CHARLES STEVEN SANFORD, Plaintiff and Appellant, v. JACY LEANN RASNICK et al., Defendants and Respondents.
No. A145704
First Dist., Div. Two.
Apr. 25, 2016.
246 Cal. App. 4th 1121
Seiler Epstein Ziegler & Applegate and Mark Lewis Mosley for Plaintiff and Appellant.
Philip M. Anderson & Associates and Jeanette N. Little for Defendants and Respondents.
OPINION
RICHMAN, J.—Appellant Charles Steven Sanford was injured when his motorcycle was struck by a car owned by William Rasnick and driven by his daughter Jacy Leann Rasnick (when referred to collectively, the Rasnicks). Sanford sued both Rasnicks, who made a joint Code of Civil Procedure section 998 offer (section 998 offer) for $130,000.1 The offer lapsed, the case went to trial, and a jury returned a verdict for less than $130,000.
Sanford appeals from both orders, contending the section 998 offer was not valid and the court erred in connection with its rulings on his cost items. We agree with Sanford on both accounts, and remand the matter with instructions to enter a new order denying the Rasnicks any costs, and hold a new hearing to analyze the Rasnicks’ motion to tax certain of Sanford‘s cost items in accordance with the law.
FACTUAL AND PROCEDURAL BACKGROUND
On June 13, 2011, Sanford was injured when a car driven by 17-year-old Jacy ran a stop sign and struck his motorcycle. The car was owned by Jacy‘s father, William.
On February 20, 2013, Sanford filed suit against the Rasnicks. The complaint alleged two counts: (1) vehicular negligence against Jacy and (2) general negligence against both Rasnicks. The second count repeated the same factual basis of liability as in the first count—i.e., that Jacy had negligently run a stop sign and caused the accident and Sanford‘s injuries—and also alleged that William “owned the vehicle that [Jacy] was driving and negligently entrusted said vehicle to her.”
As described in the Rasnicks’ respondent‘s brief, Jacy and her father “were covered under the same policy of automobile insurance and were represented by attorney, Michael Welch. [Citation.] Mr. Welch filed a joint answer on behalf of both Respondents, Jacy Leann Rasnick and her father, William Rasnick which consisted of a general denial and several affirmative defenses. [Citation.]” As will be seen, the insurance aspect apparently factored into the strategy on behalf of the Rasnicks.
The trial court initially set the case for trial for December 1, 2014, the effect of which was that the discovery cutoff, including expert discovery, was calculated from that date. The parties disclosed experts in September 2014 and all discovery, including expert discovery, closed on November 1, 2014, by which date all expert depositions had been concluded. Meanwhile, the Rasnicks withdrew two of their experts, Carol Hyland and William Hoddick, neither of whom was ever deposed.
On December 24, 2014, after discovery had closed and after the last deposition had concluded, the Rasnicks served a section 998 offer. It provided in its entirety as follows:
“Defendants, JACY LEANN RASNICK and WILLIAM RASNICK hereby offer, pursuant to
CCP §998 , to compromise all of the claims, allegations and actions of plaintiff CHARLES STEVEN SANFORD for $130,000 in exchange for each of the following:“1. The entry of a Request for Dismissal, with prejudice, of the entire action (including any and all complaints, cross-complaints or actions filed by any party against or as to these defendants) and/or a finding that this compromise was entered into and constitutes a good faith settlement or compromise as to any cross-complainants; and
“2. The notarized execution and transmittal of a written settlement agreement and general release. Each party will bear their own fees, costs and expenses.
“This offer will expire in 30 days or the commencement of trial, whichever is sooner, unless earlier withdrawn.
“Any acceptance of this offer must be made by a written statement, signed by counsel for the accepting party (or party, if in pro per), that the offer is accepted on the terms and conditions stated above. Acceptance may be made by signing the Acceptance of Offer to Compromise below and returning it to counsel for the offering party.”
Neither the offer itself nor any other communication from counsel for the Rasnicks purported to apportion the $130,000 offer amount between them. Nor did any communication from the Rasnicks’ counsel ever disclose any of the terms that they planned to put into the “written settlement agreement” required as a condition to accepting their offer.
The offer lapsed, and the case proceeded to trial, which began on March 24, 2015. On March 30, Sanford moved to amend his complaint to conform to proof by adding a cause of action for limited joint and several liability under
Following entry of judgment, on May 8, Sanford filed a memorandum of costs (cost bill) seeking $7,881.25. On May 19, the Rasnicks filed their cost bill seeking $28,150.02. This included all of their postoffer costs and their expert witness fees as penalties under
On or about May 21, the Rasnicks filed their motion to tax, objecting to essentially every item on Sanford‘s cost bill.
On June 1, Sanford filed his motion to tax. Sanford objected to the validity of the section 998 offer and requested that the Rasnicks’ cost bill be stricken in its entirety. Alternatively, Sanford objected to the Rasnicks’ application to recover some of their pre-offer deposition costs, their private investigators’ fees, and the fees they claimed they had paid to two withdrawn experts.
On June 11, both sides filed their oppositions to the motions to tax. Included within the Rasnicks’ opposition were authenticated copies of the receipts and invoices supporting the claimed costs.
On June 23, the trial court issued its tentative rulings, both favorable to the Rasnicks. The tentative rulings were set forth in three single-spaced pages, with no paragraphs.
Sanford contested both tentative rulings, and argument was held on June 24. The argument was quite lengthy, in the course of which Sanford‘s counsel went to great lengths to attempt to demonstrate where, and why, the tentative rulings were wrong. We will not detail all that here, but do note two items of interest.
First, Sanford‘s counsel pointed to the tentative ruling that taxed Sanford‘s costs in item 1 (in limine motions) and item 4 (deposition costs) because, quoting the tentative ruling, “Defendants correctly note that Plaintiff did not submit any evidence supporting his claim that he incurred these fees” and that “Plaintiff must provide the Court and Defendants with documentation to support his claim that such fees were incurred.” Counsel for Sanford pointed
Second, another item in the tentative ruling taxed the mediator‘s fee, with this language: “Defendant‘s Motion to Tax Plaintiff‘s claimed costs incurred in participating in mediation and for delivering papers in connection with motions (Item 13), in the sum of $1,646.53, is GRANTED. The costs and expenses described in Item 13 of the memorandum of costs are not allowed. See
On or about June 24, the trial court issued its order on the Rasnicks’ motion to tax costs. As best we can tell, with the exception that there is an introduction and that it has paragraphs, the substance of the order is word for word the tentative ruling. It reads as follows:
“The Motion to Tax Costs was set for hearing on 06/24/2015 at 02:30 PM in Department 522 before the Honorable Dennis Hayashi. The Tentative Ruling was published and was not contested.
“IT IS HEREBY ORDERED THAT:
“The tentative ruling is affirmed as follows: The Motion of Defendants and Judgment Debtors to Tax the Memorandum of Costs of Plaintiff and Judgment Creditor Charles Stephen Sanford, pursuant to Rule of Court 3.1700, is GRANTED as follows:
“1. Defendants’ Motion to Tax Plaintiff‘s claimed filing fees for his motions in limine (Item 1), in the sum of $120.00, is GRANTED. Defendants correctly note that Plaintiff did not submit any evidence supporting his claim that he incurred these fees. In addition, Plaintiff is not authorized to recover these fees because he did not obtain a judgment more favorable than the
“3. Defendants’ Motion to Tax Plaintiff‘s claimed costs of making models, exhibits and blowups (Item 11), in the sum of $127.66, is GRANTED. Plaintiff must provide the Court and Defendants with documentation to support his claim that such fees were incurred. In addition, Plaintiff is not authorized to recover these fees because he did not obtain a judgment more favorable than the
“4. Defendants’ Motion to Tax Plaintiff‘s claimed costs incurred in participating in mediation and for delivering papers in connection with motions (Item 13), in the sum of $1,646.53, is GRANTED. The costs and expenses described in Item 13 of the memorandum of costs are not allowed. See
Sanford timely appealed from both orders.
DISCUSSION
The General Rules Regarding Costs
Citing numerous cases, we set forth the general principles in Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 773–774 (Ladas):
“‘Section 1033.5, enacted in 1986, codified existing case law and set forth the items of costs which may or may not be recoverable in a civil action. [Citation.]’ [Citation.] An item not specifically allowable under subdivision (a) nor prohibited under subdivision (b) may nevertheless be recoverable in the discretion of the court if ‘reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.’ (
§ 1033.5, subd. (c)(2) .)“If the items appearing in a cost bill appear to be proper charges, the burden is on the party seeking to tax costs to show that they were not reasonable or necessary. On the other hand, if the items are properly objected to, they are put in issue and the burden of proof is on the party claiming them as costs. [Citations.] Whether a cost item was reasonably necessary to the litigation presents a question of fact for the trial court and its decision is reviewed for abuse of discretion. [Citation.] However, because the right to
costs is governed strictly by statute [citation][,] a court has no discretion to award costs not statutorily authorized. [Citations.]”
The section 998 Offer Was Not Valid
The Rasnicks’ section 998 offer is set forth in full above. Sanford contends it does not meet the requirements of
The effect of a valid section 998 offer3 that is not accepted is to establish a fee-shifting procedure, shifting some postoffer costs upon a party‘s refusal to settle. If the party who prevailed at trial obtained a judgment less favorable than a pretrial settlement offer submitted by the other party, then the prevailing party may not recover its own postoffer costs and, more, must pay its opponent‘s postoffer costs, including, potentially, expert witness costs. (
Our colleagues in Division Five distilled the rules governing section 998 offers in Barella v. Exchange Bank (2000) 84 Cal.App.4th 793, 799 [101 Cal.Rptr.2d 167]: “In interpreting section 998, this court has placed squarely on the offering party the burden of demonstrating that the offer is a valid one under
Since the issue presents no disputed facts, the interpretation of a section 998 offer and its application are reviewed de novo. (Rouland v. Pacific Specialty Ins. Co. (2013) 220 Cal.App.4th 280, 285, fn. 3 [162 Cal.Rptr.3d 887]; Whatley-Miller v. Cooper (2013) 212 Cal.App.4th 1103, 1113 [151 Cal.Rptr.3d 517].)
Here, as quoted, the section 998 offer required that Sanford agree to enter into a “settlement agreement and general release.” Sanford claimed that such condition invalidated the offer. The trial court disagreed, citing one case: Linthicum v. Butterfield (2009) 175 Cal.App.4th 259 [95 Cal.Rptr.3d 538]. The Rasnicks rely on Linthicum v. Butterfield and also on Goodstein v. Bank of San Pedro (1994) 27 Cal.App.4th 899 [32 Cal.Rptr.2d 740], both of which are cited in the Rasnicks’ argument that “Case Law Specifically Allows for Settlement Agreements/Releases as a Term in a Section 998 Offer to Compromise.”
The case law does allow for releases. (See Linthicum v. Butterfield, supra, 175 Cal.App.4th at p. 270 [under
But a release is not a settlement agreement, and the Rasnicks have cited no case, and we have found none, holding that a valid section 998 offer can include a settlement agreement, let alone one undescribed and unexplained.
The Rasnicks apparently attempt to explain their offer as being standard in the automobile insurance defense context. In their words: “As commonly set forth in automobile, insurance defense cases, [the Rasnicks‘] section 998 offer in this case, if accepted, required [Sanford] to sign a document entitled ‘Settlement Agreement and Release’ and execute a Dismissal of the entire action with prejudice.” Or, as the Rasnicks put it at another point, their section 998 offer “is a standard, insurance defense offer that requires that [Sanford] execute a document entitled ‘settlement agreement and release’ along with a
As most experienced trial lawyers and judges appreciate, the terms of a settlement agreement can be the subject of much negotiation. And the terms can be problematical. For example, settlement agreements typically contain a waiver of all claims “known and unknown,” a provision that has been held to invalidate a section 998 offer. (See McKenzie v. Ford Motor Co. (2015) 238 Cal.App.4th 695, 706 [189 Cal.Rptr.3d 560] [
The terms of a settlement agreement can, and frequently do, implicate the protection of lienholders, which could be involved here, where there was a medical lien. Indeed, this subject is so important that attorneys risk personal liability if they “settle around” known liens. (See Kaiser Foundation Health Plan, Inc. v. Aguiluz (1996) 47 Cal.App.4th 302, 305 [54 Cal.Rptr.2d 665], disapproved on other grounds in Snukal v. Flightways Manufacturing, Inc. (2000) 23 Cal.4th 754, 775 [98 Cal.Rptr.2d 1, 3 P.3d 286].) And the State Bar may impose discipline upon an attorney who purposely disregards a valid lien. (See In the Matter of Respondent P. (Review Dept. 1993) 2 Cal. State Bar Ct. Rptr. 622; Kennedy v. State Bar (1989) 48 Cal.3d 610, 617-618 [257 Cal.Rptr. 324, 770 P.2d 736] [attorney disbarred for purposely failing to pay client‘s doctor bills from settlement proceeds].)
Finally, and as every lawyer who has settled a case will appreciate, the issue as to
Here, the required “settlement agreement” was not described or revealed, Sanford having no understanding what he would have to agree to. In the words of Sanford‘s brief, he was “left to guess at what terms [the Rasnicks] might insist upon, and he had to accept or reject the offer without knowing what those terms were. This omission made it essentially certain that, had [Sanford] accepted their offer, the parties would have wound up in a disagreement over what terms could be included in the settlement agreement.”
Sanford sums up with this: “The consequences of what [the Rasnicks] are asking the Court to do here should not be overlooked. Were the State‘s appellate courts to start allowing section 998 offers to condition acceptance
The Trial Court Rulings That Certain Cost Items Were Not Allowed Was Error
Sanford‘s opening brief argued that the trial court erred in taxing his costs in several particulars. Following briefing, the parties resolved some of the issues, so Sanford‘s reply brief addresses the only two issues that remain: the rulings taxing some attorney service charges and his share of the fee in a court-ordered mediation.
To recap, the trial court ruled as follows: “Defendants’ Motion to Tax Plaintiff‘s claimed costs incurred in participating in mediation and for delivering papers in connection with motions (Item 13), in the sum of $1,646.53, is GRANTED. The costs and expenses described in Item 13 of the memorandum of costs are not allowed. See
Under
Neither subdivision (a) nor (b) of
Moreover, the trial court‘s statement that these two items of costs “are not allowed” is wrong, as many cases have held.
We ourselves have affirmed such awards, including in Ladas, supra, 19 Cal.App.4th at page 776, where we upheld a trial court‘s allowance of attorney service messenger and delivery charges, and in Gibson v. Bobroff (1996) 49 Cal.App.4th 1202, 1207-1209 [57 Cal.Rptr.2d 235], where we upheld a trial court‘s exercise of discretion to award mediation expenses as costs under
Here, the trial court never exercised any discretion on either of those two cost items because it erroneously believed it had no discretion to award these costs. And it reached that conclusion because it could not find either item listed among the costs allowable under subdivision (a) of
The Rasnicks’ response is that the “trial court properly exercised its discretion in denying” the costs. We read the record differently, that the trial court not only did not exercise its discretion, but that it ruled that these costs could not be recovered. This is simply wrong.
DISPOSITION
The orders are reversed, and the matter remanded to the trial court (1) to enter a new order granting Sanford‘s motion to tax the Rasnicks’ costs and
Kline, P. J., and Miller, J., concurred.