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Court of Appeal:
Defendant’s Rejection of CCP §998 Offer Is Binding on Estate
Justices Unswayed by Argument That Where Defendant Dies, Estate Administrator, Who Had No Previous Control of Litigation, Should Not Incur Consequences Where Plaintiff Obtains Verdict for Higher Amount Than That Proposed
By a MetNews Staff Writer
The Court of Appeal for this district has rejected an inventive argument—though finding it reasonable—that because Code of Civil Procedure §998 penalizes a “defendant” who rejects a settlement offer and fares no better at trial, that section cannot be applied where the defendant dies and a personal representative takes over the defense.
Justice Helen I. Bendix of Div. One authored the unpublished opinion, filed Monday. It affirms a postjudgment order by Los Angeles Superior Court Judge Frederick C. Shaller awarding expert witness fees and prejudgment interest to the plaintiff in an action for severe personal injuries she sustained in a traffic accident.
At the outset, the defendant was Jose Chavez. Calleja made a §998 offer to comprise in the amount of $750,000; there was no acceptance; a jury awarded Calleja $1,176,992.60.
Statutory Authority
The expert witness fees, in the amount of $81,789.75, were awarded pursuant to §998(d) which provides:
“If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the defendant to pay a reasonable sum to cover postoffer costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the plaintiff, in addition to plaintiff’s costs.”
Prejudgment interest was allowed under Civil Code §3291 which says, in part:
“If the plaintiff makes an offer pursuant to Section 998 of the Code of Civil Procedure which the defendant does not accept prior to trial or within 30 days, whichever occurs first, and the plaintiff obtains a more favorable judgment, the judgment shall bear interest at the legal rate of 10 percent per annum calculated from the date of the plaintiffs first offer pursuant to Section 998 of the Code of Civil Procedure which is exceeded by the judgment, and interest shall accrue until the satisfaction of judgment.”
Appointment of Administrator
The offer to compromise was served on Chavez on Feb, 25, 2016 and he did not respond within the 30 days allotted by §998(b)(2). Chavez died on Nov. 13, 2018, and professional fiduciary Donna Bogdanovich was appointed administrator of the estate.
On Aug. 9, 2021, the case went to trial. The ensuing $1.2 award of damages was affirmed in an unpublished opinion on Aug.17, 2023. The award of expert witness fees and prejudgment interest were separately appealed. Bogdanovich argued in her opening brief:
“The issue in this case seems to be one of first impression. Appellant contends awarding section 998 penalties against the administrator of a defendant’s estate who was never served with the 998 offer, never had an opportunity to accept it and was added as a completely separate party defendant after the offer expired and after the actual party served with the 998 offer had died and was separately dismissed from the case would be adding provisions to the statute that are not there and would be punishing a party that had nothing to do with refusing the settlement offer.”
Calleja countered, in her brief:
“[I]t is well settled that a personal representative for a deceased party stands in their shoes and takes the case as the deceased party left it. Accordingly, Bogdonovich was bound by Chavez’s failure to accept Calleja’s section 998 offer even though it predated her involvement in the case.”
Bendix’s Opinion
Bendix wrote:
“We conclude that because the statutory language is reasonably susceptible to either interpretation, Code of Civil Procedure section 998 and the corresponding language in Civil Code section 3291 are ambiguous. In the absence here of relevant legislative history, we conclude that the purposes underlying both statutes are better served by adopting Calleja’s interpretation.”
She went on to say:
“Neither Bogdanovich nor Calleja asserts there is evidence of legislative intent resolving this ambiguity, and our own research has not located any legislative history or judicial decisions resolving the interpretive issue before us. We thus turn to the purposes underlying Code of Civil Procedure section 998 and Civil Code section 3291 for guidance in selecting the appropriate construction of ‘the defendant.’ ”
Supreme Court Decision
The justice said the purposes were delineated in the California Supreme Court’s 2013 decision in Martinez v. Brownco Construction Co. Then-Justice Marvin Baxter, now retired, wrote for a unanimous court in saying:
“The policy behind section 998 is ‘to encourage the settlement of lawsuits prior to trial.’…To effectuate this policy, section 998 provides ‘a strong financial disincentive to a party— whether it be a plaintiff or a defendant—who fails to achieve a better result than that party could have achieved by accepting his or her opponent’s settlement offer.’…At the same time, the potential for statutory recovery of *expert witness fees and other costs provides parties ‘a financial incentive to make reasonable settlement offers.’…Section 998 aims to avoid the time delays and economic waste associated with trials….”
Bendix noted:
“Although Martinez construed only Code of Civil Procedure section 998…, we conclude that this statute and Civil Code section 3291 were both designed to effectuate the same purposes.”
The justice declared:
“Construing ‘the defendant’ in Code of Civil Procedure section 998, subdivision (d) and Civil Code section 3291 to include a decedent-offeree’s personal representative would best effectuate the statutory purposes our high court identified in Martinez. Under Calleja’s interpretation of the two statutes, the specter of section 998 penalties imposed on account of the deceased’s failure to accept the original offer within the statutory deadline would incentivize the personal representative to engage in further settlement discussions with the plaintiff.”
The case is Calleja v. Udewitz, B319906.
Mark P. LaScola of the Long Beach office of Ford, Walker, Haggerty & Behar and Neil Tardiff of its San Luis Obispo office represented Chavez’s estate. Benjamin I. Siminou of the San Diego firm of Singleton Schreiber and Greyson M. Goody of Simon Law Group in Santa Ana acted for Calleja.
Administrator Removed
Last January, Bogdanovich was removed as administrator. That month, she was arrested on suspicion of having pilfered about $2.5 million from special-needs trusts and accounts of conservatees.
On May 10, her license as a professional fiduciary was revoked by the California Department of Consumer Affairs’s Professional Fiduciaries Licensing Bureau. Los Angeles Superior Court Judge Gus P. May, presiding in a probate court, on Nov. 6 appointed Rolling Hills Estates attorney Jonathan Udewitz as “Special Administrator...for the sole purpose of representing the Estate” in the appeal, resulting in his name being inserted in the caption.
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