Friday, February 10, 2012

Martinez v. Brownco Const. Co. (Cal. Ct. App. - Feb. 10, 2012)

The California Supreme Court should grant review in this case.

The traditional rule -- at least as articulated by the Court of Appeal -- during the past three decades is that a subsequent CCP 998 settlement offer effectively revokes the first.  So if, for example, plaintiff makes a 998 offer to settle for $100,000, then later makes a different 998 offer for $200,000, you pretend that the first offer doesn't exist.  So if plaintiff obtains a judgment for, say, $300,000, she only gets 998 costs after the second offer, even though this judgment is greater than the first offer as well.  Similarly, if plaintiff gets a judgment for $110,000, she gets no benefit under CCP 998; even though the judgment exceeds the first 998 offer, that one is deemed not to exist given the second offer.  Even if the second offer was months (or years) apart from the first.

That's the consistent rule.  But today, the Second District decides otherwise.  Disagreeing with this traditional rule and permitting plaintiff to recover her costs from the date of her first offer (in addition to her second).

I'm actually pretty sympathetic with what the Second District does here.  I think it's the right (or nearly right) rule.  For many of the reasons the Court of Appeal articulates here as well as some additional ones as well.

But the California Supreme Court should review the case regardless.  Section 998 offers are too common -- and too important -- for their import to depend on whatever draw you happen to get on appeal.  There has to be a set rule about successive offers:  either they effectively withdraw the first or they don't.  Lawyers as well as litigants have to know what the rule is, and if it's uncertain, settlement will be discouraged.

So the California Supreme Court should decide the issue once and for all.  So I'll be bummed -- exceedingly so -- if they don't take this case.  There's no reason not to.