CALIFORNIA ATTORNEY'S FEES

Costs/Section 998: Second District, Division 1 Issues Important Opinion On Reimbursement of PowerPoint Argument Presentations And CCP § 998 Cost-Shifting Where Plaintiff Presents Successive 998 Offers

 

PowerPoint Argument Presentations No Go; Videotaped Depositions A Go Under the Right Facts; And “Bright Line” Rule Offered On Cost Reimbursement Where Plaintiff Makes Successive 998 Offers.

     As you can probably tell from our topical headlines above, the Second District, Division 1 issued an important routine costs/CCP § 998 cost-shifting opinion in Martinez v. Brownco Construction Co., Inc., Case No. B226665 (2d Dist., Div. 1 Feb. 10, 2012) (certified for publication), authored by Justice Chaney on behalf of a 3-0 panel.

     If you haven’t guessed it yet, plaintiffs won respective $1.645 million and $250,000 jury awards against defendant in a negligence personal injury action after defendant rejected two prior significant 998 offers, each of which beat the eventual jury verdicts.

     That inspired the trial court to do this: (1) award about $12,000 for editing video deposition testimony/presenting jurors with videotaped deposition recording; (2) award plaintiffs over $87,280 for a PowerPoint presentation used during closing argument; (3) award plaintiffs over $64,500 in expert witness fees based on expert expenses after defense rejection of the second offer; but (4) deny plaintiffs expert witness fees of $188,500 incurred after their first section 998 offers but before their second 998 offers.

     Well, those lower court rulings did result in a published opinion setting some things straight. (Interestingly, the costs proceedings were heard before a bench officer not presiding at the trial--a not infrequent occurrence when original bench officers die or moves on--with the appellate court indicating that the moving party for costs needs to give more complete evidence when this situation occurs, but with the more detached bench officer’s rulings only going to the burden of persuasion rather than the ultimate standard of review. This is a nuanced determination which should be noted in subsequent cases.) Here is what happened on appeal:

#1: Videotaped deposition expenses were sustained, especially given the lower court record indicating that they were incurred for a crucial witness (“necessary,” not just helpful in nature);

#2: PowerPoint presentation for closing argument, not a summary of proof, was only “helpful” but not necessary, so that it was an abuse of discretion to award it as costs (contrasted with mandatory cost reimbursements for exhibits and summaries presented as evidence before the trier of fact); and

#3: The expert witness fees incurred between the first and second 998 offers were incorrectly denied to plaintiff. This was the heavily discussed item, given two appellate court decisions that could be construed as going the other way. However, the Second District, Divison 1 determined, both on contractual, policy, and preference for “bright line” rule grounds, that “[w]hen a party makes two section 998 offers to compromise more than 30 days apart, the purpose of section 998 is adequately served by the statute’s existing language, which entitles an offeror to cost shifting from the date of the earliest reasonable offer. This rule encourages early settlement, respects the Legislature’s preference for early discovery and evaluation of the merits of lawsuits, and presents a certain, bright line rule by which settlement negotiations may be guided. If any mischief or confusion results from later offers, or any gamesmanship arises, the court can address such concerns when it awards costs.” (Slip Opn., pp. 16-17.)

     So, the videotape costs were sustained, the PowerPoint argument costs were reversed, and the expert witness fees denial between the two 998 offers was remanded for a further redetermination.

     BLOG UNDERVIEW--This Division has announced prior “bright line” rules, determining that 998 offers which exclude “costs” means that attorney’s fees are within the ambit of the “costs” exclusion of the 998 offer. (See Martinez v. L.A. County Metropolitan Transp. Auth., 195 Cal.App.4th 1038 (2011) (Rothschild, J.) [one of our Top 20 Opinions for 2011].)

        BLOG BONUS:  The Anti PowerPoint Party is a Swiss political party dedicated to decrease professional use of PowerPoint.  Really.

Section 998: $125,000 998 Offer Was Hardly Token When Defendant Defensed Plaintiff’s Negligence Case On A Summary Judgment In Bizarre Concert Incident

 

$18,957 Award of Expert Witness Fees Against Plaintiff Was the Outcome.

     The facts in some cases are simply amazing. Cano v. Anaheim Arena Management, LLC, Case No. G044751 (4th Dist., Div. 3 Feb. 6, 2012) (unpublished) is one of them.

     Plaintiff doctor was attending a concert by “The Boss” (Bruce Springsteen) at the Honda Center in Anaheim when another concertgoer, who apparently was intoxicated, fell backwards and landed on plaintiff’s head resulting in permanent blindness in her left eye requiring her to close her medical practice. The falling concertgoer died from a heart condition six months after the concert. Plaintiff sued defendant management company mainly for negligence, although defendant won a summary judgment because it adequately screened each concertgoer and even the other concertgoer’s wife said he did not appear drunk at the time of the concert. The trial court later awarded defendant $18,957 in expert witness fees because plaintiff failed to beat a 998 offer worth $125,000 ($101,000, plus waiver of the costs inclusive of routine costs and expert witness fees).

     Plaintiff did not convince the appellate court that the section 998 offer was token or made in bad faith, in a 3-0 decision authored by Justice Aronson.

     Just because plaintiff claimed serious injuries did not justify finding the offer to be illusory in nature. After all, there were serious liability questions and the offer was made nearly five months after defendant served its summary judgment motion such that plenty of information was available to plaintiff for assessment purposes. Also, plaintiff may have suffered from a preexisting eye condition that would have diluted the damages picture. In the end, even hindsight could not support disturbing the trial court’s discretionary decision that the 998 decision was reasonable based on the circumstances existent at the time of the offer. Expert fee-shifting was appropriate in this interesting case. (Essex Ins. Co. v. Heck, 186 Cal.App.4th 1513, 1528-1530 (2010).)

Arbitration/Costs/Section 998: Where Arbitration Submission Agreement Is Broad, Seek Winning 998 Enhancements From Arbitrator, Not Just The Court

 

Denial of 998 Cost Enhancements Was Not Improper.

     Maaso v Signer, Case No. B228314 (2d Dist., Div. 2 Feb. 7, 2012) (certified for publication) is one of those lessons for all of us practitioners who arbitrate to take to heart--make sure you check the arbitration submission agreement for breadth of issues, meaning that fees and costs must be sought from arbitrators, and not confirming trial courts after a win.

     Succinctly put, plaintiff lost a first arbitration but won a second arbitration after the initial one was vacated based upon an ex parte contact between a party arbitrator and neutral arbitrator. Plaintiff won a significant monetary award in the second arbitration, exceeding a CCP § 998 offer made by plaintiff and rejected by defendant prior to the first arbitration. However, plaintiff sought 998 costs as the prevailing party at the trial court level after granting of the petition to confirm the arbitration award. The trial court denied all arbitration costs on the basis that they were within the sole purview of the arbitrators.

     Plaintiff’s appeal of the cost denial was unsuccessful. The arbitration submission was broad such that the 998 cost enhancements should have been sought from the arbitrators. See Corona v. Amherst Partners, 107 Cal.App.4th 701, 706 (2003). (The appellate court did reject the defense argument that the 998 offer made during the first arbitration somehow had to be renewed to be effective.) The alternative language in section 998 that the costs enhancement could be made by “the court or arbitrator” did not mean that the court could override arbitral authority where the submission agreement was broad in nature; otherwise, arbitrator finality would be eroded if that ADR route is truly chosen.

Section 998: Lemon Case Won By Plaintiffs Still Resulted In Defendant Winning 998 Costs

 

Lemons into Lemonade:  Defense 998 Offer Was Well-Taken and Plaintiffs Did Not Achieve Their Real Litigation Objectives in Rejecting Offer and Going to Trial.

     CCP § 998 offers are tricky things, but legislatively crafted so that the offeree give serious consideration to the offer so that a settlement can be reached--saving everyone (the litigants and courts) a lot of resources. Plaintiffs in the next case did win “lemon law” relief for an apparently defective Bentley, but did not win their real litigation objectives as we shall see soon. That meant the defense, even though having to pony up money, was able to garner certain costs of the litigation under § 998.

     Williams v. Bentley Motors, Inc., Case No. B217997 (2d Dist., Div. 8 Feb. 3, 2012) (unpublished) is a case where plaintiffs did obtain significant “lemon law” relief by equitable rulings from a trial court after a jury verdict and grant of a new trial motion. However, the problem was that the defendant had served a tightly-crafted § 998 offer that gave them all the reimbursements awarded by the court (which it seemingly had paid anyway along the way to plaintiffs). What plaintiffs really wanted was reimbursement of full-time chauffeur costs to drive them around when the Bentley was out of commission and recovery of lost profits from using the limo for personal rather than business purposes. Plaintiffs did not win any of this relief, such that the § 998 offer prevailed--with both the trial and appellate courts focusing on whether the pragmatic litigation objectives of plaintiffs were met (and they were not). Defendant was entitled to recover certain costs allowable under § 998, although not specified in the decision.

     Also, even though the defendant misidentified one particular offeree once in the § 998 offer, the offeree was identified correctly many other times; this one typo did not invalidate the offer.

Toomer’s Drug Store.  Auburn, Alabama.  2010.  Carol M. Highsmith collection, Library of Congress.

Section 998: Defendants’ Successful 998 Offers Were Sufficiently Definite And Beat Plaintiffs’ Recovery Even After Offsets

 

998 Offers Do Not Have to Resolve All Claims, Only Those Involving the Offeror and Offeree.

     Newport Psychcare v. Windstone Behavioral Health, Inc., Case No. G044449 (4th Dist., Div. 3 Jan. 31, 2012) (unpublished) concerned plaintiffs who rejected defendants’ respective CCP § 998 offers to pay some positive moneys ($91,000, $70,000, and $15,000) to certain parties and dismiss all of their cross-claims. Bad news, because plaintiffs won, but when all the applicable offsets and preoffer interest/fees were calculated, they still came below the 998 offers. That meant defendants were the 998 prevailing parties, a determination appealed by losing plaintiffs.

     Justice Aronson, as author for a 3-0 panel, found the 998 prevailing party determination to be correct, even under a de novo standard of review because the facts were undisputed in nature.

     The main infirmity in plaintiffs’ attacks was the failure to correctly value the judgment and the nature of the defense offers (including what preoffer fees and costs should be factored into gauging the nature of the 998 offers). Once offsets and preoffer interest/fees were calculated in the mix, the defense indeed did prevail. (If you need to see specifics on how this calculus works, the numbers are provided in an enlightening table by the appellate court.) The 998 offers were certainly definite in nature given that they did resolve the dispute between the impacted parties--the offers did not have to attempt resolution of disputes with others (folks other than the offerors and offerees).

Costs/Section 998: Fourth District, Division 3 Tackles Some Pragmatic Costs-Shifting Issues Arising From Successful 998 Offer

 

Main Holding is that Winning Defendant Can Recoup Expert Fees Paid In Deposing Plaintiff’s Expert.

     Acting Presiding Justice Bedsworth, on behalf of a 3-0 panel of the Fourth District, Division 3, authored a colorful opinion in the routine costs/section 998 area in Chaaban v. Wet Seal, Inc., Case No. G044718 (4th Dist., Div. 3 Jan. 31, 2012) (certified for partial publication), providing some new jurisprudence on the scope of expert fees recoverable by the defense and clarifying some specific items of routine costs that are recoverable. (After all, pretty good to pen a colorful opinion in what some might perceive as a fairly “dry” area of the law.)

 

     Seals by beach.  Charles Livingston Bull, artist.  Library of Congress.

Section 998: Losing Litigant Did Not Waive “Puerta Right” Challenge To 998 Award Invalidity For Absence Of Acceptance Line By Not Challenging In The Trial Court

 

Reversal of Costs Based On Invalid Offer Occurred, While Another Cost Award Sustained Because 998 Offer Made In Good Faith/Reasonable in Nature.

     Our local Santa Ana appellate court decided Puerta v. Torres, 195 Cal.App.4th 1267, 1273 (2011), which invalidated a CCP § 998 offer because it did not include the acceptance provision required by the 2005 amendment to section 998. The next case explored whether this “Puerta right” was waived because it was not advanced as a trial court argument in opposition to the costs award based on a successful 998 offer by the defense.

     Justice Yegan, author for a 3-0 panel, in Azizad v. Feinfield, Case No. B231568 (2d Dist., Div. 6 Jan. 19, 2012) (unpublished), decided that a plaintiff losing a 998 offer rejection could still raise a Puerta right challenge even though it was not raised in the trial court. Aside from its discretion to consider a pure question of law not raised below, the appellate court found that it would be unfair to penalize plaintiff for not raising an argument clarified in Puerta way after the 998 offer was made and after the trial court ruled in favor of costs entitlement. This reversal saved plaintiff from having to reimburse one prevailing defendant for $47,425 in expert witness fees.

     However, there was another defendant who did serve a separate compliant 998 offer who was awarded $16,512.50 in expert witness fees after plaintiff rejected the offer and then lost at trial. Plaintiff did not win her argument that the offer was unreasonable and made in bad faith. She had the benefit of a summary judgment expert declaration casting doubt on her case (even though the SJM was later withdrawn) such that there was information from which an informed decision could be made. (Najera v. Huerta, 191 Cal.App.4th 872, 877 (2011).) The trial court’s determination about the reasonableness of the expert fees was no abuse of discretion, and no line item individualized scrutiny was necessary. So, in the end, she was liable for the lower expert fee cost award in the case where her medical malpractice case was lost to two defendant doctors.

Section 998: Costs/Malicious Prosecution Waiver 998 Offer Made One Year Before Expert Witness Discovery In Case With Potential Lage Exposure Was Not Reasonable In Nature

 

Fact that Defense Verdict Ultimately Resulted Did Not Change the Analysis.

     Here is an interesting unpublished decision in the CCP § 998 area, reinforcing that courts will take a pragmatic approach to gauging “reasonableness” of a 998 offer at the time that it was made--not by hindsight after an “iffy” defense verdict in a case with potentially significant exposure at the time of the offer.

     Nunes v. Ruder, Case Nos. F059191/F059723 (5th Dist. Dec. 29, 2011) (unpublished) was a medical malpractice case involving a plaintiff patient who was referred to a physician after he felt a pain in his chest while exercising. Defendant doctor told him he did not have significant coronary artery disease and needed no follow up unless something else developed. Plaintiff died six weeks later due to complications related to severe coronary artery disease. Although plaintiff’s survivors sued the doctor, the jury returned a defense verdict.

Private Attorney General Statute/Section 998: Fifth District Reverses Fee Denial For Ex-Chowchilla Police Chief Winning Prior Published Decision On POBRA Rights

 

Public Interest, Significant Benefit, and Financial Burden Components Are Analyzed in this One; Section 998 Rejected Offer Also Considered.

     An ex-Chowchilla police chief (Mr. Robinson) won a Public Safety Officers Procedural Bill of Rights Act (POBRA) claim against the City, with the trial court later awarding $50,140 on a separate contract claim. Previously, however, Mr. Robinson rejected a $61,592.47 CCP § 998 offer. The Fifth District, in an earlier decision published decision, vindicated Mr. Robinson’s win on the POBRA claim.

     In Robinson v. City of Chowchilla, Case No. F060571 (5th Dist. Dec. 27, 2011) (certified for partial publication; 998 offer discussion not published), the trial court denied Mr. Robinson’s motion for attorney’s fees under the private attorney general statute (CCP § 1021.5) and granted the City’s motion to tax costs based on Mr. Robinson’s rejection of the 998 offer--prompting yet another appeal by Mr. Robinson.

     He won the most significant battle by obtaining a reversal of the fee denial. In must reading for practitioners involved in § 1021.5 fee-shifting contests, the Fifth District concluded that he did enforce an important public interest right in the POBRA area, especially given the prior published decision and the expression of importance of rights in the whole POBRA area. When it came to the significant benefit prong of the private attorney general statute, the appellate court found that the financial interest of Mr. Robinson versus benefit for others was a very nuanced determination--with nothing in governing law dictating that a secondary benefit for others cannot qualify for a fee award even though the primary benefit was for the individual alone. (“Practitioners are cautioned about using the ‘primary effect’ language as a substitute for analyzing the criteria in section 1021.5 separately.”) Conservatorship of Whitley, 50 Cal.4th 1206 (2010) needed to guide the financial burden analysis, with the substantial fees incurred and paid by Mr. Robinson ($232,000) to be considered quite heavily on remand given that the case was going to be redetermined anyway.

     On the 998 issue, nothing showed that the costs denial was incorrect. However, the reversal of the fee denial meant that this redetermination might affect whether Mr. Robinson ultimately recovers down the line, with the issue being put in limbo.

Year in Review - 2011

Wrapping It Up:  M & M’s Top 25 Attorney’s Fees Decisions For 2011  Part 1 of 2

     It is that time of year, at year end, for us to list our top published attorney’s fees decisions from the U.S. Supreme Court, Ninth Circuit Court of Appeals, and California Courts of Appeal. Although we normally do the “Top 20” decisions, the 2011 year was prolific for many, many decisions of interest, so we expanded it to the top 25.

     We might note that 2012 looms as an important year for the California Supreme Court to decide the issues involved in Kirby v. Immoos Fire Protection, United Parcel Service Wage & Hour Cases (McGann), and related cases considering whether a prevailing defendant is entitled to recover Labor Code section 218.5 attorney’s fees for successfully defending against a plaintiff employee’s claims for meal/rest break violations even if those claims were joined with Labor Code section 1194 overtime compensation claims subject to a unilateral pro-plaintiff fee shifting provision. (See our posts of September 28, October 25, and November 25, 2011.)

     However, we can only report and score on the top 25, keeping in mind that appellate jurists did decide many other important cases. These are our favorites in a wide range of areas, so enjoy. This will be the first 13 cases, with 12 more to follow in a subsequent post--likely closer to year’s end.

     25. La Cuesta v. Benham, 193 Cal.App.4th 1287 (2011) [4th Dist., Div. 3]; author--Presiding Justice Sills (who, unfortunately, passed away earlier this year after a long and distinguished career):  Under Civil Code section 1717, a lopsided win by landlord in obtaining repossession and compensation from tenant made landlord the prevailing party, reversing denial of fees even under an abuse of discretion standard. [Discussed in our March 30, 2011 post.]

     24. Ferwerda v. Bordon, 193 Cal.App.4th 1178 (2011) [3d Dist.]; author--Justice Robie:  Attorney’s fees cannot be awarded to a homeowners’ association based on unrecorded CC&R enforcement documents and manuals.  [Discussed in our March 26, 2011 post.]

     23. Turner v. Assn. of American Medical Colleges, 193 Cal.App.4th 1047 (2011) [1st Dist., Div. 5]; author--Justice Simons:  Attorney’s fees are not awardable to defendant prevailing on Unruh Civil Rights Act, Civil Code sections 52 and 54.3 claims even though defendant did prevail (but did not claim entitlement to work) under a broader fee-shifting provision contained in section 55. [Discussed in our March 25, 2011 post.]

     22. In re Marriage of Fong, 193 Cal.App.4th 278 (2011) [2d Dist., Div. 3]; author-- Justice Croskey:  Wife not complying with her financial disclosure requirements in family law proceeding could not seek fee award from noncompliant husband under Family Code section 2107(c). [Discussed in our March 4, 2011 post.]

     21. Marriage of Fossum, 192 Cal.App.4th 336 (2011) [2d Dist., Div. 1]; author--Justice Johnson, writing for the majority; Justice Rothschild, dissenting:  Spouse/domestic partner’s breach of Family Code section 721(b) fiduciary duty gives rise to mandatory fee award under Family Code section 1101(g); dissenting justice spelled out anomalous results from this interpretation and suggested a legislative amendment to the statute to make it discretionary in nature. [Discussed in our January 29, 2011 post.]

     20. Harris v. Maricopa County Superior Court, 631 F.3d 963 (9th Cir. 2011); author--Circuit Judge Reinhardt for the majority; Circuit Judge Bybee, concurring and dissenting:  “But for” test, not pro-rata allocation of fees between frivolous and nonfrivolous claims, was proper standard for fee recovery under federal civil rights fee-shifting statute; dissenting judge argues that “but for” test will make it impossible for defense to argue fee apportionment in mixed-bag cases. [Discussed in our January 16, 2011 post.]

     19. Garcia v. Politis, 192 Cal.App.4th 1474 (2011) [2d Dist., Div. 4]; author--Justice Willhite: Plaintiff seeking fees in default judgment context cannot file a fee motion post-judgment, but must make a fees request in plaintiff’s default judgment packet paperwork. [Discussed in our February 26, 2011 post.]

     18. First National Mortgage Co. v. Federal Realty Investment Trust, 631 F.3d 1058 (9th Cir. 2011); author--Senior Circuit Judge Thompson: 28 U.S.C. § 1821(b) $40-per-day limitation on witness expenses “preempted” application of California Code of Civil Procedure section 998’s allowance of broader “reasonable” expert witness fees in diversity cases. [Discussed in our February 1, 2011 post.]   Justice Thompson died February 19, 2011.

     17. Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, 195 Cal.App.4th1275 (2011) [2d Dist., Div. 1]; author--Presiding Justice Mallano:  Unspecified attorney’s fees prayer in complaint did not void future default judgment based on terminating sanctions conduct. [Discussed in our May 26, 2011 post.]

      16. Puerta v. Torres, 195 Cal.App.4th 1267 (2011) [4th Dist., Div. 3]; author--Justice Moore: Failure to include some type of acceptance language in Code of Civil Procedure section 998 offer invalidates the offer. [Discussed in our May 25, 2011 post.]

      15. Martinez v. L.A. County Metropolitan Transp. Auth., 195 Cal.App.4th 1038 (2011) [2d Dist., Div. 1]; author--Justice Rothschild:  Code of Civil Procedure section 998 offer excluding “costs” from recovery also means that attorney’s fees are excluded from the ambit of the offer. [Discussed in our May 23, 2011 post.]

     14. Ilshin Investment Co., Ltd v. Buena Vista Home Entertainment, Inc., 195 Cal.App.4th 612 [2d Dist., Div. 1]; author—Justice Chaney:  Attorney’s fees are not allowable for prevailing party in post-judgment enforcement independent creditor’s suit. [Discussed in our May 15, 2011 post.]

      13. In re Marriage of Davenport, 194 Cal.App.4th 1507 (2011) [lst Dist., Div. 2]; author--Justice Richman:  Scorched earth litigation practices justified denial of family sanction fees to wife and allowed for substantial fees against her/in favor of husband; case distinguishes between zealous advocacy and “attack dog”/”scorched earth” litigation. [Discussed in our May 6, 2011 post.]

      BLOG UNDERVIEW--This last one is a good one to end on, because both co-contributors have dogs--Mike has Riffle, a Labrador, and Marc has Watson, a mixed-breed dog, but still a good dog! Watch for our ensuing post before the end of the year with the next 12 decisions rounding out our “Top 25.” Happy Holidays to all of our readers.

Earlier Year End Wrap-Ups:

     2010  Part I; Part II     2009 Part I; Part II     2008 Part I; Part II

 

Civil Rights/Section 998: Winning Civil Rights Litigant Being Awarded $416,000 In Fees With A 1.5 Multiplier Was Properly Compensated, With Dueling 998 Costs Awards Also Being Sustained

 

Lower Court Properly Scaled Back Expert Fee Costs Award Against Plaintiff Based on Her Financial Situation.

     Hernandez v. The Regents of the University of California, Case Nos. A129427/A130063 (1st Dist., Div. 4 Dec. 12, 2011) (unpublished) involved some interesting fees and costs issues, especially given the shifting impact of Code of Civil Procedure section 998 when woven into the FEHA pro-plaintiff fee shifting provision.

     In this one, a Native American assistant professor at University of California, Berkeley brought a FEHA claim against the Regents. She rejected a 998 offer of $300,000 plus reasonable attorney’s fees, costs, and expenses. After a jury trial, plaintiff was awarded a total of $266,347, which was less than the defense 998 offer.

     She moved to recover $2,662,645 in fees and $46,312.82 in costs under the FEHA fee-shifting provision. In turn, based on the winning 998 offer, the defense sought a total of $144,560.74 in costs (mainly expert witness fees). After a comprehensive fee/costs hearing, the lower court awarded plaintiff $415,938.75 in fees (with a 1.5 multiplier). awarded plaintiff $26,932.84 in pre-998 offer costs, and awarded the defense $33,414.25 in post-998 offer costs as well as $50,000 in expert witness fees (scaled down from its request for more than $111,000 due to plaintiff’s financial situation).

     Plaintiff appealed the fees and costs awards across the board, all to no avail.

     The hourly rates awarded and multiplier were not incorrect under an abuse of discretion standard. Because plaintiff failed to obtain a more favorable award than the defense 998 offer, the defense was treated as the prevailing party for purposes of postoffer attorney’s fees as costs. The preoffer award of costs was justified. So, too, was the postoffer award of expert witness fees to the defense, because the record did reveal that the trial court “scaled back” the requested $111,000 award to $50,000 based on plaintiff’s financial situation. (Seever v. Copley Press, Inc., 141 Cal.App.4th 1550, 1561-1562 (2006); Holman v. Altana Pharma US, Inc., 186 Cal.App.4th 262, 284 (2010).)

 

The University Library.  Berkeley. c1911.

Special Fee Shifting Statute/Section 1717/Section 998/Allocation: Fee Awards Do Not Have To Be Proportional To Damages Award

 

2d Dist., Division 6 So Holds In Two Unpublished Opinions, Besides Facing Other Issues.

Weiss v. Cope, Case No. B24970 (2d Dist., Div. 6 Nov. 22, 2010) (unpublished)

     In this one, plaintiff rejected defendant’s 998 offer. However, plaintiff’s total judgment--the sum of the jury award and $100,000 in attorney’s fees awarded by the trial court pursuant to Code of Civil Procedure section 1021.4 (a fee-shifting statute allowing the trial court to award fees to a prevailing party in an action against a defendant based upon defendant’s commission of a felony)--beat the 998 offer and made plaintiff the prevailing party, with the fee award putting plaintiff over the top. This meant that defendant was not entitled to recover post-offer costs. (Steele v. Jensen Instrument Co., 59 Cal.App.4th 326, 330 (1997).) The defense appeal of the fee award was unsuccessful, because (1) fees do not need to be proportionate to damages (here, $100,000 in fees versus $49,000 in damages); (2) the fee award was reasonable (the trial court substantially cut down the $242,000 fee request); and (3) the section 1021.4 fee entitlement statute was remedial and not punitive in nature (Marron v. Superior Court, 108 Cal.App.4th 1045, 1065 (2003)).

Asphalt Professionals, Inc. v. T.O. IX, LLC, Case No. B230927 (2d Dist., Div. 6 Nov. 22, 2011) (unpublished)

     This one began with a bang: “This case is before us once again. It teaches a lesson: A surfeit of litigation over a relatively modest damage claim can produce an abundance of attorney’s fees far in excess of that claimed and payable by the losing side.”

     Defendant appealed a $1.65 million fee award (out of a requested $1,682,195) in a breach of construction contract case where trial court found defendant had no legitimate defense for not paying and used six different law firms during the course of the case. The fee award was sustained, rejecting these arguments otherwise: (1) no apportionment was required because the contract, fraud, and alter ego claims were all interrelated; (2) it was appropriate for the trial court to award interim fees in the bifurcated first phase of the case (Sundance v. Municipal Court, 192 Cal.App.3d 268, 271 (1987)); (3) proportionality is not required between fees and the damages award (with plaintiff obtaining a $320,000 substantial damages award--see Harman v. City and County of San Francisco, 158 Cal.App.4th 407, 421 (2007)); (4) the hourly rate used in the lodestar analysis was commensurate with those rates cited in the National Law Journal annual surveys; and (5) the fees were not excessive because the case was vigorously contested, with the defense spending about the same as the plaintiff in litigating the case.

     Both 3-0 decisions were authored with panache by Presiding Justice Gilbert.

Section 998: $10,000 Offer In Case Where Plaintiff Lost Due To Causation Held To Be Too Nominal In Nature

 

Plaintiff Did Not Have to Pay $21,000 in Expert Witness Fees.

     Plaintiff in Sanchez v. Molina, Case No. F059653 (5th Dist. Nov. 21, 2011) (unpublished), who sought $700,000 in damages and lost a jury trial based on lack of causation (although negligence was found), had rejected a defense $10,000 offer under CCP § 998 and the defense rejected plaintiff’s $124,999.99 998 offer. The defense sought to recovery $21,000 in expert witness fees because plaintiff did not beat the 998 offer.

     Didn’t happen. The Fifth District affirmed the lower court’s determination that the $10,000 offer was too nominal in nature. At the time of the defense offer, plaintiff had incurred over $80,000 in costs and had no money from other defendants (although another set of defendants later did settle for $250,000). Plaintiff’s injuries were not insignificant, and jury did find the nonsettling defendants were negligent even though not awarding damages on causation grounds. The 998 requirement of not enforcing token offers made in bad faith was fairly applied in this case, the appellate court found.

  Mid-century NYC Transit Authority Token.  Wikipedia.

Section 998/Reasonableness Of Fees: Three Appellate Cases Highlight Issues In These Areas

 

Cost or Fee Shifting Justified Under CCP § 998.

     Plaintiff seeking damages in a dental malpractice case rejected a 998 offer of $25,001 inclusive of each side bearing their own costs, but was defensed after a jury trial and ordered to pay $2,850 in expert witness fees based on rejecting the 998 offer. She argued that the 998 offer was illusory, but the appellate court said “no way” in Branner v. Leizerovich, Case No. B224548 (2d Dist., Div. 8 Nov. 8, 2011) (unpublished)--especially since settlement offers need not include attorney’s fees and the jury found defendant not negligent.

     Plaintiff lost a trespass/nuisance case against neighbors based on an adverse summary judgment ruling, even though plaintiff earlier rejected a zero dollar judgment 998 offer containing an express waiver of costs by the defendants. The trial court awarded routine costs to defendants. In Evans v. Wymore, Case No. B228340 (2d Dist., Div. 8 Nov. 9, 2011) (unpublished), the appellate court affirmed the costs award, determining (1) there is no exception in the costs award statute based on the health of a plaintiff who had to stop pursuing a suit so as to result in the adverse summary judgment; (2) the 998 offer was made in good faith, because it was made at a juncture where the defense could have avoided summary judgment expenses had the offer been accepted and it could have saved plaintiff from exposure for expert witness fees; and (3) government employees serving as experts can be paid more than the $35/day rate set forth in Government Code section 68093.

Fees Were Reasonable and 998 Offer Was Made In Good Faith.

      Burkett v. Caffaro, Case No. B226932 (2d Dist., Div. 2 Nov. 8, 2011) (unpublished) involved plaintiffs who lost a summary judgment in a real estate purchase fraud case, with the trial court awarding the defense $147,778.75 in fees (out of a requested $153,128.75) and $10,946.41 in costs (out of a requested $11,671.33). This all happened after plaintiffs rejected a 998 walkaway offer by which the defense would waive fees and costs. Although everyone agreed there was a computation error on the “fees on fees” issue resulting in a $9,707.50 judgment correction, the remainder of the trial court’s rulings were sustained on appeal. Adequate substantiation was presented to justify the fee award, and the lower court did consider the proper lodestar factors. The 998 offer was hardly token in nature, being made one year after the initial lawsuit was filed and after the defense argued that defendants made full disclosures of the property’s condition at the time of sale (which the trial court credited, given plaintiffs’ problems of proof in showing otherwise). Finally, fees of experts not ordered by the court--although not routine costs usually--are allowable as costs when a proper 998 offer is rejected.

Appeal Sanctions: Fourth District, Division 2 Says $8,000 Is Frivolous Sanctions Cost To Taxpayers For Processing An Appeal

Frivolous Appeal No Laughing Matter.

     Marriage of Shannahan, Case No. D058220 (4th Dist., Div. 2 Nov. 10, 2011) (unpublished) is not blog-worthy for its ultimate result of affirming a $20,000 Family Code section 271 sanctions award against husband. However, it is worthy for establishing the “going rate” for frivolous appeal sanctions to the clerk of the court when the winner on appeal fails to submit proof of its fees/costs on appeal. What is the going rate? $8,000, according to the 4/2 appellate court, which relied on (but reduced a little) the $8,500 figure derived from a 2008 study by the Second District. (See Huschke v. Slater, 168 Cal.App.4th 1153, 1163-1164 (2008).) It will be interesting to see if the Second District ups the ante in upcoming decisions.

 

Library of Congress.  c1896.

Section 998: Plaintiff Failing To Beat 998 Offer Liable For $12,403 In Costs

 

Premature Filing of Costs Memorandum Was Not Fatal.

     In Tate v. Prendergast, Case No. G044621 (4th Dist., Div. 3 Nov. 7, 2011) (unpublished), personal injury plaintiff seeking $750,000 in damages rejected a CCP § 998 offer of $20,001 but only was awarded $300 for past medical expenses by a jury. This kicked in the costs-shifting feature of section 998, with defendant seeking $12,703 in costs. The only problem is that defendant prematurely filed the costs memo right after the jury verdict rather than waiting for entry of judgment and then following the time schedule. The trial court nevertheless awarded $12,403 in costs to defendant.

     Plaintiff appealed, but to no avail. Acting Presiding Justice Bedsworth, writing for a 3-0 panel, adhered to the the law indicating that costs memo time limitations are not jurisdictional and to case law where courts indeed had treated prematurely filed cost bills as timely. (See, e.g., Haley v. Casa Del Rey Homeowners Assn., 153 Cal.App.4th 863, 880 (2007).) Also, a premature filing does not constitute reversible error unless it prejudices the other party. (Pamela W. v. Millsom, 25 Cal.App.4th 950, 961 (1994).) Here, the lack of prejudice and failure to move to strike below were dispositive, resulting in an affirmance of the costs award to the defense.

Section 998/Expert Fee Reasonableness: Court Of Appeal Publishes Adams v. Ford Motor Co.

 

     In our September 30, 2011 post, we discussed Adams v. Ford Motor Co., Case No. B225791, which involved whether a small monetary CCP § 998 offer was reasonable and in good faith in a difficult causation case, where the offer did contain an important “waiver of costs” feature. Also, there was a nice discussion on how to show reasonableness of substantial expert witness expenses in a costs memorandum battle.

     We can now report that the Second District, Division 1 certified Adams for publication on October 19, 2011.

Section 998: $10,000 CCP § 998 Offer Was Reasonable And Made In Good Faith In Automotive Friction Case Where Defense Prevailed Against 4 Plaintiffs

 

$185,741.82 Was Costs Hit Against Plaintiffs, $167,570 Of Which Was Expert Witness Expenses.

     The next case teaches plaintiffs in difficult causation cases to carefully evaluate Code of Civil Procedure section 998 offers made by remaining defendants close to trial. Their rejection of an aggregate $10,000 offer, with a proposed mutual waiver of costs, resulted in plaintiffs being ordered to pay costs to defendant totaling $185,741.82.

     Adams v. Ford Motor Co., Case No. B225791 (2d Dist., Div. 1 Sept. 29, 2011) (unpublished) involved Ford’s section 998 offer of $10,000 ($2,500 to each of four plaintiffs) in an automotive friction case (decedent husband/father was exposed to asbestos while working as a “shade tree mechanic” [a mechanic who maintains and repairs his vehicles himself] on Ford cars with components containing asbestos) which plaintiffs lost after a jury trial. That meant that Ford’s section 998 offers were not beat. The lower court subsequently awarded Ford total costs of $185,741.82, which included $167,570 in expert witness fees. Plaintiffs appealed.

 

 

[Drives ancient "Lizzie" to White House to show Henry Ford. Washington, D.C., April 27. His 1921 Model T Ford polished to a mirror like finish, Ernest A. Franke, elderly Washingtonian, drove to the White House executive offices today with intentions of showing the ancient model to Henry Ford. "Where's Henry" shouted Franke, from the driver's seat, "I want to show him his old car". Police declines to allow Franke to await the arrival of Ford who was due to have lunch with President Roosevelt, 4/27/38.  Library of Congress.]

Section 998: Second District, Division 1 Remands Again To Determine Fees And Costs Due To 998-Beating Plaintiffs

 

Shaffer II Finds That Its Prior Appellate Decision Did Not Find Plaintiffs Failed to Attempt Mediation Under CAR Purchase Agreement.

     This is a sequel to our December 30, 2009 post on Shaffer v. Sassoon (Shaffer I), which found plaintiffs beat a defense CCP § 998 offer once pre-offer costs were included in the calculus and remanded for a determination of fees/costs owed to the plaintiffs.

     On remand, the trial court refused to award any attorney’s fees to plaintiffs, because it interpreted Shaffer I to indicate that plaintiffs had failed to attempt to mediate, a contractual precondition under the operative CAR purchase agreement. (In many past posts, we have explored the impact of this contractual clause on an award of fees under Civil Code section 1717. See, e.g. our July 14, 2009 post on Carradine v. Cowell and May 30, 2008 post on Lange v. Schilling.) That resulted in a denial of plaintiffs’ request to recover $236,354.50 in fees ($30,987 pre-offer fees and $236,354.40 post-offer fees/costs).

     Well, the Second District, Division 1, in a 3-0 decision authored by Justice Johnson, reversed and remanded for a determination of plaintiffs’ fees in the case. The decision is Shaffer v. Sassoon (Shaffer II), Case No. B227080 (2d Dist., Div. 1 Sept. 23, 2011) (unpublished).

     Although acknowledging that Shaffer I found no evidence that the defendants refused to mediate, the appellate panel implicitly had determined that the plaintiffs did attempt to mediate even though it sent the letters so offering to defendants’ real estate brokers in a way that maybe did not reach defendants. Judge Johnson recognized that a failure to comply with the mediation precondition would have ended plaintiffs’ claim to say they obtained a more favorable result, but the record did show an attempt to mediate. The panel also decided that “costs” for 998 purposes encompasses both fees and routine costs (as well as expert witness fees).

     BLOG UNDERVIEW--We noticed that Scott L. Gilmore was the losing attorney on appeal (and we all have lost appeals, unless one has been extremely fortunate or lucky, or both). Co-contributor Mike has had the pleasure to mediate before Mr. Gilmore, who is an accomplished mediator with a good track record based out of Los Angeles.

Section 998: Co-contributor Mike Authors Section 998 Article in The Orange County Lawyer’s September 2011 Edition.

 

     For those of you wanting to know about updates on Code of Civil Procedure section 998 issues (especially as the fees/cost-shifting provision impacts fee and costs), co-contributor Mike has authored an article that has been published in the September 2011 edition of The Orange County Lawyer. Enjoy.

Section 998: Substantial $107,408.33 Costs Award Affirmed Against Losing Plaintiff

 

998 Offer Was Made in Good Faith

     In Robbins v. Essex Management Corp., Case No. B221857 (2d Dist., Div. 4 Aug. 16, 2011) (unpublished), plaintiff rejected a $200,000 998 offer and was defensed after a jury trial. Defendant then filed a memorandum of costs seeking a substantial sum, being successful in obtaining a costs award totaling $107,408.33. Disappointed plaintiff appealed, arguing that the 998 offer was not in good faith.

     Wrong, said the appellate court. Nothing in the record demonstrated that the offer was not in good faith, with a favorable verdict to the defendant constituting prima facie evidence showing the offer was reasonable in nature. (People ex rel. Lockyer v. Fremont General Corp., 89 Cal.App.4th 1260, 1271 (2001); Elrod v. Oregon Cummins Diesel, Inc., 195 Cal.App.3d 692, 700 (1987).) The amount of fees charged by plaintiff’s attorney, even though it may have exceeded $20,000, was not germane to the reasonableness of the offer, because the plaintiff here was not entitled to recover fees as part of the 998 calculus in this case in any event.

     BLOG UNDERVIEW--Co-contributor Mike noticed that one of the winning attorneys on appeal was Golnar J. Fozi. Mike worked with Ms. Fozi while they were both a Menke, Fahrney & Carroll in Costa Mesa. Greetings to you, Golnar, and congratulations.

Section 998: Failure To Award Expert Expenses Reversed For Inverting Burden Of Proof

 

Burden of Proof Is On Plaintiff to Prove Unreasonableness of 998 Offer.

     In Leve v. Patient Safety Technologies Inc., Case No. B220274 et al. (2d Dist., Div. 5 June 15, 2011) (unpublished), a lower court granted a plaintiff’s motion to tax requested expert witness fees by the defense, ruling the defense did not carry its initial burden to establish the reasonableness of its rejected 998 offer.

     Reversed. The lower court got the burden of proof mixed up, because the burden is on plaintiff to show that the 998 offer was unreasonable in nature. (Essex Ins. Co. v. Heck, 186 Cal.App.4th 1513, 1528 (2010).)

Appeal/Section 998: Prevailing Party Status From Rejected 998 Offer Examined In Fifth District Opinion

Primer on Allocation of Preoffer/Postoffer Costs in Instructive Decision.

     Code of Civil Procedure section 998, as we should know by now, is a legislatively-mandated statute that modifies the general routine costs provision of CCP § 1032 by augmenting or withholding the costs normally allowable under section 1032. Put another way, section 998 establishes a procedure for costs shifting upon a party’s refusal to settle. (Westamerica Bank v. MBG Industries, Inc., 158 Cal.App.4th 109, 128 (2007).)

     The Fifth District, in Warfield v. Chandler, Case No. F059208 (5th Dist. May 27, 2011) (unpublished), offers us a great primer on how sections 998 and 1032 operate for purposes of determining the prevailing party and then what must be done to augment/withhold recovery of certain costs depending on who “won” the 998 costs-shifting battle.

     Warfield involved a situation where plaintiff rejected a 998 offer that exceeded the award she ultimately received from the jury. (Under 998, in this situation, plaintiff may only recover preoffer costs, plaintiff cannot recover postoffer costs, and defendant may recover postoffer costs.) The trial court, however, got a little confused because the postoffer costs incurred by the defense exceeded the total judgment in plaintiff’s favor, so that it then decided the defendant was the costs prevailing party--awarding preoffer costs to the defense pursuant to section 1032(b). Plaintiff appealed this costs ruling.

     In a twist we see often, even though it agreed there was error, the appellate court affirmed because plaintiff appealed the prior judgment without appealing the postjudgment order relating to costs. That meant the court was without jurisdiction to hear the matter. (Kajima Engineering and Construction, Inc. v. Pacific Bell, 103 Cal.App.4th 1397, 1402 (2002).) However, the appellate court discussed the issue so it “may preclude repetition of the error” by the trial judge.

     The lower court should have followed this two-step methodology rather than dub someone the prevailing party after doing the preoffer/postoffer calculus: (1) the trial court determines the prevailing party utilizing the general rule of section 1032 and determine recoverable costs as permitted by section 1033.5; and (2) the trial court then augments or withholds the amount determined in step one pursuant to the dictates of section 998. “After these two steps are completed, the trial court’s cost award is complete.” The main flaw was that the trial court did not have authority to award a defendant preoffer costs pursuant to section 998(c).

     We thank Justice Cornell, on behalf of a 3-0 panel, for the 998/1032 primer.

Section 998: Valid 998 Offer Dispute Remanded On Issue Of Receipt By Offeree

 

Trial Court Must Focus on Receipt Issue.

     This next case takes us back to evidence class sessions in law school. It involves presumptions, so relax and go back in time to days past in your educational experience.

     Plaintiff won a warranty dispute against Ford Motor Company, who said that it sent a valid CCP § 998 offer that beat the jury award to plaintiff. However, plaintiff claimed that it never received the offer. The trial court allocated preoffer and postoffer costs, awarding some to plaintiff and some to defendant. This prompted an appeal by plaintiff.

     In Robey v. Ford Motor Co., Case No. A127796 (1st Dist., Div. 3 May 26, 2011) (unpublished), the appellate court remanded on the issue of whether plaintiff received the offer. Although Evidence Code section 641 creates a presumption that a 998 offer properly mailed is presumed to be received, this presumption of receipt disappears when met by contradictory evidence--here, plaintiff’s claim that he did not receive the offer. The record was unclear whether the trial court ruled on this issue, although the determination might be academic given some circumstantial proof that the offer was not received (unless the lower court rejects the credibility of the witnesses on this point).

     The appellate court also rejected other creative challenges to the 998 offer by plaintiff. First, it dismissed the notion that the 998 offer has to allocate the offered sum betweeen damages and sought-after attorney’s fees, citing Federal Rule of Civil Procedure rule 68 decisional law to back its conclusion. (See Marek v. Chesny, 473 U.S. 1, 6-7 (1985).) Second, the reviewing court found nothing wrong about a 998 offer to a party and his counsel, dismissing that this was analogous to a lump sum invalid offer to multiple parties.

Section 998: 998 Offer Invalid Where No Acceptance Language Included In Offer

 

Statutory Construction of 998 Was Unclear, Nullifying $5,350 Expert Witness Fee Award.

     We have seen a recent flurry of decisions in the CCP § 998 area. The next one, from a published decision perspective, trailblazes on the issue of whether a § 998 offer with no acceptance language can survive an invalidity attack.

     It did not, ruled our local Santa Ana appellate court, in a 3-0 opinion authored by Justice Moore in Puerta v. Torres, Case No. G043745 (4th Dist., Div. 3 May 25, 2011) (certified for partial publication on the 998 issue).

     The defense’s $5,350 expert witness fee award was predicated on the lower court’s determination that the 998 offer was valid. Not so, said the appellate court, because there was the absence of a Notice of Acceptance line mandated under 998 amendments. Justice Moore did suggest a couple of acceptable alternatives: “The Judicial Council form section 998 offer (CIV-090), for example, includes a signature line to indicate acceptance. A sentence in the offer stating that acceptance could be indicated by return letter might be equally acceptable.” (Slip Opn., p. 12.) The absence of any language regarding acceptance was damning in this one.

     BLOG UNDERVIEW--The Second District came to the same conclusion in the unpublished decision of Sargon Enterprises, which you can review by going to our February 10, 2011 post.

Section 998: “Monster” Decision On 998 Offer Interpretation--Offer Including “Costs,” If Accepted, Also Includes Attorney’s Fees

 

Another “Bright-Line” Rule Emanates In Recent 998 Decision.

     Engle v. Copenbarger & Copenbarger, 157 Cal.App.4th 165, 168-169 (2007) announced a “bright-line rule” in the CCP § 998 area: a defense offer silence as to costs and fees means that they are excluded from the ambit of the offer, such that plaintiff should have recovered both. Well, that is hardly the end of the story.

     Another “bright-line rule” emerged in Martinez v. Los Angeles County Metropolitan Transp. Auth., Case No. B221234 (2d Dist., Div. 1 May 23, 2011) (certified for publication). And exactly what is that “bright-line rule?” A 998 offer excluding “costs” alone, unless expressly stated otherwise in the offer, also excludes “attorney’s fees” because they are costs encompassed within the definition of related statutory provisions.

     There you go, practitioners. Another case in which 998 offers must be explicit in what they encompass; failure to specify otherwise could result in disaster.

     Justice Rothschild, on behalf of a 3-0 panel, provided the clarification here.

Section 998: $70,215 Costs Award Affirmed Because CCP § 998 Offer Was Reasonable

No Procedural or Substantive Infirmities in Plaintiff’s Rejected 998 Offer.

     In Ganson v. Ayoub, Case No. B223504 (2d Dist., Div. 5 May 13, 2011) (unpublished), plaintiff motorcyclist sued car driver and car owner for injuries occurring as a result of being struck by the car. Plaintiff offered to settle through a 998 offer of $499,999.99 through identical offers to each defendant, which was sent to defendants’ lead counsel but not their newly-associated counsel. The 998 offers expired without acceptance, and the jury awarded plaintiff total damages of $549,198. After dueling costs memoranda were filed, the trial court awarded plaintiff $70,215 in costs. Defendants appealed.

Section 998: Unsuccessful Will Contestant’s Rejection Of 998 Offer Means She Had To Pay $4,790 In Expert Witness Trial Preparation Expenses

 

$10,000 Offer Not Token Where Pretrial Investigation Showed No Basis to Invalidate Will in “All or Nothing” Case.

     CCP § 998 offers do not have to be substantial to survive a “good faith” test. If the offeror does adequate pretrial investigation in an “all or nothing” case, even fairly small offers will be found to be non-token in nature and will give rise to costs exposure. That happened in the next decision we look at.

     In Estate of Fuller, Case No. C063407 (3d Dist. May 11, 2011) (unpublished), will contestant, in an “all or nothing” battle in which the stakes ranged from the opponents receiving a substantial estate or nothing at all, eventually lost on a summary judgment motion which was affirmed on appeal in favor of the opponents supporting the will. Winning opponents, who were more successful than their $10,000 998 offer, then sought to recover certain costs, including $4,790 in expert witness trial preparation expenses. These were awarded, with the will contestant also appealing the costs award.

Costs/Deadlines/Section 998: $40,000 Costs Award Based On 998 Offer Sustained Despite The Fact Defendant Failed To Enter Favorable Costs Ruling To Judgment For Over 2 Years

 

No Provision Required that Winning Defendant Enter Costs Judgment Under Any Deadlines.

     Here is an interesting case that really is a big one to be archived in our “Deadlines” category. It goes to show you that recalcitrance, while not to be condoned, may not get punished unless there are statutory or court rule deadlines that are specific in application.

     Millsaps v. Doehrman Co., Inc., Case No. C064390 (3d Dist. Apr. 11, 2011) (unpublished) was a situation where plaintiff employee sued both employer and a third party for personal injuries arising from a malfunctioning piece of equipment alleged to have been negligently installed by third party on employer’s premises. (Employer had paid workers’ compensation benefits to plaintiff, bringing a complaint in intervention to recover those benefits.) Third party made a 998 offer to plaintiff, offering to pay plaintiff $50,000 in exchange primarily for plaintiff’s agreement to indemnify and hold harmless third party from any claims or liens asserted by intervener employer. Plaintiff did not accept the 998 offer, but lost a jury verdict finding that third party did not install the equipment causing plaintiff’s injuries. Third party sought $50,000 in costs, with the trial court eventually awarding third party nearly $40,000 in costs and ordering third party’s counsel to reduce the favorable ruling to a form of order. However, defendant did nothing more on the case for more than two years, but eventually submitted a draft order that drew an estoppel/waiver challenge from plaintiff. Although finding the submission of the form of order “extremely tardy,” the lower court nevertheless entered it, prompting an appeal by the losing plaintiff.

Prevailing Party/Section 998: Fourth District, Division 3 Unpublished Opinion Explores Nuances In Scope of 998 Offers And Prevailing Party Status When No Monetary Relief Obtained After Factoring of Prior Credits

 

L.A. County Gets Nada Monetary Relief After Credits, And Is Stung By Affirmance of 998 Offers by Insurers Costing It $5.9 Million.

     The next one is the apparent conclusion of what our local Santa Ana appellate court analogized as being “easily the 14 Years War of civil litigation in Orange County” between Los Angeles County, seeking well over $100 million from certain insurers, and insurers who recovered $5.9 million from the County after their Code of Civil Procedure section 998 offers were rejected.

Above:  The miseries and misfortunes of war (1632).

     The decision capping this litigation war took the form of County of Los Angeles v. New York Marine and General Insurance Co., Case No. G038218 (4th Dist., Div. 3 Mar. 30, 2011) (unpublished), a 114-page unpublished opinion written with panache by Acting Presiding Justice Rylaarsdam on behalf of a 3-0 panel--must reading in the 998 area.

     In affirming the 998 cost awards, here are the highlights of the appellate court’s discussion:

     *998 offers do not have to deal with issues outside the pleadings, with underinclusive offers being better than overinclusive ones (Valentino v. Elliott Sav-On Gas, Inc., 201 Cal.App.3d 692 (1988) [condemning overinclusive offers]);

     *Insurers’ 998 offers were nice models of simplicity, offering terms if County dismissed its complaint and if the insurers dismissed their cross-complaints;

     *A 998 offer does not require a party to make a global settlement offer to all opponents or to resolve all aspects of a case (One Star, Inc. v. STAAR Surgical Co., 179 Cal.App.4th 1082, 1096 (2009));

     *a 998 offer does not need to clear up all uncertainties between the parties as long as it is specific in what it proposes, with the parties encouraged to meet and confer over uncertainties or make counteroffers (Berg v. Darden, 120 Cal.App.4th 721 (2004); Hartline v. Kaiser Foundation Hospitals, 132 Cal.App.4th 458 (2005));

     *998 offers are interpreted as contracts, with the insurers doing a good job in this case of making a specific statement containing clear terms and conditions in the offers.

     The last issue was debunking County’s argument that it actually prevailed. Although it did get credits from prior settlements with other defendants, plaintiff recovered no monetary judgment in the end. Goodman v. Lozano, 47 Cal.4th 1327 (2010) [one of our Leading Cases] put the nail in this argument, holding that a party recovering nothing monetarily by way of trial is not a prevailing party (even if prior credits got the matter down to this “zero result”).

Prevailing Party/Section 998/Section 1717: Defendant Prevailed Under Section 1717 Because Earlier Appellate Court Decision Found Reversal And No Need For Retrial

 

Plaintiff’s Voluntary Dismissal Without Effect; Offset for Prior Settlements Meant No Change in Result Due to Her Prior 998 Offer.

     A trifecta of issues was considered by the appellate court in Goldstein v. Williams, Case No. D057826 (Mar. 24, 2011) (unpublished).

     In this one, plaintiff sued for breach of contract and in tort for claimed residential condominium nondisclosures. Eventually, she prevailed on a negligent misrepresentation theory, but the appellate court in an earlier opinion reversed her win on the contractual breach claim in a way that found no retrial was necessary given that no new evidence could be introduced to get around the absence of a contract claim as a matter of law. Defendant moved for fee recovery under Civil Code section 1717 (given the presence of a fees clause in the purchase agreement), with the lower court awarding her $34,375 in fees. Plaintiff appealed.

     None of her three arguments for reversal hit the persuasiveness target.

     Given that the prior reversal was one in which no retrial occurred, defendant did prevail on the merits. Plaintiff’s subsequent dismissal of the contract claim without prejudice, on remand, had no effect given that the appellate court had legally ruled on the merits of the case as a matter of law. Finally, when prior settlements with other defendants were considered, plaintiff had a zero verdict that did not exceed her prior CCP § 998 offer, which meant the lower court had discretion to determine she did not prevail under Goodman v. Lozano, 47 Cal.4th 1327, 1333 (2010). No discretion was abused in finding that plaintiff was not entitled to fees based on her 998 offer. Fee award to defendant affirmed.

Section 998: $15,000/Fee Waiver Offer Was Accepted Before Revocation

Result ... 998 Offer Was Enforceable.

     Gardenias v. Candreva, Case No. B223556 (2d Dist., Div. 6 Mar. 14, 2011) (unpublished) reminds us all that Code of Civil Procedure section 998 offers are guided by contract principles, especially in the area of acceptance and revocation.

     In this one, defendant accepted a $15,000 § 998 offer from plaintiff, complete with a mutual release of claims and each side bearing its own fees/costs. Plaintiff had buyer’s remorse after the acceptance, trying to argue that she properly revoked the 998 offer later on.

Section 998: Plaintiff, After Lower Court Reduced Award At New Trial Motion Stage, Was Liable For Costs Based On Not Beating Defendants’ Substantial 998 Offer

 

Plaintiff Could Not Claim Costs, At All, Because His Judgment Did Not Exceed His 998 Offer.

     Here is an interesting case involving dueling CCP § 998 offers (which we are seeing more of recently), demonstrating how appellate and trial courts will take a pragmatic approach when interpreting joint section 998 offers depending on the circumstances of the overall litigation.

     Felix v. Aronson, Case No. 218160 (2d Dist., Div. 1 March 2, 2011) (unpublished) is a case where a plaintiff was rear-ended with a vehicle driven by defendant son and owned by defendant father. Son admitted liability for the accident, with plaintiff obtaining a personal injury damages award that was reduced after a new trial motion by over one-half (from $311,570.87 to $143,331.31). The lower court also awarded $23,898.82 in costs to plaintiff, and $23,953.11 in costs to the defendants. (We assume the costs awards were based on pre-offer versus post-offer costs incurred by both sides). Plaintiff appealed the adverse cost award, because it essentially “washed” out his cost win.

     The defense costs award was sustained on appeal.

     Plaintiff’s primary argument was that the defense 998 offer of $350,000 was a joint invalid offer. However, the appellate court disagreed because the joint offer did provide notice of who really prevailed for purposes of a lower court awarding costs under section 998. (Johnson v. Pratt & Whitney Canada, Inc., 28 Cal.App.4th 613, 629 (1994).) The lower court could easily determine that plaintiff did not exceed the 998 offer because father’s liability limit was $15,000 under Vehicle Code section 17151(a) such that son offered $335,000 as part of the $350,000 998 offer. After the trial court’s reduction in damages, the remaining jury damages were clearly less than $335,000 so that plaintiff did not prevail against son (the party with the most exposure). The joint offer was not invalid, meaning the costs award was just fine.

Costs Two-Fer: Court Has Discretion To Deny Costs To Parties Unified In Interest And Wrong Zip Code Will Invalidate Mailing Notice For Costs Memorandum

 

“Unity of Interest” Doctrine Gives Discretion To Lower Courts in Awarding Costs.

     In Toland v. Arredondo, Case Nos. F058619/F059182 (5th Dist. Mar. 1, 2011) (unpublished), one plaintiff was awarded $114,590 and another was awarded $12,585 by a jury against a corporate defendant, although an individual defendant (unified in interest with the corporate defendant) was let out through a directed verdict. The lower court then awarded these two plaintiffs expert witness fees after corporate defenant rejected their CCP § 998 offers. The lower court also denied the corporate defendant’s costs requests.

Costs/Section 998: Motion To Correct Earlier Costs Award Rejected, With Aggrieved Party Needing To Appeal Or Bring Motion To Vacate

Failure to Appeal Earlier Judgment Was Critical, With Motion to Correct Not Being the Right Move.

     Boteach v. Botach, Case No. B224823 (2d Dist., Div. 4 Feb. 24, 2011) (unpublished) is interesting for purposes of demonstrating that a litigant not liking an earlier costs ruling needs to appeal or bring a motion to vacate. A motion to correct an earlier costs order is not the way to proceed, ruled the appellate court, because it sought to correct judicial rather than clerical error. The way to correct judicial error would have been either an appeal or a motion-to-vacate route. (The case involved dueling costs award of a substantial nature, with $80,969.42 awarded to plaintiff and against one defendant and with $374,502.47 awarded to all defendants and against plaintiff in a case where she recovered $250,000 against one defendant only, and with defendants serving a rejected group §998 offer of $400,000 to plaintiff, each party bearing respective costs.)

     However, the appellate court also went on to address some costs/CCP § 998 issues that often recur, showing that the impact of section 998 needs to be carefully explained to clients. Here are the other gems from this unpublished decision:

     *Plaintiff still prevailed against the one defendant because she obtained a “net monetary recovery” under CCP § 1032(a)(4), (b), even though the one defendant prevailed on the majority of the claims asserted (Mitchell v. Olick, 49 Cal.App.4th 1194, 1198 (1996));

     *Even though plaintiff’s recovery was less than the one defendant’s group § 998 offer (with that defendant’s post-offer costs exceeding the amount of the judgment plus plaintiff’s pre-offer costs), plaintiff is still entitled to recover pre-offer costs under section 1032 (Scott Co. v. Blount, Inc., 20 Cal.4th 1103, 1108-1112 (1999));

     *CCP § 998(e)’s offset provision--meaning the defense costs award should be setoff from the plaintiff’s judgment and costs award--is mandatory, but only if the trial court has been supplied the information to determine the amount (Fundamental Investment etc. Realty Fund v. Gradow, 28 Cal.App.4th 966, 974-975 (1994)); and

     *The validity of multi-defendant offers where liability is not joint and several has not been finally resolved. (Compare Persson v. Smart Inventions, Inc., 125 Cal.App.4th 1141, 1169-1172 (2005) [joint offer valid by defendant shareholder and his wholly owned corporation valid, although corporation had no potential liability for plaintiff’s fiduciary duty breach claim] with Taing v. Johnson Scaffolding Co., 9 Cal.App.4th 579, 584 (1992) [where each defendant is only jointly liable for the plaintiff’s economic damages but severally liable for noneconomic damages in proportion to fault, the validity of joint offers is questionable].)

Section 998: Defendant’s Zero Offer With Costs Waiver Was Not Token In Nature

$172,546 Costs/Expert Fee Award Against Plaintiff Affirmed On Appeal.

     In Zamora v. Textron, Inc., Case Nos. A124923/124992 (1st Dist., Div. 3 Feb. 18, 2011) (unpublished), plaintiff lost to one defendant in a case where she claimed injuries when the brakes failed in her “Haulster” three-wheeled vehicle. Prior to trial (where plaintiff eventually won almost $1.6 million against the vehicle manufacturer), the eventual winning defendant offered to settle for $35,000, an offer which was rejected. After a deposition the next day, the 998 offer went down to zero dollars and a mutual waiver of costs, also rejected. Defendant prevailed at trial, and the trial court awarded it $172,546 in costs and expert fees pursuant to Code of Civil Procedure section 998. Plaintiff appealed.

The Peardrop - a 2-Wheeled Car

Sections 1717/998: Substantial Fee Awards To One Defendant And To Plaintiff As Against Other Defendants Sustained By Second District, Division One

Mutuality Principles and Invalidity of 998 Offer Buttressed Correctness of Trial Court’s Fee Awards.

     Sargon Enterprises, Inc. v University of Southern California, Case Nos. B202789/B205034 (2d Dist., Div. 1 Feb. 9, 2011) (unpublished) was a hard fought case where plaintiff sued USC for breach of contract. Although lost profits evidence was found to have been erroneously excluded, the appellate court did sustain the trial court’s decisions on fee awards under a contractual fees clause. The fee awards went this way: (1) one individual defendant was awarded $440,000 (out of a requested $1,488,503.33) in fees for prevailing against plaintiff; and (2) plaintiff was awarded $4 million (out of a requested $5 million plus) in fees against USC, even though $1.2 million had previously been awarded. As we earlier indicated, the fee awards were affirmed in entirety.

     With respect to plaintiff’s appeal of the fee award against it, section 1717’s mutuality principles gave reciprocity to a fees clause. The trial court apportioned and did so with correct discretion, awarding individual defendant a little under 20% of the fees expended by USC. Fees for services rendered prior to filing a complaint were found properly compensable. (Stokus v. Marsh, 217 Cal.App.3d 647, 655 (1990).)

     That brought the appellate court to USC’s cross-appeal of the adverse fee award. Its main argument was that plaintiff was not entitled to fees because plaintiff did not beat a CCP § 998 offer. The problem here was that the 998 offer was invalid because it was tardy and did not contain a signature line for plaintiff’s acceptance as required under section 998. Because the potential lost profit damages of $220 million in the case were large, the substantial fee award of $6.2 million total was no abuse of discretion given the overall complexity and length of the litigation. Finally, USC argued that fees should have been reduced because plaintiff declined an informal settlement offer of an amount greater than that recovered at trial. In response, the appellate court noted that this very contention had been rejected in Greene v. Dillingham Construction N.A., Inc., 101 Cal.App.4th 418, 425-426 (2002) and also “[w]e decline to extend Meister [v. Regents of University of California, 67 Cal.App.4th 437, 452 (1998)] to circumstances where, as here, the section 998 offer failed to give the offeree proper notice that the punitive provisions of the statute would apply if the offer were declined.” (Slip Opn., at p. 37.)

     Because the matter was remanded for a new trial on lost profits, nothing indicated that the existing fee award against USC would be changed in anyway. “So we leave the award as it is.”

     The opinion was authored by Presiding Justice Mallano. It was 3-0 on the fee issue, but 2-1 on the lost profits issue--with interesting discussions by both the majority and dissent on lost profit damages.

     BLOG UNDERVIEW--Los Angeles County Superior Court Judge Terry A. Green was the trial judge whose fee awards were affirmed. He and co-contributor Mike have a common bond--they are both undergraduate alumni of USC.

 

Tommy Trojan covered in duct tape in preparation for UCLA football game.   Source:  Wikipedia.

Section 998 In Diversity Cases: CCP § 998 Properly Not Applied In Diversity Case

District Judge Properly Denied Expert Fees Requested Under § 998 Because More Restrictive Federal Law Applied.

     In First National Mortgage Co. v. Federal Realty Investment Trust, Nos. 9-16377 et al. (9th Cir. Feb. 1, 2011) (for publication), plaintiff won a breach of contract case, but the district court refused to award it expert witness fees based on California Code of Civil Procedure section 998(b).

     The Ninth Circuit affirmed based on the application of federal law.

     Although section 998 allows a successful plaintiff to recover all reasonable expert witness fees, 28 U.S.C. § 1821(b) only allows the plaintiff to recover $40 per day per witness. Aceves v. Allstate Ins. Co., 68 F.3d 1160, 1167-1168 (9th Cir. 1995) (federal law applies in diversity cases on this procedural issue). Thus, the district court properly denied expert witness fee recovery pursuant to section 998.

 

Section 998: “Early On” 998 Offer Did Not Give Rise To Cost Shifting Because There Was No Free Flow Of Information Or Pre-existing Relationships Between Litigants

 

Fifth District Passes On Impact of Third District’s Opinion in Barba v. Perez.

     Just to show you how California intermediate appellate opinions do indeed enter into the jurisprudential “flow” of decisions, we now can report on how another appellate court has reacted to Barba v. Perez, 166 Cal.App.4th 444 (2008), an interesting CCP § 998 decision from the Third District resulting in a split result.

     The Fifth District weighed in on the impact of this prior decision in Najera v. Huerta, Case No. F058850 (5th Dist. Jan. 10, 2011) (certified for partial publication, including § 998 and costs decision).

     In Najera, plaintiff was awarded $728,708.83 in an automobile-motorcycle accident case, with a new trial granted on a specific damages component only. The defense failed to accept a 998 offer, served at the time of the original summons and complaint, and then moved to tax costs after plaintiff won. The trial court granted the motion to tax costs in entirety, consisting of requests for expert witness fees and routine costs.

     The trial court determination was affirmed on the costs issue.

     A 998 offer must be evaluated early on, but only if the defense has a flow of sufficient information to evaluate it. Here, the facts showed that the defense did not commit error in providing an early 998 offer under the deferential abuse of discretion standard, with the opinion engaging in a scholarly review of the Third District’s decision of Barba v. Perez, 166 Cal.App.4th 444 (2008) in reaching the result--with the Fifth District suggesting it liked the dissenting viewpoint more than the majority decision in Barba. Very interesting reading as to how courts are interpreting Barba.

Section 998/Routine Costs: 998 Offer Not In Bad Faith And Routine Costs Are in Order Except for FedEx Charge

Court of Appeal Disagrees that FedEx Charge Allowable Under Costs Statute as “Postage” Charge Equivalent.

     Many of the decisions we review are fairly technical, and the next one is no exception. It does show that 998 offer rejection decisions will be reviewed for abuse of discretion, but that costs decisions on legal entitlement will frequently draw de novo review except to the extent that “necessary/reasonable” determinations are involved.

     Vigliotti v. Harkleroad, Case No. D055638 (4th Dist., Div. 1 Jan. 10, 2011) (unpublished) involved a “parking lot bump” personal injury action in which the defense won a jury verdict (even after an appeal sustaining the verdict). The defense moved to recover costs of $21,090.84, which was granted in full after the trial court denied plaintiff’s motion to tax costss. Following an appeal by plaintiff, the appellate court affirmed the costs award, except to strike $67.54 in FedEx expenses from the costs award.

     Plaintiff appealed, but was rebuffed in the costs award challenges.

     The main challenge was to the defense CCP § 998 pretrial offer of $3,501 as being a “bad faith” 998 offer. (Arno v. Helinet Corp., 130 Cal.App.4th 1019, 1024-1025 (2005).) Did not work. All of the challenges were rejected because the defense offer had to be evaluated based on evidence available at the time of the offer, which worked in the defense favor for purposes of showing no abuse of discretion. (Elrod v. Oregon Cummins Diesel, Inc.,, 195 Cal.App.3d 692, 699 (1987).)

     The amount of expert witness fees were found to be reasonable; after all, credibility and fee amount challenges are hard to win on appeal.

     That brings us to the one item that resulted in a slight (and, we mean, very slight) reversal. Plaintiff did challenge a FedEx costs charge of $67.54, which was meritorious. The Fourth District, Division 1 disagreed with Foothill-De Anza Community College Dist. v. Emerich, 158 Cal.App.4th 11 (2007) to the extent it held that a FedEx costs charge was not the equivalent of a “postage” charge not recoverable under Code of Civil Procedure section 1033.5(b)(3). With that exception, costs award affirmed in toto.