WALLACE A. GOODSTEIN, Plаintiff and Appellant, v. BANK OF SAN PEDRO, Defendant and Respondent.
No. B053778
Second Dist., Div. Seven
Aug. 18, 1994
27 Cal. App. 4th 899
John Clifton Elstead for Plaintiff and Appellant.
Epport & Richman and Steven N. Richman for Defendant and Respondent.
LILLIE, P. J.---Plaintiff Goodstein appeals from a September 11, 1990, order granting defendant‘s motion to recover expert witness fees, awarding fees and costs of $138,421, and denying plaintiff‘s motion to tax costs. On appeal, plaintiff challenges the trial court‘s award of expert witness fees under
FACTUAL AND PROCEDURAL BACKGROUND
After a judgment of nonsuit was granted in favor of defendant (Bank) on Goodstein‘s complaint for slander of title and negligence,1 Bank filed a memorandum of costs in conjunction with a motion to recover expert witness fees totaling about $116,000, based on Goodstein‘s rejection of Bank‘s written statutory offer to compromise and his failure to obtain a judgment more favorable than the offer (
According to declarations submitted in support of Bank‘s motion, Goodstein claimed numerous items of damages exceeding $2 million in his suit against Bank, including damages for loss of business investment in Jook Box Corporation, of which Goodstein was the sole shareholder. Prior to trial, Bank designated numerous expert witnesses, including Robert Wagman and James Call who were deposed in early 1989, before trial in September and October 1989; Wagman was a partner of Price Waterhouse with over 12 years of experience in financial services and tax issues; his trial testimony would relate to the financial status of Goodstein and his ability to obtain capital for the operation of Jook Box Corporation; Call was a senior managеr at Price Waterhouse; his trial testimony would relate to the management and operation of Jook Box Corporation and the reasons for its failure.
Wagman rendered 103 hours of service for Bank in connection with the lawsuit, including initial investigation and research, preparation for deposition, and trial preparation, but excluding the time spent in deposition; his
Call rendered 481 hours of service in connection with the lawsuit, excluding time spent in deposition; Price Waterhouse charged Bank $69,725 for his services, plus costs of $5,696, equating to an averagе hourly rate of $135; about $69,300 of the fees were incurred after the statutory offer to compromise.3
Goodstein filed opposition to Bank‘s motion for expert witness fees and a motion to tax costs, challenging items of costs sought by Bank by virtue of its status as a prevailing party under
After oral argument on the motions, the court took the matters under submission. On September 11, 1990, the court issued its ruling on submitted matter, which stated in pertinent part: “The Motion of defendant [Bank] to recover expert witness fees in the sum of $116,184.05, as claimed in the Memorandum of Costs filed November 15, 1989, is granted (
I
STATUTORY OFFER UNDER SECTION 998
Appellant claims that certain aspects of the statutory offer to compromise prevent it from constituting an offer to compromise within the provisions of
In this case, the оffer was captioned “Statutory Offer to Compromise,” and provided in pertinent part that: “In full settlement of this action, [Bank] hereby offers to pay [Goodstein] the total sum of $150,000 in exchange for each of the following: 1. The entry of a Request for Dismissal with prejudice on behalf of the Plaintiff in favor of [Bank]; 2. The execution and transmittal of a General Release by [Goodstein] in favor of [Bank]; 3. Each party is to bear their own respective costs and attorney‘s fees.”
Appellant contends that the foregoing offer does not fall within
The distinctions set up by appellant are not tenable, and he offers no authority to support his argument, which is premised on the claim that a compromise settlement under
“Judgment” is defined in
“However, until a party seeks to enforce a compromise аgreement and to have judgment entered thereon, the underlying lawsuit has not finally been disposed of although the parties may in fact be bound by a valid and enforceable settlement contract.” (Varwig v. Leider (1985) 171 Cal.App.3d 312, 315.) Because compromise agreements “are contracts and are governed by the general principles of contract law” (id. at p. 316), the court in Varwig stated that even though the underlying lawsuit giving rise to a settlement agreement is dismissed for failure to bring the action to trial in five years, “The parties will retain their right to seek to specifically enforce their settlement contract even if the underlying lawsuit is dismissed” (ibid.), and “A dismissal . . . will not . . . adversely affect the agreement between the parties.” (Ibid.)
The word “judgment” in
In light of the foregoing, we conclude that the instant offer to compromise meets the requirements of subdivision (b) of
In Gregory, plaintiff accepted a settlement offer for $7,500 during a settlement conference in the judge‘s chambers and then refused to sign a release and reрudiated the settlement; on motion, the trial court granted defendant‘s motion for an order compelling enforcement of compromise settlement agreement and judgment thereon for $7,500; plaintiff appealed and complained on appeal that “the court was without power to enter a judgment in her favor, since the compromise agreement contemplated no such thing, but rather payment by respondent and dismissal of the action by appellant. However, it is recognized that a compromise agreement operates as a merger and bar of all preexisting claims and causes of action [citation] and is as binding and effective as a final judgment itself [citation]. Thus, entry of judgment in favor of appellant in conformance with the compromise
We interpret Gregory to stand for the proposition that, as between the parties thereto and for purposes of enforcement of settlement agreements, a compromise agreement contemplating payment by defendant and dismissal of the action by plaintiff is the legal equivalent of a judgment in plaintiff‘s favor.
Appellant points out that the distinction between a judgment and a voluntary dismissal may have an impact on a party‘s status as a prevailing party under the provisions of
We also reject appellant‘s argument that the offer is fatally uncertain because it fails to specify whether it was an offer intended to compromise all three of the actions consolidated for trial, or just Goodstein‘s action against the Bank. The trial court impliedly determined that the offer was clear and unambiguous and was intended to settle only Goodstein‘s complaint against Bank. Substantial evidence in the record supports the trial court‘s determination.
“Compromise agreements are, of course, ‘governed by the legal principles applicable to contracts generally.’ [Citation.] They ‘regulate and settle only such matters and diffеrences as appear clearly to be comprehended in them by the intention of the parties and the necessary consequences thereof, and do not extend to matters which the parties never intended to include therein, although existing at the time.‘” (Folsom v. Butte County Assn. of Governments, supra, 32 Cal.3d at p. 677.)
Citing the provision of the instant offer pertaining to Goodstein‘s execution of a general release, appellant contends that the foregoing provision required him to surrender “other present and future possible causes of action against the defendant,” thus rendering the offer “hopelessly uncertain and directly under the purview of Valentino [v. Elliott Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692].” Appellant argues that his other potential causes of action against the Bank “include abuse of process and malicious prosecution, neither one of which [he] was willing to surrender at the time of the Bank‘s offer.” The clear and unambiguous language of the offer provides that the terms and conditions applied only “in full settlement of this action.” Accordingly, the offer reasonably cannot be construed to apply to other litigation contemplated by Goodstein.
The instant case is distinguishable from Valentino v. Elliott Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692, a personal injury case in which defense counsel included with a $15,000 offer a requirement that plaintiff sign and file a notice of acceptance which “not only terminated the instant personal injury action against Sav-On but also released Sav-On, its attorneys and insurance carrier from any and all claims and causes of action arising out of аppellant‘s claims including insurance bad faith and violation of
Inasmuch as the general release in the instant case pertained only to the same action before the trial court which Bank sought to have dismissed upon its payment of $150,000 to Goodstein, Valentino has no application to the facts of this case.
We also reject appellant‘s claim that had he accepted the instant offer, calling for dismissal, such dismissal would have been paramount to “a judgment on the merits in favor of defendant,” and he would have incurred the risk “of having the defendant declared the prevailing party under [
Without merit also is appellant‘s contention that “The Bank‘s offer was an invalid bad faith offer that had no reasonable prospect of acceptance.” Bank‘s declarations establish without contradiction that at a voluntary settlement conference in December 1988, the judge reviewed the file, spoke with each party, independent of the other, and expressed his opinion that the case had a settlement value of $200,000. After thе settlement conference, defense counsel decided to offer the figure of $150,000 to Goodstein, and such a statutory offer was served on Goodstein shortly thereafter.
Moreover, in light of the judgment of nonsuit, and the affirmance of that judgment on appeal, appellant‘s characterization of this case as one of “clear liability” is without merit. As stated in our opinion dealing with the appeal from the judgment of nonsuit, “Bank did not slander [Goodstein‘s] title by filing a forged deed of trust, . . . Dr. Goodstein‘s partner did these wrongful acts.” We also affirmed the judgment on the ground that certain alleged wrongful conduct by Bank was determined to be privileged, other allegedly negligent conduct was not the proximate cause of damage to Goоdstein, and Goodstein had no standing to sue for the lost profits involving the Jook Box Corporation and a derivative action was not pleaded. (Goodstein v. Bank of San Pedro, supra, B048044.) “Where, as here, the offeror obtains a judgment more favorable than its offer, the judgment constitutes prima facie evidence showing the offer was reasonable. . . .” (Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 700.)
Appellant implies that despite pleading defects and the lack of evidence of causation, Bank nevertheless took Goodstein‘s claims against it for millions of dollars seriously because its offer “barely exceeded its own costs” of about $138,000, and “it is unlikely that the Bank would have spent so much on the defense of the case and withheld a 998 offer until the eve of trial if it had not reasonably anticiрated a significant verdict against it, greatly in excess of the $150,000 offered.”
We find nothing in this record to indicate that Bank actually valued the case in excess of its statutory offer. According to the declaration of counsel monitoring the case on behalf of Bank‘s insurer, “It was decided that a Statutory Offer in the sum of $150,000 would be offered for the sole purpose of confirming the offer that had been made at the December 29, 1988 settlement conference and to give us the opportunity to collect any expert fees that were generated in this case.” Thus, the offer is consistent with the fact that, despite its lack of merit, Goodstein‘s action would entail substantial costs and expenses if it went to trial.
Given all of the above circumstances, appellant fails to establish that the trial court abused its discretion in impliedly determining that the statutory offer in this case was made in good faith. Accordingly, we reject appellant‘s contentions that the offer in this case does not fall within the provisions of
II
EXPERT WITNESS FEES
Appellant contends that the Bank was not entitled to expert witness fees within the provisions of
III
COSTS
In addition to expert witness fees, the trial court awarded costs totaling $22,237.62 for filing and motion fees, deposition costs, service of process, witness fees, and court-ordered transcripts. Appellant contends that “The Bank was not entitled to more than $7,853.08 of its costs because all of the other costs were incurred before its offer was made.”
Appellant argues that the trial court abused its discretion in awarding costs incurred before the statutory offer was made because the trial court “made no determination as to when the complaint in any of the three consolidated actions was filed, let alone which of the costs claimed pertained to which of these actions. It simply ordered that all costs claimed by the Bank were to be paid by the plaintiff, which could mean costs for two of the cases that have not even been dismissed, as well as costs incurred before any of the complаints were filed.”
This argument is simply absurd. We should not have to point out to appellant‘s counsel that Bank‘s memorandum of costs contained detailed schedules containing itemized lists of deposition dates, costs, and deponents, investigative costs, lists of dates and fees for service of process on named persons, and an itemized list of expert witness fees. Bank‘s motion contained detailed declarations further explaining and justifying the expert witness fee expenses. Bank‘s declarations were not contradicted by any declarations submitted by Goodstein. “If the items on a verified cost bill appear proper charges, they are prima facie evidence that the costs, expenses and services therein listed were necessarily incurred.” (Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 266.) Appellant‘s mere statements in his points and authorities and in his briefs on appeal are insufficient to rebut Bank‘s prima facie showing (ibid.), and we must presume the trial court‘s order to be correct inasmuch as appellant fails to affirmatively show any error. (Ibid.)
Appellant also fails to establish any abuse of discretion by the trial court in awarding Bank both preoffer and postoffer costs under the provisions of
DISPOSITION
The order is affirmed. Respondent is entitled to its costs on appeal.
Woods (Fred), J., concurred.
JOHNSON, J.---I respectfully dissent.
My concerns about the majority opinion center on a single issue. Was the defendant‘s offer a valid
In my view, this very court actually decided this issue in a unanimous opinion six years ago. (Valentino v. Elliott Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692 review den. Aug. 18, 1988.) In that opinion, we characterized the issue as follows: “[W]e cоnfront a fundamental issue in the interpretation of California‘s settlement incentive scheme. May costs be shifted against a prevailing party who rejected a statutory settlement offer (under
The majority opinion is correct in stating there are factual differences between Valentino and the instant case. But the Valentino rationale is broad enough to decide this case as well. Furthermore, principles of statutory construction and policy considerations underlying that rationale strongly support a rule against allowing
In Valentino, the defendant made a
There was a somewhat different outcome at trial, however. In Valentino, the plaintiff received a judgment of $9,750 while the instant case ended in а defense verdict. Still, what the plaintiff won in Valentino fell short of the defendant‘s
This court reversed in Valentino specifically because the defendant‘s
“. . . Evaluated in the light of this (general release), the monetary term of the offer is not really $15,000 to settle the causes of action at issue in the instant case. Instead that $15,000 is diluted by the worth of other present and future possible causes of action (the plaintiff) must surrender in order to receive the defendant‘s cash. (Italics in original.) Most or indeed all of the $15,000 actually may represent a payment to be released from potential bad faith or other claims against the insurance company, the lawyer, or the (defendant) rather than a payment to settle the instant case. . . .”
“. . . In retrospect, of course, (plaintiff‘s) bad faith claim appears valuelеss and it is hard to conjure any other claims she could file . . . . But
“To pinpoint the value of the various potential unfiled claims [plaintiff] might have had at the time of the statutory offer or in the future . . . , would require the court to engage in wild speculation bordering on psychic prediction. Merely identifying all the potential claims would take some clairvoyance as well as the collection of a host of facts unrelated to the merits of the instant case. . . . After all the potential causes of action had been identified, the court would then have to gather further facts about the apparent probabilities of success and possible recoveries for each as they would have appeared at the time of the statutory offer. Then it would have had to arrive at estimates as to all these variables and calculate an estimated value for each individual potential claim, cumulate those estimated values, and determine whether the total exceeded [the difference between defendant‘s section 998 offer and plaintiff‘s recovery in the case on trial]. . . .”
“. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .”
“It would be hard enough for a trial court to place a value on a condition requiring the plaintiff to dismiss a single specific lawsuit she had already filed against the defendant in another court. But when the condition mandates surrender of an array of potential lawsuits . . . the task becomes impossible. Even if it were possible, it would not be worth the cost. Recalling the underlying purpose of section 998 is to promote judicial economy, this court is not about to encourage defendants to add conditions to their statutory offers which introduce so much uncertainty to those offers the courts must spend hours or days sorting them out to determine whether plaintiffs have achieved a more favorable result at trial.” (201 Cal.App.3d at pp. 697-701, italics added.)
As the language quoted above demonstrates, this court in Valentino disapproved the inclusion of general releases in
In my view, then, the lesson of Valentino is that
Still, Valentino only surfaced some of the problems inherent in
First, a general release clause in a
The opposing party could make a monetary offer that was quite reasonable for settlement of this case, but unreasonable as an offer to settle both this case and any other actual or potential litigation between the parties. If such an offer nevertheless is to be considered a valid
Second, by placing a general release clause in a
Indeed if settlement of other actual and potential lawsuits can be embraced in a
Third, the offeree is only allowed to count his recovery in this case in determining whether he achieved a more favorable judgment than the offer. Hence the
Fourth, nothing in the language of section 998 itself suggests it contemplates an offer which covers anything other than the causes of action which are before the court in the precise cause which is otherwise going to trial. The courts certainly have understood that language to be so limited. “[T]he reasonableness of a defendant‘s offer . . . represents a reasonable prediction of the amount of money, if any, defendant would have to pay plaintiff following a trial, . . .” (Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 699.) The offer thus does not embrace the amount of money the defendant might have to pay the plaintiff in causes of action which will not be resolved at the trial of the litigation in which the offer is made. Consequently, the offer cannot require the plaintiff to terminate or abstain from pursuing those other causes of action as the price of receiving the monetary consideration the defendant tenders.
Fifth, the legislative purpose of the
The majority seeks to characterize the “general release” in this case as somehow confined to the precise causes of action that were being litigated in this case. Thus, according to that opinion, the offer does not suffer from any of the vicеs which bother me.
While it might be reassuring and certainly would have saved me time and effort to accept that narrow view of this general release, I was unable to do so. Other terms of this offer required the offeree to dismiss with prejudice all the claims which were the subject of the cause before the court in this action. A “general release” confined to those causes of action would be mere surplusage---a completely redundant term. Res judicata takes care of any concern as to the possible revival of the dismissed claims and does so at least as effectively as would a “release” of those causes of action.
So when the offer contained a separate and distinct term requiring a “general release” in addition to dismissal of the claims actually before the court, what is the reasonable interpretation of that term? I submit the term meant what it normally means---a general relinquishment of all causes of action, whether embraced in complaints already filed in the courts or ones which might be filed in the future. This meaning of the phrase “general release” has become a recognized term of art in the law and among lawyers. It is a term with a settled meaning. Indeed that settled meaning even has been recognized in statutes. (See, e.g.,
Accordingly, when defendant made a
If this is the proper reading of the “general release” condition included in this