Goodstein v. Bank of San Pedro

• Decision Date: 18 August 1994
• Docket Number: No. B053778,B053778
• Citation: 27 Cal.App.4th 899,32 Cal.Rptr.2d 740
• Court: California Court of Appeals Court of Appeals
• Parties: Wallace A. GOODSTEIN, M.D., Plaintiff and Appellant, v. BANK OF SAN PEDRO, Defendant and Respondent.

Page 740

32 Cal.Rptr.2d 740

27 Cal.App.4th 899

Wallace A. GOODSTEIN, M.D., Plaintiff and Appellant, v. BANK OF SAN PEDRO, Defendant and Respondent.

No. B053778.

Court of Appeal, Second District, Division 7, California.

Aug. 18, 1994.

[27 Cal.App.4th 902] John Clifton Elstead, Pleasanton, for plaintiff and appellant.

Epport & Richman and Steven N. Richman, Los Angeles, for defendant and respondent.

LILLIE, Presiding Justice.

Plaintiff Goodstein appeals from a September 11, 1990, order granting defendant's motion to recover expert witness fees, awarding fees and costs of $138,421, and denying plaintiff's motion to tax costs. On appeal, plaintiff challenges the trial court's award of expert witness fees under Code of Civil Procedure section 998 and the cost award on several grounds.

FACTUAL AND PROCEDURAL BACKGROUND

After a judgment of nonsuit was granted in favor of defendant (Bank) on Goodstein's complaint for slander of title and negligence, ¹ Bank filed a memorandum of costs in conjunction with a motion to recover expert witness fees totaling about $116,000, based on Goodstein's rejection of Bank's written Statutory Offer to Compromise and his failure to obtain a judgment more favorable than the offer (Code Civ.Proc., § 998, subd. (c)). ²

According to declarations submitted in support of Bank's motion, Goodstein claimed numerous items of damages exceeding $2 million in his suit against Bank, including damages for loss of business investment in Jook Box Corporation, of which Goodstein was the sole shareholder. Prior to trial, Bank designated numerous expert witnesses, including Robert Wagman and James Call who were deposed in early 1989, before trial in September and October 1989; Wagman was a partner of Price Waterhouse with over 12 years of experience in financial services and tax issues; his trial testimony would relate to the financial status of Goodstein and his ability to obtain capital for the operation of Jook Box Corporation; Call was a senior manager at Price Waterhouse; his trial testimony would relate to the management and operation of Jook Box Corporation and the reasons for its failure.

Wagman rendered 103 hours of service for Bank in connection with the lawsuit, including initial investigation and research, preparation for deposition, and trial preparation, but excluding the time spent in deposition; his fees were $15,077, equating to an average hourly rate of about $146; about $12,500 of his fees were incurred after the December 1988 Statutory Offer to Compromise.

Call rendered 481 hours of service in connection with the lawsuit, excluding time spent in deposition; Price Waterhouse charged Bank $69,725 for his services, plus costs of $5,696, equating to an average hourly rate of $135; about $69,300 of the fees were incurred after the Statutory Offer to Compromise. ³

Goodstein filed opposition to Bank's motion for expert witness fees and a motion to tax costs, challenging items of costs sought by Bank by virtue of its status as a prevailing party under Code of Civil Procedure section 1032, as well as items of costs sought by virtue of section 998, subdivision (c).

After oral argument on the motions, the court took the matters under submission. On September 11, 1990, the court issued its Ruling on Submitted Matter, which stated in pertinent part: "The Motion of defendant [Bank] to recover expert witness fees in the sum of $116,184.05, as claimed in the Memorandum of Costs filed November 15, 1989, is granted (CCP § 998(c)). Defendant Bank has carried its burden to establish that the foregoing sum is reasonable, actually incurred, and reasonably necessary in the preparation for trial of the case at bench. [p] ... Costs, over and above the foregoing expert witness fees, and which costs are in the sum of $22,237.62 ... are granted ... under the provisions of CCP §§ 998(c), 1032, and 1033.5.... [p] ... Plaintiff's Motion to Tax

                the foregoing costs is denied."   Plaintiff filed timely notice of appeal from the order
                

I STATUTORY OFFER UNDER SECTION 998

Appellant claims that certain aspects of the Statutory Offer to Compromise prevent it from constituting an offer to compromise within the provisions of Code of Civil Procedure section 998, subdivision (b). ⁴ He argues that "The Bank's requirement of a dismissal with prejudice invalidated its offer as a section 998 offer and, consequently, the trial court's order granting the Bank's motion for expert witness fees and denying Dr. Goodstein's motion to tax costs was erroneous as a matter of law."

In this case, the offer was captioned "Statutory Offer to Compromise," and provided in pertinent part that: "In full settlement of this action, [Bank] hereby offers to pay [Goodstein] the total sum of $150,000 in exchange for each of the following: [p] 1. The entry of a Request for Dismissal with prejudice on behalf of the Plaintiff in favor of [Bank]; [p] 2. The execution and transmittal of a General Release by [Goodstein] in favor of [Bank]; [p] 3. Each party is to bear their own respective costs and attorney's fees."

Appellant contends that the foregoing offer does not fall within section 998 because it fails "to allow judgment to be taken" against Bank. Appellant maintains that a dismissal with prejudice operates as a final judgment on the merits while a judgment obtained pursuant to section 998 is deemed to be a "compromise settlement" under section 998, subdivision (f), so that "the Bank created a situation where it would have been impossible for the terms of its offer to become operative" under section 998, subdivision (b), which requires that "the clerk or the judge shall enter judgment accordingly."

The distinctions set up by appellant are not tenable, and he offers no authority to support his argument, which is premised on the claim that a compromise settlement under section 998 can never include an agreement for a voluntary dismissal or release. Had Goodstein accepted the offer in this case, and had Bank performed pursuant to the terms of the offer, there would have been no impediment to Goodstein's execution of a request for dismissal and the clerk's entry of it. Such a procedure would have resulted in a "judgment ... taken in accordance with the terms and conditions stated at that time" in the offer. We perceive no impediment to that dismissal being part of the compromise settlement and "judgment" within the meaning of section 998.

"Judgment" is defined in Code of Civil Procedure section 577 as "the final determination of the rights of the parties in an action or proceeding." " '[A] valid compromise agreement has many attributes of a judgment, and in the absence of a showing of fraud or undue influence is decisive of the rights of the parties thereto and operates as a bar to the reopening of the original controversy.' " (Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 677, 186 Cal.Rptr. 589, 652 P.2d 437.)

"However, until a party seeks to enforce a compromise agreement and to have judgment entered thereon, the underlying lawsuit has not finally been disposed of although the parties may in fact be bound by a valid and enforceable settlement contract." (Varwig v. Leider (1985) 171 Cal.App.3d 312, 315, 217 Cal.Rptr. 208.) Because compromise agreements "are contracts and are governed by the general principles of contract law" (id. at p. 316, 217 Cal.Rptr. 208), the court in Varwig stated that even though the underlying The word "judgment" in section 998 indicates that the statute contemplates that an offer to compromise which is accepted will result in the final disposition of the underlying lawsuit; the statute does not indicate any intent to limit the terms of the compromise settlement or the type of final disposition. The acceptance of the instant compromise agreement calling for a voluntary dismissal with prejudice would have finally disposed of the complaint as effectively (see Code Civ.Proc., § 581d) as one calling for entry of judgment in favor of plaintiff.

lawsuit giving rise to a settlement agreement is dismissed for failure to bring the action to trial in five years, "The parties will retain their right to seek to specifically enforce their settlement contract even if the underlying lawsuit is dismissed" (ibid.) and "A dismissal ... will not ... adversely affect the agreement between the parties." (Ibid.)

In light of the foregoing, we conclude that the instant offer to compromise meets the requirements of subdivision (b) of section 998. Our conclusion is consistent with Gregory v. Hamilton (1978) 77 Cal.App.3d 213, 142 Cal.Rptr. 563, although that case did not involve a section 998 offer.

In Gregory, plaintiff accepted a settlement offer for $7,500 during a settlement conference in the judge's chambers and then refused to sign a release and repudiated the settlement; on motion, the trial court granted defendant's motion for order compelling enforcement of compromise settlement agreement and judgment thereon for $7,500; plaintiff appealed and complained on appeal that "the court was without power to enter a judgment in her favor, since the compromise agreement contemplated no such thing, but rather payment by respondent and dismissal of the action by appellant. However, it is recognized that a compromise agreement operates as a merger and bar of all preexisting claims and causes of action [citation] and is as binding and effective as a final judgment itself [citation]. Thus, entry of judgment in favor of appellant in conformance with the compromise is not improper, and indeed has been sanctioned in the past. [Citation.]" (77 Cal.App.3d at p. 221, 142 Cal.Rptr. 563.)

We interpret Gregory to stand for the proposition that, as between the parties thereto and for purposes of enforcement of settlement agreements, a compromise agreement contemplating payment by defendant and dismissal of the action by plaintiff is the legal equivalent of a judgment in plaintiff's favor.

Appellant points out that the...