Although I try to keep this blog full of more practical advice, this is more of a technical topic (sorry).
CA Code of Civil Procedure Section 998 generally penalizes a litigant for rejecting a settlement offer that is greater than what a judge or jury awards at trial. Such a litigant gets penalized by paying the other parties costs after the date of the offer they rejected but shouldn’t have in hindsight. I wrote about Texas adopting something exactly like our 998 to fix their litigation problems. We’ll see how that works for them. Note: Texas is turning to California for tort reform ideas.
This is where it gets technical. What happens if you make a 998 offer, then make another 998 offer a month later, then the jury award is less than your second 998 offer? Do you only get costs after the second offer…or do you get all your costs after the first offer? Until last week, courts had always said that the second 998 offer destroys the first and that the litigant is only entitled to costs following the second offer. Well, that was until the Second District Court of Appeals screwed everything up. Their decision is contrary to all the case law out there. The statute itself doesn’t give any direction. So this case is prime for CA Supreme Court review.
In this case, these costs were incurred after the first offer but before the second:
The cost of the power point presentation: $87,282.86 (How does a ppt cost 87k?)
The cost of editing video tape of a deposition: $11,956
The cost of expert fees: $188,536.86
Now you see why it makes a big difference. That must have been one magical powerpoint for eighty-seven grand. For $87k you get buy an overpriced 1966 Chevy Corvette or the Lee Harvey Oswald’s casket. Ok, maybe those are bad examples, but $87k is a lot of money.
The actual lawsuit was about an electrical explosion caused by negligently cutting live electrical wires and leaving them unsecured and exposed.
Technical, boring, and the Court of Appeals screwed up.