Monday, June 22, 2015
C.A. Clarifies Rule on Section 998 Offers in Multiparty Cases
Defendant Can Recover Costs Paid by Co-Party Under Indemnity Agreement, Court Says
By KENNETH OFGANG, Staff Writer
Co-defendants are treated separately for the purpose of determining prevailing party status under Code of Civil Procedure §998 when only one of them made the settlement offer in question, the Fourth District Court of Appeal ruled Friday.
Div. Onealso ruled, however, that where one defendant made the settlement offer, and the other paid the first party’s expert witness costs under an indemnity agreement, the prevailing defendant can recover those costs.
The unusual situation arose in connection with a suit by David Litt, who was injured when his head struck a partially closed gate at a cafeteria at Eisenhower Medical Center in Rancho Mirage. Litt sued the medical center, and later turned down its $15,000 statutory settlement offer.
Subsequent to that, he amended his complaint to add an additional defendant, Compass Group USA, Inc., which ran the cafeteria under a contract with the medical center. Compass did not make a §998 offer.
The case went to trial, with the jury awarding $3,000 against both defendants. Citing the §998 offer, both defendants claimed their costs, including expert witness costs, while Litt claimed more than $8,000 in costs from the defendants.
Riverside Superior Court Judge John G. Evans ruled that Eisenhower, by virtue of its settlement offer, was entitled to post-offer ordinary costs and expert witness costs, other than costs paid by Compass pursuant to an indemnity agreement.
As to Compass, the judge said, Litt was the prevailing party because he recovered damages and the defendant had not made a §998 offer, so Litt was entitled to his ordinary costs and Compass to nothing.
To rule otherwise, he said, “could allow a nominal defendant in a jointly represented multiple defendant case to recover all costs of all defendants even though plaintiff prevailed and was entitled to recover his costs as to one or more of the other defendants.”
But Justice Gilbert Nares, writing for the Court of Appeal, said the judge’s reasoning was incorrect because the statutes make no requirement that a defendant have “personally” paid the costs it seeks to recover.
He cited Ceranski v. Muensch (1943) 60 Cal.App.2d 751, which allowed the prevailing defendants to recover costs paid by their insurer, and Skistimas v. Old World Owners Assn. (2005) 127 Cal.App.4th 948, which allowed defendant members of a homeowners’ association board to recover §998 expert witness fees paid by the association’s insurer.
Although the fees were not “personally” incurred by the defendants, the court reasoned in the latter case, they were “actually” incurred by them, which is all that the statute requires.
The appeals court did uphold the trial judge’s determination that Litt prevailed against Compass, and sent the case back to the superior court to apportion costs and determine the reasonableness of the claimed expert costs.
Attorneys on appeal were Neil S. Tardiff, along with Ford, Walker, Haggerty & Behar’s William C. Haggerty, for the defendants and Robert S. Gerstein along with Daniels, Fine, Israel, Schonbuch & Lebovits’s Alan J. Carnegie, for the plaintiff.
The case is Litt v. Eisenhower Medical Center, 15 S.O.S. 3102.
Copyright 2015, Metropolitan News Company