998 Offer Validity Is Gauged At the Time of the Offer, Not On After Events.
What we take away from Smith v. Wagner, Case No. B245821 (2d Dist., Div. 4 Dec. 19, 2013) (unpublished) is that CCP § 998 offers must be evaluated based on the state of pleadings when the 998 offers are served, not on after events.
Here is what happened in this one: Plaintiff car driver was injured when a car owned by defendant Wagner and driven by defendant Samsel collided with Plaintiff’s car. Plaintiff sued these two defendants, in essence, for negligence and negligent entrustment. Defendants, jointly represented by an insurer, answered. Plaintiff served a 998 offer on defendants for $100,000, inclusive of costs and other conditions–requiring acceptance by both defendants, which did not happen. Two months later, the two defendants served a joint 998 offer for $32,000 plus costs in exchange for a release/dismissal of the complaint. Defendants then made a subsequent offer, upping the ante to $36,760. More than a year after the initial 998 offer, Plaintiff moved to amend the complaint and add defendant Lindlear Corporation as a defendant, arguing defendant Samsel was an employee and drove the car in the course of her employment. The motion to amend was granted. Trial took place, with the jury finding that defendant Samsel was an employee of defendants Corporation and Wagner. Plaintiff prevailed, after some negligent apportionment, so as to recover $247,660 plus costs against all of the defendants. Plaintiff them moved to recover section 998 fee-shifting costs against all defendants, all of whom challenged the 998 offer as invalid because it was jointly made to defendants Wagner/Samsel without apportionment and no 998 offer was made to Corporation. The trial court agreed, awarding no fee-shifting costs.
The appellate court affirmed this determination.
The unapportioned offer to defendants was fatal, especially when each defendant had potential varying liability, before any stipulation or adjudication of joint and several liability prior to the 998 offer. (Burch v. Children’s Hospital of Orange County Thrift Stores, Inc., 109 Cal.App.4th 537, 544, 547, 550 (2003).) Plaintiff tried to skirt around this by arguing, that at the time of the 998 offer, defendants Wagner and Samsel were jointly liable for Plaintiff’s damages. Nope, because at the time of the 998 offer, the complaint did not allege Samsel was Wagner’s employee. Even though the complaint was subsequently amended to allege this relationship, the pleading did not so state at the time of the 998 offer, which meant Wagner could only have been liable as the owner of the car Samsel was driving so as to limit liability to $15,000. (Burch, 109 Cal.App.4th at 550, citing Veh. Code, § 17151(a).) This meant, pure and simple, the unapportioned offer was not valid, justifying the denial of 998 fee-shifting costs.