May a trial court award defendant expert witness fees under CCP section 998 after plaintiff declined offer and then dismissed action?

Posted in: Appellate Practice, Trial Practice by Steven Vartabedian on

California Code of Civil Procedure section 998, subdivision (c) (1) states, “If an offer made by a defendant is not accepted, and the plaintiff fails to obtain a more favorable judgment or award . . . the court or arbitrator . . . in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses. . .” On its face, this provision is clear, and one that carries an important policy (as do reciprocal provisions favoring a prevailing plaintiff) to encourage parties to settle cases pretrial when reasonable offers of settlement are made by the opponent. But this provision does not specify whether a judgment is necessary to trigger recovery. Mon Chong Loong Trading Corp v. Superior Court (filed 7/23/2013) 2013 DJDAR 9593 seeks to resolve this ambiguity.

Plaintiff Cui had been offered $10,000 by defendant in exchange for a release from liability and dismissal of suit. In this personal injury lawsuit, plaintiff had been served with a demand to exchange witnesses and a notice for an independent medical examination (IME). Plaintiff did not respond to the offer, which expired; nor did she participate in the witness exchange or appear for the IME. Facing a motion in limine to exclude any expert testimony on plaintiff’s part, plaintiff requested a voluntary dismissal of her complaint without prejudice, which was entered. Defendant, in turn, sought its expert witness fees. The trial court granted plaintiff’s motion to tax the expert fees. The Court of Appeal, Second Appellate District, Division Three, disagreed and granted defendants request that the trial court reconsider under section 998.

On the merits of the above question, the appellate court found that section 998’s “more favorable judgment award” language dictates that the appropriate moment for a court to assess whether a more favorable judgment or award has been obtained is at the conclusion of the lawsuit, regardless of whether that conclusion is in the form of a judgment. Here, the action ended, in the appellate court’s view, with the voluntary dismissal. That is so, even if the dismissal is without prejudice and the potential exists for refiling. By comparison, the price of such a dismissal is the payment of other costs under CCP section 1032. In each instance, the possibility exists for a resumption of the lawsuit, but both” justice and judicial economy” require a swift cost award. The trial court must exercise its discretion in deciding whether to award costs in these situations, not simply say it has no power to do so, as the trial court did here.

An important lesson here for trial attorneys is to be aware of these consequences of filing a “dismissal without prejudice.” It would be wise to gain an express stipulation that each party is to bear its own costs, or face an unpleasant bill for costs, including expert fees.

Additionally, there is a significant saving device employed by the Court of Appeal. As I have discussed in earlier blogs (see June 23, 2011 and March 22, 2013), a party should not expect the appellate court to save an improvident appeal from a non-appealable order. But here, the appellate court did find it appropriate to treat the notice of appeal (from a non-appealable order taxing costs that has no underlying judgment) as a petition for a writ of mandate. I supposed it could have dismissed the appeal and suggested that defendant file its writ; but again, judicial economy ruled the day.

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