Judge: Armen Tamzarian, Case: 22STCV06022, Date: 2025-04-29 Tentative Ruling

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Case Number: 22STCV06022    Hearing Date: April 29, 2025    Dept: 52

Plaintiffs’ Motion to Tax Costs

Plaintiffs Scott Miller and Melissa Miller move to tax the memorandum of costs by defendant The People of the State of California, acting by and through the Department of Transportation. 

Section 998 Offer

            Plaintiffs move to tax $94,643 in expert witness fees defendant incurred after its offer to compromise under Code of Civil Procedure section 998. 

A. Simultaneous Offers

Plaintiffs contend the section 998 offer was defective because it contains two simultaneous alternative offers.  Section 998 offers must meet two specificity requirements.  (Anthony v. Li (2020) 47 Cal.App.5th 816, 821.)  “ ‘First, from the perspective of the offeree, the offer must be sufficiently specific to permit the recipient meaningfully to evaluate it and make a reasoned decision whether to accept it, or reject it and bear the risk he may have to shoulder his opponent’s litigation costs and expenses.’ ”  (Ibid.)  “Second, ‘section 998 offers must be written with sufficient specificity because the trial court lacks authority to adjudicate the terms of a purported settlement.  “Section 998 was designed to encourage settlement of disputes through a straightforward and expedited procedure.”  [Citation.]  Once the offer is accepted, the clerk or court performs the purely ministerial task of entering judgment according to the terms of the parties’ agreement.’ ”  (Ibid.)

Plaintiffs identify a split of authority on the validity of simultaneous offers.  The California Supreme Court has granted review of both cases but permitted citing the opinions for their persuasive value and for establishing the existence of a conflict of authority. 

In Gorobets v. Jaguar Land Rover North America, LLC (2024) 105 Cal.App.5th 913 (Gorobets, review granted, Jan. 15, 2025, S287946), the court found that “simultaneous offers to the same party are not effective under section 998 because such offers satisfy only” the first of the two specificity requirements.  (Id. at p. 928.)  “[S]imultaneous offers do not satisfy the second, trial court-focused requirement of sufficient certainty because they interfere with the trial court’s ability, at the time the case is resolved, to determine ‘whether the judgment is more favorable than the offer.’ ”  (Ibid.)  Because “simultaneous offers are invalid only because such offers are too uncertain for the trial court to evaluate under section 998 on the back end,” courts must “examine whether each of the offers is independently valid: If each simultaneous offer is valid, then the trial court is unable to apply section 998 at the back end and … the offers are all ineffective; but if only one offer is independently valid, then the trial court can apply section 998 at the back end as to that offer and the prohibition against simultaneous offers is not implicated.”  (Id. at p. 930.)

Zavala v. Hyundai Motor America (2024) 107 Cal.App.5th 458 (Zavala, review granted, Mar. 19, 2025, S289000) “disagree[d] … with Gorobets’s conclusion ‘simultaneous offers are generally invalid’ to shift costs.”  (Id. at p. 478.)  “When … a defendant has extended multiple simultaneous settlement offers under section 998, a trial court may separately evaluate each offer to determine (1) whether it is sufficiently specific and certain to be valid for triggering cost shifting under section 998; and (2) if it is a valid offer, whether the plaintiff obtained a more favorable judgment or award.”  (Ibid.)      

Ultimately, however, this disagreement had no impact on the outcome of either case.  In Gorobets, the court held that because only one of the two simultaneous offers was valid, there were not “really simultaneous offers that render the independently valid offer ineffective.”  (Gorobets, supra, 105 Cal.App.5th at p. 935.)  As a result, the court measured the judgment against “the sole valid offer.”  (Ibid.)  In Zavala, the court disagreed on the process but reached the same result: “Applying the bright-line approach here of separately considering the validity of the two simultaneous statutory offers to compromise, we independently consider the validity of” each option.  (Zavala, supra, 107 Cal.App.5th at p. 480.)  Only one option was valid, so the plaintiff’s recovery must be measured against that option.  (Ibid.)  Gorobets’s conclusion on the first step of the analysis—making simultaneous valid offers results in no valid offer—is therefore arguably dicta.  There was only one valid offer, so using Zavala’s approach would have resulted in the same outcome Gorobets reached.

Here, defendant presented a single offer of $500,000 to end the case, with two options for the procedural mechanism of ending the case.  The offer provides that defendant “hereby jointly offers to Plaintiffs MELISSA MILLER and SCOTT MILLER (‘PLAINTIFFS’) the sum of $500,000 (Five Hundred Thousand Dollars and No Cents) to compromise their claims and lawsuit against this offering Defendant pursuant to Code of Civil Procedure Section 998, and all the provisions thereunder, in accordance with the following terms and conditions.”  (Tesser Decl., Ex. A, p. 2.)  The first option provided: “That PLAINTIFFS dismiss with prejudice, the case captioned above, and all causes of action…”, “That PLAINTIFFS execute a general release of all claims in the pending litigation in favor of Caltrans”, and “That said dismissal with prejudice be filed with the above-entitled court in lieu of judgment in favor of defendant Caltrans.”  (Id., ¶¶ A, B, F.)  The second option provided: “OR, IN THE ALTERNATIVE, that PLAINTIFFS, allow judgment to be taken in favor of Defendant, Caltrans, and against PLAINTIFFS, in this action” (id., p. 3) and “That said judgment be filed with the court of the above-entitled action” (id., ¶ N). 

The difference between the options is a minor procedural issue.  “ ‘[T]he law aspires to respect substance over formalism and nomenclature.’ ”  (Walker v. Los Angeles County Metropolitan Transportation Authority (2005) 35 Cal.4th 15, 22.)  Plaintiff does not explain any meaningful difference between dismissal with prejudice as opposed to entry of judgment against plaintiffs.  “[A] dismissal with prejudice is tantamount to a judgment and a final disposition of the case… .”  (On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079, 1085.)  Regardless of the procedural mechanism used to end the case, $500,000 is $500,000.

Assuming the court were to reject Zavala and follow Gorobets, that case’s reasoning does not apply here.  As discussed above, Gorobets concluded, “[S]imultaneous offers are invalid only because such offers are too uncertain for the trial court to evaluate under section 998 on the back end.”  (Gorobets, supra, 105 Cal.App.5th at p. 930.)  Defendant’s offer presents no such difficulty for the court.  Assuming defendant’s two options constitute different simultaneous offers, it is trivial for the court to determine that plaintiffs failed to obtain a more favorable judgment than either option.  The judgment was a complete dismissal of plaintiff’s claims.  Of course, that is less favorable to plaintiffs than recovering $500,000. 

B. Acceptance Provision

            Plaintiffs also contend defendant’s section 998 offer was invalid because it did not include a sufficient acceptance provision.  Under section 998, “the written offer ‘shall’ contain what has come to be known as an ‘acceptance provision.’ ”  (Mostafavi Law Group, APC v. Larry Rabineau, APC (2021) 61 Cal.App.5th 614, 618 (Mostafavi).)  “[T]he statute states that the written offer ‘shall’ include ‘a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted.’ ”  (Ibid.)  “[A] section 998 offer lacking an acceptance provision is invalid, and therefore an offeree’s failure to accept it does not trigger any of section 998’s cost-shifting provisions.”  (Id. at p. 622.) 

Mostafavi is distinguishable.  There, the “section 998 offer ‘did not have any statement at all regarding acceptance,’ and thus did not comply with the statutory language requiring an acceptance provision.”  (61 Cal.App.5th at p. 621.)

In contrast, defendant’s offer includes acceptance provisions.  For the first option of dismissal with prejudice, it provides: “That this offer be accepted in writing within thirty (30) days of the date of service of this statutory offer” (Tesser Decl., Ex. A, p. 2, ¶ E) and “That, pursuant to Code of Civil Procedure § 998(b), any acceptance of the offer, whether made on the document containing the offer or on a separate document of acceptance shall be in writing and signed by counsel for the accepting party or, if not represented by counsel, by the accepting party” (id., ¶ I).  For the second option of entering judgment against plaintiffs, it provides: “That this offer be accepted in writing within thirty (30) days of the date of service of this statutory offer” (id., ¶ M) and “That said judgment be filed with the court of the above-entitled action” (id., ¶ N).

Rouland v. Pacific Specialty Ins. Co. (2013) 220 Cal.App.4th 280 (Rouland) is instructive.  There, the court explained: “Nothing in the statute’s language requires an offer to include either a line for the party to sign acknowledging its acceptance or any specific language stating the party must accept the offer by signing an acceptance statement.  Indeed, no ‘ “magic language” ’ or specific format is required for either an offer or acceptance under section 998.  [Citations.]  The offer’s acceptance provision simply must specify the manner in which the offer is to be accepted [citations], and the only statutory requirements for a valid acceptance mandate a written acceptance signed by the accepting party or its counsel.  [Citation.]  We may not impose any additional requirements or limitations that do not appear on the face of the statute.”  (Id. at p. 288.) 

The court “recognize[d]” that “the offers did not expressly require a written acceptance signed by the [offerees’] counsel, but that requirement is implicit in the offers’ identified means of acceptance because any acceptance the [offerees] sought to file with the court necessarily would have to be in writing and signed by their counsel.”  (Rouland, supra, 220 Cal.App.4th at p. 288.)  “As long as a section 998 offer specifies the manner of acceptance, the steps for completing the acceptance may be implicit in the identified means of acceptance.”  (Ibid.)

Here, accepting the offer included the implied step of choosing one of the two options.  Failing to include a space near the signature line to indicate the option chosen does not render the offer invalid.

Pre-Offer Expert Witness Fees

Plaintiffs move to tax $136,823 in expert witness fees defendant incurred before making its section 998 offer.  Code of Civil Procedure section 1033.5, subdivision (b)(1) provides that “Fees of experts not ordered by the court” are not recoverable “except when expressly authorized by law.”  Defendant relies on the parties’ contract, which permits the prevailing party to recover “legal expenses (including reasonable attorneys’ fees).”  (Tesser Decl., Ex. B, ¶ 17.)  That provision does not apply to expert witness fees.

Defendant’s reliance on Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC (2010) 185 Cal.App.4th 1050 is misplaced.  There, the court stated expert witness fees can “be recoverable as costs when the parties specifically agree to such a provision in a freely negotiated contract.  [¶] This does not mean—and we do not hold—that expert witness fees are recoverable in every case where ‘costs’ are merely mentioned in a contract.  A general cost provision should be interpreted according to the established statutory definition.  [Citation.]  But where sophisticated parties knowingly and intentionally negotiate a broader standard into their contract—and particularly where, as here, that standard specifically includes ‘witness and expert fees’—the intent of the parties should be upheld by the court.”  (Id. at p. 1066.) 

“[W]itness and expert fees” cannot reasonably be interpreted to exclude expert witness fees.  Here, the parties’ contract has no similar provision.  It permits recovery of “legal expenses (including reasonable attorneys’ fees).”  (Tesser Decl., Ex. B, ¶ 17.)  That provision must be interpreted according to the established statutory definition of costs under Code of Civil Procedure section 1033.5, including subdivision (a)(10), which permits recovering attorney fees when authorized by contract, and excluding “[f]ees of experts not ordered by the court” under subdivision (b)(1).

Defendant also relies on Bussey v. Affleck (1990) 225 Cal.App.3d 1162.  That opinion has been heavily criticized (see, e.g., Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69 Cal.App.4th 1141, 1154) and expressly “disavow[ed]” by the court that issued it (Hsu v. Semiconductor Systems, Inc. (2005) 126 Cal.App.4th 1330, 1342).  Assuming Bussey v. Affleck has any precedential value, the court finds the contrary opinions more persuasive. 

Mediation

            Plaintiffs move to tax $17,095 in mediation costs claimed in item 15B of defendant’s memorandum of costs.  “[M]ediation costs fall within the category of costs that may be awarded in the trial court’s discretion.”  (Berkeley Cement, Inc. v. Regents of University of California (2019) 30 Cal.App.5th 1133, 1140 (Berkeley).)  The court finds these costs were reasonably necessary rather than merely convenient or beneficial.  (Code Civ. Proc., § 1033.5, subd. (c)(2).)  Plaintiffs argue that the potential of paying the opposing parties’ mediation fees would make parties less willing to mediate.  That potential, however, also encourages settlement because it “ ‘exposes parties who fail to agree to a reasonable settlement proposal to the risk of a discretionary court determination that they should pay their opponent’s share of the failed mediation.’ ”  (Berkeley, supra, 30 Cal.App.5th at p. 1140.)  The court will exercise its discretion to allow defendant to recover these costs.

Other Expenses

            Plaintiffs move to tax $435.40 in filing fees.  Defendant concedes it cannot recover that expense.

Plaintiffs contest $425.19 in expenses for obtaining copies of documents from prior litigation between the parties.  The court finds this expense was “reasonably necessary to the conduct of the litigation” (Code Civ. Proc., § 1033.5, subd. (c)(2)) and will exercise its discretion to allow it. 

Finally, plaintiffs move to tax $312 for personal service of defendant’s motion for summary judgment.  (Memo. Of Costs, p. 4, line 22.)  Defendant’s opposition does not address this expense.  Defendant could have served its motion electronically two court days earlier.  The court exercises its discretion to deny this expense as “merely convenient or beneficial.” (Code Civ. Proc., § 1033.5, subd. (c)(2).)   

Disposition

Plaintiffs Scott Miller and Melissa Miller’s motion to tax costs is granted in part.  The court hereby taxes defendant’s memorandum of costs by: $136,823 for expert witness incurred before the section 998 offer, $435.40 for filing fees, and $312 for personal service of the motion for summary judgment.  Defendant The People of the State of California, acting by and through the Department of Transportation, shall recover $129,973.02 in expenses from plaintiffs Scott Miller and Melissa Miller.