Lead Opinion
Opinion
Following a special verdict by the jury, the trial court entered judgment in favor of plaintiff and respondent Antonio Barba for $117,053.42 against defendant and appellant Lupe Perez. Following judgment, Perez moved to tax certain costs Barba had claimed under Code of Civil Procedure section 998.
Perez appeals from the judgment and the order denying his motion to tax costs, contending that (1) the jury’s verdict is not supported by substantial evidence; (2) the trial court erred in denying his motion for nonsuit based on an agency theory of liability; (3) the trial court erred in rejecting his proposed special jury instruction; and (4) the trial court erred in allowing Barba to recover section 998 costs against him. We shall affirm the judgment and order denying the motion to tax costs.
Viewing the evidence most favorable to respondent (Barba), as we must (In re Paul C. (1990)
On May 18, 2004, Perez was the owner of the Tropical Club in Lodi, which included a rental housing unit above the club. At the time of the events at issue, Perez was 82 years old, blind, and confined to a wheelchair. Because of his infirmities, his wife Leticia Perez (Leticia)
On May 18, 2004, Barba and his wife visited Leticia at the apartment above the Tropical Club. Juan Mendoza, a musician at the club and occasional aide to Perez, was also there, preparing to move into the apartment with his wife. Earlier that day, Leticia had asked Mendoza to move an old refrigerator out of the apartment to make room for the new one. When Barba and his wife arrived at the apartment to visit, she asked Barba to help Mendoza move the refrigerator.
The record contains conflicting testimony of the incident; however, it appears that Barba and Mendoza put the refrigerator on a dolly and together began moving it down the stairwell, with Mendoza holding the dolly handles at the top of the stairs and Barba holding the refrigerator from the bottom. After moving the refrigerator a short distance, Mendoza suddenly let go of the dolly handles and the refrigerator fell towards Barba. Barba attempted to hold up the refrigerator by himself but it was too heavy. Barba tried to move out of the way as the refrigerator fell, but it landed on his left foot.
Barba was taken to Lodi Memorial Hospital, and then transferred to UC Davis Medical Center, where he underwent surgery for a broken ankle. As a result of the injuries, Barba incurred more than $70,000 in medical expenses and lost time from work.
PROCEDURAL HISTORY
On January 11, 2005, Barba filed a complaint against Perez, alleging Perez was vicariously liable for his injuries due to the negligence of “[his]
The case was tried to a jury. The jury answered questions posed on a special verdict form, as follows:
“1. Was JUAN MENDOZA negligent?
“[ANSWER: Yes.] ...
“2. Was JUAN MENDOZA’S negligence a substantial factor in causing harm to ANTONIO BARBA?
“[ANSWER: Yes.] . . .
“3. Was JUAN MENDOZA the agent of LETICIA PEREZ or LUPE PEREZ?
“[ANSWER: Yes.] . . .
“4. Was JUAN MENDOZA requested to move the refrigerator by LETICIA PEREZ?
“[ANSWER: Yes.] . . .
“5. Was LETICIA PEREZ authorized to ask JUAN MENDOZA for assistance in moving the refrigerator?
“[ANSWER: Yes.] . . .
“6. Was ANTONIO BARBA negligent?
“[ANSWER: No.] ... ffl ... H]
“8. What are ANTONIO BARBA’S damages?
“a. Medical expenses: $75,053.42
“b. Loss of Income: 42,000.00
“c. Non-economic loss,
including physical
[p]ain/mental suffering: 0.00
“Total: $117,053.42
*449 “9. What percentage of responsibility for ANTONIO BARBA’S harm do you assign to:
“ANTONIO BARBA: [0]%
“LUPE PEREZ: 100%.” (Boldface added.)
Based on these answers, the trial court entered judgment in favor of Barba against Perez for $117,053.42.
DISCUSSION
I.-IIL
IV. Section 998 Costs
Procedural background
Along with the summons and complaint, Barba served Perez with an offer to settle the case pursuant to section 998 for $99,999.99.
Following entry of judgment in the amount of $117,053.42, Barba filed a memorandum of costs, including prejudgment interest and expert witness fees, pursuant to section 998. Perez filed a motion to tax costs, contending that such fees and costs were not recoverable. The trial court denied this aspect of the motion.
A.-B.
Perez contends that “[e]ven assuming, arguendo, that service of the [section] 998 [offer] was effected while the trial court had jurisdiction,” “[i]t is unreasonable to expect that [he], when first faced with the service of summons and a complaint, would have a reasonable basis to believe an offer to compromise was fair.” Perez therefore argues the trial court abused its discretion in denying his motion because at the time Barba served him with the section 998 offer, he “had absolutely no basis to determine if the offer was reasonable.”
Whether a section 998 offer was reasonable and made in good faith is a matter left to the sound discretion of the trial court, and will not be reversed on appeal except for a clear abuse of discretion. (Nelson v. Anderson (1999)
One factor to be considered by the trial court as to the reasonableness of a section 998 offer is the amount offered as compared to the judgment ultimately recovered. (Elrod v. Oregon Cummins Diesel, Inc. (1987)
Perez uses language in Elrod stating that “[i]f the offeree has no reason to know the offer is reasonable, then the offeree cannot be expected to accept the offer” (Elrod, supra,
Perez’s reliance on Elrod is misplaced. In Elrod, we upheld the trial court’s determination that a defendant’s low-ball settlement offer to a plaintiff was not reasonable, where the defendant possessed crucial information limiting its exposure that was unknown to the plaintiff. {Elrod, supra, 195 Cal.App.3d at pp. 700-702.)
Here, Barba was not playing “hide the ball.” The parties had a close, semifamilial relationship, and there was free flow of information between them. Barba waited eight months , after the accident before filing the lawsuit. He wrote a letter before the suit was filed, informing defendant’s agent that his medical bills were about $70,000 and requesting that they be paid. The
The purpose of section 998 is to encourage pretrial settlements and avoid needless litigation. (T. M. Cobb Co. v. Superior Court (1984)
Our dissenting colleague advocates a far-reaching extension of Elrod, concluding that, absent the almost unheard-of fact scenario that he poses, any section 998 offer served by a plaintiff before the answer is due is per se unreasonable, ostensibly because the defendant has not had an adequate opportunity to conduct discovery on the issue of damages. We disagree.
Because the Legislature has made an award of costs under section 998 discretionary, appellate decisions have held that trial courts may properly consider whether the subject offer was made in good faith and was reasonable under the existing circumstances. (Burch v. Children’s Hospital of Orange County Thrift Stores, Inc. (2003)
This is exactly the way section 998 was designed to operate: to encourage the parties to consider the option of settlement seriously, before significant fees are incurred and they become entrenched in their positions.
DISPOSITION
The judgment and order denying the motion to tax costs are each affirmed. Plaintiff is awarded his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
Robie, J., concurred.
Undesignated statutory references are to the Code of Civil Procedure.
To avoid confusion between Lupe Perez and his wife Leticia, we will refer to Leticia Perez by her first name. No disrespect is intended.
See footnote, ante, page 444.
Section 998 establishes a procedure to shift costs if a party fails to accept a reasonable settlement offer presented not less than 10 days before trial. It provides that if a defendant fails to accept a written offer to compromise by a plaintiff and fails to obtain a more favorable judgment, the defendant must pay the plaintiff’s costs incurred after the offer, and may be ordered to pay the expert witness fees. (§ 998, subds. (b), (d).)
The trial court granted the motion to tax costs with regard to a filing fee that had been reimbursed previously and a service of process fee because the court determined the method of service was neither reasonable nor necessary.
Concurrence Opinion
I concur in parts L, II. and III. of the majority opinion.
I respectfully dissent from part IV., which affirms the trial court’s award of prejudgment interest and expert witness fees under Code of Civil Procedure section 998. (Undesignated statutory references are to the Code of Civil Procedure.) In my view, plaintiff’s section 998 offer (998 offer), which was served at the same time as the summons and complaint, was invalid. The majority’s contrary conclusion unfortunately adds another wicked slider to a plaintiff’s arsenal of hardball litigation tactics: serving a 998 offer with the summons and complaint.
In Elrod v. Oregon Cummins Diesel, Inc. (1987)
In Wilson v. Wal-Mart Stores, Inc. (1999)
The question before this court was whether the first 998 offer, for $150,000, remained valid. Applying traditional contract principles, we concluded the second 998 offer served to revoke the first offer. (Wilson v.
I do not think defendant in this case was given a reasonable opportunity to evaluate plaintiff’s 998 offer, which was served with the summons and complaint.
I think a defendant should be entitled to complete minimal discovery before being expected to evaluate and respond to a 998 offer. In the present case, for example, I should think that a defendant should be entitled, at a minimum, to take the plaintiff’s deposition and to use formal discovery procedures to discover his medical specials from medical providers.
Yet, in this case, defendant was required to respond to plaintiff’s 998 offer within 30 days of service of summons and complaint—the same period of time in which defendant was obligated to answer the complaint. Thus, section 998, subdivision (b)(2), provides, “If the offer is not accepted prior to trial or arbitration or within 30 days after it is made, whichever occurs first, it shall be deemed withdrawn, and cannot be given in evidence upon the trial or arbitration.” (Italics added.) Thus, plaintiff’s 998 offer had to be accepted within 30 days of its service (at the same time as the summons and complaint) or else it was deemed withdrawn and could not thereafter have been accepted. (The period to respond to a complaint is 30 days; see § 412.20, subd. (a)(3).)
While it is technically true that a defendant can notice the deposition of the plaintiff as soon as the defendant is served with the summons and complaint (§ 2025.210, subd. (a)), I do not think it is a good idea to force defendants to jam basic discovery into the 30 days following service of the summons and complaint in order to respond to a 998 offer. As a practical matter, here is what typically has to happen within 30 days following service of a personal injury complaint upon a defendant: (1) The defendant has to deliver the summons and complaint to his insurance carrier; (2) A claims adjuster for the insurer has to review the allegations of the complaint with the insured; (3) The claims adjuster has to line up counsel for the defendant; (4) Defense counsel has to discuss the allegations of the complaint with the insured and prepare an answer.
Why on earth do we want to do this?
The majority proffer arguments why plaintiff’s 998 offer was reasonable and valid in this case.
Thus, the majority assert “the parties had a close, semifamilial relationship, and there was free flow of information between them.” (Maj. opn., ante, at p. 450.) However, the “free flow” of information from plaintiff as to his damages was contained in a letter from plaintiff to defendant, which is not a part of the record. With respect, I do not think a defendant should be obligated to evaluate a $99,000 offer based on damages information supplied informally (not under oath) by a plaintiff or his attorney. Although plaintiffs’ attorneys are officers of the court, on rare occasions such attorneys have been known to inflate their client’s damages in demand letters written prior to discovery. In my view, a 998 offer approaching $100,000 can be reasonably evaluated only after basic discovery procedures (requiring responses under oath) have been used.
The majority also argue that “defense counsel may request that plaintiff provide informal discovery on the damage issue and/or allow an extension of time to respond to the demand.” (Maj. opn., ante, at p. 451.) As I have already explained, informal discovery is unsatisfactory. And section 998 provides no mechanism to obtain a court order extending the time to respond to a 998 offer. Defense counsel should not be at the mercy of plaintiff’s counsel’s charitable mood.
I can envision at least one scenario in which such service of a 998 offer would be reasonable. Imagine a scenario in which plaintiff files a lawsuit for personal injury; defendant answers; and discovery is conducted. But, on the eve of trial, plaintiff’s counsel, who is unprepared for trial, dismisses the lawsuit without prejudice. When plaintiff refiles that lawsuit, in my view, either plaintiff or defendant would act reasonably in serving a 998 offer as soon as defendant is served with the summons and complaint. The key is that the party receiving a 998 offer has had the opportunity for basic discovery.
In the instant case, I would conclude, following Elrod, supra,