Substantial Costs Awards Are Becoming More Prevalent In Corporate Defendant Type Situations.
In several recent posts in the last few months, we have noted a trend for personal injury or consumer plaintiffs to suffer adverse costs awards of a substantial nature. This, of course, counsels that CCP § 998 offers must be carefully assessed and that request for admissions need to be candidly answered. This next case continues the trend we have been reporting on.
Huang v. State Farm General Ins. Co., Case No. B276878 (2d Dist. Div. 2 Sept. 27, 2018) (unpublished) was a situation where plaintiff insureds should have been aware of facts showing that damages to their residence resulted from long-term settlement rather than vibrations from some demolition work. Insured denied requests for admissions despite having prior reports and facts showing such inquiry notice and rejected insurance company’s pre-trial CCP § 998 offer to pay plaintiffs $5,000, with each side bearing their own attorney’s fees and costs.
This conduct had disastrous consequences. The lower court granted summary judgment on the breach of implied covenant claim, and the jury found in favor of the defense on the contract claim. Then, the trial judge granted RFA costs-of-proof sanctions of $167,861.50 and post-rejection 998 expert witness fees of $50,664.44 (the total requests by State Farm).
The appellate court affirmed based on the deferential abuse of discretion standard. Plaintiffs did have enough data to know that preexisting damage was the culprit rather than the demolition vibrations. Even though some billings were redacted, plenty of substantiation was presented so that RFA costs-of-proof sanctions could be “settled” by the lower court as far as amount. The reasonableness of the 998 offer is not based on plaintiffs’ subjective belief but on information that was known or reasonably should have been known by them—and, in this case, they had lots of expert witness reports and other information to evaluate the offer and State Farm’s belief that their case was not worth much.