Thursday, September 10, 2015
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C.A. Overturns Award of Expert Witness Fees Under Section 998
Joint Offer Not Effective Where Claims Remain Against Some Defendants, Panel Says
By KENNETH OFGANG, Staff Writer
A joint offer of settlement by multiple defendants cannot be the basis of an expert witness fee award unless all of those defendants obtain favorable judgments, this district’s Court of Appeal has ruled.
Div. Three Tuesday overturned Los Angeles Superior Court Judge Elizabeth White’s ruling that 14 defendants who obtained nonsuit in a toxic exposure suit were entitled to $206,000 in costs under Code of Civil Procedure §998. Those defendants were tried jointly with six others, as to whom the jury deadlocked and retrial is pending.
The plaintiff, Brian Kahn, claimed the defendants were responsible for injuries he suffered after being exposed to hazardous gases during the 15 years he lived at a San Fernando mobile home park prior to suing. The defendants and their predecessors-in-interest, he claimed, had used the site for industrial waste disposal prior to 1996.
$75,000 Offer
The 20 defendants joined in a §998 offer of $75,000, which Kahn rejected. The case went to trial in March of last year, and in May White granted nonsuit as to all but six defendants.
The trial continued for five more days, followed by six days of deliberations and a mistrial due to jurors’ inability to reach a verdict as to any of the six remaining defendants.
The 14 dismissed defendants filed a memorandum of costs, claiming, among other items, more than $206,000 in expert witness fees. They claimed that the total of such fees was nearly $300,000, and that since they represented 70 percent of the total number of defendants, they should recover 70 percent of their fees.
In siding with the defendants, White reasoned that they had joined in a valid §998 offer, that the plaintiff failed to obtain a verdict against them for more than the amount of the offer, and that the apportionment of the costs proposed by the defendants was reasonable.
Justice’s Opinion
But Presiding Justice Lee S. Edmon, writing for the Court of Appeal, said the trial judge’s reasoning was erroneous.
Edmon noted that §998 makes no reference to joint offers, but that such offers have been recognized as valid in certain circumstances. She also noted that two lines of authority have developed regarding when parties making a joint offer may recover expert witness fees under the statute.
Under one approach, fees may be recovered by an “absolute prevailing party”—a party absolved of all liability—regardless of the resolution of the plaintiff’s claims against the other parties. Under the alternative, “comparison” approach, however, the total of all amounts recovered against the parties making the joint offer is compared to the amount of the offer in order to determine whether the final result was more favorable to the party rejecting the offer.
The latter approach, the presiding justice concluded, is more consistent with the purposes of the statute because it encourages settlement and discourages gamesmanship.
‘Absolute Prevailing Party’
“The flaw in the ‘absolute prevailing party’ approach is well illustrated by the present case,” Edmon wrote. While the plaintiff could only assess reasonableness of the $75,000 offer by comparing it to what he thought the totality of his claims was worth, she explained, that total value has not yet been determined.
“As a result [of there not being a final judgment as to all defendants], all we can determine at this juncture is that the offer made by 20 defendants exceeds Kahn’s recovery against 14,” the presiding justice wrote. “Neither we nor the trial court thus can evaluate whether the offer exceeded the judgment, and the award of expert witness fees therefore was premature.”
To hold otherwise, she continued, “would create an incentive in every multi-defendant case for the defendants to jointly make a low-ball offer that would guarantee individual defendants enhanced costs if any one of them were to be dismissed or found not liable.” Instead of encouraging reasonable offers, she said, “it would encourage defendants to make unreasonable offers for the sole purpose of recovering enhanced fees.”
The court also addressed another issue, holding that the defendants’ cost memorandum, filed 17 days after electronic service of the notice of entry of judgment, was timely. The panel reasoned that Code of Civil Procedure §1010.6(a)(4), which provides for an extension of two court days in the time to respond to a paper or pleading when that document has been served electronically, applies.
By rule, Edmon explained, a cost memorandum must be served and filed within 15 days after service of the notice of entry of judgment or dismissal. Section 1010.6(a)(4), she concluded, extends this time by two court days if the notice of entry of judgment is served electronically, regardless of which party served it.
Attorneys on appeal were Roger L. Gordon and Joshua M. Merliss of Gordon, Edelstein, Krepack, Grant, Felton & Goldstein for the plaintiff and Peter L. Garchie, Ruben Tarango and James P. McDonald of Lewis, Brisbois, Bisgaard & Smith for the defendants.
The case is Kahn v. Dewey Group, 15 S.O.S. 4327.
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