Woodland Hills personal injury lawyer Barry P. Goldberg is a big proponent of the California Code of Civil Procedure § 998 Offer to Compromise process. In fact, there is no logical reason not to use the process in every litigated case! Section 998 provides, among other things, that if a party fails to accept a settlement offer and fails to obtain a more favorable judgment, the court may require that party to pay the other party’s reasonable expert witness fees. (§ 998(c)(1).) I am a big advocate of using 998 Offers in Uninsured and Underinsured Motorist arbitrations as well! This could mean the difference between a good result and a great result, essentially reversing the costs of litigation.
In my several articles and blogs on the subject, I have repeatedly counseled to make the offers early and simple. Make certain that the Offer is in the proper format and capable of being accepted. It is critical to make the Offer for near the lowest amount you would ever accept and are also very likely to beat at trial 9 times out of 10. Otherwise, the reversal of costs aspect of the Offer is inconsequential.
Of course, no case is completely simple. (I am still waiting for the “easy” case!) When there are multiple plaintiffs and/or multiple defendants, the Offer to Compromise process is often mishandled and results in a wasted effort. In the recent published case of Kahn v. The Dewey Group (Sept. 8, 2015, 2nd Dist.) Cal.App.4th , the Court reminded litigators of another important wrinkle in the 998 process.
In Kahn, plaintiff sued 20 defendants who he alleged were jointly and severally liable for causing him to suffer personal injury. Prior to trial, all 20 defendants jointly made a Code of Civil Procedure section 998 Offer to Compromise the entire action for $75,000. Kahn did not accept the Offer. Subsequently, the trial court granted a nonsuit as to 14 of the 20 defendants, and judgment was entered as to them. The case against the remaining six defendants went to a jury, but the jury was unable to reach a verdict and the trial court granted a mistrial.
The 14 dismissed defendants filed a memorandum of costs seeking, among other things, expert witness fees of $206,090 pursuant to section 998. The dismissed defendants asserted that defendants collectively had incurred nearly $300,000 in expert witness fees, and urged that they were entitled to recover 14/20ths (70 percent) of that total.
Kahn moved to strike or tax costs on the ground that a final judgment had not yet been entered against all 20 of the defendants on whose behalf the section 998 offer had been made, and thus the dismissed defendants could not yet recover expert witness fees. The trial court denied the motion to strike or tax costs, and it awarded the dismissed defendants expert witness fees. The Court of Appeal reversed the fee award.
The Court reasoned that if multiple defendants jointly make an Offer to Compromise pursuant to section 998, whether the offer exceeds the judgment cannot be determined by comparing it to a judgment (or judgments) entered against only some of the offering defendants. Instead, the offer must be compared to the judgment(s) obtained against all defendants. Accordingly, because no judgment had yet been entered with regard to six of the 20 defendants on whose behalf the section 998 offer was made, the trial court erred in awarding expert witness fees to the 14 dismissed defendants.
While this fact situation may seem unusual, there are valuable lessons to be learned. If at all possible, parties should avoid “joint” Offers to Compromise. The simplest form is usually the best. Consider individual Offers to Compromise which are capable of being accepted by the opposing party for a particular amount. This eliminates being “tied” to the results concerning other parties and increases the chances that substantial costs will be awarded if a more favorable result is obtained.