Wednesday, January 16, 2013

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C.A. Liberally Interprets Requirements for Offer of Compromise

Placing Signature Blocks on Separate Document Did Not Preclude Offer’s Effectiveness, Court Says

By JACKIE FUCHS, Staff Writer

This district’s Court of Appeal yesterday held valid a Code of Civil Procedure Sec. 998 compromise in which the signature blocks for acceptance appeared in a separate document from the offer.

Div. Eight said Los Angeles Superior Court Judge William Stewart did not abuse his discretion when he determined that the form of plaintiffs’ offer of compromise in a suit alleging medical negligence and wrongful death complied with statutory requirements and was made validly and in good faith, even though it was made just two months after the complaint was filed.

Thomas Miller died in late 2006. A little over a year later, Miller’s widow, Susanne Whatley-Miller, and his two daughters, Holly Elizabeth Miller and April Ann Miller, filed a complaint for medical negligence and wrongful death against Verdugo Hills Hospital and physicians Michael A. Stark and Collin Cooper.

The plaintiffs dismissed their claims against the hospital with prejudice prior to trial. In a first trial, the jury returned a verdict in favor of Stark but was unable to reach a verdict as to Cooper.

Verdict on Retrial

On retrial, the jury returned a verdict against Cooper. Stewart later entered a conditional order granting Cooper a new trial motion on damages unless plaintiffs agreed to a reduced award of economic damages in the total amount of $948,907.

The plaintiffs agreed and served Cooper with an offer to compromise pursuant to Code of Civil Procedure Sec. 998, which penalizes a party that refuses to accept the other’s offer if at trial the refusing party obtains an outcome less favorable to it than that contained in the offer.

In their offer, the plaintiffs agreed to resolve their claims against Cooper in consideration of payment of $950,000. The offer also stated that “[e]ach side [was] to bear its own costs.”

At the same time, plaintiffs served Cooper with a document entitled “Acceptance of Plaintiffs’ Offer to Compromise Pursuant to [Section] 998 and Civil Code [Section] 3291,” which directed the clerk to enter judgment “pursuant to Plaintiff’s Offer to Compromise which is attached hereto.” The document contained a place for the signature of Cooper’s counsel.

Both the offer letter and the acceptance document were served on Cooper in the same envelope.

On appeal, Cooper argued, among other things, that the compromise offer did not meet the procedural requirements of Sec. 998.

Judicial Council Form

Justice Madeleine Flier, writing for the panel, noted that the California Judicial Council has made available a form setting forth the elements of an offer to compromise and an acceptance under Sec. 998. The use of it “may be a convenience for litigants,” she said.

She added that the form is not the only way to comply with statutory offer and acceptance requirements, however, and the plaintiffs had satisfied Sec. 998 with an offer of compromise consisting of a statement of the offer and a separate document of acceptance, which clearly referred to the offer. No specific words were required.

The panel was also not swayed by Cooper’s argument that language in the offer saying “[e]ach side [is] to bear its own costs” was “transformed into an ambiguity” by a clause in the acceptance document which said that costs were to be submitted pursuant to a cost bill filed by plaintiffs. Flier characterized the latter clause as “simply surplusage.”

Nor did the panel accept Cooper’s claim that two months was insufficient time for him to conduct enough discovery to evaluate the plaintiffs’ offer. In his findings, Stewart set forth in considerable detail information regarding the decedent’s annual income and the financial impacts of his death, which were produced to Cooper during discovery prior to the plaintiffs’ offer.

Policy Limits

Additionally, Cooper never asked the trial court for more time in which to evaluate the offer. Since the amount of the offer was within the limits of Cooper’s insurance it was reasonable, the panel said, and Stewart did not abuse his discretion in finding that the plaintiffs’ offer to compromise was valid and made in good faith.

Justices Laurence Rubin and Elizabeth Grimes concurred in the opinion.

Daniel Powell of Thon Beck Vanni Callahan & Powell and Stuart Esner and Andrew Chang of Esner, Chang & Boyer, represented the plaintiffs.

John McCurdy and Lee Moulin of McCurdy & Liebl, LLP were the attorneys for Cooper.

The case is Whatley-Miller v. Cooper, B237335