Carriers Can Protect Themselves, With the Offeree Needing To Press A Carrier To Help Accept A Good Faith 998 Offer.
Insurance considerations are very important at all stages of a case, including mediation. But they are no less crucial in evaluation of CCP § 998 offers, as the next case shows, because they can result in added expenses such as substantial expert witness fees.
In Ruckman v. Ag-Wise Enterprises, Inc., Case No. F086037 et al. (5th Dist. Dec. 3, 2025) (unpublished), plaintiffs, adjoining property owners, were injured from an underground gas line explosion, suing Ag-Wise, the property manager hiring the company whose employee ruptured the gas line on the adjoining property. Other defendants were also sued, one of which was also an insured with a carrier insuring Ag-Wise. After a jury trial, plaintiffs were awarded $73 million in damages, with liability split among the defendants (with around 10% allocated to Ag-Wise). The trial court awarded plaintiffs $317,813 in expert witness fees against Ag-Wise based on a rejected CCP § 998 offer. The lower court determined that the offer was valid and reasonable, not brought in bad faith—the offer was within a reasonable range for acceptance purposes.
The expert witness fee award was affirmed on appeal. Ag-Wise rejected plaintiffs’ 998 offer to settle for a full policy limit amount of just under $6 million. Ag-Wise’s insurance carrier sent a letter saying that the offer could not be accepted based on partially exhausting coverage, meaning its concern was that the other insured defendant might not be covered (even though the appellate record did not provide concrete evidence the other insured had objected or what coverage it had sought). The lower court had determined that the offer was not infirm even if acceptance of the offer left another insured bereft of benefits, because all impacted parties on the defense side could see if a compromise could be made with the carrier—but no global settlement to all insured defendants needed to be made.
The Fifth District agreed with this analysis, relying primarily on Arno v. Helinet Corp., 130 Cal.App.4th 1019, which held that nothing in section 998 required service on an insurer and that the interest of an insurer did not restrict acceptance of a section 998 offer such that the interests of the other insured did not factor into the equation from a preclusive standpoint. The panel did understand the pickle for Ag-Wise and its carrier, given the other insured, but suggested one way to handle was a counter-offer to plaintiffs to solve the dilemma—something never done. Interesting case in the insurance/998 areas.