Daily Blast March 12, 2012

On March 12, 2012, Division Four of the Second Appellate District (Los Angeles) issued a nice succinct opinion in the case of Bates v. Presbyterian Intercommunity Hospital (March 12, 2012, B232731) ___ Cal.App.4th ___ clarifying some important points regarding recovery of costs. First, prevailing defendants in elder abuse cases are entitled to costs even though elder law statute provides for one-way attorney fee shifting. Second, the provision of 998 giving the court discretion to award a prevailing party expert witness fees is not limited to expert fees incurred after the offer is made. The case also has good language about reasonableness of offers to waive costs.

This elder abuse and wrongful death case was filed by well-known elder abuse lawyer Russell Balisok. The case alleged that home health nurses employed by Presbyterian Intercommunity Hospital (“PIH”) failed to obtain immediate hospitalization for a patient for treatment of a serious pressure sore rather than waiting for her private physician to obtain authorization for readmission, which allegedly resulted in her death. PIH served an offer to compromise under Code of Civil Procedure section 998 in which it offered to waive costs and to refrain from pursuing malicious prosecution if plaintiff agreed to dismiss her claims with prejudice. Plaintiff did not accept the offer and it expired. Just prior to trial, plaintiff settled with two of the co-defendants. PIH made it clear that it would not settle the case and intended to try the case. So, during jury selection, plaintiff voluntarily dismissed PIH to facilitate settlement with a final remaining defendant. The court awarded PIH $78,166 in costs, including expert witness fees incurred prior to the service of the 998 offer.

On appeal, plaintiff argued that defendants should be precluded from recovering costs and expert witness fees under section 998 in elder abuse cases for the same reason that attorney fees are not recoverable, i.e. that the Elder Abuse and Dependent Adult Civil Protection Act provides only for one-way fee shifting. The Court of Appeal rejected this argument as foreclosed by the Supreme Court case of Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, which held that there is a statutory right to costs under section 1032 “except as otherwise expressly provided by statute.” In Murillo the Supreme Court held that since the Song-Beverly Consumer Warranty Act did not expressly disallow recovery of costs by prevailing sellers, the defendant was entitled to costs, including 998 expert fees. (Id. at p. 991; Slip Opn., pp. 9-11.) The Court of Appeal in Bates similarly held that while Welfare and Institutions Code section 15657 impliedly precludes an award of attorney fees to prevailing defendants, it does not expressly disallow costs under sections 1032 and 998 to prevailing defendants. (Slip Opn., p. 11.)

Plaintiff also argued that only post-offer expert witness fees should be recoverable. The Court of Appeal held that expert witness fees are not tied to when the fees are incurred. Quoting a Supreme Court case, the court clarified, “limits recoverable ‘costs’ to those incurred from the time of the offer. The second sentence, which relates to the ‘costs of the services of expert witnesses,’ contains no such limitation.” (Slip Opn., p. 15 quoting Regency Outdoor Advertising, Inc. v. City of Los Angeles (2006) 39 Cal.4th 507, 532.)

Finally, the opinion has some nice language that may be useful when confronted with an argument that a 998 offer is not reasonable. The determination of whether a 998 offer is reasonable is within the sound discretion of the trial court. When a defendant obtains a judgment more favorable than the offer, it is prima facie evidence that the offer was reasonable. The burden then is on the plaintiff to demonstrate the offer was not reasonable. (Slip Opn., pp. 12-13.) In this case, the court held that plaintiff did not meet this burden. The court was not required to accept plaintiff counsel’s statement that the dismissal was not based on his perceived merits of the case and could have reasonably concluded that the dismissal represented an acknowledgement of the “tenuous nature of claims against section 998 offer has value beyond the monetary award provided if it also includes a waiver of costs’ because ‘if accepted it would . . . eliminateexposure to the very costs which are the subject of appeal.’” In this case, the court noted the defendant offered not only to waive costs, but to forego any future litigation. “Thus, the offer had substantial value when weighed against appellant’s prospects of success. . . .” (Id. at p. 14.)

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