Thursday, July 25, 2013

Man, You Should Have Taken that 998 Offer ...

Mon Chong Long Trading Corp. v. Superior Court, No. B240828 (D2d3 July 23, 2013)

The application of offer of judgment rule under Code Civil Procedure § 998 is one of the most litigated appellate issues in California Procedure. The question presented was whether a dismissal without prejudice on the eve of trial is a less favorable termination subjecting the plaintiff to a potential shifting of expert witness costs under § 998. According to the court, the answer is yes.

In a slip and fall case the defendant made a  § 998 offer of $10,000 in exchange for a full release. Plaintiff had been dodging an independent medical exam, and had declined to participate in the exchange of expert information.  A motion in limine was pending to preclude his use of expert testimony at trial. In lieu of opposing the motion, plaintiff dismissed his case without prejudice.  Defendant sought costs, most of which were awarded by the trial court, but the court granted the plaintiff’s motion to tax by striking defendant’s expert fees.  Defendant appealed, arguing that it was entitled to those costs under  § 998.

The court first addressed the issue that, as no judgment had entered, there could be no appeal. Reasoning that the circumstances were unusual, the issue of first impression, and that justice would be served, the court elected to treat the appeal as a writ.

Addressing the merits, the court determined that § 998’s reference to the offeree’s having obtained a “more favorable judgment or award,” referred to the conditions under which the offeree would be relieved of cost-shifting. This, according to the court, must be measured at the end of the lawsuit, judgment or not. Because a plaintiff can fail to obtain a more favorable judgment or award than the offer as the result of his voluntary dismissal, that was sufficient to provide the court with the discretion to shift expert fees under § 998(c)(1). The court noted that the price of any voluntary  dismissal is the payment of costs under § 1032. Section 998 just expands those costs to potentially include expert fees. Thus, the court reversed the taxing of the expert fees and ordered the trial court on remand to exercise its discretion under  § 998(c)(1).

Peremptory writ granted.

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