Costs/998 Offers: Defense Beating Its Own 998 Offer Got A Nice Reward–$369,850 Costs Award Affirmed On Appeal

Second District, Division 4 Rebuffs Multiple Challenges to Costs Award by Losing Plaintiff.

     We have often discussed how fee awards can be substantial and crippling; however, costs award can have the same sting, especially when substantial expert witness fees are shifted because a plaintiff rejected a CCP § 998 offer that the defense beat. Here is a good illustration of how costs awards can hurt.

     Defendant in Roberti v. Andy’s Termite & Pest Control, Inc., Case No. B201438 (2d Dist., Div. 4 Feb. 23, 2011) sent a 998 offer for $50,000 based on its perception that there was a causation problem in a minor’s case against a termite company claiming brain damage for in utero exposure to a Dursban application to minor’s home. After a prior appeal in which a dismissal was reversed, the matter went to another jury trial with a defense verdict being the ultimate result. Defendant then moved for costs totaling $400,152 ($276,296 of which was witness fees, mainly for experts) based on its successful 998 fee-shifting offer. The trial court allowed total costs of $369,850, which prompted an appeal by plaintiff.

     The costs award was affirmed, with numerous challenges rejected by the appellate court.

     Defendant admitted some errors in the original costs memorandum, which led plaintiff to argue that this rendered the actually claimed costs to be unreliable in nature. No. “ . . . plaiantiff cites no authority that supports the contention that admitted errors in a memorandum of costs render the entire cost bill and verification unreliable, and we have found no such authority.” (Slip Opn., pp. 26-27.)

     The 998 offer was found not to be patently unreasonable or in bad faith, even though plaintiff had made his own offer of $999,999.99. The defense had good reason to believe plaintiff would have causation issues, so the 998 offer was just fine. The appellate court distinguished Elrod v. Oregon Cummins Diesel, Inc., 195 Cal.App.3d 692 (1987) and Pineda v. Los Angeles Turf Club, Inc., 112 Cal.App.3d 53 (1980) as involving reversals where costs were denied, not a grant of costs guided by the deferential abuse of discretion standard.

     The Court of Appeal also rebuffed challenges to costs awarded for non-testifying experts, statutory court reporter fees, and unused models/exhibits/blow-ups. The rule, here (except for the authorized court reporter fees), is that the trial court has to make a factual call if the cost items were reasonably necessary to the litigation, a call subject to the abuse of discretion review standard. (Ladas v. California State Auto. Assn., 19 Cal.App.4th 761, 774 (1993).) No abuse here.

     The opinion was 3-0, written by Justice Willhite.