California Court Holds Prevailing Defendants in Personal Injury Lawsuit Can Recover Expert Fees Only When Judgment Entered as to All Defendants

In a California Court of Appeal case, the court addressed the rules of law concerning settlements, particularly those involving a lawsuit with multiple defendants. The California Code of Civil Procedure maintains that a plaintiff that does not accept a settlement offer and then does not receive a more favorable judgment may be required to pay the defendant’s expert witness fees. In this case, some of the defendants in a personal injury lawsuit sought to recover their fees before final judgment was entered as to all defendants. file0001225592472

Brian Kahn brought a lawsuit against 20 defendants for his personal injuries.  He claimed that as a resident of a mobile home park in San Fernando, he was exposed to hazardous gases due to the defendants’ previous use of the land as an industrial waste disposal site. Before trial, all 20 defendants jointly made an offer to settle the lawsuit for $75,000, according to Code of Civil Procedure section 998.  Mr. Kahn rejected the offer.

The trial court then granted a nonsuit as to 14 of the 20 defendants, and judgment was entered as to the 14 defendants.  The lawsuit against the other six defendants went to a jury but ended in a mistrial because the jury could not reach a verdict.  At the time of the appeal, a retrial was pending.

According to section 998, when a plaintiff does not accept a defendant’s settlement offer and does not receive a more favorable judgment, the plaintiff may be required to pay the defendant’s expert witness fees.  In this case, the 14 dismissed defendants sought to recover witness fees for $206,090.00.  These defendants claimed that they were entitled to recover 14/20ths of the total fees ($300,000.00).

Mr. Kahn made a motion to strike or tax costs. He argued that the court had not entered a final judgment against all 20 defendants.  Since the section 998 offer was made on behalf of all 20 defendants, he argued that the 14 dismissed defendants could not yet recover fees. The trial court denied Mr. Kahn’s motion and awarded the 14 defendants fees. Mr. Kahn appealed.

The court stated the policy behind section 998:  to encourage the settlement of lawsuits before trial.  The actual statute does not address offers to compromise made by or to multiple parties.  Courts have taken different approaches to the issues of joint offers and multiple judgments.

In this case, the appellate court stated the “comparison” approach is most consistent with the statutory purpose of encouraging reasonable settlements and avoiding gamesmanship. This requires looking at the offer made by the group of defendants and the recovery obtained against that same group of defendants. In other words, if two defendants jointly offer to settle, the reasonableness of their offer is compared to the judgment (or judgments) obtained against all defendants.  This approach reflects the purpose of section 998 in that it allows for the offering party to recover fees only when the offer and the judgment concern the same parties.  This allows the judgment to reveal whether the offer was reasonable.

To apply another approach, such as the “absolute prevailing party” approach, allows for recovery by a party that has absolutely prevailed, without regard to the recovery against the other offerors. The flaw with that approach in this case would be that without a final judgment as to all 20 defendants, it cannot be determined whether the offer by 20 exceeded the judgment.

The appellate court also stated that interpreting section 998 as the defendants suggested leads to opportunities for gamesmanship.  The California Supreme Court has stated that courts should avoid disputes when applying section 998. The court stated that by allowing particular defendants to recover expert witness fees after making a joint section 998 offer, there would be an incentive in multi-defendant cases to make a low-ball offer.  This would guarantee individual defendants enhanced costs if any of them was dismissed.

Here, the trial court’s award of expert witness fees was premature. The court reversed the judgment awarding expert witness fees to the 14 dismissed defendants.

The skilled Southern California personal injury attorneys at Sharifi Firm can provide guidance and representation to those injured in an accident. We offer a no-obligation consultation and can be reached by calling 1-866-422-7222.

More Blog Posts:

California Court Reverses Summary Judgment in Favor of Defendant Due to Failure to Meet Burden of Proof Regarding Negligence Claim, Southern California Injury Lawyer Blog, January 27, 2016

California Court of Appeals Upholds Evidentiary Ruling in Grocery Store Slip & Fall Case, Southern California Injury Lawyer Blog, June 17, 2015

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