Defendants’ Alleged Indigent Status And Insurer Excess Liability Factors Were Inconsequential, And Technical Argument On 998 Acceptance Line Formatting Rejected.
Although unpublished, Hackett v. Silva Trucking, Inc., Case No. C076745 (3d Dist. Nov. 22, 2017) (unpublished) is an interesting analysis of factors which were not properly considered when the defense rejected 998 offers in a personal injury case where the plaintiffs far eclipsed their 998 offers to the two defendants.
What happened here is that plaintiffs made $12.5 million separate 998 offers to two defendants, both rejected, with the jury later awarding plaintiffs more than $34 million in damages where the defense admitted negligence and causation. Even later, the trial judge awarded plaintiffs $339,467 in costs based on them being the successful parties under the 998 offers.
Defendants appealed, but to no avail.
Because plaintiffs’ offers were reasonable when measured by the ultimate favorable verdict, the defense was somewhat hamstringed to argue that defendants’ respective indigent status—they did not have the financial ability to pay—had to be considered in evaluating the 998 offers. That contention was rebuffed this way by the appellate court: “However, defendants cite no authority that a tortfeasor’s financial status determines reasonableness of an offer which is supposed to compensate for injuries sustained by the tort victim … Leaving aside future finances, it is not bad faith for plaintiffs to seek amounts commensurate to their loss. Indeed, a defendant who perceives himself or herself as judgment-proof might not mind entry of an uncollectible judgment against him or her in a settlement amount likely to be less than a jury award, particularly where, as here, the defendant admits negligence and causation.” (Slip Op., at p. 10.)
In a nuanced spin-off argument, the defense argued it was unreasonable for plaintiffs to reject their 998 offers because plaintiffs should have known that excess insurers might be liable for amounts exceeding policy limits. The Third District did not buy this argument either, essentially saying that defendants must evaluate offers objectively regardless of whether the insurer would end up paying in excess of policy limits. There is an interesting discussion of Aguilar v. Gostischef, 220 Cal.App.4th 475 (2013) on the excess insurer liability concern, which came to the same conclusion in a different context.
Last, but not least, the defense argued that the 998 offers were procedurally infirm because both had language saying defendants must file any acceptance with the court. The problem is that the statute does not mandate who has to file the acceptance, such that this language was not offending with respect to the validity of the 998 offers.