A Statutory Offer To Compromise Made Jointly To Spouses May Trigger The Offertory’s Right To Costs
Farag v. ArvinMeritor, Inc.
(Cal. Ct. of App., 2d Dist.), filed April 24, 2012
Nasseem Farag was diagnosed with mesothelioma, a cancer linked to asbestos exposure. Nasseem and his wife, Sanna, sued various companies that manufactured or sold asbestos-containing automobile parts. One of these was ArvinMeritor, whose predecessor, Rockwell International Corporation, was a manufacturer and distributor of asbestos-containing brake linings.
Before trial, ArvinMeritor served an offer to compromise pursuant to California Code of Civil Procedure section 998. ArvinMeritor offered the Farags one cent ($0.01) in exchange for a dismissal with prejudice and a mutual waiver of costs. The offer was made jointly to the Farags and did not specify that the offer was capable of acceptance by either Nasseem or Sanna without the consent of the other. The offer was based on ArvinMeritor’s assertion there was no evidence that Nasseem had been exposed to any ArvinMeritor product.
The Farags did not accept the offer and proceeded to trial. The jury returned a verdict in favor of ArvinMeritor.
Because it prevailed after having made a statutory offer to compromise, ArvinMeritor submitted a memorandum of costs which included a request for $11,033 for expert witness fees, as well as $2,173 in expert travel costs.
The Farags filed a motion to tax those costs, as well as other costs requested by ArvinMeritor.
The trial court partially granted the motion to tax costs, but denied the Farags’ motion to tax the expert witness fees and expert travel costs.
The Farags appealed the court’s denial of their motion to tax the expert witness fees and expert travel costs.
HOLDING & REASONING
The Court of Appeal affirmed, rejecting the Farags’ argument that an unallocated joint offer under Section 998 to a husband and wife is void in the absence of a showing the offer provides fair and reasonable value.
In Meissner v. Paulson, 212 Cal.App.3d 785 (1989), the court held that a joint offer was made to the two plaintiffs did not give the offeror a right to costs. It reasoned that to be accepted, both plaintiffs had to consent to settlement and agree as to apportionment of the settlement offer between them and that a plaintiff would be required to second-guess all joint offers to determine whether a failure to reach agreement with a coplaintiffs would cause a risk of section 998 costs against them. The court concluded that the Legislature had not intended such a result.
In Vick v. DaCorsi, 110 Cal.App.4th 206 (2003), the court noted that in Meissner, the offer required that all of the plaintiffs accept and distinguished an offer made jointly to a husband and a wife who were suing over the purchase of an asset that constituted community property.
In Weinberg v. Safeco Ins. Co. of America, 114 Cal.App.4th 1075 (2004), the court held that a joint offer by a defendant to a husband and wife who were suing over an insurer’s mishandling of a personal injury claim under its uninsured motorist coverage did not trigger the right to costs. However, in Barnett v. First National Ins. Co. of America, 184 Cal.App.4th 1454 (2010), another insurance bad faith case, the Weinberg court reversed itself. It did so based on considerations of how community property laws impacted the rights of a husband or wife to accept a settlement.
Having addressed prior discussions, the court held that the Farags failed to properly raise the issue of the joint offer in the trial court. Thus, right or wrong, they could not raise it on appeal. Moreover, the Farags failed to show why Barnett was wrongly decided and ought not be followed.
This is yet another in a series of recent cases in which the courts have upheld a litigant’s rights to costs when an opponent fails to accept a statutory offer to compromise. Prior decisions often made it very difficult for a defendant to serve 998 offers in multi-plaintiff cases. At least where the plaintiffs are married, serving an effective statutory offer may now be easier.