Expert Fees Of $21,377.08 Were Assessed Against Law Firm Under 998 Cost-Shifting Feature.
In Ellis Law Group, LLP v. Nevada City Sugar Loaf Properties, LLC, Case No. C080930 (3d Dist. May 8, 2019) (unpublished), client disputed a law firm’s contention it was owed for unpaid legal fees based upon a conflict of interest and nonreceipt of a billing statement (for work the client said it never authorized). Well into the case, after client’s affirmative defenses were revealed to the law firm, client served a CCP § 998 offer by which client would waive costs if law firm dismissed the suit with prejudice, an offer not accepted by the law firm. Fourteen months later, law firm dismissed the matter without prejudice. Client moved for recovery of $21,377.08 in expert fees (mainly for professional ethics experts) based on section 998’s cost- shifting feature.
The Third District affirmed the expert fee award against law firm.
A voluntary dismissal without prejudice will trigger section 998 cost shifting. (Mon Chong Loong Trading Corp. v. Superior Court, 218 Cal.App.4th 87, 93-94 (2013).) Given that client notified law firm about significant affirmative defenses and provided detailed discovery responses in support of the defenses, there was a probability that client would win such that a “waiver of costs” offer was not unreasonable under the circumstances. Retaining professional experts based on a conflict of interest defense should not have been a surprise to the law firm, such that the waiver of the eventually-awarded expert fees did have “value” to the law firm. There is no “reasonable rejection exception” to the operation of section 998, such that the lower court award of expert fees was no abuse of discretion. (Arno v. Helinet Corp., 130 Cal.App.4th 1019, 1027 (2005).)
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