Martinez v. Brownco Construction Co.
56 Cal. 4th 1014
| Cal. | 2013Background
- Martinez sued Brownco Construction for injuries from an electrical explosion; plaintiff-martinez and wife asserted negligence and loss of consortium claims.
- Before trial, Martinez offered $4.75M (negligence) and Mrs. Martinez offered $250k (loss of consortium); Brownco did not respond within 30 days.
- Before trial, later offers were made: Martinez offered $1.5M and Mrs. Martinez $100k; Brownco again did not respond.
- At trial, Martinez damages totaled $1,646,674 for Raymond and $250,000 for Gloria; plaintiffs sought $561,257.14 in costs; Brownco moved to disallow expert fees incurred after the first offer.
- Trial court limited expert fees to those incurred after the second offer; Court of Appeal reversed, holding first offer costs may be recovered.
- Supreme Court upheld that two unaccepted offers allow recovery of expert fees incurred from the date of the first offer, to promote settlement and compensate injured parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a second §998 offer extinguish a prior offer for cost-shifting? | Martinez: both offers remain viable; costs allowed from first offer date. | Brownco: later offer extinguishes earlier one; costs only from last offer date. | Not per se; court may award from first offer date where both offers are unaccepted. |
| Should the last-offer rule apply to determine postoffer expert fees? | Martinez argues flexible application promotes settlements. | Brownco argues last-offer rule ensures predictability and discourages gamesmanship. | Court declines universal last-offer rule; permits costs from first offer when appropriate to encourage settlements. |
| Does applying a first-offer recovery align with §998’s purpose to promote settlement? | Recovery from first offer furthers settlement incentives. | Applying first offer undermines predictability of offers. | Yes; aligns with §998 goal of encouraging early settlements. |
Key Cases Cited
- Distefano v. Hall, 263 Cal.App.2d 380 (Cal. Ct. App. 1968) (first offer extinguishes prior offer; promotes multiple offers to encourage settlement)
- Wilson v. Wal-Mart Stores, Inc., 72 Cal.App.4th 382 (Cal. Ct. App. 1999) (last-offer rule; second offer extinguishes first for cost-shifting purposes)
- T.M. Cobb Co. v. Superior Court, 36 Cal.3d 273 (Cal. 1984) (section 998 policy encourages settlements; revocability before acceptance)