A Joint Settlement Offer Was Valid

McDaniel v. Asuncion
(Cal. Ct. of App., 5th Dist.), filed March 27, 2013

Amy Jo McDaniel and Melissa McDaniel sued Loyd Asuncion and others for wrongful death after Steven McDaniel died in a multi-car automobile collision.

Before trial, Asuncion served a statutory offer to compromise under Code of Civil Procedure section 998.  The offer was for of $100,000 and was made jointly to Amy Jo McDaniel and Melissa McDaniel.  They did not accept this offer.

Amy Jo McDaniel and Melissa McDaniel went to trial against Asuncion and one other defendant.  While the jury awarded Amy Jo McDaniel and Melissa McDaniel over $3.3 million on their claim against the other defendant, the jury returned a defense verdict in favor of Asuncion.

As the prevailing party, Asuncion submitted a memorandum of costs. Asuncion sought over $41,000 in expert witness fees.  Because Amy Jo McDaniel and Melissa McDaniel failed to obtain an award that was more favorable than Asuncion’s offer, the trial court awarded these expert fees to Asuncion.

The Court of Appeal affirmed the fee award.

The failure to accept a Section 998 offer can have consequences.  For example, if a plaintiff fails to obtain a more favorable result at trial, that plaintiff cannot recover his or her post-offer costs, must pay the defendant’s costs from the time of the offer, and may be required to pay the defendant’s reasonably incurred expert witness fees.

The purpose behind penalizing a party who fails to accept a reasonable Section 998 is to encourage the settlement of lawsuits before trial.

In general, a Section 998 offer made to multiple parties is valid only if it is expressly apportioned among them and not conditioned on acceptance by all of them. This is because with unallocated settlement offers to multiple plaintiffs, it may be impossible to determine whether any one plaintiff received a less than favorable result at trial than that plaintiff would have received under the offer.  Further, a lump sum offer places an offeree who wishes to accept at the mercy of an obstinate offeree who does not.

There are exceptions to this general rule.  Where there is more than one plaintiff, a defendant may still extend a single joint offer if the separate plaintiffs have a unity of interest such that there is a single, indivisible injury. Moreover, some courts have declined to mechanically apply a rule that renders a joint offer void without first examining whether it can be determined that the party claiming costs has, in fact, obtained a more favorable judgment.

Under California law, either the heirs or the personal representative on behalf of the heirs may bring a single joint indivisible action for wrongful death.  If the heirs or personal representative prevail, the proceeds are divided among the heirs.  As a result, there is no difficulty in telling if the judgment was more or less favorable than a joint settlement offer.  As a further result, the joint offer was not invalid.