Judge: Mark H. Epstein, Case: BC705877, Date: 2023-12-01 Tentative Ruling

Case Number: BC705877    Hearing Date: December 1, 2023    Dept: I

This is a motion to tax costs.  Following a jury trial, the jury entered judgment in plaintiff’s favor.  Plaintiff is entitled to costs as a prevailing party, and defendant does not contest as much (although there are some items in dispute).  But plaintiff also claims additional costs under CCP section 998.  Years ago, plaintiff made a statutory offer of $100,000, which is less than the jury’s ultimate verdict, which is reflected in the judgment.  Defendant did not accept the offer.  Defendant contends that the offer should be disregarded because it was a bad faith offer given the state of play at the time.  More specifically, defendant notes that at the time the offer was made, much of the damage plaintiff asserted at trial in terms of medical procedures had not yet been incurred and there was no good reason to assume that they ever would be incurred.  Accordingly, while a $100,000 offer close to trial might have been good faith, the offer in 2019 was not and the rejection of it should not trigger additional costs under the statute.

The recovery of costs is purely statutory, and a prevailing party is entitled as a matter of right to recover costs of suit in any action or proceeding.  (Code Civ. Proc., § 1032, subd. (b).)  Statutorily allowable costs, however, must be “reasonably necessary to the conduct of the litigation” and “reasonable in amount.”  (Code Civ. Proc., § 1033.5 subd. (c)(2), (3).)  A verified memorandum of costs is prima facie evidence of its propriety.  (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774.)  The party opposing those costs must show they were not reasonable or necessary.  (Ibid.)  It is therefore the objecting party’s burden to show the costs were not legitimate.  (Fennessy v. DeLeuw–Cather Corp. (1990) 218 Cal.App.3d 1192, 1195.)  Section 998 allows certain additional costs to be recovered under certain circumstances.

The court turns first to whether the 998 offer was reasonable when made.  Defendant asserts that plaintiff only had two epidural shots during that time and there was no indication of future treatment.  In reply, defendant emphasizes the claim that plaintiff was gaming the system by sending the 998 offer when he did.  The court must resolve that issue to determine whether enhanced costs are available.  The test works as follows.  “An offering party who prevails on its offer bears the later burden of showing that the offer was ‘valid’ under CCP section 998, meaning compliant with the statute and ‘ “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 [one] may have to shoulder [the] opponent's litigation costs and expenses.  [Citation.]” ’  (MacQuiddy v. Mercedes-Benz USA, LLC (2015) 233 Cal.App.4th 1036, 1050; see Covert v. FCA USA, LLC (2022) 73 Cal.App.5th 821, 833.)  Validity is determined as of the date the offer was served.  (Covert, at p. 832.)  [¶] Once the validity of a CCP section 998 offer is established by the offeror, the burden then shifts to the offeree to demonstrate that the offer was unreasonable or not made in good faith.  (Covert, supra, 73 Cal.App.5th at p. 833.)  If the actual judgment is more favorable to the offeror than was the offer, it is prima facie evidence of the offer's reasonableness.  (Id. at pp. 833–834.)  Whether an offer is made in good faith is based on whether, at the time it was made, it carried a reasonable prospect of acceptance by the offeree.  (Id. at p. 834.)  The court inquires: ‘ “First, was the [CCP section] 998 offer within the ‘range of reasonably possible results’ at trial, considering all of the information the offeror knew or reasonably should have known?  [Citation.]  Second, did the offeror know that the offeree had sufficient information, based on what the offeree knew or reasonably should have known, to assess whether the ‘offer [was] a reasonable one,’ such that the offeree had a ‘fair opportunity to intelligently evaluate the offer’?”  [Citations.]’  (Id. at p. 834.)”  (Glassman v. Safeco Ins. Co. of America (2023) 90 Cal.App.5th 1281, 1313–1314, parallel citations omitted.)  The theory is easy to understand.  The test is designed to ensure that the offeree understands what it means to accept or reject the offer; there can be no uncertainties.  Thus, an offer to settle for $10,000 plus future expenses if incurred would not suffice because it is too vague to be analyzed and the offeror would fail to meet its burden.  Similarly, an offer that expired in three days would fail because the statute requires a longer period.  On the other hand, an offer by defendant to settle for $10.00 made along with the answer is generally invalid.  True, it meets the technical requirements, but no reasonable plaintiff would accept it under most circumstances.  The purpose of the offer is not to settle the case; it is to change the statutory costs that are recoverable.  Because there is no real debate here as to whether the 998 offer was valid when made (that is, it met the technical statutory requirements), it is defendant’s burden to show that the offer was unreasonable or made in bad faith.  The test is not a hindsight test.  The court does not look at whether the offer made sense at the time of trial; the court looks to whether the offer made sense at the time it was made.

The 998 offer here was reasonable at the time it was made.  It was made more than a year after the case was filed and while discovery was well underway.  Further, defendant had access to evidence indicating that plaintiff’s treatment cost approximately $48,457.24 at that time.  Plaintiff also testified that he was still in pain and would consider additional treatment if it would help with the pain.  (Dollison Decl., ¶¶4-7.)  To the court, this indicates that the 998 offer was within the reasonable range when made, given the cost of the medical bills and the expressed potential need for future treatment.  Defendant complains that there was a big gap between these 2019 statements and when plaintiff sought more treatment.  The court agrees that there was a big gap between the 2019 statements and the time when plaintiff sought more treatment, but that is not the test.  The information that defendant had at the time indicated that plaintiff’s medical bills, as of 2019, were already approximately $50,000 and that he might seek more treatment.  And that was just medical bills.  Defendant ignores quantifying the numbers for non-economic losses like pain and suffering.  The deposition indicates that plaintiff continued to suffer from pain.  As such, the $100,000 number seems reasonable in light of the evidence defendant had in her possession on October 4, 2019.  It was a high number, to be sure, but not an unreasonably high one.  The court also notes that one purpose of a 998 offer is that it limits and caps future risk.  A physical injury often carries a risk of the unknown.  Things can get worse.  (Of course, they can also get better, but money already paid is water over the dam; the costs can only go up.)  The offer was a willingness by plaintiff to cap that risk.  By rejecting the offer, defendant elected to take that risk.  True, were the additional costs utterly and completely unforeseeable the analysis would be harder, but that is not the case here.  To be clear, the court is not saying that defendant acted unreasonably in rejecting the offer.  A clear-eyed party could well do the math and decision-tree analysis and reasonably conclude that as an economic matter it would be better to reject the offer and take its chances as things go forward or at trial.  But that is not the test or the question.

This necessarily means that plaintiff is entitled to request post-offer expert fees and demand pre-judgment interest from the date the offer expired.  “If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the defendant to pay a reasonable sum to cover postoffer costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the plaintiff, in addition to plaintiff's costs.”  (Code Civ. Proc., § 998, subd. (d).)  “If the plaintiff makes an offer pursuant to Section 998 of the Code of Civil Procedure which the defendant does not accept prior to trial or within 30 days, whichever occurs first, and the plaintiff obtains a more favorable judgment, the judgment shall bear interest at the legal rate of 10 percent per annum calculated from the date of the plaintiff's first offer pursuant to Section 998 of the Code of Civil Procedure which is exceeded by the judgment, and interest shall accrue until the satisfaction of judgment.”  (Civ. Code, § 3291.)  In this case, the court believes that expert fees are appropriate.  The point of the 998 offer is to avoid having to retain the expert and pay the fees.  Here, because the offer was rejected, plaintiff had to incur the fees and costs.  The court, in its discretion, will allow recovery of those fees under section 998.  Prejudgment interest is not discretionary and thus is awarded.  Were it discretionary, the court would award such interest.

Turning to costs recoverable under section 1033.5, defendant challenges: costs incurred prior to October 4, 2019; mediation; DME nurse; lodging; subpoenae; and minute orders.  Defendant also claims that the expert fees, even if recoverable, are excessive.  The court turns next to the amount of the expert fees.  Plaintiff requests $27,812.50 for his expert, Dr. George Rappard, and an additional $2,850 for deposing defendant’s experts.  On the former cost, defendant asserts that only the $8,000 for trial was reasonable based on Dr. Rappard’s trial testimony.  Defendant fails to establish that the Dr. Rappard fees are unreasonable or unnecessary, and that is her burden.  Dr. Rappard testified on August 30.  He testified that his fee for his trial appearance was $8,000.  But he also charged a retainer and for work done on the case prior to trial (but after the 998 was rejected).  This is reasonable for an expert witness.  The court does not believe that section 998 limits the recovery to the fees incurred while the expert is actually in the courtroom.  Further, deposing defendant’s experts is reasonable and necessary.  Plaintiff needed to know what their testimony would be in order to defend against their testimony at trial.  Those costs are recoverable under section 998.

As to the remainder of the fees, the court GRANTS the motion in part and DENIES the motion in part.  The court GRANTS the motion as to the mediation mediation costs of $4,250 (plaintiff paid $2,125 twice).  Mediation is voluntary and so the fees cannot be shifted onto defendant.  The case upon which defendant relies was not a voluntary mediation agreed upon by the parties.  Unless the parties also stipulated that the mediation cost would be recoverable, it is not recoverable.  The mediation costs are taxed.

Sending a DME nurse to a medical examination in order to monitor how the exam is administered is reasonable and necessary.  This is done to protect the client’s interests and have a basis to challenge the report if biased or improper.  The subpoenae are also proper, as they were directed to anesthesiologists who were subpoenaed to appear at the 2021 trial.  The fact that they were not called to the witness stand does not mean that subpoenaing them was unreasonable.  Trials are fluid things.  Some witnesses are under subpoena but as the trial progresses, the party issuing the subpoena elects not to call the witness.  That does not mean that the subpoena was unnecessary or improper.  The other 2021 subpoena fees are proper for the same reason.  It is proper to subpoena witnesses, even if they do not testify, as long as their testimony might have been necessary.  (And as to 2021, the trial began and a mistrial was declared.  That problem can hardly be laid at plaintiff’s door.)  The photocopy cost of the trial binders is also recoverable.  Plaintiff placed the cost in the wrong section, but it does not mean it is not recoverable.  The statute permits recovery for photocopies and these were binders for the case.  (See Code Civ. Proc., § 1033.5, subd. (a)(13).)  The motion is DENIED as to these items.

The motion is GRANTED as to defendant’s hotel costs.  Plaintiff offered to pay the cost.  Having so offered (for good and sufficient reason), plaintiff cannot now recover it.  The hotel costs are taxed.  While plaintiff argues that defendant basically forced this issue by failing to stipulate to liability until the last minute, that does not suddenly transform the cost into a reasonable or necessary one.

Any cost set forth in the motion not discussed above is proper in the court’s view, and the motion is DENIED as to any such cost.  The parties are to meet and confer and agree upon the amount of the costs that will be awarded based on the above order.  They will then submit an appropriate document to the court.  Of course, agreeing on the number is not a waiver of any appellate rights concerning any part of this order with which any party disagrees; any such rights are preserved.