Section 998: “First Impression” Unpublished Case—Plaintiff Can Defeat 998 Cost Shifting By Presenting Pre-Offer Costs In Opposition To Tax Costs Motion, Rather Than Claiming As Routine Costs Memorandum

Fourth District, Division 2 Finds Plaintiff Can Defensively Block 998 Fee Shifting Outside the Costs Memorandum Decision, Even Though Undisclosed Costs Are Not Recoverable.

     Boy, oh boy, in between the Lakers-Celtics game tonight, we have decided to blog on a very interesting unpublished decision from the Fourth District, Division 2, which itself admits involves an apparent issue of first impression. Why unpublished? We don’t know, although this appellate division historically has been among the lowest publishing divisions among intermediate California appellate courts.

     The case is Sloan v. Gilbert, Case No. E049187 (4th Dist., Div. 2 June 17, 2010) (unpublished).

     Plaintiff brought a car incident personal injury case against defendant, with a jury ultimately awarding plaintiff $16,270 in damages. A year earlier, defendant made a Code of Civil Procedure section 998 offer of $30,000, inclusive of costs, even though this offer was rejected by plaintiff. After prevailing, plaintiff filed a costs memorandum listing $10,581.47 in costs (all but $320 of which were costs incurred after the date of the 998 offer). Defendant, in turn, filed a costs memorandum seeking recovery of $47,067.97. These dueling costs memoranda also produced dueling motions to tax costs on both sides. In response to the defense motion to tax costs arguing that the damages and costs in the costs memorandum did not exceed $30,000, plaintiff’s attorney came forward with a declaration that said plaintiff actually spent $15,960.48 in pre-offer costs. Defendant objected to this “additional” amount of pre-offer costs, but the trial court actually added the $16,270 in damages to the $15.960.48 in newly claimed costs to conclude that plaintiff prevailed at the trial court level (because the sum of the parts exceeded $30,000), inspiring defendant to appeal.

     The Fourth District, Division 2 admitted that the set of circumstances before it raised an issue that “appears to be one of first impression.”

     On appeal, defendant argued that the pre-offer costs could only be claimed through a costs memorandum such that the newly claimed costs in opposition to the tax costs motion was unfair gamesmanship. The appellate court’s bottom line conclusion was to the contrary: “We do not share defendant’s view.”

     Interestingly enough, plaintiff conceded that he could not recover his later pre-offer costs because he failed to include them in his original costs memorandum. However, plaintiff argued that this omission did not mean that he was barred from adding them (even though they were not collectible) to the jury’s damage award to determine if the judgment was more favorable than the 998 offer, especially to prevent defendant from claiming he could recoup his post-offer costs under section 998. The Court of Appeal agreed.

     “We find no reason to limit a party’s costs for purposes of calculating whether the party obtained a more favorable judgment under section 998 to those costs set out in a timely filed memorandum of costs. Instead we hold for that purpose costs may be set out in an appropriately documented and verified filing, such as the declaration under penalty of perjury of plaintiff’s attorney filed as part of plaintiff’s opposition to defendant’s motion to tax plaintiff’s costs in this case.” So, in the end, the trial court determination was affirmed in this very unique 998 situation.

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