246 Cal. App. 4th 1121
Cal. Ct. App.2016Background
- On June 13, 2011, plaintiff Charles Sanford was injured when a car driven by 17‑year‑old Jacy Rasnick ran a stop sign and struck his motorcycle; the car was owned by her father, William Rasnick.
- Sanford sued both Jacy (negligence) and William (general negligence / negligent entrustment); the parties shared counsel and insurance.
- After expert discovery closed, defendants served a joint Code of Civil Procedure § 998 offer for $130,000 that required, as a condition of acceptance, execution of a “written settlement agreement and general release” (terms not described) and dismissal with prejudice.
- The offer lapsed; at trial the jury found Jacy negligent and awarded damages that, after plaintiff’s comparative fault, produced a judgment less than $130,000.
- Defendants sought post‑offer costs (including expert witness fees) under § 998; the trial court found the § 998 offer valid and awarded some costs to defendants, and also taxed certain items from Sanford’s cost bill (including mediator fee and service/delivery charges).
- Sanford appealed, arguing (1) the § 998 offer was invalid because it conditioned acceptance on an undefined settlement agreement, and (2) the trial court erred in taxing certain of his cost items without exercising discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of § 998 offer conditioned on executing an undefined “settlement agreement and general release” | Sanford: conditioning acceptance on an unexplained settlement agreement rendered the offer invalid under § 998 because offeree could not know required terms | Rasnicks: offers may include releases/settlement terms; such a requirement is common in insurance defense offers and is permitted (citing Linthicum, Goodstein) | Court: Offer invalid because conditioning acceptance on an unspecified/undisclosed settlement agreement made the offer impermissibly contingent and uncertain under § 998; release language differs from an open‑ended settlement agreement |
| Burden and construction of § 998 offers | Sanford: offer must be strictly construed against offeror and meet statutory requirements | Rasnicks: offered cases allow releases and settlement terms in § 998 offers | Held: Offeror bears burden to show compliance; ambiguities construed against offeror; unspecified settlement agreement unacceptable |
| Trial court’s denial of mediator fee and service/delivery costs as "not allowed" under § 1033.5(a) | Sanford: mediator fee and attorney service/messenger fees are recoverable under § 1033.5(c) in the court’s discretion; court failed to exercise discretion | Rasnicks: court properly denied these costs | Held: Reversed—trial court incorrectly concluded these costs were categorically not allowed and failed to exercise its discretion; remand for new hearing to analyze recoverability under § 1033.5(c) |
| Taxing plaintiff’s cost items for lack of documentation | Sanford: he had submitted documentation and the court improperly taxed items without considering evidence | Rasnicks: objected to items as unsupported | Held: Trial court erred in parts (did not properly consider submitted documentation and failed to exercise discretion); remand for proper consideration and new orders (including entry granting Sanford’s motion to tax Rasnicks’ costs) |
Key Cases Cited
- Ladas v. California State Auto. Assn., 19 Cal.App.4th 761 (1993) (statutory framework for allowable costs under Cal. Code Civ. Proc. § 1033.5 and discretionary recovery under subdivision (c))
- Barella v. Exchange Bank, 84 Cal.App.4th 793 (2000) (offeror bears burden to show § 998 offer validity; offers strictly construed against offeror)
- Linthicum v. Butterfield, 175 Cal.App.4th 259 (2009) (permitting mutual release language in a § 998 offer in certain forms)
- Goodstein v. Bank of San Pedro, 27 Cal.App.4th 899 (1994) (upholding § 998 offer that included execution of a general release)
- McKenzie v. Ford Motor Co., 238 Cal.App.4th 695 (2015) (conditioning a § 998 offer on waiver of unknown claims can invalidate the offer)
- Valentino v. Ellion Sav‑On Gas, Inc., 201 Cal.App.3d 692 (1988) (conditioning an offer on waiving claims outside the suit invalidates § 998 offer)
- Rouland v. Pacific Specialty Ins. Co., 220 Cal.App.4th 280 (2013) (interpretation of § 998 reviewed de novo where no factual dispute)
- Ashburn v. AIG Financial Advisors, Inc., 234 Cal.App.4th 79 (2015) (failure to exercise discretion is itself an abuse of discretion)
- Gibson v. Bobroff, 49 Cal.App.4th 1202 (1996) (trial court may award mediation expenses under § 1033.5(c) in its discretion)
- Foothill‑De Anza Community College Dist. v. Emerich, 158 Cal.App.4th 11 (2007) (upholding messenger/service fees as recoverable costs in appropriate circumstances)