Tuesday, June 11, 2013
State Supreme Court Clarifies Rule on Multiple Settlement Offers
By KENNETH OFGANG, Staff Writer
A party who makes multiple statutory settlement offers, and obtains a verdict at trial that is at least as favorable as any of them, is entitled to expert witness costs from the date of the first offer, the state Supreme Court ruled yesterday.
Justice Marvin Baxter, writing for a unanimous court, said Los Angeles Superior Court Judge Elihu Berle erred in ruling that a second offer under Code of Civil Procedure Sec. 998 “extinguished” the prior offer, limiting the plaintiff to costs from the date of the second offer.
Allowing expert witness costs from the date of the earlier offer, Baxter wrote, “is consistent with section 998’s language and best promotes the statutory purpose to encourage settlements.”
The ruling stems from a suit against Brownco Construction Company, Inc. for injuries sustained in an electrical explosion.
In 2007, plaintiffs’ counsel served an offer to settle Raymond Martinez’s negligence claim for $4.75 million, and his wife’s loss-of-consortium claim for $250,000. In 2010, just before trial, counsel served new offers of $1.5 million on the negligence claim and $100,000 for loss of consortium.
The jury awarded nearly $1.65 million for the husband’s injuries and $250,000 for the wife’s loss of consortium. The plaintiffs filed a bill of costs that included a claim for more than $188,000 in expert witness fees incurred by the wife between the two settlement offers.
Berle granted the defendant’s motion to tax costs and disallowed the witness fees, but the Court of Appeal’s Div. One reversed, citing the public policy in favor of settlements and declining to apply the “last offer” rule of Wilson v. Wal-Mart Stores, Inc. (1999) 72 Cal.App.4th 382. The trial and appellate courts in that case held that where the plaintiff’s first Sec. 998 offer was for $150,000; the second was for $249,000; and the verdict was for $175,000, the plaintiff could not collect expert witness fees because the second offer extinguished the first.
Baxter said the Court of Appeal ruling in favor of the plaintiff was a sensible construction of the statute, which does not precisely address the issue.
“…[T]he Legislature sought to encourage settlement by affording the benefit of enhanced costs to parties who make reasonable settlement offers and imposing the burden of those costs on offerees who fail to obtain a result better than they could have achieved by accepting such offers....This purpose would be more fully promoted if the statutory benefits and burdens were to operate whenever the judgment or award is not more favorable than any of the statutory offers made. Conversely, if the statutory benefits and burdens were to run only from the date of the last offer in circumstances such as these, plaintiffs may be deterred from making early offers or from later adjusting their demands.”
The case was argued on appeal by George M. Lindahl of Lindahl Beck for the defendant and by Albro L. Lundy III of Baker, Burton & Lundy for the plaintiff.
The case is Martinez v . Brownco Construction Company, Inc., 13 S.O.S. 2925.
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