Daily Blast - January 7, 2019 - Lewis Brisbois Bisgaard & Smith LLP

Here is a new 998 case we thought you should be aware of addressing whether a 998 offer is made in good faith and whether a defendant has sufficient information to assess whether a 998 offer is reasonable:

Yesterday, Division Two of the Second District Court of Appeal (Los Angeles) published it opinion in Licudine v. Cedars-Sinai Medical Center (Jan. 3, 2019, B286350) __ Cal.App.5th ___ [2019 Cal. App. Lexis 2], addressing the relevant criteria that must be considered in determining whether a 998 offer is “valid” for purposes of awarding prejudgment interest. A 998 offer is “valid” and made in “good faith” only if it realistically reasonable under the circumstances, i.e., (1) was the offer within the range of reasonably possible results at trial, and (2) did the offeror know that the offeree had sufficient information so that it could intelligently evaluate the offer? The court held that three particular factors must be considered in assessing the second criteria: (1) how far into the litigation was the 998 offer made, (2) what information was available to the offeree prior to the offer’s expiration, and (3) whether the offeree let the offeror know it lacked sufficient information to evaluate the offer. (Slip opn., p. 2.)

In Licudine, during a surgical procedure, the surgeon nicked the plaintiff’s vein, resulting in significant injuries. The plaintiff filed her complaint, which was answered by Cedars. Five days after Cedars answered, the plaintiff served her 998 offer of $249,999.99 on Cedars. Cedars objected that the offer was not reasonable because it had not had the opportunity to investigate the claim. The offer expired after 30 days without acceptance. The case was ultimately tried, with a judgment entered in favor of the plaintiff in the amount of $5,594,557. The plaintiff sought $2,335,929 in prejudgment interest. The trial court denied the plaintiff’s request, concluding the 998 offer was invalid because it was made so early in the litigation. The only information available to Cedars at the time of the offer was the plaintiff’s medical chart, but no information was made available regarding the plaintiff’s loss of earning capacity, or her pain and suffering. (Slip opn., pp. 3-5.)

On appeal, the court first recognized that the offer was within the range of reasonable trial results, satisfying the first criteria. (Slip opn., pp. 11-12.) But after considering the factors described above in assessing the second criteria, the Court of Appeal agreed that Cedars did not have sufficient information to properly evaluate the reasonableness of the offer. Accordingly, the trial court did not abuse its discretion in denying the plaintiff’s request for prejudgment interest. (Id. at pp. 12-14.)