Opinion
B306198
09-20-2021
LIDIA MKHITARIAN, Plaintiff and Appellant, v. DOROTHY ANN JACKSON, Defendant and Respondent.
Moss Bollinger, and Ari Emanuel Moss; YMPK Law Group, and Hayk Yeghoyan for Plaintiff and Appellant. Mark R. Weiner & Associates and Kathryn Albarian for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. BC703449 Frank J. Johnson, Judge. Affirmed.
Moss Bollinger, and Ari Emanuel Moss; YMPK Law Group, and Hayk Yeghoyan for Plaintiff and Appellant.
Mark R. Weiner & Associates and Kathryn Albarian for Defendant and Respondent.
RUBIN, P. J.
If a plaintiff rejects a pre-litigation settlement offer, is it reasonable for a defendant to repeat that offer a second time after plaintiff files a complaint? The answer is: It depends. The answer determines whether the defendant can recover certain costs, including expert witness fees, after receiving a more favorable verdict at trial. Under Code of Civil Procedure section 998, only a defendant who makes a reasonable offer to settle can recover its costs. We consider here whether the defendant's second, identical offer to settle was reasonable.
All undesignated statutory references are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
On April 28, 2016, defendant Dorothy Ann Jackson rear-ended plaintiff Linda Mkhitarian's car at a speed of less than 10 miles per hour. Neither party claimed an injury at the time of the accident, and the physical damage to defendant's car was limited to a cracked headlight and scratches on the bumper. Plaintiff later complained of pain in her back, neck, and head, and sought treatment from a chiropractor.
Plaintiff did not provide evidence at trial of any repair costs for her car.
During the following six months, plaintiff visited a chiropractor 39 times and was billed $5,995 for these treatments. Plaintiff did not receive further medical care for her pain until 11 months later (October 2017), when she saw a pain management doctor. The doctor gave her an epidural injection and billed her $16,800.
In April 2018, almost two years after the accident, plaintiff made a $30,000 policy limit demand on defendant's insurance. Defendant offered to settle for $12,000. Plaintiff rejected the offer and filed this lawsuit for negligence on April 23, 2018. On August 7, 2018, defendant answered and served an “offer to compromise” under Code of Civil Procedure section 998 for $12,000 with a waiver of costs. Plaintiff did not respond, and the offer was deemed rejected as a matter of law. (§ 998, subd. (b)(2).)
At trial, plaintiff introduced $22,795 in medical bills for the chiropractic care and epidural, and asked the jury to award nearly $1.7 million in general damages. The jury found that plaintiff had not proven that defendant's negligence was a substantial factor in causing her injuries and rendered a defense verdict. The court entered judgment for defendant.
Defendant sought costs as the prevailing party, including $25,440 in expert witness fees under section 998. Plaintiff moved to strike these fees on the ground that defendant's section 998 offer was not reasonable. In opposition, defendant argued that the $12,000 offer was reasonable because the accident was “low impact” and this was “at most a soft tissue case.”
At the hearing on the cost motion, plaintiff's counsel argued that defendant “had no reasonable expectation that the offer that they made was going to be accepted by the plaintiff... because that same offer was made pre-litigation.... [P]laintiff rejected that offer because, again, she was in pain. She had [$]27, 000 in medical bills.... And defense knew, at the time that they made the 998 offer, that the plaintiff was going to reject it. But they made it regardless and just to recover expert fees and costs after - at the trial. So the offer did not carry any reasonable prospect of acceptance as required by case law.”
The trial court concluded the offer was in good faith and denied the motion to tax costs. The court reasoned that “This appears to have been, to the jury's eyes - and frankly to this court's as well, a minor traffic accident that resulted in very minimal damage to the defendant's car.... A lot of the time, when [] you have a minor traffic accident, the juries just don't believe that tens of thousands of dollars in medical bills are justified. And they rule as they've ruled in this case. So for that reason, I'm inclined to and will deny that motion as well.”
The order is appealable under Code of Civil Procedure section 904.1, subdivision (a)(2) as a post-judgment order.
DISCUSSION
1. Section 998
Under section 998, any party in a civil suit may serve a settlement offer to any other party at least 10 days before the commencement of trial. (§ 998, subd. (b).) The statute provides that “[i]f 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 postoffer costs and shall pay the defendant's costs from the time of the offer. In addition, ... the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover postoffer costs of the services of expert witnesses... actually incurred and reasonably necessary in... preparation for trial or arbitration... of the case by the defendant.” (Id., subd. (c)(1).)
To be valid, an offer to settle under section 998 must be made in good faith such that it is “realistically reasonable under the circumstances of the particular case” and carries with it some reasonable prospect of acceptance. (Wear v. Calderon (1981) 121 Cal.App.3d 818, 821.) “ ‘One having no expectation that his or her offer will be accepted will not be allowed to benefit from a no-risk offer made for the sole purpose of later recovering large expert witness fees.' [Citation.]” (Arno v. Helinet Corp. (2005) 130 Cal.App.4th 1019, 1024-1025 (Arno).)
“Although the party making a 998 offer generally has the burden of showing that her offer is valid [citations], it is the 998 offeree who bears the burden of showing that an otherwise valid 998 offer was not made in good faith. [Citations.]” (Licudine v. Cedars-Sinai Medical Center (2019) 30 Cal.App.5th 918, 926 (Licudine).) “ ‘[W]hether a section 998 offer was reasonable and made in good faith is a matter left to the sound discretion of the trial court.' [Citation.] ‘However, when 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.' [Citation.]” (Arno, supra, 130 Cal.App.4th at p. 1025; Whatley-Miller v. Cooper (2013) 212 Cal.App.4th 1103, 1113.)
2. The Court Acted Within its Discretion in Determining the Section 998 Offer was Reasonable
Plaintiff argues the trial court erred in holding her responsible for defendant's expert witness fees under section 988 for two reasons: (1) defendant had no reasonable expectation that plaintiff would accept the second settlement offer because plaintiff had already rejected an identical amount; and (2) the offer was not reasonable because defendant proffered it at the outset of litigation when plaintiff had limited information about liability and damages.
“Whether a section 998 offer has a reasonable prospect of acceptance is a function of two considerations, both to be evaluated in light of the circumstances ‘ “at the time of the offer”' and ‘ “not by virtue of hindsight.”' [Citations.] First, was the 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.]” (Licudine, supra, 30 Cal.App.5th at pp. 924-925.)
Here, plaintiff does not dispute that the section 998 offer was within the range of reasonably possible results at trial, but she argues there was a “reasonable possibility, even if slight” that defendant would be held liable for all of her damages. This is not the test. We look to the range of reasonably possible results. The possibility that a defendant might be held liable for a greater amount does not invalidate a section 998 offer. (See Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 699.)
Plaintiff next hangs her argument hat on the point that defendant's section 998 offer could not carry a reasonable prospect of acceptance because plaintiff had already rejected the identical offer. That a section 998 offer have a “reasonable prospect of acceptance” is simply another way of stating the requirement that the offer be “ ‘realistically reasonable under the circumstances of the particular case.' ” (Licudine, supra, 30 Cal.App.5th at p. 924.) The rationale for this requirement is that only a reasonable offer will encourage settlement, and by contrast, a “no-risk” offer that amounts to a token would simply allow litigants to recover additional costs without furthering the goal of settlement. (Ibid.)
Whether or not plaintiff acted reasonably in rejecting this offer is not before us. (See Licudine, supra, 30 Cal.App.5th at p. 925 [“In light of this focus on the reasonableness of the offeror's conduct in making the 998 offer... whether the offeree acted reasonably in rejecting that offer is irrelevant”].) We look to whether the offer itself was reasonable under the circumstances, and not the offeree's subjective perception of that offer. Thus, even when an offer is repeated, as it was here, we objectively evaluate the offer's reasonableness based on the evidence available to the parties, and not based on whether the offeree was, in fact, inclined to accept it.
Here, we presume that defendant's offer was reasonable because defendant obtained a more favorable outcome at trial. (See Arno, supra, 130 Cal.App.4th at p. 1025 [“when a party obtains a judgment more favorable that its pretrial offer, it is presumed to have been reasonable and the opposing party bears the burden of showing otherwise”].) Defendant supports this presumption by citing to the evidence available when it made the offer: the accident occurred at low speed, plaintiff claimed only soft tissue damages, and plaintiff had incurred only $5,995 in fees for chiropractic care immediately after the accident. Defendant argues that its offer of $12,000 was reasonable based on this evidence, and it reasonably concluded there was no causation as to plaintiff's costs for the epidural shot she received a year after her chiropractic treatments had concluded.
Defendant also argues that her section 998 offer included a waiver of costs and, thus, was a better offer than the original. We do not consider the waiver of costs at the outset of litigation to be meaningful.
Plaintiff argues the offer was an inadequate “token” because, at the time it was made, respondent knew she had incurred $27,000 in medical expenses with an additional $20,000 in future medical expenses. Plaintiff does not cite to any evidence in the record supporting these amounts, but only her counsel's argument. On this record, she has not shown that defendant was aware of her claimed damages beyond the $5,995 for chiropractic care and $16,800 for an epidural.
Plaintiff also argues the offer was per se unreasonable because it was made at the outset of litigation when she only had information from her own doctors about liability and damages. When we evaluate whether an offeree had sufficient information and opportunity to evaluate an offer, relevant circumstances include whether an offeree alerted the offeror that it lacked sufficient information to evaluate the offer. (Licudine, supra, 30 Cal.App.5th at p. 926.) Nothing in the record suggests plaintiff told defendant that she needed more time to consider the offer. (See Whatley-Miller v. Cooper, supra, 212 Cal.App.4th at p. 1114 [offeree's decision not to ask for more time to evaluate a section 998 offer suggested he “believed he did not need more information and time to determine whether or not to accept the offer”].) More telling is that the section 998 offer was made more than two years following the accident, an interval that provided plaintiff with plenty of time to assess whether she should accept it.
Nor does the record suggest that for plaintiff to evaluate properly liability and damages, she needed to engage in significant formal discovery. Defendant's position that plaintiff's damages were limited to her chiropractic care and excluded the epidural that occurred after a substantial period of time was based on a reasonable analysis of the available evidence. The challenge of establishing causation was patent as well, given the accident occurred at a low speed, the physical damage to the cars was minimal, plaintiff complained of no injuries at the scene, and her subsequent pain was based on soft tissue damage, not a structural injury.
Finally, we know of no rule that disqualifies a section 998 offer simply because it is the same as an offer made prior to litigation. A defendant's willingness to make a pre-litigation offer should not foreclose automatically a reinstatement of the offer made four months later under the benefits of section 998. Instead that factor, like the others we have mentioned, becomes part of the mix to be considered by the trial court in exercising its discretion.
We conclude plaintiff did not meet her burden of rebutting the presumption that defendant's section 998 offer was reasonable. The trial court acted within its discretion in denying her motion to tax costs.
DISPOSITION
The order denying the motion to tax costs is affirmed. Respondent shall recover her costs on appeal.
WE CONCUR: BAKER, J. MOOR, J.