Rouland v. Pacific Specialty Insurance
162 Cal. Rptr. 3d 887
Cal. Ct. App.2013Background
- Lars and Lisa Rouland sued their insurer, Pacific Specialty Insurance Company, for breach of contract and bad faith after a landslide-damage claim was denied.
- About two months before trial, Pacific Specialty served separate Code of Civil Procedure section 998 offers: $95,000 to Lars and $30,000 to Lisa, each requiring that acceptance be effected by filing an "Offer and Notice of Acceptance" with the court within 30 days.
- The Roulands did not accept; after a five-week trial the jury ruled for Pacific Specialty (policy did not cover the landslide) and judgment entered for the insurer.
- Pacific Specialty sought costs including roughly $331,000 in expert witness fees under § 998 because the Roulands failed to obtain a more favorable judgment than the offers.
- The Roulands moved to tax those expert fees, arguing the § 998 offers were invalid because they lacked an explicit signed acceptance block (i.e., did not follow Judicial Council form CIV-090). The trial court granted the motion and taxed the fees. Pacific Specialty appealed.
Issues
| Issue | Roulands' Argument | Pacific Specialty's Argument | Held |
|---|---|---|---|
| Whether Pacific Specialty's § 998 offers complied with the statutory requirement that an offer "include... a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted." | Offers invalid because they lacked an express signed acceptance space or explicit language that acceptance must be by signing a statement; thus fees cannot be recovered. | Offers valid because they instructed the acceptor to file an "Offer and Notice of Acceptance" with the court, which necessarily requires a written, signed document by counsel; no specific form or magic words are required. | Reversed trial court: offers satisfied § 998 because they specified a manner of acceptance (filing an Offer and Notice of Acceptance) and the statute does not mandate a particular form or explicit signature line. |
| Whether Pacific Specialty is entitled as a matter of right to recover the expert witness fees once an offer is valid | (N/A to this appeal) | (N/A to this appeal) | Remanded to trial court to exercise its discretion whether to award expert witness fees; validity of offer does not entitle insurer to fees as a matter of right. |
Key Cases Cited
- Martinez v. Brownco Constr. Co., 56 Cal.4th 1014 (2013) (explains § 998’s settlement incentive purpose)
- Puerta v. Torres, 195 Cal.App.4th 1267 (2011) (statute requires an offer to specify how it may be accepted; silence invalidates the offer)
- Boeken v. Philip Morris USA Inc., 217 Cal.App.4th 992 (2013) (acceptance must be in writing and signed; form not the only means of compliance)
- Whatley-Miller v. Cooper, 212 Cal.App.4th 1103 (2013) (separate acceptance document can validate a § 998 offer; form CIV-090 is not exclusive)
- Perez v. Torres, 206 Cal.App.4th 418 (2012) (some indication of how to accept is required; bright-line rule supports certainty)
- Chaaban v. Wet Seal, Inc., 203 Cal.App.4th 49 (2012) (discusses discretionary nature of awarding expert fees under § 998)
- Berg v. Darden, 120 Cal.App.4th 721 (2004) (no specific magic language or format required for offers and acceptances)