First District, Division 1 Faces Some Interesting Section 998 Wrinkles in a Joint and Several Defense Context.
Wrinkles. Shar Pei. Wikipedia.
Hats off to the First District, Division 1 for a very scholarly opinion centering on Code of Civil Procedure section 998 pretrial offers in a multiple defendant situation, even though the winning offer was only made by plaintiff as against one losing defendant.
The facts of Lum v. Orellana, Case No. A126691 (1st Dist., Div. 1 Sept. 15, 2010) (unpublished) go this way. Plaintiff filed a motor vehicle accident against three defendants. Before trial, defendants admitted that defendant Gonzalez was 100% at fault and was acting in the course and scope of employment with defendant Ortiz. However, defendants did contest causation, injuries, and damages. Both sides served 998 offers. Plaintiff served a 998 offer only against defendant Gonzalez in the amount of $200,000. Conversely, defendants jointly offered to settle for $400,000. None of the offers were accepted. Well, plaintiff did pretty well, with a jury awarding damages of $580,955. Eventually, the trial judge awarded plaintiff his expert fees and costs against Gonzalez (somewhere around $33,000 if we read the appellate court opinion correctly, although no less than about $16,000 under any interpretation). Defendants appealed.
Their contentions on appeal were unsuccessful, although the Court of Appeal did a very nice analysis of section 998 in a multiple defendant context.
First up, defendants argued that plaintiff’s offer to Gonzalez was made in bad faith and collectively put them in a bad situation vis-à-vis all defendants as a group. Not so, said the appellate court. The offer was certainly less than the eventual $580,955 jury award against defendant Gonzalez, and it was reasonable—after all, defense counsel argued to jurors that a global defense verdict of $212,598 would be reasonable in nature. Beyond that, however, plaintiff has under no obligation to confirm the CCP § 877 settlement credit rights to other defendants as part and parcel of plaintiff’s 998 offer. (Cf. Arno v. Helinet Corp., 130 Cal.App.4th 1019, 1024 (2005).)
Second up, defendants contended that no costs were awardable because the eventual judgment—if divided by a third—did not exceed the 998 offer made to defendant Gonzalez. The problem with this approach is that defendants did not demonstrate why the judgment had to be divided into thirds for purposes of assessing the 998 offer. After all, the other non-Gonzalez defendants faced vicarious liability such that the division calculus advocated by the defense did not make conceptual sense.
Third up, defendants argued that only one-third of the costs should be entered against defendant Gonzalez. This contention was rebuffed based upon case law establishing that a prevailing plaintiff can be entitled to recover all costs against a losing defendant even if the plaintiff did not prevail with respect to other defendants. (Oakes v. McCarthy Co., 267 Cal.App.2d 231, 238 (1968).) Although costs apportionment under 998 may be justified in some circumstances, this was not one of them. Apportionment generally occurs where there are defendants with distinct liability, not where all defendants were jointly liable based on the operation of vicarious liability principles.
Result: costs awards affirmed.
