Costs, Experts, Insurance, Section 998: Denial Of All But $11,753.94 Of Prevailing Personal Injury Plaintiff’s $83,048.06 Costs Request Affirmed On Appeal

An Invalid Section 998 Offer And A Failure To Reserve The Right To Seek Prevailing Party Fees In Agreements To Split Costs Sealed Plaintiff’s Fate.

            In Anthony v. Li, Case No. A156640 (1^st Dist., Div. 3 April 13, 2020) (published), a prevailing personal injury plaintiff, to whom a jury awarded $650,235.00 in damages which exceeded a $500,000 section 998 rejected by defendant, moved post-trial for recovery of $83,048.06 in costs.  However, the trial court granted only a small portion of the requested costs – denying the requested $62,082.50 for section 998 post-offer expert fees, $2,650 for mediation fees, and another $6,561.62 for court reporter fees.

            Plaintiff appealed, but the 1/3 DCA affirmed – finding the trial court had properly taxed the costs. 

            First, as to the expert witness fees, the simple explanation for the denial is that plaintiff had made an invalid section 998 offer.  However, as the saying goes – the devil is in the details.   

            Defendant Li resided outside of the United States.  He was driving a rental car at the time of the accident – for which he had purchased a $1 million liability insurance policy.  Plaintiff originally sued both Li and the holding corporation doing business as the rental car company, which held the insurance policy, but later dismissed Holding Corp. with prejudice.  Afterward, plaintiff tendered a joint section 998 offer that was not apportioned and required acceptance by, and entry of judgment against, both Defendant Li and Holding Corp.   Plaintiff argued his joint 998 offer was proper because: (1) Li and Holding Corp. were “one and the same” as plaintiff had included Holding Corp. in 998 offer as an insurer; (2) the law allowed plaintiff to make a section 998 offer to an insurer pursuant to Meleski v. Estate of Albert Hotlen (2018) 29 Cal.App.5^th 616 [discussed in our December 6, 2018 post]; (3) Defendant Li was not a participating in the action which was being litigated by Holding Corp., as the insurer; (4) Defendant Li was a named defendant solely for the purpose of reaching insurance under Civ. Code section 1939.33; and (5) Defendant Li was a foreign national who was unaware of the lawsuit, and plaintiff was not allowed to collect against Li because he had agreed to limit his recovery to insurance. 

            The 1/3 DCA disagreed.  First, plaintiff’s 998 offer did not advise defendants that the offer was directed at Holding Corp. as the insurer responsible for any judgment entered against Li.   Rather, it was presented as a section 998 offer to more than one defendant - as opposed to a defendant and insurer - and requiring acceptance by both defendants making it invalid. As such, Meleski was of no help to plaintiff.  Additionally, the 1/3 DCA determined that if plaintiff had made the 998 offer solely to Defendant Li, and Li had rejected it, then plaintiff – after judgment exceeding the 998 offer was entered against Li – would have had recourse by bringing a second direct action against Holding Corp., as the insurer, to recover any judgment and statutory cost award entered against Li.

            Next, as to the mediation and court reporter fees, the parties had entered into agreements for a voluntary mediation and for court reporter fees that stated that the fees were being equally divided and paid by plaintiff and defendant[s].  No language reserving the right to later seek the fees as prevailing party costs was added to either of the agreements.  The language in the agreements was unambiguous, and the trial court properly enforced those agreements as written.  (Carr Business Enterprises, Inc. v. City of Chowchilla (2008) 166 Cal.App.4^th 25, 30 and Howard v. American National Fire Ins. Co. (2010) 187 Cal.App.4^th 498, 539-540.)