Cases

After a motor vehicle accident, plaintiff sued both the driver and his employer seeking $10 million in damages.  When plaintiff propounded requests for admissions, defendants denied that the driver employee was negligent and that his negligence caused plaintiff some harm.  Plaintiff rejected defendants’ pre-trial Code of Civil Procedure section 998 offer to compromise for $250,001, each party bearing its own costs and attorney fees.

After a 17-day trial, on the second day of which the employee admitted running a red light and which thereafter focused on the extent of the plaintiff’s injuries, the jury awarded plaintiff approximately $180,000 (less than 2% of what plaintiff requested).  Plaintiff moved for cost-of-proof Code of Civil Procedure section 2033.420 fees, seeking more than $1 million in attorney fees but without proffering any records allocating the amount of attorney time spent proving the matters denied (fault and causation).  The trial court awarded $500,000 in cost-of-proof attorney fees.

Defendants moved for their costs based on plaintiff underperforming their section 998 offer.  The trial court entered judgment in plaintiff’s favor without resolving the section 998 motion, despite defendants’ argument that their costs likely would exceed plaintiff’s judgment for both liability and costs, resulting in a net costs judgment for the defense.

GMSR represented defendants on appeal.  Adopting GMSR’s arguments, the Fourth Appellate District, Division One, reversed the judgment and the order awarding cost-of-proof attorney fees, and remanded the matter for a redetermination of the attorney fees and a determination of defendants’ section 998 motion in the first instance.  The trial court abused its discretion by, among other things, awarding cost-of-proof attorney fees without considering whether plaintiff incurred those fees for proving the matters denied, and by selecting a seemingly arbitrary hourly rate to calculate the award.  The Court of Appeal also agreed with GMSR that the trial court erred by entering judgment before ruling on defendants’ section 998 costs motion, because the outcome of that motion may have affected the amount of the judgment.  Because section 998 requires its calculations to be performed before entry of judgment, the court held that the trial court effectively denied defendants the rights they invoked under the statute without first determining whether defendants were entitled to those rights.

To read the Court of Appeal Opinion, click HERE.