Woodland Hills Personal Injury Attorney Barry P. Goldberg is a major advocate of utilizing the California Code of Civil Procedure § 998 Offer to Compromise in every case. In fact, Mr. Goldberg calls the procedure the “Tactic of Champions” because it can reverse substantial costs of litigation to the losing party. Unfortunately, many lawyers do not fully understand the process and serve defective Offers to Compromise when there are multiple defendants.
“Section 998 provides for a reallocation of allowable costs when a party rejects an offer to compromise, and the offering party subsequently obtains a more favorable judgment.” (Steinfeld v. Foote-Goldman Proctologic Medical Group, Inc. (1996) 50 Cal.App.4th 1542, 1546 (Steinfeld).) Subdivision (d) of section 998 provides in relevant part: “If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment. . ., the court. . . in its discretion may require the defendant to pay a reasonable sum to cover post offer costs of the services of expert witnesses. . . .” “The purpose of section 998 is to encourage the settlement of lawsuits before trial by penalizing a party who fails to accept a reasonable offer from the other party.” (Taing v. Johnson Scaffolding Co. (1992) 9 Cal.App.4th 579, 583 (Taing).)
“[A] section 998 offer made to multiple parties is valid only if it is expressly apportioned among them and not conditioned on acceptance by all of them.” (Burch, supra, 109 Cal.App.4th at p. 544, Emphasis added.) This is because an unapportioned offer made to multiple defendants would require the concurrence of all codefendants and thus place each of them at the mercy of other codefendants whose refusal to settle may be unreasonable. (Taing, supra, 9 Cal.App.4th at p. 584.) Thus, to be effective for purposes of section 998, an offer must be sufficiently specific to permit an individual defendant to evaluate and make a reasoned decision whether to accept it, without the additional burden of obtaining the acceptance of codefendants or suffering their refusal to settle. (Id. at p. 585.) Even if each defendant is jointly liable for a plaintiff’s economic damages, but only severally liable for noneconomic damages in proportion to that defendant’s degree of wrongdoing, an unapportioned section 998 offer made to multiple defendants jointly is still invalid.
The Offer to Compromise is usually tested after the case is over once a party receives a more favorable judgment. Then, the party applies for costs, including the substantial expert witness fee costs. The losing party normally opposes the costs filing a Motion to Tax Costs. It is in this motion that the losing party raises, for the first time, that the Offer to Compromise was defective. It is not unusual the Offer to Compromise is served early in the case and is essentially forgotten. It is a rude awakening for a client to learn that the very Offer which would have reversed the substantial costs was defective.
Our office recommends serving the Offer to Compromise at the earliest opportunity. It is absolutely imperative that the Offer be in the proper form in order to be binding and effective. Further, when served on multiple defendants, to be effective for purposes of section 998, an offer must be sufficiently specific to permit an individual defendant to evaluate and make a reasoned decision whether to accept it, without the additional burden of obtaining the acceptance of codefendants or suffering their refusal to settle.