st Dist., Div. 4 Aug. 23, 2018), a hybrid wrongful death, strict liability, and negligence action where the Court of Appeal reversed cost-shifting under a CCP § 998 offer which was unallocated between multiple plaintiffs (which did not have a unity of interest on certain of the claims). The 998 discussion was unpublished when the opinion was originally filed, but we can report that it subsequently was certified for publication on September 24, 2018.
See our August 24, 2018 post here.
998 Offer Would Have Been Fine In Wrongful Death Action Alone, But Separate Offers Had To Be Served In This Particular Survival Claim Action.
Although the CCP § 998 discussion is unpublished, Williams v. The Pep Boys Manny Moe & Jack of California, Case No. A146060 (1st Dist., Div. 4 Aug. 23, 2018) (partially published; 998 discussion unpublished) does show that an unallocated 998 offer to multiple plaintiffs can be invalid such that validity has to be gauged on the claims at issue to see if a true unity of interest is involved so as to make an enforceable 998 offer.
This case involved seven adult children of a decedent bringing claims for wrongful death, strict liability, and negligence against several defendants, including The Pep Boys. The wrongful death claims were found to be barred by the statute of limitations, but the trial court after a bench trial awarded the children $213,052 as economic damages on the remaining claims, but found them to be offset by the settlements that the children had entered into before trial with other parties (determinations all affirmed, except for a published discussion of a damages component which should have been awarded so as to require a limited remand).
Later, the trial court awarded The Pep Boys with $32,542.51 in costs, with $16,724.10 of that consisting in expert witness fees based on the children rejecting a $60,000 998 offer (which was beaten by the zero award after settlement offset credits). The glitch here was that the 998 offer was made to all the children, without allocations, and called for acceptance by decedent’s estate and decedent’s estate’s counsel. The appellate court reversed the shifting of expert witness fees adversely against children under the 998 offer. It found that the unallocated offer to multiple parties was invalid. Although acknowledging that the offer would have been valid in a true wrongful death action, the claims here were different, with the children distinct from decedent’s estate where a joint offer might have been valid under different circumstances.
BLOG OBSERVATION—This case counsels that 998 offers need to be carefully structured (actually, in every case), but especially in cases where “unity of interest” between parties does not exist or might be questionable in nature.
We Think Panel Erred On The Trial Judge Lacking Jurisdiction To Entertain Fee Motion.
In Swinerton Builders v. Fresno Plumbing & Heating, Inc., Case No. F069825 (5th Dist. July 31, 2018) (unpublished), a general contractor won an indemnity dispute against a plumbing contractor under a subcontract with an indemnification/fees clause. The jury entered a compensatory award in favor of general contractor (which was appealed), and the trial judge later entered a substantial costs award for expert fees after the defense rejected a CCP § 998 offer and even later entered a $399,854.90 attorney’s fees award based on Civil Code section 1717.
The Fifth District affirmed the compensatory award, affirmed the costs award, and reversed the fee award without prejudice to it being the subject of another fee application.
With respect to the costs award, the defense principally challenged that it was erroneous to award expert witness fees where the 998 offer was not attached to plaintiff’s cost memorandum. The appellate panel determined that this was not the law, based on reasoning in Jones v. Dumrichob, 63 Cal.App.4th 1258, 1267 (1998), which does not require that bills, invoices, statements, or any other such documents be attached to the memorandum given that counsel’s statement that costs were true and correct is prima facie evidence of propriety. The defense argued that Behr v. Redmond, 193 Cal.App.4th 517, 538 (2011) was authority for the proposition that the 998 offer had to be attached, but the Fifth District panel found Behr was distinguishable because the costs claimant never provided the 998 offer at any time (with the plaintiff in this case so doing along the way) and it “would decline to follow” Behr and follow Jones instead.
Result Was Affirmance Of $38,000 Fees Award On One Of Three Cases, But Affirming The Denial Of The Remaining $165,000 Total Request Based On Topical Analysis Above.
Contreras v. Silla America, Inc., Case No. B283118 (2d Dist., Div. 3 July 17, 2018) (unpublished) involved a situation where a trial judge decided that an overall prevailing party was entitled to apportioned attorney’s fees of $38,000 in one of three cases, although denying the total fee request on all three cases coming to a total of about $165,000. Prevailing party—as appellant – wanted more, appealing, but he did not gain his wish.
With respect to one case where he was a defendant, the appellant could not gain fees because the plaintiff dismissed the case during closing argument. Appellant was not happy, but the dismissal was proper because it was done before submission of the matter for decision so as to preclude fee recovery. In this respect, Division 3 agreed with the analysis of the Second District, Division 4 in Shapira v. Lifetech Resources, LLC, 22 Cal.App.5th 429, 437 (2018) on the issue [reviewed in our April 20, 2018 post].
However, not to give up on the Santisas point in the case where fees were denied, appellant argued that the causes of action were noncontractual in nature so as to fall outside of the contractual dismissal ban. No, that did not work. The fees provision only focused on collection actions following the buyer’s failure to pay for purchased goods, not containing any broad language to support an award of fees as it related to noncontractual claims.
Prince v. Invensure Ins. Brokers, Inc., Case Nos. G051996 et al. (4th Dist., Div. 3 May 18, 2018) (partially published; section 998 discussion published, with remaining fee discussion unpublished) is an insurance business merger discussion gone bad, with plaintiff suing for moneys owed on a payout note and defendant cross-complainant suing for unauthorized computer access and theft of trade secrets, including a violation of Penal Code section 502. Plaintiff sent two CCP § 998 offers, which were rejected. After a five-week jury trial, plaintiff won $647,706.48 on his complaint and “defensed” defendant’s cross-complaint.
Plaintiff/cross-defendant then moved to recover costs under the rejected 998 offers and reduced fees under a fee-shifting provision in Penal Code section 502 under the cross-complaint. The trial judge found the first 998 offer was invalid and the second 998 offer only applied to plaintiff’s complaint (not the defense cross-complaint), awarding only $5,272,95 out of a requested $134,682.53 in expert fees under the second 998 offer. He denied completely the request for fees under Penal Code section 502, which was a reduced $445,000 request of the $864,000 in fees expended in defending the cross-complaint because “[t]he evidence does not allow the court to allocate fees to the § 502 cause of action” given that the 502 count was not inextricably linked to the cause of action for trade secrets theft so as to allow for recovery of “intermingled” fees.
Plaintiff’s cross-appeal was successful on the costs and fees issues.
That shifted things to the lower court’s denial of fees to plaintiff for prevailing on the cross-complaint. Penal Code section 502’s fee-shifting provision was broad in nature, stating “[i]n any action brought pursuant to this subdivision the court may award reasonable attorney’s fees.” Nothing in this statute limited the award only to a prevailing plaintiff, with the other work inextricably intertwined with the companion computer access/trade secret theft allegations. As such, the trial judge erred in denying fees on this basis such that the issue had to be remanded for further consideration.
BLOG OBSERVATION—One needs to carefully consider 998 offers. Here, the case could have been resolved for $400,000, all in, if the losing party indeed had accepted the 998 offer before trial. Instead, defendant/cross-complainant owes $647,706.48 plus another potential $575,000 - $994,000 depending on the remand result on the “re do” costs and fees issues.
Acting Presiding Justice Moore authored the 3-0 decision on behalf of the 4/3 DCA panel.
Matter Remanded For Defense To Seek 998 Costs, Including $96,192.86 In Expert Witness Fees.
One of the key issues in drafting Code of Civil Procedure section 998 offers is to make the offer definite enough, given there is a good body of case law offering clues on how to make offers certain in nature.
The trial judge denied the defense’s post-trial motion to recover costs shifted under section 998, including $96,192.86 in claimed expert witness fees, based on Sanford v. Rasnick, 246 Cal.App.4th 1121 (2016).
The 4/3 DCA reversed, remanding the matter so that the trial judge could determine the expert witness fees to which the defense was entitled under section 998.
The appellate court found Sanford distinguishable, because it was a 998 offer subject to a future settlement agreement whose terms were not fully disclosed—definiteness was present, given how negotiations over settlement agreements are problematic at best. In contrast, the 998 offer in Johnson contained no indication that it extended beyond a release of the claims in the lawsuit (given other language in the offer) and included properly medical/other lienholders given that only the offeree would know what the lienholders claimed, and was a reminder that plaintiff needed pay lienholders providing services in the case (Toste v. CalPortland Construction, 245 Cal.App.4th 362, 374 (2016)).
The 3-0 decision was authored by Presiding Justice Aronson.
It Did Not Matter That The Defense Itself Spent About $80,000 In Expert Witness Fees To Defend Themselves.
Under our category “Section 998,” we have posted on numerous cases which show how even a modest 998 offer can result in significant fee- or costs-shifting in favor of the successful offeror. To this list, we add the results in Ibarra v. Papierniak, Case No. A140835 (1st Dist., Div. 3 May 10, 2018) (unpublished).
In that case, plaintiff lost a condominium damages action against defendants, who had made a CCP § 998 offer to settle for $1,000 (an offer accepted by another aggrieved person) but was rejected by the plaintiff here. That had disastrous results: the trial judge awarded the defense $60,878.71 (out of the approximate $80,000 requested) in expert witness fees under section 998.
In rejecting plaintiff’s appellate challenges, the 1/3 DCA panel found unpersuasive the argument that the $1,000 offer was unreasonable because the defense itself expended $80,000 in expert witness fees to show the potential exposure was way above $1,000. The jury did award zero, with the appellate court accepting the reasoning that the defense—believing the case was meritless—should not have been penalized from hiring experts necessary to defend themselves, citing Culbertson v. R.D. Werner Co., Inc., 190 Cal.App.3d 704, 710-711 (1987). With respect to the reasonableness of the expert fee award, it was in light of the fact that at least six visits to the properties and many inspections/tests were made by the defense experts.
Also, Joint Offer To Husband And Wife Was Valid.
In Gunter v. Schneier, Case Nos. B271517 & B277066 (2d Dist., Div. 1 Feb. 28, 2018) (unpublished), husband and wife, as plaintiffs, sued a neurosurgeon for medical malpractice, but lost after a jury verdict found the doctor was not negligent. Earlier, but two years into the litigation and 20 days before trial, doctor served a 998 offer to both plaintiffs by which he offered to waive costs and malicious prosecution/abuse of process claims in exchange for a dismissal with prejudice, an offer which was rejected. After trial, the lower court awarded $111,016.11 in costs (including expert witness fees).
Plaintiffs’ challenges on appeal did not resonate.
The 998 offer was unambiguous and there is nothing invalid about the offer where the offeror offers to waive tort claims in exchange for a costs waiver (as opposed to an offeror asking an offeree to waive claims other than those involved in the lawsuit). Beyond that, the offer was made in good faith given it was done deep in the litigation so that plaintiffs could assess their prospects at trial. Finally, the joint offer to aligned husband and wife, where any recovery would be community property proceeds, was valid.

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