Court Opinion

ID: 5125109
Source: CourtListenerOpinion
Date Created: 2021-11-10 21:02:41.450342+00
Date Added: 2024-06-11T08:22:47.659841
License: Public Domain

Filed 11/10/21
            CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                          DIVISION TWO

MITCHELL HUNTER OAKES,                B305535

       Plaintiff and Appellant,       (Los Angeles County
                                      Super. Ct. No. BC556759)
       v.

PROGRESSIVE
TRANSPORTATION
SERVICES, INC., et al.,

     Defendants and
Respondents.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Norman P. Tarle, Judge. Affirmed.
     Kyle Scott Law and Kyle J. Scott for Plaintiff and
Appellant.
     Prindle, Goetz, Barnes & Reinholtz, Nicholas Paulos,
Steven Maslauski; Greines, Martin, Stein & Richland, Laurie J.
Hepler and Eleanor S. Ruth for Defendants and Respondents.

*     Pursuant to California Rules of Court, rules 8.1100 and
8.1110, this opinion is certified for publication with the exception
of part I of the Discussion.
      Plaintiff and appellant Mitchell Hunter Oakes (plaintiff)
appeals from the judgment and postjudgment orders entered in
favor of defendants and respondents Progressive Transportation
Services, Inc. (Progressive), and Salvador Guzman (collectively,
defendants) in this action arising out of injuries plaintiff
sustained in an automobile accident. Plaintiff contends the trial
court erred in denying his motion for a new trial based on
purported juror misconduct. Plaintiff further contends the trial
court erred in concluding defendants’ Code of Civil Procedure
section 9981 offer to settle was valid, subjecting plaintiff to the
statutory penalty because he recovered less at trial than the
amount of the offer. Finally, plaintiff contends the trial court
erred by not according priority to reasonable litigation expenses
and attorney fees owed to plaintiff’s counsel under Labor Code
section 3856.
      We affirm the judgment.

                   FACTUAL BACKGROUND
      On March 4, 2013, Guzman rear-ended plaintiff’s vehicle.
At the time of the accident Guzman was driving a truck for his
employer, Progressive, and plaintiff was driving a truck for his
employer, Asplundh. In the days following the accident plaintiff
reported low back pain, stiffness in his neck, and a strained
shoulder muscle. He was prescribed pain medication and a
muscle relaxant. Plaintiff returned to work regular hours and
duties for the next three weeks, but left his employment in early
April 2013.

1    All further statutory references are to the Code of Civil
Procedure, unless stated otherwise.

                                 2
      During the months following the March 2013 accident,
plaintiff continued to receive treatment for pain, including
prescription medications, doctor visits, diagnostic tests, and
physical therapy. His former employer’s workers’ compensation
insurance carrier, Liberty Insurance Corporation (Liberty), paid
for the treatment. In August 2013, plaintiff’s pain worsened, and
an MRI showed a significantly herniated disc. In September
2014, plaintiff had spinal surgery, which was not approved or
paid for by Liberty.

                    PROCEDURAL HISTORY
Pretrial proceedings, trial, and jury verdict
      Plaintiff commenced this action against defendants
Progressive and Guzman for negligence and negligence per se,
seeking damages for past and future medical expenses, pain and
suffering, and lost earnings and earning potential. Liberty filed a
complaint in intervention, seeking to recover against any
judgment a lien for workers’ compensation benefits paid to
plaintiff, as authorized by Labor Code section 3852. Liberty
subsequently assigned its workers’ compensation lien to
defendants and was dismissed from the case.
      In November 2015, defendants served an offer to settle
under section 998 for $200,000. Plaintiff rejected the offer.
      Before the jury trial commenced the parties stipulated that
a workers’ compensation lien existed in the amount of
$256,631.76; that defendants would admit negligence, but not
causation as to plaintiff’s injuries; and that notwithstanding the
stipulation as to negligence, defendants could present evidence
regarding comparative fault. At the parties’ request, the trial
court read the stipulation to the jury twice, before the
presentation of evidence and again before jury deliberation

                                3
commenced. Also at the parties’ request, the trial court
instructed the jury pursuant to CACI No. 105 not to consider
insurance: “You must not consider whether any of the parties in
this case has insurance. The presence or absence of insurance is
totally irrelevant. You must decide this case based only on the
law and evidence.”
       The jury returned a verdict of $115,000 in plaintiff’s favor,
and on January 22, 2020, the trial court entered an initial
judgment for that amount in plaintiff’s favor.
Posttrial proceedings and final judgment
       Motion for new trial
       Plaintiff filed a motion for a new trial, or in the alternative,
for additur, arguing that two jurors committed prejudicial
misconduct by bringing into deliberations their prior experience
and knowledge regarding the workers’ compensation system. In
support of the motion, plaintiff submitted affidavits from two
jurors, Sophia Martinez and Gretchen Kiker, explaining the
alleged misconduct and its effect on the jury’s deliberations and
verdict. The trial court granted defendants’ motion to strike
portions of the affidavits that discussed the jury’s “mental
processes” and were therefore inadmissible under Evidence Code
section 1150.2

2      Evidence Code section 1150, subdivision (a) states: “Upon
an inquiry as to the validity of a verdict, any otherwise
admissible evidence may be received as to statements made, or
conduct, conditions, or events occurring, either within or without
the jury room, of such a character as is likely to have influenced
the verdict improperly. No evidence is admissible to show the
effect of such statement, conduct, condition, or event upon a juror
either in influencing him to assent to or dissent from the verdict
or concerning the mental processes by which it was determined.”

                                   4
       The trial court ruled that what remained of Martinez’s and
Kiker’s affidavits did not establish misconduct, but rather,
correctly described the court’s instruction not to consider
insurance and included general observations about workers’
compensation, a matter of common knowledge that the jury could
permissibly consider. The trial court took judicial notice of the
fact that workers’ compensation was a matter of common
knowledge in California, citing Evidence Code sections 451,
subdivision (f) and 452, subdivision (g).3
       The trial court noted that the affidavits “demonstrate[d] an
unfortunate level of confusion” among the jurors, “conflat[ing] the
Workers Compensation lien with insurance.” Such confusion, the
court stated, was compounded by the parties’ instructions and
argument. The trial court noted that although the parties both
asked the court to read to the jury the stipulation regarding the
workers’ compensation lien, they never asked the court to further
instruct the jury on the meaning of the word “lien” or the
significance of the stipulation. The court further noted that
plaintiff’s counsel told the jury during closing argument “that the
workers compensation lien amount would not go to the plaintiff”
and that “may have compounded the confusion.”

3      Evidence Code section 451 subdivision (f) requires a court
to take judicial notice of “[f]acts and propositions of generalized
knowledge that are so universally known that they cannot
reasonably be the subject of dispute.” (Evid. Code, § 451, subd.
(f).) Evidence Code section 452, subdivision (g) allows a court to
take judicial notice of “[f]acts and propositions that are of such
common knowledge within the territorial jurisdiction of the court
that they cannot reasonably be the subject of dispute. (Evid.
Code, § 452, subd. (g).)

                                 5
       The trial court denied plaintiff’s motion for a new trial,
concluding: “This is not a matter of concealed bias or the use of
specialized knowledge. The affidavit[s] reveal[] an effort to
conform universal knowledge or common knowledge with the
dictates of the court and the guidance of the attorneys.”
       Labor Code section 3856 motion for fees
       Plaintiff then filed a motion for attorney fees and litigation
expenses under Labor Code section 3856, subdivision (b),
claiming a $50,600 fee (44 percent of the jury verdict pursuant to
his contingency agreement with his attorney), and $28,343.52 in
costs. Defendants opposed the motion for fees and moved to tax
plaintiff’s postoffer section 998 costs, arguing he should not
recover fees and postoffer costs because the jury verdict did not
exceed defendants’ section 998 offer. Defendants argued that
plaintiff was entitled to recover only his pre-offer costs—the
$475.95 filing fee—and filed a cost memorandum claiming that
defendants, as the prevailing parties under section 998, should be
awarded their postoffer costs under section 998, subdivisions
(c)(1) and (e). Defendants’ costs, totaling $174,830.29, consisted
primarily of expert witness fees incurred to dispute causation.
Plaintiff moved to strike defendants’ cost memorandum and
opposed defendants’ motion to tax his costs.
       On April 30, 2020, the trial court, without a hearing, issued
a minute order granting plaintiff’s motion for $50,600 in attorney
fees under Labor Code section 3856, subdivision (b); denying
plaintiff’s motion to strike defendants’ $174,830.29 cost
memorandum; and granting defendants’ motion to tax plaintiff’s
postoffer costs under Code of Civil Procedure section 998.
       The following day, defendants filed a request for
clarification of the trial court’s order in which they argued that
the order failed to consider defendants’ status as prevailing

                                 6
parties under section 998, and that as such, they were entitled to
judgment in their favor for their full costs—$174,830.29.
Plaintiff objected, arguing he was entitled to $28,343.52 in costs
in addition to $50,600 in attorney fees, his claim had priority
under Labor Code section 3856, and no penalty under section 998
should apply.
        On May 20, 2020, the trial court issued a second minute
order ruling that plaintiff’s entitlement to attorney fees under
Labor Code section 3856 was not subject to the Code of Civil
Procedure section 998 penalty provision, but that plaintiff’s
entitlement to litigation costs was subject to the penalty. The
court awarded plaintiff $50,600 in attorney fees and only the
$475.98 preoffer filing fee in costs.
        Although the trial court noted that Labor Code section 3856
required costs to be paid from the judgment, the court added
plaintiff’s attorney fees and allowable costs to the jury’s $115,000
verdict rather than subtracting them from that amount. The
court calculated plaintiff’s award as “$115,000 + $50,600 +
$475.98 = $166,075.98.” The trial court awarded defendants
costs of “$174,830.20” under section 998, subdivision (c)(1). The
court then concluded “[t]he defense has a net gain over the
plaintiff of $8,754.22, and thereby becomes the prevailing party,
i.e., ‘the party with a NET monetary recovery.’”
        Plaintiff then filed a “Request That the Court Clarify and
Revise Its Rulings Based Upon Authority Not Previously
Considered by the Court,” citing Phelps v. Stostad (1997) 16
Cal.4th 23 (Phelps). Defendants opposed the request as an
improper request for reconsideration and argued that the trial
court should not have awarded plaintiff any attorney fees under
the Labor Code. The trial court declined to consider either
party’s briefs.

                                 7
      On June 23, 2020, the trial court vacated the January 2020
judgment and entered a new final judgment in favor of
defendants for $8,754.22, concluding that defendants were the
prevailing parties. Plaintiff appeals from that judgment.

                             DISCUSSION
I.      Motion for new trial*
        “The standard of review on a new trial motion alleging
juror misconduct is abuse of discretion.” (Sarti v. Salt Creek Ltd.
(2008) 167 Cal.App.4th 1187, 1213.) “To the extent that the trial
court confronted conflicting declarations in denying the new trial
motion, we affirm the trial court’s factual determinations,
whether express or implied, if supported by substantial evidence.
[Citations.] . . . ‘In our review of such order denying a new
trial . . . we must fulfill our obligation of reviewing the entire
record, including the evidence, so as to make an independent
determination as to whether the error was prejudicial.’”
(Sandoval v. Los Angeles County Dept. of Public Social Services
(2008) 169 Cal.App.4th 1167, 1176, fn. 6.)
        The record discloses no abuse of discretion. The admitted
portions of the juror affidavits submitted in support of plaintiff’s
new trial motion are not substantial evidence of juror
misconduct. The affidavits state that Jurors Cynthia McLean
and Robert Zettler told the other jury members that “the Workers
Compensation lien was insurance and that we were told not
consider insurance” and that because the “doctors and medical
bills were already paid by insurance the jury could not award
[plaintiff] those damages.” Zettler based the latter statement on

*     See footnote, ante, page 1.

                                    8
his “experience with workers’ compensation in his job.” As the
trial court explained, these statements do not constitute
misconduct because they were based on information from
permissible sources: the court’s instructions, the parties’
stipulation, plaintiff’s counsel’s closing argument, and “general
knowledge in the community about the function of workers
compensation.”
       The trial court stated: “The statements that the jury is not
to consider insurance is a correct statement of the general
instruction given by the court, CACI 105, and appears to be an
effort to comply with the court’s instructions.” The reference to
the workers’ compensation lien as insurance was based on “a
jointly requested stipulation” and CACI No. 105 was “provided to
the court as part of the jointly filed and requested jury
instructions.” The trial court noted that “[t]he jurors were
therefore . . . entitled to consider each of those facts, as well as
their interrelationship.”
       The trial court took judicial notice of the fact that “the
prevalence of Workers Compensation as a form of insurance, that
is, coverage for medical expenses due to on-the-job injury, within
California” is common knowledge or universally known. The
court accordingly concluded that Zettler’s statement that “‘he had
experience with Workers Compensation in his job and that he
knew how it works’ adds nothing of substance by itself. . . . It
may well be that Zettler did have additional experience, but if his
information was discernible from sources the jury was permitted
to use, then any improper statement was nugatory. How the jury
processed the information is barred by Evidence Code section
1150 and may not be considered by this court.” Plaintiff does not
challenge the trial court’s evidentiary rulings taking judicial
notice of workers’ compensation as a form of insurance for work-

                                 9
related injuries or striking portions of the affidavits that were
inadmissible under Evidence Code section 1150.
       Plaintiff contends the jury improperly considered the fact
that workers’ compensation paid for medical expenses included in
the workers’ compensation lien because there was no evidence
that the lien was insurance or that plaintiff was not entitled to
recover those expenses. Plaintiff’s counsel provided this
information to the jury, however, when he argued: “[W]rite this
other number down, [$]209,670.21. That’s the past medical
expenses that are not part of the workers’ compensation lien.
[$]209,670.21. And when you add that with the workers’ comp
lien, it’s [$]466,301.97. [T]hat’s his past economic losses. That’s
for the workers’ comp and for the surgery; [$]466,301.97.
Remember, the workers’ comp lien, that’s not going to [plaintiff].”
To the extent the jury considered that some medical expenses
were paid by workers’ compensation insurance and that plaintiff
would not receive any damages awarded for the amount of the
workers’ compensation lien, it did so at plaintiffs’ invitation.
       The record does not support plaintiff’s suggestion that
Jurors McLean and Zettler concealed during voir dire any bias or
special knowledge concerning workers’ compensation. Their
nonresponse to a general question as to whether the jurors had “a
problem with the fact that they’re going to be asked to say a
number of pain and suffering, a number for the workers’
compensation lien” was not substantial evidence of misconduct.
(See Hasson v. Ford Motor Co. (1982) 32 Cal.3d 388, 408 [juror’s
failure to volunteer that his son died from resulting brain injuries
sustained in automobile accident when jury was asked on voir
dire if any of them had “‘dealt with brain injuries’” was
insufficient proof of bias].)

                                10
       Juror McLean’s purported discussion of workers’
compensation with another juror evidences neither bias nor
specialized knowledge. In response to concerns expressed by
plaintiff’s counsel, the trial court admonished and ordered the
jury “not to discuss the case amongst yourselves or with anyone
else.”
       Tapia v. Barker (1984) 160 Cal.App.3d 761, on which
plaintiff relies, is distinguishable. Jurors deliberating in that
case made racist and disparaging remarks about the plaintiff’s
Mexican ethnicity and discussed collateral sources of
compensation, including disability, welfare, and unemployment,
when there was no evidence of such collateral sources. (Id. at
pp. 764-765.) The jurors here did not introduce the subject of
workers’ compensation insurance into the case. The parties did.
       The trial court did not abuse its discretion by denying the
motion for new trial based on juror misconduct.
II.    Section 998 offer
       “[S]ection 998 establishes a procedure to shift costs if a
party fails to accept a reasonable settlement offer before trial.
The purpose of the statute is to encourage pretrial settlements.”
(Fassberg Construction Co. v. Housing Authority of City of Los
Angeles (2007) 152 Cal.App.4th 720, 764 (Fassberg).) If the party
who prevails at trial obtains a judgment less favorable than a
pretrial settlement offer submitted by the other party, then the
prevailing party cannot recover its own postoffer costs but must
pay its opponent’s postoffer costs, including, potentially, expert
witness fees. (§ 998, subd. (c)(1); Barella v. Exchange Bank
(2000) 84 Cal.App.4th 793, 798.)
       An offer to compromise under section 998 “must be
sufficiently specific to allow the recipient to evaluate the worth of
the offer and make a reasoned decision whether to accept the

                                 11
offer. Any nonmonetary terms or conditions must be sufficiently
certain and capable of valuation to allow the court to determine
whether the judgment is more favorable than the offer.”
(Fassberg, supra, 152 Cal.App.4th at p. 764.) Whether an offer is
sufficiently specific and certain under section 998 is an issue we
review de novo. (Fassberg, at p. 765.)
       Defendants’ section 998 offer was sufficiently certain and
capable of valuation. It contained no vague or nonmonetary
terms. The offer stated that defendants “hereby offer to allow
judgment to be taken against them in the total sum of TWO
HUNDRED THOUSAND DOLLARS ($200,000.00), with all
parties bearing their own fees and costs.”
       That the section 998 offer did not refer to the workers’
compensation lien and state whether settlement proceeds could
be used to recoup the lien does not render the offer uncertain or
invalid. A party making a section 998 offer “need not take into
account a lien against the judgment when making the offer.”
(Manthey v. San Luis Rey Downs Enterprises, Inc. (1993) 16
Cal.App.4th 782, 791 (Manthey), citing Culbertson v. R. D.
Werner Co., Inc. (1987) 190 Cal.App.3d 704, 708.)
       Chen v. Interinsurance Exchange of the Automobile Club
(2008) 164 Cal.App.4th 117 and MacQuiddy v. Mercedes-Benz
USA, LLC (2015) 233 Cal.App.4th 1036, which plaintiff cites in
support of his position, are distinguishable. The offer to settle in
Chen required a “general release of all claims” and was
ambiguous as to whether it barred future lawsuits for other
pending claims. (Chen, at p. 122.) The offer in MacQuiddy
included a conditional term offering to repurchase a car “‘in an
undamaged condition, save normal wear and tear.’” (MacQuiddy,
at p. 1050.) The court in MacQuiddy concluded the condition
“inserted uncertainty into the offer” as the term “undamaged

                                12
condition” was undefined and required a factual determination.
(Ibid.) The offer was accordingly invalid. (Ibid.) No such
ambiguities exist in the section 998 offer at issue here. The trial
court did not err by concluding that defendants’ section 998 offer
was sufficiently certain and valid.
III. Code of Civil Procedure section 998 and Labor Code
       section 3856
       When employers or employees sue third party defendants
for injuries subject to workers’ compensation, Labor Code section
3856 governs the allocation of any judgment.4 “That statute

4      Labor Code section 3856 states: “In the event of suit
against such third party: [¶] (a) If the action is prosecuted by
the employer alone, the court shall first order paid from any
judgment for damages recovered the reasonable litigation
expenses incurred in preparation and prosecution of such action,
together with a reasonable attorney’s fee which shall be based
solely upon the services rendered by the employer’s attorney in
effecting recovery both for the benefit of the employer and the
employee. After the payment of such expenses and attorney’s
fees, the court shall apply out of the amount of such judgment an
amount sufficient to reimburse the employer for the amount of
his expenditure for compensation together with any amounts to
which he may be entitled as special damages under Section 3852
and shall order any excess paid to the injured employee or other
person entitled thereto. [¶] (b) If the action is prosecuted by the
employee alone, the court shall first order paid from any
judgment for damages recovered the reasonable litigation
expenses incurred in preparation and prosecution of such action,
together with a reasonable attorney’s fee which shall be based
solely upon the services rendered by the employee’s attorney in
effecting recovery both for the benefit of the employee and the
employer. After the payment of such expenses and attorney’s fee
the court shall, on application of the employer, allow as a first
lien against the amount of such judgment for damages, the

                                13
provides that whether the third party is sued by the employer
alone (§ 3856, subd. (a)), the employee alone (§ 3856, subd. (b)), or
both the employer and the employee (§ 3856, subd. (c)), any
resulting judgment shall be used first to pay the ‘reasonable
litigation expenses incurred in preparation and prosecution of
such action, together with a reasonable attorney’s fee.’ (§ 3856,
subd. (b).) Next, the judgment shall be used to reimburse the
employer for the amount of compensation paid to the employee.

amount of the employer's expenditure for compensation together
with any amounts to which he may be entitled as special
damages under Section 3852. [¶] (c) If the action is prosecuted
both by the employee and the employer, in a single action or in
consolidated actions, and they are represented by the same
agreed attorney or by separate attorneys, the court shall first
order paid from any judgment for damages recovered, the
reasonable litigation expenses incurred in preparation and
prosecution of such action or actions, together with reasonable
attorneys’ fees based solely on the services rendered for the
benefit of both parties where they are represented by the same
attorney, and where they are represented by separate attorneys,
based solely upon the service rendered in each instance by the
attorney in effecting recovery for the benefit of the party
represented. After the payment of such expenses and attorneys’
fees the court shall apply out of the amount of such judgment for
damages an amount sufficient to reimburse the employer for the
amount of his expenditures for compensation together with any
other amounts to which he may be entitled as special damages
under Section 3852. [¶] (d) The amount of reasonable litigation
expenses and the amount of attorneys’ fees under subdivisions
(a), (b), and (c) of this section shall be fixed by the court. Where
the employer and employee are represented by separate
attorneys they may propose to the court, for its consideration and
determination, the amount and division of such expenses and
fees.”

                                 14
Any remaining portion of the judgment goes to the injured
employee.” (Phelps, supra, 16 Cal.4th at p. 30.)
       A.     Section 998
       Except as otherwise provided by statute, the prevailing
party in an action or proceeding is entitled, as a matter of right,
to recover its costs. (§ 1032, subd. (b).) A prevailing party’s
entitlement to costs may be affected, however, by a refusal to
accept a pretrial settlement offer under section 998. For
example, a plaintiff who rejects a defendant’s section 998 offer
and fails to obtain a more favorable judgment at trial faces both
mandatory and discretionary penalties. (Weil & Brown, Cal.
Practice Guide: Civil Procedure Before Trial (The Rutter Group
2021) ¶ 12:648.) The mandatory penalties imposed by section
998 preclude such a plaintiff from recovering any postoffer costs
(although preoffer costs are recoverable if the plaintiff is the
prevailing party), and require the plaintiff to pay the defendant’s
postoffer costs. If the defendant’s postoffer costs exceed the
amount of damages awarded to the plaintiff, a judgment must be
entered against the plaintiff for the net excess. (§ 998, subd. (e);
Weil & Brown, ¶ 12:648.1.) As a discretionary penalty, a court
may also order the plaintiff to pay the defendant’s postoffer
expert witness fees. (§ 998, subd. (c).)
       Section 998 states in relevant part:
       “(c)(1) If 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, in any
       action or proceeding other than an eminent domain
       action, the court or arbitrator, in its discretion, may
       require the plaintiff to pay a reasonable sum to cover
       postoffer costs of the services of expert witnesses,

                                 15
      who are not regular employees of any party, actually
      incurred and reasonably necessary in either, or both,
      preparation for trial or arbitration, or during trial or
      arbitration, of the case by the defendant. [¶] . . . [¶]
      “(e) If an offer made by a defendant is not accepted
      and the plaintiff fails to obtain a more favorable
      judgment or award, the costs under this section, from
      the time of the offer, shall be deducted from any
      damages awarded in favor of the plaintiff. If the
      costs awarded under this section exceed the amount
      of the damages awarded to the plaintiff the net
      amount shall be awarded to the defendant and
      judgment or award shall be entered accordingly.”
       To determine whether a plaintiff has obtained a judgment
or award more favorable than a defendant’s offer under section
998, a trial court must calculate the “net judgment,” considering
the status of the litigation at the time the section 998 offer was
outstanding. (See Scott Co. v. Blount, Inc. (1999) 20 Cal.4th
1103, 1111-1112 (Scott).) To do so, the court must add to the
judgment or award costs incurred by the plaintiff prior to the
offer,5 including preoffer attorney fees in any case in which
attorney fees are otherwise awardable as costs.6 The court must

5     Section 998 expressly excludes a plaintiff’s postoffer costs
when determining whether the plaintiff obtained a more
favorable judgment. (§ 998, subd. (c)(2)(A).) By expressly
excluding postoffer costs, the statute indicates that preoffer costs
are included in determining whether the judgment is more
favorable than the section 998 offer. (Heritage Engineering
Construction, Inc. v. City of Industry (1998) 65 Cal.App.4th 1435,
1441.)
6     Section 998 does not provide greater rights to attorney fees
than provided for by the underlying statute or contract. A party

                                 16
then deduct from the judgment or award the defendant’s
postoffer costs allowable under section 1033.5 (§ 998, subd. (a);
Scott, at pp. 1112-1113), and any postoffer expert witness fees
assessed against the plaintiff in the court’s discretion. (§ 998,
subd. (c)(1), (e); Murillo v. Fleetwood Enterprises, Inc. (1998) 17
Cal.4th 985, 1000.) A trial court may not deduct, however, any
liens against the plaintiff’s award, including any workers’
compensation lien, when determining whether the plaintiff
obtained a more favorable judgment or award. (Poire v. C.L.
Peck/Jones Brothers Construction Corp. (1995) 39 Cal.App.4th
1832, 1842 (Poire); Manthey, supra, 16 Cal.App.4th at p. 789.) If
the defendant’s postoffer costs exceed the damages awarded to
the plaintiff, a judgment in the net amount of the difference must
be entered in the defendant’s favor. (§ 998, subd. (e); see Elite
Show Services, Inc. v. Staffpro, Inc. (2004) 119 Cal.App.4th 263,
267.)
       The purpose of section 998 is “‘to encourage settlement by
 providing a strong financial disincentive to a party—whether it
 be a plaintiff or a defendant—who fails to achieve a better result

with no statutory or contractual basis to recover attorney fees
cannot add them to the verdict when deciding whether a section
998 offer was exceeded. (See Scott, supra, 20 Cal.4th at pp. 1111-
1112 [plaintiff who rejects settlement offer greater than the
recovery it ultimately obtains may recover preoffer costs,
including preoffer attorney fees where attorney fees are an
authorized category of recoverable costs under §§ 1032 and
1033.5].) Attorney fees are not an authorized category of
recoverable costs in this case involving claims of negligence and
negligence per se. (Gray v. Don Miller & Associates, Inc. (1984)
35 Cal.3d 498, 506 (Gray) [attorney fees not generally available to
prevailing parties in tort actions].)

                                17
than that party could have achieved by accepting his or her
opponent’s settlement offer.’” (Burchell v. Faculty Physicians &
Surgeons etc. (2020) 54 Cal.App.5th 515, 532.) “‘Section 998
must be strictly construed in favor of the party sought to be
subjected to its operation.’” (People ex rel. Lockyer v. Fremont
General Corp. (2001) 89 Cal.App.4th 1260, 1264, quoting Garcia
v. Hyster Co. (1994) 28 Cal.App.4th 724, 732-733.)
      B.     Labor Code section 3856
      Labor Code section 3856 is part of the statutory scheme
that governs personal injury actions against third party
tortfeasors by employees who have received workers’
compensation benefits. (Lab. Code, §§ 3850-3865.) When a
worker is entitled to workers’ compensation benefits for an
injury, those benefits are generally the worker’s exclusive
remedy against the worker’s employer for injuries sustained in
the course of employment. (Lab. Code, § 3602, subd. (a); Phelps,
supra, 16 Cal.4th at p. 30.) The worker may, however, sue a
negligent third party who caused the injury. (Lab. Code,
§ 3852.)
      The employer is likewise entitled to recover from the
negligent third party the amount of workers’ compensation
benefits paid to the injured worker. (Lab. Code, § 3852.)
“Employer” in this context includes the employer’s workers’
compensation insurer. (Lab. Code, § 3850; Fidelity & Casualty
Co. v. McMurry (1963) 217 Cal.App.2d 767, 769.) The employer
or workers’ compensation insurer may sue the third party
directly, intervene in the worker’s action against the third party,
or assert a lien or right of reimbursement against any judgment
obtained by the injured employee to recover the amount paid in
workers’ compensation benefits. (Lab. Code, §§ 3852, 3856,

                                18
subd. (c); Quinn v. State of California (1975) 15 Cal.3d 162, 167;
Manthey, supra, 16 Cal.App.4th at pp. 786-787.)
      “[Labor Code] [s]ection 3856 governs the allocation between
the employee and the employer of a judgment obtained against a
negligent third party.” (Phelps, supra, 16 Cal.4th at p. 30.)
When, as was the case here, the employee solely litigated the
action, Labor Code section 3856, subdivision (b) gives the
employee a priority right to reimbursement of litigation
expenses before the employer or workers’ compensation insurer
is reimbursed for workers’ compensation benefits. The statute
provides:
      “If the action is prosecuted by the employee alone, the
      court shall first order paid from any judgment for
      damages recovered the reasonable litigation expenses
      incurred in preparation and prosecution of such
      action, together with a reasonable attorney’s fee
      which shall be based solely upon the services
      rendered by the employee’s attorney in effecting
      recovery both for the benefit of the employee and the
      employer. After the payment of such expenses and
      attorney’s fee the court shall, on application of the
      employer, allow as a first lien against the amount of
      such judgment for damages, the amount of the
      employer’s expenditure for compensation together
      with any amounts to which he may be entitled as
      special damages under Section 3852.” (Lab. Code,
      § 3856, subd. (b).)
      Labor Code section 3856 is a statutory application of the
“so-called ‘common fund doctrine.’ [Citation.] That is, a party
who expends attorney fees in winning a lawsuit which creates a
fund from which others derive benefits may require those
passive beneficiaries to bear a fair share of the litigation costs.
The amount of the judgment owing to the passive beneficiary

                                19
 may be reduced to compensate the active litigant for his attorney
 fees.” (Walsh v. Woods (1986) 187 Cal.App.3d 1273, 1276.)
       The priority scheme established by Labor Code section
 3856 is not dependent on whether the judgment obtained
 exceeds the amount of the employer’s lien. “The rule giving
 priority to the claim for litigation expenses and attorney fees
 was created for cases like the present one in which the amount
 of the judgment is insufficient to pay reasonable litigation
 expenses and attorney fees and also fully reimburse the
 employer.” (Phelps, supra, 17 Cal.4th at pp. 30-31.) “[T]he
 Legislature in enacting [Labor Code] section 3856, created a
 priority scheme which assures the worker the services of an
 attorney by guaranteeing priority to attorney fees in the event a
 judgment is insufficient to recompense the worker and satisfy
 the employer’s claim.” (Manthey, supra, 16 Cal.App.4th at
 p. 789.)
       C.     Application of Labor Code section 3856 and
              Code of Civil Procedure section 998
              1.    General legal principles
       The parties here agree that the trial court erred by adding
to, rather than subtracting from the judgment the $50,600 in
attorney fees incurred by plaintiff. They disagree on the
sequence in which the statutes at issue should be applied and
which statute takes priority in application.
       Plaintiff contends his attorney fees and litigation expenses
are entitled to priority under Labor Code section 3856 and should
be deducted from the $115,000 verdict and initial judgment
entered in his favor before satisfying the workers’ compensation
lien and before applying the cost-shifting provisions of Code of
Civil Procedure section 998. Defendants maintain the cost-
shifting provisions of section 998 should apply before the Labor

                                20
Code section 3856 allocations. Resolution of this question
involves issues of statutory construction, which we review de
novo. (Citizens for a Responsible Caltrans Decision v. Department
of Transportation (2020) 46 Cal.App.5th 1103, 1120.)
       “‘A fundamental rule of statutory construction is that a
court should ascertain the intent of the Legislature so as to
effectuate the purpose of the law. [Citations.] In construing a
statute, our first task is to look to the language of the statute
itself. [Citation.] When the language is clear and there is no
uncertainty as to the legislative intent, we look no further and
simply enforce the statute according to its terms. [Citations.] [¶]
Additionally, however, we must consider the [statutory language]
in the context of the entire statute [citation] and the statutory
scheme of which it is a part. “We are required to give effect to
statutes ‘according to the usual, ordinary import of the language
employed in framing them.’ [Citations.]” [Citations.] “‘If
possible, significance should be given to every word, phrase,
sentence and part of an act in pursuance of the legislative
purpose.’ [Citation.] . . . . ‘When used in a statute [words] must
be construed in context, keeping in mind the nature and obvious
purpose of the statute where they appear.’ [Citations.]
Moreover, the various parts of a statutory enactment must be
harmonized by considering the particular clause or section in the
context of the statutory framework as a whole.”’” (Phelps, supra,
16 Cal.4th at p. 32.)
       If statutes “conflict on a central element, we strive to
harmonize them so as to give effect to each. If conflicting
statutes cannot be reconciled, later enactments supersede earlier
ones [citation], and more specific provisions take precedence over
more general ones [citation]. Absent a compelling reason to do
otherwise, we strive to construe each statute in accordance with

                                21
its plain language.” (Collection Bureau of San Jose v. Rumsey
(2000) 24 Cal.4th 301, 309-310.)
              2.    The statutory language requires Code of Civil
                    Procedure section 998 to be applied before Labor
                    Code section 3856
       The plain language of Code of Civil Procedure section 998
and Labor Code section 3856, read together, dictate the sequence
in which those statutes should be applied. Section 998,
subdivision (e) states that when a plaintiff fails to obtain a more
favorable judgment or award than a defendant’s section 998 offer,
the costs awarded to the defendant “shall be deducted from any
damages awarded in favor of the plaintiff. If the costs awarded
under this section exceed the amount of the damages awarded to
the plaintiff the net amount shall be awarded to the defendant
and judgment or award shall be entered accordingly.” (§ 998,
subd. (e), italics added.) The statute requires deduction of the
defendant’s postoffer costs from the plaintiff’s damages award;
then if the costs exceed the amount of the award, as was the case
here, a judgment must be entered in the defendant’s favor.
Section 577 defines “judgment” as “the final determination of the
rights of the parties in an action or proceeding.”7 Section 998
thus contemplates entry of a final judgment between the parties
after its cost-shifting provisions have been applied.

7     The Legislature amended section 998 in 1997 to include the
term “award” when determining whether the plaintiff obtained “a
more favorable judgment or award.” (Stats. 1997, ch. 892, § 1.)
The statutory language as amended does not strictly require
entry of judgment, but contemplates a final determination of the
parties’ claims. (See American Airlines, Inc. v. Sheppard, Mullin,
Richter & Hampton (2002) 96 Cal.App.4th 1017, 1055-1056.)

                                22
        The plain language of Labor Code section 3856
contemplates the existence of a judgment. Labor Code section
3856, subdivision (b) states that when an employee alone
prosecutes an action against a third party tortfeasor, “the court
shall first order paid from any judgment for damages recovered
the reasonable litigation expenses incurred in preparation and
prosecution of such action, together with a reasonable attorney’s
fee . . . . After the payment of such expenses and attorney’s fee
the court shall . . . allow as a first lien against the amount of such
judgment for damages, the amount of the employer’s expenditure
for compensation . . . .” (Lab. Code, § 3856, subd. (b), italics
added.) As noted, under section 577 a judgment is the final
determination of the parties’ rights and therefore must reflect
any cost shifting under section 998. The cost shifting under
section 998 must therefore occur before ordering payment from
the judgment litigation expenses and attorney fees under Labor
Code section 3856.
               3.    Applying Code of Civil Procedure section 998
                     before Labor Code section 3856 is consistent
                     with case authority
        Applying the cost-shifting provisions of Code of Civil
Procedure section 998 before the Labor Code section 3856
allocations is consistent with applicable case authority. As the
court in Manthey stated: Labor Code section 3856, subdivision
(b) “requires in unambiguous language, that a workers’
compensation lien be satisfied out of the judgment and not the
verdict. ‘It is for the court, after judgment has been entered (or
concurrently therewith) to make the orders provided for by
subdivision (b) of section 3856 of the Labor Code.’ [Citation.] ‘If
the employer elects [to abstain and claim a lien on the
judgment] . . . it is clear that the jury is not concerned, in arriving

                                  23
at its verdict, with the rights of the employer and that the verdict
and judgment may properly refer only to the plaintiff and to the
third party tortfeasor.’” (Manthey, supra, 16 Cal.App.4th at
p. 789.) The court in Manthey explained that “[t]he workers’
compensation lien is an interest in future acquired property, and
that property—the judgment—does not exist until a judgment
has been entered. . . . Thus, it is error to offset the amount of the
lien against the verdict. Rather, the lien should be taken in
partial satisfaction of the judgment after it is entered.” (Ibid.)
Other appellate courts have agreed. “We follow the reasoning of
the Manthey court in concluding that the section 998
determination should be made before workers’ compensation
benefits are deducted from the judgment.” (Poire, supra, 39
Cal.App.4th at p. 1842.)
       Phelps, supra, 16 Cal.4th 23, on which plaintiff relies,
undermines rather than supports his position. The high court in
that case examined the interplay between Labor Code section
3856 and Code of Civil Procedure section 1141.21, former
subdivision (a)(ii),8 a cost-shifting statute similar to section 998.9

8    Section 1141.21 was subsequently amended and
renumbered. The language of the current statute, section
1141.21, subdivision (a)(1)(B) remains unchanged from section
1141.21, former subdivision (a)(ii).
9     Section 1141.21, former subdivision (a)(ii) governed the
recovery of costs when a party elected a trial de novo following a
judicial arbitration. It stated in relevant part: “(a) If the
judgment upon the trial de novo is not more favorable in either
the amount of damages awarded or the type of relief granted for
the party electing the trial de novo than the arbitration award,
the court shall order that party to pay the following
nonrefundable costs and fees . . . . [¶] . . . [¶] (ii) To the other

                                 24
        The plaintiff in Phelps, who suffered a workplace injury
caused by a third party defendant, rejected an arbitration award
in his favor and obtained a less favorable judgment following a
trial de novo. The trial court ruled that section 1141.21, former
subdivision (a)(ii) precluded the plaintiff from recovering his
litigation expenses and attorney fees under Labor Code section
3856, and the appellate court affirmed.
        The Supreme Court reversed, concluding that section
1141.21, former subdivision (a)(ii) does not preclude application
of Labor Code section 3856 because litigation expenses and
attorney fees under the latter statute are not recoverable costs,
but payments to be made from the judgment: “[E]ven when a
party who has elected a trial de novo following judicial
arbitration is precluded by section 1141.21[, former subdivision]
(a)(ii) from recovering his or her costs, the proceeds of the
judgment obtained by the party are subject to allocation pursuant
to the provisions of [Labor Code] section 3856, including the use
of the judgment for the payment of reasonable litigation expenses
and attorney fees.” (Phelps, supra, 16 Cal.4th at p. 34.) The
court explained that a party does not “‘recover’ costs” in
contravention of section 1141.21, former subdivision (a)(ii)
“simply because a portion of the judgment that the party has
been awarded is used to pay litigation expenses or attorney fees.”
(Phelps, at p. 33.)
        Distribution of a judgment occurs after the judgment is
final. A judgment is not final until costs have been allocated
under section 998. Plaintiff’s failure to obtain a more favorable

party or parties, all costs specified in Section 1033.5, and the
party electing the trial de novo shall not recover his or her costs.”
(§ 1141.21, former subd. (a)(ii).)

                                 25
judgment after rejecting defendant’s section 998 offer did not
preclude him from recovering his reasonable litigation expenses
and attorney fees from any final judgment entered in his favor.
(Phelps, supra, 16 Cal.4th at pp. 30-31, 34.)
             4.    The trial court erred in its calculation of the net
                   judgment and its application of Labor Code
                   section 3856
       We agree with the parties that the trial court erred by
adding plaintiff’s $50,600 in attorney fees to the $115,000 jury
verdict when calculating the net judgment under section 998.
Attorney fees are not an authorized category of recoverable costs
in this case involving claims of negligence and negligence per se.
(Gray, supra, 35 Cal.3d at p. 506 [attorney fees not generally
available to prevailing parties in tort actions].)
       The trial court should have entered an order awarding
plaintiff $475.98 in preoffer costs. Plaintiff’s total damages
award would have totaled $115,475.98 ($475.98 + the $115,000
jury verdict). The court should then have deducted from the
$115,475.98 award the $174,830.29 in postoffer costs awarded to
defendants under section 998. A judgment in the resulting net
amount of $59,354.31 should then have been entered in
defendants’ favor. This result would conform to section 998,
subdivision (e).
       Only after entry of the judgment should the trial court have
then applied Labor Code section 3856. Because the resulting
judgment was in defendants’ favor, there was no “judgment for
damages recovered” in favor of plaintiff from which plaintiff’s
reasonable litigation expenses and attorney fees or Progressive’s
workers’ compensation lien could be paid. (Lab. Code, § 3856,
subd. (b).)

                                 26
       Plaintiff fails to establish any basis for reversing the
judgment entered in defendants’ favor. Defendants did not cross-
appeal, and they do not challenge the $8,754.22 final judgment
entered in their favor. Absent such a challenge, we have no basis
for overturning the $8,754.22 judgment entered in defendants’
favor.

                           DISPOSITION
         The judgment is affirmed. Each side is to bear its own
costs.

                                       ________________________
                                       CHAVEZ, J.

We concur:

________________________
LUI, P. J.

________________________
HOFFSTADT, J.

                                  27