CCP § 998 Fees Rejected As Judgment Was Less Than Offer To Compromise

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[co-author: Victoria Boyko]

In Lee v. Silveira, 2015 DJDAR 5287, the California Court of Appeal for the Fifth Appellate District ruled on an interesting tort case involving the interpretation of CCP § 998. In the appeal, a personal injury plaintiff contended the trial court erred in denying her request for expert witness fees and prejudgment interest under Civil Code Section 3291. The Plaintiff argued she was entitled to such fees and interest, which totaled over $350,000, because the defendants “fail[ed] to obtain a more favorable judgment” (citing CCP § 998). The Plaintiff had previously made a § 998 offer in the sum of $1 million but the Defendant ignored the offer.

At issue in the case was the holding in the California Supreme Court case of Howell v. Hamilton Meats & Provisions Inc. (2011) 52 Cal.4th 541, 548.  In that case the court interpreted the “negotiated rate differential.” The differential is the difference between the billed rate for medical care and the actual amount paid for the services. However, the court concluded that a plaintiff was not entitled to recover the differential as economic damages in a personal injury lawsuit.

At trial, the Plaintiff received a verdict in excess of the $1 million § 998 offer. However, the court made specific findings that the Plaintiff’s judgment was subject to amendment concerning the reduction for the Plaintiff’s past medical expenses under the rate differential. The Defendant moved to reduce the jury verdict by the differential, which put the verdict under $1 million. The trial court sided with the Defendant and entered judgment for $887,098, which excluded the Plaintiff’s fees and interest. The Plaintiff filed an appeal of that decision.

The court of appeal affirmed. The court noted that under CCP 998, a party who declines an offer to compromise and fails to obtain a more favorable settlement may be compelled to pay the offeror’s expert witness fees incurred during trial. Because the judgment of more than $1 million expressly stated that it was subject to the stipulated reduction for the Plaintiff’s past medical expenses, the Defendant was only liable for $887,098. Because the net verdict was less than the Plaintiff’s CCP 998 offer, the court concluded that the Defendant was not liable for the Plaintiff’s fees under CCP 998.

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