A statutory offer to compromise set in the California Code of Civil Procedure section 998, has been used by many attorneys as a strategic tool to force a settlement since attorneys can arrange the value of an offer as a reasonable settlement amount, to either pressure the opposing party to accept the offer or to take the risk to pay the other party’s costs actually incurred and reasonable necessary, including expert fees and costs paid by a third party.
Under Section 998, if the offer made by defendant is not accepted and at the end the plaintiff failed to obtain a better judgment or award than the offer itself, the plaintiff may not be able to recover their post-offer costs. Instead, the plaintiffs may pay the defendant’s costs actually incurred.
In addition, multiple defendants are jointly liable for a plaintiff’s economic or special damages and severally liable for each defendant’s proportion of non-economic damages. In general, an offer by multiple defendants jointly is considered to be an offer by each of the co-defendants in their single capacities.
The case, David Litt v. Eisenhower Medical Center et al., 2015 DJDAR 6921 exemplify the effect of a Section 998 offer to compromise by several co-defendants to an individual plaintiff. Here, the plaintiff sued for negligence as he got his head stuck in one of the defendant’s cafeteria gates. Before trial, defendant served on Plaintiff a 998 statutory offer to compromise for $15,000. Plaintiff did not accept the offer, but amended his complaint, adding the co-defendant that operated the cafeteria. This co-defendant did not serve a 998 statutory offer to compromise on plaintiff before trial.
The Payor of Costs and Expert Fees is Irrelevant
During trial preparation, the two co-defendants entered into a joint defense agreement to hire joint medical experts, and in accordance to an indemnity agreement, the second co-defendant agreed to pay for all of the experts’ fees, including the fees incurred prior to the amendment. At trial, Plaintiff failed to defeat the original defendant’s $15,000 statutory offer Section 998. Then, at the end of trial, the jury awarded only $3,000 to the Plaintiff and against co-defendants, jointly and severally. As prevailing parties, the two co-defendants demanded $124,662 in expert fees and costs paid by the second co-defendant. Then, the plaintiff denied the request, arguing that the second co-defendant was not a prevailing party since it was not a party to the 998 offer; also alleging that the original defendant should not be allowed to recover any expert fees or costs because it did not actually pay for the post-998 expert fees. The trial court agreed with the Plaintiff.
Subsequently, the Court of Appeal reversed the judgment stating that under section 988, the payor of expert fee is irrelevant as a matter of law. Because the original defendant’s post-998 request for costs and expert fees were actually incurred, they just happened to be “actually incurred” by co-defendant in accordance to an indemnification provision. The Court of Appeal’s ruling was based on CCP section 1033.5, stating that the actual payor is irrelevant because under the CCP section 998, “[c]osts are allowable if incurred, whether or not paid.” (CCP § 1033.5, subd. (c)(1).)
Finally, some other cases advise that there is no need for co-defendants to make an allotment among themselves with regard to potential liability; either joint or several, meaning that under CCP Section 998 offers to compromise, there is no need to specify as to which co-defendant should assume liability for which claims or settlements. Persson v. Smart Inventions, Inc. Cal: Court of Appeal, 2nd Appellate Dist., 8th Div., 2005.
