Anthony v. Xiaobin Li

47 Cal.App.5th 816

261 Cal.Rptr.3d 242

Chad ANTHONY, Plaintiff and Appellant,

v.XIAOBIN LI, Defendant and Respondent.

A156640

Court of Appeal, First District, Division 3, California.

Filed April 13, 2020

As Modified April 14, 2020

Pacific Legal Group, Douglas A. Applegate, San Francisco, for Plaintiff and Appellant.

Matheny Sears Linkert & Jaime, Douglas A. Sears, Sacramento, for Defendant and Respondent.

Petrou, J. Plaintiff and appellant Chad Anthony (Anthony) filed a personal injury lawsuit against defendant and respondent Xiaobin Li (Li). Anthony prevailed at trial and sought to recover costs under Code of Civil Procedure sections 998 and 1032 and Li moved to tax (or strike) costs.¹ The court granted the motion, in part, denying reimbursement for expert witnesses, mediation, and court reporter fees. We see no merit to Anthony’s challenge to the court’s ruling and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In 2016, Anthony filed a lawsuit seeking to recover damages for personal injuries sustained in a 2014 car accident between him and Li in San Francisco. At the time of the accident, Li resided out of the United States and was driving a vehicle rented from PV Holding Corporation (PV Holding), doing business as Avis Rent-A-Car. He purchased a $1 million liability insurance policy from PV Holding, which was self-insured for its own liability. The complaint alleged causes of actions for "motor vehicle" and "general negligence" and named as defendants Li (driver of vehicle) and PV Holding (owner and entruster of vehicle).

Anthony served the summons and complaint on PV Holding as a named defendant, and separately served the pleadings on Li as a named defendant by service on PV Holding under Civil Code former section 1936 [now and hereinafter referred to as "section 1939.33"² ]. Li and PV Holding, represented by the same counsel, filed separate answers and separate discovery responses.

In December 2017, the parties agreed to participate in voluntary private mediation pursuant to a JAMS standard form agreement. The agreement provided, in pertinent part, that the parties "agree to divide the professional fees and additional fees as follows: 50% [named counsel](Chad Anthony); 50% [named counsel] (Xiaobin Li, et al.); and as set forth in the neutral’s Fee Schedule." Each party further agreed "to pay its share of the estimated fees and expenses to be received by JAMS at least 14 calendar days prior to the session." The parties paid the requested fees, and participated in mediation that ultimately was not successful. Four months later, in April 2018, Anthony filed a voluntary dismissal in favor of PV Holding.

In June 2018, Anthony served a section 998 offer, seeking to compromise the action subject to the following terms and conditions: "Pursuant to Code of Civil Procedure [s]ection 998, Plaintiff, CHAD ANTHONY, hereby offers to allow judgment to be taken against Defendants, XIAOBIN LI, PV HOLDING CORPORATION, and in favor of Plaintiff, CHAD ANTHONY, in the sum of five hundred thousand dollars and no cents ($500,000.00), each side to bear its own fees and costs." The attached "[NOTICE OF ACCEPTANCE OF OFFER TO COMPROMISE]," read: "Comes now Defendants, XIAOBIN LI, PV HOLDING CORPORATION, by and through their attorney of record with full and specific authority in the circumstances, and ACCEPT the within OFFER TO COMPROMISE to allow judgment to be entered against Defendants XIAOBIN LI, PV HOLDING CORPORATION and in favor of Plaintiff CHAD ANTHONY in the sum of five hundred thousand dollars and no cents ($500,000.00), each side to bear its own fees and costs." Neither Li nor PV Holding accepted the offer.

In July 2018, Li alone made a section 998 offer to settle all claims against him for $175,001.00, in exchange for (1) "a dismissal with prejudice of plaintiff’s complaint against defendant;" (2) Anthony’s execution and acceptance of the terms stated in an attached document releasing all claims for damages sought or could be sought by Anthony as a result of the incident described in the complaint, and (3) each party bearing their own attorney fees and costs. The attached release sought to release Li and unspecified agents, employees, insurers, and corporate entities. Anthony did not accept the offer.

In September 2018, the parties jointly hired a court reporting service, US Legal Support, to record the trial proceedings. Counsel signed a memorandum of understanding prepared by US Legal Support, which provided that the "parties ... agree to share equally the fees for court reporting services rendered in the matter referred above [Anthony v. Li]. Services for this matter will be charged at the rates attached. Each party will be invoiced an equal share of the per diem fee and charges associated with the original transcript." Anthony was billed and paid his share of court reporter fees.

In October 2018, following a ten-day trial, a jury returned a verdict finding Li negligent and awarding Anthony damages of $650,235.00. Following entry of judgment, Anthony served a memorandum of costs for $83,048.06, seeking in pertinent part: $62,082.50 for section 998 post-offer expert witness fees; $2,650 for mediation fees, and $6,561.62 for court reporter fees. Li filed a motion to tax (or strike) costs, which was opposed by Anthony. The parties waived oral argument.

The court granted the costs motion, in part, taxing expert witness, mediation, and court reporter fees. The court taxed expert witness fees because Anthony’s section 998 offer "was joint and not apportioned. The offer was made on June 5, 2018 and was directed to two defendants, one of which had been dismissed on April 12, 2018. The offer was ambiguous and not effective to burden defendant Li with the fees of [Anthony’s] expert witnesses." The court taxed mediation and court reporter fees because "[t]he papers show that the counsel agreed to split the fees equally, and it is undisputed that each party paid half of the fees incurred. The parties did not reserve the right to seek relief from that agreement or to seek prevailing party fees notwithstanding that agreement. The parties are bound by their agreement."

Anthony’s timely appeal ensued.

DISCUSSION

I. The Expert Witness Fees were Properly Taxed as the Section 998 Offer was Invalid

Reviewing the validity of the section 998 offer de novo ( Barella v. Exchange Bank (2000) 84 Cal.App.4th 793, 797-798, 101 Cal.Rptr.2d 167 ), we find Anthony did not make a valid section 998 offer since it was conditioned on acceptance by multiple defendants and was directed at a party that had already been dismissed with prejudice from the action. Therefore, the trial court correctly taxed expert witness fees.

A. General Guidelines Regarding Section 998 Offers

Section 998 provides that "any party may serve an offer in writing upon any other party to the action to allow judgment to be taken ... in accordance with the terms and conditions stated at the time. The written offer shall include a statement of the offer, containing the terms and conditions of the judgment ..., and a provision that allows an accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted. Any acceptance of the offer ... shall be in writing and signed by counsel for the accepting party, or if not represented by counsel, by the accepting party." (Id ., subd. (b).) "If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment ..., the court ... in its discretion may require the defendant to pay a reasonable sum to cover post offer costs of the services of expert witnesses ... in addition to plaintiff’s costs." (Id ., subd. (d).)

Section 998 offers must be "clear and specific. First, from the perspective of the offeree, the offer must be sufficiently specific to permit the recipient meaningfully to evaluate it and make a reasoned decision whether to accept it, or reject it and bear the risk he may have to shoulder his opponent’s litigation costs and expenses. [Citation.]" ( Berg v. Darden (2004) 120 Cal.App.4th 721, 727, 15 Cal.Rptr.3d 829 ( Berg ).) Second, " section 998 offers must be written with sufficient specificity because the trial court lacks authority to adjudicate the terms of a purported settlement. ‘Section 998 was designed to encourage settlement of disputes through a straightforward and expedited procedure.’ [Citation.] Once the offer is accepted, the clerk or court performs the purely ministerial task of entering judgment according to the terms of the parties’ agreement. ( § 998, subd. (b)(1) [‘If the offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly.’].)" ( Berg , supra , at p. 727, 15 Cal.Rptr.3d 829.) Consequently, "[t]he party extending the statutory offer of compromise bears the burden of assuring the offer is drafted with sufficient precision to satisfy the requirements of section 998 [Citations.] To that end, a section 998 offer is construed strictly in favor of the party sought to be subjected to its operation. [Citations.]" ( Berg , supra, at p. 727, 15 Cal.Rptr.3d 829.)

B. The Offer May Not Require Acceptance by Multiple Parties

As a general rule, " ‘a section 998 offer made to multiple [defendants] is valid only if it is expressly apportioned among them and not conditioned on acceptance by all of them.’ " ( Burch v. Children’s Hospital of Orange County Thrift Stores, Inc. (2003) 109 Cal.App.4th 537, 544, 135 Cal.Rptr.2d 404 ( Burch ); see Peterson v. John Crane, Inc. (2007) 154 Cal.App.4th 498, 513, 65 Cal.Rptr.3d 185 ["we will leave intact the bright-line rule that a separate offer (or an apportioned and unconditional joint offer) should be extended to each party "].) There are exceptions to the rule barring the making of an unapportioned offer to multiple defendants, for example "where ... there is ... a single injury, and where as joint tortfeasors they would be jointly and severally liable, an...