Martinez v. Brownco Constr. Co.
| Citation | 301 P.3d 1167,56 Cal.4th 1014,157 Cal.Rptr.3d 558 |
| Decision Date | 10 June 2013 |
| Docket Number | No. S200944.,S200944. |
| Parties | Raymond MARTINEZ et al., Plaintiffs and Respondents, v. BROWNCO CONSTRUCTION COMPANY, INC., Defendant and Appellant. |
| Court | United States State Supreme Court (California) |
Lindahl Beck, George M. Lindahl, Los Angeles, and Laura H. Huntley for Defendant and Appellant.
Baker, Burton & Lundy and Albro L. Lundy III, Hermosa Beach, for Plaintiffs ad Respondents.
Section 998 of the Code of Civil Procedure1 was enacted to encourage the settlement of lawsuits prior to trial. The statute accomplishes this purpose by providing for augmentation and withholding of the costs recoverable at trial when a party fails to achieve a result better than it could have obtained by accepting an offer of compromise or settlement conforming to statutory requirements. Among other things, section 998 provides that a defendant may be ordered to pay a reasonable sum to cover the plaintiff's postoffer costs of expert witness services when the judgment is not more favorable than the plaintiff's settlement offer. ( § 998, subd. (d).)
The terms of section 998 do not prohibit a party from making more than one settlement offer, but they are silent as to the effect of a party's multiple offers. In this action, we consider whether a later offer extinguishes a previous offer for purposes of section 998's cost-shifting provisions. We conclude that where, as here, a plaintiff makes two successive statutory offers, and the defendant fails to obtain a judgment more favorable than either offer, allowing recovery of expert fees incurred from the date of the first offer is consistent with section 998's language and best promotes the statutory purpose to encourage settlements.
Plaintiffs Raymond Martinez and his wife, Gloria Martinez, sued defendant Brownco Construction Company, Inc. (Brownco) for damages arising out of an electrical explosion that severely injured Mr. Martinez.
Prior to trial, plaintiffs each served on Brownco two settlement offers pursuant to section 998. In August 2007, Mr. Martinez offered to compromise his negligence claim in the amount of $4.75 million, and Mrs. Martinez offered to compromise her loss of consortium claim for $250,000. Brownco neither accepted nor rejected these offers within the statutory 30–day period. ( § 998, subd. (b)(2).) Just before trial, in February 2010, Mr. Martinez and Mrs. Martinez served reduced compromise offers of $1.5 million and $100,000, respectively. As before, Brownco took no action.
At trial, Mr. Martinez obtained a judgment of $1,646,674, and Mrs. Martinez obtained a $250,000 judgment. Plaintiffs filed a memorandum of costs seeking a total of $561,257.14 in itemized costs. Brownco moved to tax costs, and as pertinent here sought an order disallowing Mrs. Martinez's recovery of $188,536.86 in expert fees incurred after her first settlement offer but before her second offer. The trial court sided with Brownco and entered an order taxing the disputed expert fees.2 Relying on Wilson v. Wal–Mart Stores, Inc. (1999) 72 Cal.App.4th 382, 85 Cal.Rptr.2d 4 (Wilson ), the court stated:
The Court of Appeal reversed, reasoning that allowance of expert fees incurred from the date of the first rejected offer is consistent with section 998's language and purpose, and that contract principles do not compel otherwise.
We granted Brownco's petition for review.
The question presented is this: When a plaintiff serves two unaccepted offers to compromise pursuant to section 998, and the defendant fails to obtain a judgment more favorable than either offer, does the plaintiff's last offer extinguish the first offer for purposes of expert fee recovery under section 998 ? Because this issue involves the application of law to undisputed facts, we review the matter de novo. ( Saakyan v. Modern Auto, Inc. (2002) 103 Cal.App.4th 383, 390, 126 Cal.Rptr.2d 674.)
As a general matter, a party prevailing at trial may not recover the fees of experts who are not ordered by the court. (§§ 1032, 1033.5, subd. (b)(1).) Such fees are recoverable, however, when a judgment following the nonacceptance of a pretrial settlement offer triggers operation of section 998. As relevant here, section 998 provides: [¶] .... 3 To qualify for these augmented costs, the plaintiff's offer must be in writing and conform to statutory content requirements. ( § 998, subd. (b).) "If the offer is not accepted prior to trial or arbitration or within 30 days after it is made, whichever occurs first, it shall be deemed withdrawn ...." ( § 998, subd. (b)(2).)
The policy behind section 998 is "to encourage the settlement of lawsuits prior to trial." ( T.M. Cobb Co. v. Superior Court (1984) 36 Cal.3d 273, 280, 204 Cal.Rptr. 143, 682 P.2d 338 (T.M.Cobb ); see Poster v. Southern Cal. Rapid Transit Dist. (1990) 52 Cal.3d 266, 270, 276 Cal.Rptr. 321, 801 P.2d 1072 (Poster ).) To effectuate this policy, section 998 provides "a strong financial disincentive to a party—whether it be a plaintiff or a defendant—who fails to achieve a better result than that party could have achieved by accepting his or her opponent's settlement offer." ( Bank of San Pedro v. Superior Court (1992) 3 Cal.4th 797, 804, 12 Cal.Rptr.2d 696, 838 P.2d 218.) At the same time, the potential for statutory recovery of expert witness fees and other costs provides parties "a financial incentive to make reasonable settlement offers." (Ibid. ) Section 998 aims to avoid the time delays and economic waste associated with trials and to reduce the number of meritless lawsuits. ( Culbertson v. R.D. Werner Co., Inc. (1987) 190 Cal.App.3d 704, 711, 235 Cal.Rptr. 510 ; see Wilson, supra, 72 Cal.App.4th at p. 390, 85 Cal.Rptr.2d 4.)
As indicated, section 998 provides that a plaintiff may recover postoffer costs of expert witness services if: (1) the plaintiff makes an offer to compromise that conforms to the statutory time and content requirements; (2) the defendant does not accept the offer; and (3) the defendant does not obtain a more favorable result in the action. Nothing in the wording of section 998 prevents a plaintiff from making more than one compromise offer, but the statute makes no mention as to the effect of a later offer on an earlier offer.
When the language of section 998 does not provide a definitive answer for a particular application of its terms, courts may consult and apply general contract law principles. Because the process of settlement and compromise is a contractual one, such principles may, in appropriate circumstances, govern the offer and acceptance process under section 998. (See T.M. Cobb, supra, 36 Cal.3d at p. 280, 204 Cal.Rptr. 143, 682 P.2d 338.) A general contract law principle may be found controlling if the policy of encouraging settlements is "best promoted" thereby. ( Id. at p. 281, 204 Cal.Rptr. 143, 682 P.2d 338.)
For example, under general contract law, an offer may be revoked any time before acceptance. ( Civ.Code, § 1586.) In T.M. Cobb, supra, 36 Cal.3d 273, 204 Cal.Rptr. 143, 682 P.2d 338, we invoked that basic principle in concluding that a section 998 offer is revocable prior to its acceptance or statutory expiration. ( T.M. Cobb, at pp. 283–384, 204 Cal.Rptr. 143, 682 P.2d 338.) As we explained, a party is more likely to make a statutory offer to compromise in the first instance if it knows the offer may be withdrawn and revised should circumstances change or new evidence be developed. ( Id. at p. 281, 204 Cal.Rptr. 143, 682 P.2d 338.) Because "more offers will be made if revocation is permitted," and because "[t]he more offers that are made, the more likely the chance for settlement," we concluded that applying the basic principle of revocability better serves the policy of encouraging settlements than a rule of irrevocability. (Ibid. )
Of course, a contract law principle will not be found to govern if its application would conflict with section 998 or defeat its purpose. ( T.M. Cobb, supra, 36 Cal.3d at p. 280, 204 Cal.Rptr. 143, 682 P.2d 338 ; see Poster, supra, 52 Cal.3d at p. 271, 276 Cal.Rptr. 321, 801 P.2d 1072.) For instance, under general contract law, a counteroffer that deviates from the terms of an offer ordinarily operates as a rejection of the offer so as to terminate the offer immediately. (See generally 14 Cal.Jur.3d (2008) Contracts, § 76, p. 302.) In finding this principle inapplicable in the section 998 context, Poster observed that negotiations involving the making of counteroffers are a normal and routine occurrence during the statutory 30–day period and "ought not to affect the right of the offeree to ultimately accept the statutory offer in a timely fashion." ( Poster, at p. 271, 276 Cal.Rptr. 321, 801 P.2d 1072.) Because the general counteroffer rule would tend to stifle negotiations and discourage settlement, Poster concluded that, even after extending a counteroffer, an offeree may accept a statutory offer any time before its revocation or expiration. ( Id. at pp. 271–272, 276 Cal.Rptr. 321, 801 P.2d 1072.)
Another relevant consideration is whether applying section 998 in a particular manner serves the...
To continue reading
Request your trial