First District, Division 3 Holds That 998 Offer Was Invalid, Requiring Plaintiffs To Conditionally Agree On Some Apportionment Between Themselves.
Code of Civil Procedure section 998 offers require serious crafting to make sure they are valid. One of the cardinal rules is that, absent identical or indivisible interests among the offerees, the offer must be apportioned so that each multiple offeree knows exactly what is being accepted. The failure to apportion in the next case cost successful defendants from recouping $78,000 in expert witness fees that could have been shifted to plaintiffs under section 998.
In City of Mountain View v. Daoro, Zydel & Holland, Case No. A121628 (June 30, 2009) (unpublished), defendant accountants obtained a jury defense verdict against plaintiff City and Shoreline Regional Park Community. Earlier, defendants had made an unapportioned 998 offer to plaintiffs for $2 million in exchange for a dismissal of the complaint, a release of all known and unknown claims related to the complaint, and each party bearings its own costs and fees. Plaintiffs never accepted the offer. (Ouch! Given what happened after trial.) Because defendants easily beat the 998 offer, they moved to recover $78,000 of expert witness fees (an item that can be recovered from a successful offer and one of the main reasons that 998 offers are made). The trial court taxed these costs in entirety, and defendants appealed.
The First District, Division 3, in a 3-0 decision authored by Justice Siggins, found the 998 offer invalid and affirmed the denial of expert witness fees to defendants.
The big flaw was that the 998 offer did not have an express allocation between the City and Shoreline, requiring the plaintiffs to agree on some method of apportionment between themselves—a “no no” in this area unless their interests were identical or indivisible in nature (not the case even though they were both signatories on the pertinent lease). Because each plaintiff might have different settlement interests, the unapportioned offer was void. (Peterson v. John Crane, Inc, 154 Cal.App.4th 498, 508 (2007); Weinberg v. Safeco Ins. Co. of America, 114 Cal.App.4th 1075, 1086 (2004).) Ouch again!, except this time for the defendants who lost the benefit of their 998 offer.