Judge: Edward B. Moreton, Jr., Case: 19STCV39284, Date: 2023-01-17 Tentative Ruling

Case Number: 19STCV39284    Hearing Date: January 17, 2023    Dept: 205

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

BACKGROUND

            This is a personal injury action.  Plaintiff Berenice Williams was driving her car on the freeway when she was rear-ended by Defendant Jessica Mandujano.  Plaintiff also sued the owner of the car, Defendant Evelyn Rodas, whom she subsequently dismissed without prejudice.

Prior to trial, Defendants served Plaintiff with two offers to compromise pursuant to Code Civ. Proc. §998.  (Exs. A, D).  Defendants’ first 998 offer was served on July 15, 2020 and offered $15,000 plus Plaintiff’s recoverable costs incurred as of the date the offer was served in exchange for a dismissal with prejudice of the complaint against Defendants.  (Ex. A.)  Defendants’ second 998 offer was served on March 30, 2021 and offered $30,000 plus Plaintiff’s recoverable costs incurred as of the date the offer was served in exchange for a dismissal with prejudice of the complaint against Defendants.  (Ex. D).  Plaintiff did not accept either offer.  (Lindner Decl. ¶¶3, 6.) 

After a trial, the jury found that Defendant Jessica Mandujano was negligent, that Defendant’s negligence was a substantial factor in causing injury, and that Plaintiff was not negligent.  Plaintiff sought over $865,000 in damages, but the jury awarded Plaintiff only $5000. 

This hearing is on the parties’ competing motions to tax the other side’s memorandum of costs.  Defendant moves to strike or tax costs claimed by Plaintiff because Plaintiff did not obtain a judgment more favorable than the first 998 offer served on July 15, 2020, and therefore, she cannot recover costs incurred after July 15, 2020.  In turn, Plaintiff moves to tax costs claimed by Defendant because Defendant is not the prevailing party; the 998 offer was not reasonable or in good faith, and the 998 offer is invalid on its face as it contained a request to “settle” without an attached settlement agreement or release. 

LEGAL STANDARD

Generally, a “prevailing party” is entitled to costs. (Code Civ. Proc. § 1032(b); Santisas v. Goodin (1998) 17 Cal.4th 599, 606.).  “A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of mailing of the notice of entry of judgment…The memorandum of costs must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case.”  (Cal. Rules of Court, rule 3.1700.)

The losing party may contest the costs that a prevailing party seeks.  (CCP §1034(a).) The challenging party has the burden of demonstrating that those costs are unreasonable or unnecessary. (Adams v. Ford Motor Co., (2011) 199 Cal. App. 4th 1475, 1486; 612 South LLC v. Laconic Limited Partnership, (2010) 184 Cal. App. 4th 1270, 1285.)

Code of Civil Procedure § 1033.5 sets forth the costs recoverable by the prevailing party. (Code Civ. Proc., § 1033.5.)  “Allowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.”  (Code Civ. Proc., §1033.5(c)(2); Perko’s Enterprises, Inc. v. RRNS Enterprises (l992) 4 Cal.App.4th 238, 244.)  A “properly verified memorandum of costs is considered prima facie evidence that the costs listed in the memorandum were necessarily incurred.”  (Bach v. County of Butte (1989) 215 Cal.App.3d 294, 308; see also Hadley v. Krepel (1985) 167 Cal.App.3d 677, 682.)  The memorandum of costs need not contain invoices, billings, or statements.  (Bach, 215 Cal.App.3d at 308; see also Cal. Rules of Court, Rule 3.1700(a)(1) (only verification required).)

“Documentation must be submitted only when a party dissatisfied with the costs claimed in the memorandum challenges them by filing a motion to tax costs.”  (Bach v. County of Butte, supra, at p. 308.)  This puts the burden on the party seeking to tax costs to show that they were not reasonable or necessary.  (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-74.)  If items are properly objected to, they are put in issue, and the burden of proof is on the party claiming them as costs. (Id.) 

DISCUSSION

Defendants’ Motion to Tax Costs

Plaintiff seeks costs as the prevailing party.  Defendant argues, however, that Plaintiff is not entitled to recover costs incurred after the first 998 offer on July 15, 2020 because Plaintiff did not obtain a judgment more favorable than the 998 offer.  The Court agrees.

Pursuant to Code Civ. Proc. § 998(c)(1), “if an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her post-offer costs and shall pay the defendant’s costs from the time of the offer.”  The statute’s use of the word “shall” means the requirement is mandatory.  (Puerta v. Torres (2011) 195 Cal.App.4^th 1267, 1272-73.)  “[T]he basic premise of section 998 is that plaintiffs who reject reasonable settlement offers and then obtain less than the offer should be penalized for continuing the litigation.”  (Mesa Forest Products, Inc. v. St. Paul Mercury Ins. Co. (1999) 73 Cal.App.4^th 324, 330.)  “The harsh result of section 998 is that the plaintiff not only loses the right to recover his or her [postoffer] costs, but must also pay the defendant's postoffer costs."  (Id.) 

Moreover, where a defendant extends two unaccepted 998 offers, and the plaintiff fails to obtain a judgment more favorable than either offer, it is the first offer that triggers the cost-shifting provisions of Code Civ. Proc. § 998.  (Martinez v. Brownco Constr. Co. (2013) 56 Cal.4^th 1014, 1024-1026.)  As the Martinez court explained, “to be consistent with section 998’s financial incentives and disincentives, parties should not be penalized for making more than one reasonable settlement offer[,] [n]or should parties be rewarded for rejecting multiple offers where each proves more favorable than the result obtained at trial.”  (Id. at 1026.)

There is no dispute that Plaintiff obtained a judgment less favorable than either offer.

However, Plaintiff argues that the second 998 offer is defective because it does not allow judgment to be taken against defendant.  (Plaintiff does not address Defendants’ first 998 offer but as the first and second offers were virtually identical except for the amount, the Court assumes all of Plaintiff’s arguments regarding the invalidity of the second 998 offer apply equally to the first offer.)  Plaintiff’s argument is without merit.  Code Civ. Proc. § 998(b) provides that “any party may serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time.”  The statute uses the word “judgment” to mean a final disposition of the action whether by entry of judgment or voluntary dismissal of the action.  (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4^th 1017, 1055.)  Thus, “[a]lthough section 998 refers to entry of a judgment or award, an offer that provides for the plaintiff’s dismissal of the action with prejudice is a valid form of offer within section 998.”  (Hartline v. Kaiser Foundation Hospitals 2005) 132 Cal.App.4^th 458, 470; see also American Airlines, 96 Cal.App.4^th at 1054-1056; Menges v. Dep’t of Transportation (2020) 59 Cal.App.5^th 13, 26; Goodstein v. Bank of San Pedro (1994) 27 Cal. App. 4th 899, 905.)

Plaintiff next argues that Defendants’ second 998 offer was vague, ambiguous, uncertain and not valid on its face as it contained a request to “settle” but failed to attach a settlement agreement or release.  The Court disagrees.  The terms and conditions of both 998 offers are clear and unequivocal – in exchange for a dismissal with prejudice, Plaintiff would receive a set sum ($15,000 in the first offer and $30,000 in the second offer) plus all costs recoverable under Code Civ. Proc. § 1033.5 from the date the offer was served.  Defendants’ 998 offers did not require Plaintiff to sign a settlement agreement or release so there was no need to attach such documents. 

Plaintiff’s reliance on Sanford v. Rasnick (2016) 246 Cal.App.4^th 1121 is misplaced.  There, the defendants served the plaintiff with a 998 offer that required the plaintiff to enter into a “settlement agreement and general release.”  (Id. at 1130.)  It was the failure to disclose the terms of the required settlement agreement and release that led the court to find the 998 offer was invalid.  (Id. at 1130-1132.)  Here, the 998 offers did not require Plaintiff to do anything other than dismiss her complaint with prejudice.  (Cf. Covert v. FCA USA, LLC (2022) 73 Cal.App.4^th 821, 859 (“[Plaintiff] objected that the section 998 offers did not specify whether he would be required to sign a separate release agreement. This objection fares no better. The section 998 offers provided for payment ‘in exchange for dismissal of this action with prejudice in its entirety and return of the vehicle that is the subject of this lawsuit.’ This language did not create a likelihood that [Plaintiff] would have to provide a release any broader than the lawsuit that was being dismissed.”)

Plaintiff also argues that Defendants’ 998 offers were vague and ambiguous as to costs.  Again, the Court disagrees.  The 998 offers specified they included costs recoverable under Code Civ. Proc. §1033.5 incurred as of the date the 998 offer was served.  This language is sufficiently specific to have allowed Plaintiff to meaningfully evaluate the value of the offers, as Plaintiff was certainly aware of what recoverable costs she had incurred as of the date the offers were served.  In Seever v. Copley Press, Inc. (2006) 141 Cal.App.4^th 1550, 1560, disapproved on other grounds in Segal v. ASICS America Corp. (2022) 12 Cal.5^th 651, the defendant served a 998 offer on plaintiff that stated in part: “[Defendant] will pay plaintiff statutory costs, including attorneys’ fees, incurred to the date of this offer in the amount to be determined by the Court according to proof.  This amount is in addition to the $200,001.00 [defendant] agrees to pay plaintiff as stated above.”  The plaintiff argued the offer was invalid because it was uncertain.  The appellate court rejected the argument, finding a 998 offer did not have to state a specific amount of attorneys’ fees and costs to be a valid offer.  (Id. at 1561; see also Elite Show Services, Inc. v. Staffpro, Inc. (2004) 119 Cal.App.4th 263, 269 (a 998 offer that includes a provision for “reasonable attorneys’ fees and taxable costs” but fails to mention a specific amount is not invalid; “[A] settlement offer that includes an agreement to pay reasonable attorney fees is analogous to the inclusion of an award of unspecified costs in a judgment, a very commonplace occurrence. The fact that the amount of reasonable costs (in this case, fees) must be determined thereafter does not render the offer fatally uncertain.”)

Plaintiff further argues that the 998 offers were not reasonable nor in good faith.  Again, the Court disagrees.  “[W]hen a party obtains a judgment more favorable than its pretrial offer, it is presumed to have been reasonable and the opposing party bears the burden of showing otherwise.”  (Thompson v. Miller (2003) 112 Cal.App.4^th 327, 338-339; see also Santantonio v. Westinghouse Broadcasting Co., Inc. (1994) 25 Cal.App.4^th 102, 116-117; Elrod v. Oregon Cummins Diesel Inc. (1987) 195 Cal.App.3d 692, 700.)  Plaintiff has not met her burden.   She has not shown how Defendants’ 998 offers were made in bad faith or were unreasonable in amount.  Without citation to anything in the record, she only states conclusorily that the offers were unreasonable given the extent of her medical expenses and need for future surgery, which she claims all medical experts agreed she needed. 

Plaintiff’s authorities are all easily distinguishable.  In Wear v. Calderson (1981) 121 Cal.App. 3d 818, 821-822 the offer of $1.00 was found to be a token offer where plaintiff recovered $18,500 from the co-defendant.  Pineda v. Los Angeles Turf Club, Inc. (1980) 112 Cal.App.3d 53, 63, involved the wrongful death of a leading jockey, and the court found the $2,500 offer was unreasonable given defendant’s exposure, if he was found liable, would have been substantial.  In Elrod, 195 Cal. App.3d at 700-701, a settlement offer of $15,001.00 by a brake repair company to a plaintiff severely injured and rendered a paraplegic was found not to have been made in good faith. 

Unlike these cases, Defendants’ first offer of $15,000 and second offer of $30,000 cannot be said to be a token offer when Plaintiff ultimately recovered only $5,000.  Further, at the time the first offer was made, Defendants had taken Plaintiff’s deposition where she testified that following the accident she was able to engage in rigorous activities such as snowboarding and traveling to Russia.  (Lindner ¶4.)  Defendants also had Plaintiff’s discovery responses which identified soft tissue injuries and no indication of a need for future surgery.  (Lindner ¶¶2-3.)  Based on these facts, an offer of $15,000 was reasonable.  At the time of the second offer, Defendants’ expert had concluded there were no physical findings to suggest a severe neck injury, no objective basis to consider further surgery, and at best, plaintiff sustained a minor lumbar strain as a result of the accident.  (Lindler ¶6, Ex. B.)  On these facts, an offer of $30,000 was also reasonable.     

Accordingly, Plaintiff is not entitled to recover costs incurred after Defendants’ first 998 offer on July 15, 2020, and the Court will tax all such costs including items 1(a), 1(b), 1(d), 1(e), 1(f), 1(h), 1(i), 1(j), 1(k), 1(l), 1(m), 4(a), 4(c), 4(d), and 11 in the memorandum of costs.  The Court will not consider Defendants’ additional arguments for taxing these costs.   

Plaintiff’s Motion to Tax Costs

When a plaintiff does not accept a defendant’s 998 offer and fails to obtain a more favorable judgment, then plaintiff cannot recover post offer costs and must pay the defendant’s costs from the time of the offer.  (Code Civ. Proc. § 998).  Because Plaintiff did not accept Defendants’ first 998 offer of $15,000 and obtained a less favorable judgment of $5,000, Defendants are entitled to post-offer costs.

Plaintiff moves to tax Defendant’s post-offer costs on several grounds.  First, Plaintiff argues that Defendant is not the prevailing party.  But Defendant is not seeking costs as the prevailing party under Code Civ. Proc. §1032.  Rather, Defendant is seeking costs pursuant to Code Civ. Proc. §998.  Second, Plaintiff argues that the 998 offers are not reasonable nor in good faith.  For reasons set forth above, this argument is without merit.  Third, Plaintiff argues that the  998 offers are invalid on their face as they are vague, ambiguous and uncertain as they contained a request to “settle”, “the terms of which settlement were neither described nor revealed”.  For reasons stated above, this argument is also meritless.  Lastly, Plaintiff argues that the witness fees sought by Defendant are “grossly excessive and unreasonable.”  But Plaintiff never explains why she believes the fees are excessive.  As the party seeking to tax costs, she has the burden of demonstrating that the costs are unreasonable or unnecessary.  (Von Goerlitz v. Turner (1944) 65 Cal.App.2d 425, 432.)  Plaintiff has failed to meet her burden.    

Accordingly, the Court denies Plaintiff’s motion to tax costs.

CONCLUSION

            Based on the foregoing, the Court GRANTS Defendant’s motion to tax costs, and DENIES Plaintiff’s motion to tax costs.

IT IS SO ORDERED.

DATED: January 17, 2023                                         ___________________________

                                                                                    Edward B. Moreton, Jr.

                                                                                    Judge of the Superior Court