Judge: Daniel S. Murphy, Case: 19STCV01640, Date: 2024-03-20 Tentative Ruling

Case Number: 19STCV01640    Hearing Date: March 20, 2024    Dept: 32

BACKGROUND

            On January 22, 2019, Plaintiffs Antonio Leon and Blanca Leon filed this action against Defendants James Jaber, MD, Georgia Bode, MD, and Los Angeles Community Hospital, asserting causes of action for (1) medical malpractice and (2) loss of consortium. The First Amended Complaint was filed on May 8, 2019. Blanca Leon’s claims were dismissed, leaving Antonio Leon’s medical malpractice claim.

            The matter came on for trial between January 29, 2024 and February 9, 2024, after which the jury returned a verdict for Plaintiff against Defendant Bode. Plaintiff was ordered to prepare a judgment.

            Plaintiff filed a proposed judgment on February 15, 2024. Defendant filed her objection to the judgment on February 21, 2024, arguing that Plaintiff’s Section 998 offer was invalid and that Plaintiff incorrectly calculated the settlement offset. 

            On February 26, 2024, Plaintiff filed the instant motion to enforce judgment to address Defendant’s objections. Defendant filed her opposition on March 7, 2024.

DISCUSSION

I. Validity of the Section 998 Offer

            An offer under Section 998 “shall include a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted. 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 shall be signed by counsel for the accepting party or, if not represented by counsel, by the accepting party.” (Code Civ. Proc., § 998(b).)

            While “Section 998 does not require a particular form of acceptance provision,” a valid offer “must include some indication of how to accept the offer.” (Perez v. Torres (2012) 206 Cal.App.4th 418, 425, fn. 6.) “Section 998 does not specify that the acceptance must contain any specific words or that it be made in a particular manner, other than it be in writing and signed by the appropriate person.” (Whatley-Miller v. Cooper (2013) 212 Cal.App.4th 1103, 1110.) “[N]o ‘magic language’ or specific format is required for either an offer or acceptance under section 998.” (Rouland v. Pacific Specialty Ins. Co. (2013) 220 Cal.App.4th 280, 288.)

            Here, Plaintiff’s Section 998 offer provided that “if this offer is not accepted in writing prior to trial, or within thirty (30) days after it is made, whichever occurs first, it shall be deemed withdrawn and cannot be given in evidence at the trial.” (Collins Decl., Ex. A.) Defendant argues that the offer fails to specify that it could be accepted by a signed writing and generally fails to specify any method of acceptance at all.

            However, the law does not require a particular format for the acceptance provision, and there is no “magic language” to satisfy Section 998. In particular, “[n]othing 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.” (Rouland, supra, 220 Cal.App.4th at p. 288.) Plaintiff’s offer indicated that it could only be accepted in writing within a specified time frame. This meets the requirement to provide “some indication” of how to accept the offer. (See Perez, supra, 206 Cal.App.4th at p. 425, fn. 6.)

            Defendant argues that Rouland is distinguishable because the offer there, while not providing a signature line or expressly demanding a signature, at least instructed the plaintiffs to file their acceptance with the trial court. (Rouland, supra, 220 Cal.App.4th at p. 283.) The Court of Appeal found that the signature requirement was “implicit in the offers' identified means of acceptance because any acceptance the Roulands sought to file with the court necessarily would have to be in writing and signed by their counsel.” (Id. at p. 288.) While those were the specific facts in Rouland, the Court of Appeal also concluded generally that “[a]s 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 too, the steps for completing acceptance may be implied in the specified manner of acceptance. Again, the offer specifies that any acceptance must be made in writing. It is implicit that a written acceptance be signed by defense counsel. Therefore, the offer satisfies the requirements of Section 998. Accordingly, Plaintiff is entitled to prejudgment interest under Civil Code section 3291.  

II. Settlement Offset

“Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall . . . reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater.” (Code Civ. Proc., § 877(a).) “However, tortfeasors are jointly liable for only economic damages.” (Collins v. County of San Diego (2021) 60 Cal.App.5th 1035, 1064.) Under Prop 51, tortfeasors are proportionately liable for noneconomic damages. (Civ. Code, § 1431.2.) “Accordingly, as the Court of Appeal recognized, when a pretrial settlement does not differentiate between economic and noneconomic losses, a postverdict allocation is required because ‘only the amount attributable to the joint responsibility for economic damages may be used as an offset.’” (Rashidi v. Moser (2014) 60 Cal.4th 718, 722.)

To calculate the allocation, it must first be determined what percentage of the jury’s total award is attributable to economic damages, and then apply that percentage to the settlement amount to determine the offset. (Espinoza v. Machonga (1992) 9 Cal.App.4th 268, 277.) Here, the jury awarded $9,474,350.29 in economic damages and $19,250,000 in noneconomic damages, for a total award of $28,724,350.29. Plaintiff entered a settlement for $980,000. Under the traditional formula, the proportion of the award attributable to economic damages would be 33.9% ($9,474,350.29 / $28,724,350.29). Therefore, the offset amount would be $332,220 (33.9% x $980,000).

However, MICRA limits noneconomic damages to $250,000. If the $250,000 cap is considered in calculating the total award, the total award would only be $9,724,350.29 ($9,474,350.29 + $250,000). That means the proportion of the award attributable to economic damages would be 97.4% ($9,474,350.29 / $9,724,350.29). Accordingly, the offset amount would be $954,520 (97.4% x $980,000). While both parties agree that an offset is appropriate, they disagree on which formula to use. The issue is whether, for purposes of calculating a settlement offset, the trial court uses the total amount of damages actually awarded by the jury, or the total amount after applying the cap imposed by MICRA.

In Mayes v. Bryan (2006) 139 Cal.App.4th 1075, 1098, the Court of Appeal upheld the trial court’s calculation of the defendants’ liability for purposes of determining whether the plaintiffs could recover prejudgment interest based on their Section 998 offer. The trial court’s calculation did what Defendant advocates for here—calculate the proportion attributable to economic damages by using a denominator that accounts for the MICRA cap. (Id. at p. 1099.) After the economic damages were offset accordingly, the trial court additionally awarded only $50,000 in noneconomic damages, or 20% of $250,000, because the jury allocated 20% liability to the non-settling defendants. (Ibid.) The plaintiffs argued that “it was unfair for the court to first reduce the noneconomic verdict of $ 3 million to the statutory MICRA maximum of $ 250,000 and then reduce it further under Proposition 51 to reflect the percentage of fault attributed to the settlement plaintiffs received.” (Ibid.) 

The Court of Appeal held that the trial court was correct to “apply the MICRA cap to the total noneconomic damage award before it determined the pro rata liability of each defendant.” (Mayes, supra, 139 Cal.App.4th at p. 1101.) “[B]ecause the plaintiff could not recover more than $ 250,000 in noneconomic damages from all health care providers for one injury, the noneconomic damages should be apportioned based on the relative fault of each health care provider.” (Ibid.) In other words, “[t]he $ 250,000 MICRA maximum for noneconomic damages must be apportioned according to Proposition 51.” (Id. at p. 1102.) Mayes resolved “the interplay between MICRA and the percentages of fault of the various defendants under Proposition 51.” (Ibid.)

On the other hand, the court in Collins distinguished Mayes on the grounds that in Mayes, “the jury was also tasked with determining the settling defendants' proportionate liability.” (Collins, supra, 60 Cal.App.5th at p. 1065.) In such a case, “failing to reduce under MICRA before apportioning the settlement ran afoul of Proposition 51 because it would result in the settling defendants paying noneconomic damages that were inconsistent with the portion of fault set by the jury.” (Ibid.) “No such concern is present” where there is no issue of apportionment of fault. (Ibid.) Instead, “application of MICRA before calculating the setoff is not required because MICRA applies to damages awarded at trial, and not settlements, which are ‘not the same as damages.’” (Id. at pp. 1066-67.)

Here, as in Collins, the jury did not apportion liability amongst the different defendants. Rather, Defendant Bode was determined solely responsible for Plaintiff’s damages. Unlike Mayes, there is no issue of Defendant “making up the amounts the settling parties did not pay.” (Mayes, supra, 139 Cal.App.4th at p. 1102.) Therefore, “the relevant ratio is the actual economic damages as a percentage of the total damages suffered by [Plaintiff], not the ratio between the economic damages and the amount of damages that [Plaintiff] can recover.” (Francies v. Kapla (2005) 127 Cal.App.4th 1381, 1387.) Defendant will not be “held liable for any portion of noneconomic damages attributed to another defendant by the finder of fact” and will still “receive[] the benefit of MICRA.” (See Collins, supra, 60 Cal.App.5th at p. 1067, emphasis in original.) 

Defendant argues that Collins was wrongly decided and that the case illogically concludes that a MICRA-protected defendant would settle for substantially more than their potential liability. However, Defendant cites no authority disapproving of or distinguishing Collins. Moreover, a MICRA-protected defendant may settle for a substantial amount notwithstanding the MICRA cap if the defendant expects substantial economic damages. And of course, “[t]he settlement includes not only damages, but also the value of avoiding the risk, expense, and adverse public exposure that accompany going to trial. There is no conceptual inconsistency in allowing a plaintiff to recover more from a settlement or partial settlement than he could receive as damages.” (Hoch v. Allied-Signal, Inc. (1994) 24 Cal.App.4th 48, 67-68.) MICRA was not intended “to include settlement recoveries in the cap on noneconomic damages. To the contrary, we have noted that the Legislature had jury awards in mind when it enacted the cap, and that only a collateral impact on settlements was contemplated.” (Rashidi, supra, 60 Cal.4th at p. 726.)

In sum, the offset applicable to economic damages is to be calculated using the jury’s actual award. Therefore, the offset amount is $332,220 as determined above. The MICRA cap will apply when calculating Plaintiff’s total recovery. The calculation proceeds as follows:

·       Economic damages: $9,474,350.29 - $332,220 = $9,142,130.29;

·       Noneconomic damages: $250,000;

·       Total = $9,392,130.29.

Therefore, Plaintiff is entitled to $9,392,130.29, plus prejudgment interest.

CONCLUSION

            Plaintiff’s motion to enforce judgment is GRANTED.