Opinion
NOT TO BE PUBLISHED
San Mateo County Super. Ct. No. 470276
Haerle, Acting P.J.
I. INTRODUCTION
A jury awarded plaintiff John Martin (plaintiff) $200,000 in damages for personal injuries he sustained in a motor vehicle accident caused by Douglas Ratkovic (Ratkovic), an employee of defendant Gillis & Lane, Inc. (Gillis). Ratkovic was dismissed as a defendant prior to trial; the damages were awarded against Gillis. (We refer to Gillis and Ratkovic collectively as defendants.) Prior to dismissing Ratkovic, plaintiff served an offer to compromise with Gillis and Ratkovic for $199,999.99 under Code of Civil Procedure section 998. The offer lapsed unaccepted. Because the jury’s $200,000 award exceeded the amount of the section 998 offer, the trial court subsequently awarded plaintiff expert fees and costs under section 998 and prejudgment interest under Civil Code section 3291. Gillis appeals the award of expert fees and costs and prejudgment interest, contending the section 998 offer was invalid because it was made to Gillis and Ratkovic jointly and did not apportion the requested amount between them. We affirm.
All undesignated statutory references are to the Code of Civil Procedure.
II. FACTUAL AND PROCEDURAL BACKGROUND
On February 19, 2008, plaintiff filed a Judicial Council form complaint against Gillis and Ratkovic. Plaintiff alleged he suffered personal injuries in a February 21, 2006, motor vehicle accident in Redwood City. Using a Judicial Council form attachment for a Motor Vehicle cause of action (the sole cause of action in the complaint), plaintiff checked boxes to incorporate certain allegations, and listed Gillis and Ratkovic as (1) “[t]he defendants who operated a motor vehicle,” (2) “[t]he defendants who employed the persons who operated a motor vehicle in the course of their employment,” (3) “[t]he defendants who owned the motor vehicle which was operated with their permission,” (4) “[t]he defendants who entrusted the motor vehicle,” and (5) “[t]he defendants who were the agents and employees of the other defendants and acted within the scope of the agency[.]”
In May 2008, Gillis and Ratkovic, represented by the same counsel, filed a joint answer that included a general denial of plaintiff’s allegations and asserted affirmative defenses.
On June 18, 2008, Gillis and Ratkovic filed a case management statement, in which they stated: “Plaintiff claims he sustained injuries, including short term memory loss, as a result of an automobile accident on February 21, 2006 in Redwood City, California. [¶] Defendant Douglas Ratkovic was driving a truck owned by Gillis & Lane, Inc. within the course and scope of his employment at the time of the accident.” Gillis and Ratkovic also stated they were insured by Safeco Insurance Company of America.
On July 9, 2008, plaintiff served on Gillis and Ratkovic an offer to compromise under section 998, in which he offered to release both defendants for $199,999.99. The offer did not apportion the requested amount between Gillis and Ratkovic. The offer lapsed unaccepted.
On February 13, 2009, plaintiff voluntarily dismissed Ratkovic as a defendant. Gillis states in its appeal brief that this dismissal followed Gillis’s stipulation to “full liability.” After a trial on the issues of proximate causation and damages, the jury returned a verdict in favor of plaintiff and against Gillis, and awarded $200,000 in damages. The trial court entered judgment in that amount on April 2, 2009.
Plaintiff subsequently filed a memorandum of costs seeking, among other expenses, expert fees and costs in the amount of $91,020.80 pursuant to section 998. Gillis filed a motion to strike or tax certain costs. Plaintiff then filed a motion for new trial on the issue of prejudgment interest, arguing he was entitled to interest under Civil Code section 3291.
The trial court granted in part and denied in part Gillis’s motion to strike or tax costs; the court struck or taxed $28,632 in expert fees and costs, and thus allowed $62,388.80 in expert fees and costs. The court granted plaintiff’s motion for a new trial as to prejudgment interest. On June 3, 2009, the court entered judgment awarding costs totaling $85,489.86 (of which $62,388.80 represented expert fees and costs), and prejudgment interest of $25,733.20.
Gillis filed notices of appeal challenging the court’s original April 2, 2009 judgment (No. A125661) and the amended June 3, 2009 judgment (No. A125931). Pursuant to the parties’ stipulation, this court consolidated the two appeals for purposes of briefing, oral argument and decision. In its appeal brief, Gillis states that it does not challenge the trial court’s original judgment; Gillis challenges only the court’s award of expert fees and costs and prejudgment interest.
III. DISCUSSION
A. Standard of Review
The interpretation of section 998 and Civil Code section 3291 and their application to an undisputed set of facts are questions of law that we review de novo. (Burch v. Children’s Hospital of Orange County Thrift Stores, Inc. (2003) 109 Cal.App.4th 537, 543 (Burch); Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 999 (Bihun), disapproved on other grounds in Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 664 (Lakin).)
Plaintiff asserts that the facts are disputed here and that therefore we should review the trial court’s determination for abuse of discretion. However, plaintiff does not identify any disputed factual issues, and the authorities he cites do not support the applicability of the abuse of discretion standard here. As plaintiff notes, a trial court’s determination of the reasonableness and good faith of a section 998 offer lies within the court’s discretion. (Barella v. Exchange Bank (2000) 84 Cal.App.4th 793, 797-798.) However, no issue is raised here as to whether plaintiff’s offer was reasonable or in good faith.
B. Section 998 and Civil Code Section 3291
Section 998 authorizes any party to serve a written offer to allow judgment to be taken on specified terms. (§ 998, subd. (b).) Under section 998, subdivision (d), “[i]f an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award..., 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.” (§ 998, subd. (d).)
Civil Code section 3291, which applies in personal injury cases, provides that: “If the plaintiff makes an offer pursuant to [section 998] 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 plaintiff’s first offer pursuant to [section 998] which is exceeded by the judgment, and interest shall accrue until the satisfaction of the judgment.” (Civ. Code, § 3291.) The purpose of these provisions is to encourage settlement by penalizing a party who fails to accept a reasonable offer from the other party. (See Taing v. Johnson Scaffolding Co. (1992) 9 Cal.App.4th 579, 583 (Taing) [section 998]; Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 699 (Elrod) [same].)
C. Unapportioned Section 998 Offers
In cases involving multiple defendants, the liability of the defendants may vary due to the application of principles of comparative negligence and Proposition 51, which provides that each defendant has only several liability for noneconomic damages in proportion to that defendant’s degree of wrongdoing. (See Taing, supra, 9 Cal.App.4th at pp. 584-586.) Accordingly, if a plaintiff serves a section 998 offer in a case involving multiple defendants, “the offer to any defendant against whom the plaintiff seeks to extract penalties for nonacceptance [under section 998 and Civil Code section 3291] must be sufficiently specific to permit that individual defendant to determine the exact amount plaintiff is seeking from him or her.” (Taing, supra, 9 Cal.App.4th at p. 586.) “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. [Citations.]’ ” (Burch, supra, 109 Cal.App.4th at p. 544; accord, Palmer v. Schindler Elevator Corp. (2003) 108 Cal.App.4th 154, 157; see also Flahavan et al., Cal. Practice Guide: Personal Injury (The Rutter Group 2009) ¶ 4:163.2j, p. 4-50 [“[A] plaintiff’s § 998 offer to joint defendants having potentially varying liability must specify the amount plaintiff seeks from each defendant. Otherwise, there is no way to determine whether a subsequent judgment against a particular nonsettling defendant is ‘more favorable’ than the offer.”].) This rule permits an individual defendant to “evaluate [an offer] and make a reasoned decision whether to accept without the additional burden of obtaining the acceptance of codefendants or suffering from their refusal to settle, especially when that refusal may have been unreasonable.” (Taing, supra, 9 Cal.App.4th at p. 585.)
Civil Code section 1431.2, subdivision (a), adopted as part of Proposition 51, provides: “In any action for personal injury, property damage, or wrongful death, based upon principles of comparative fault, the liability of each defendant for non-economic damages shall be several only and shall not be joint. Each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant’s percentage of fault, and a separate judgment shall be rendered against that defendant for that amount.”
However, a section 998 offer to multiple defendants need not be apportioned where the defendants are jointly and severally liable for the plaintiff’s damages under the doctrine of respondeat superior or other theories of vicarious liability. (Bihun, supra, 13 Cal.App.4th at pp. 1000-1001 [corporate defendant was jointly liable with its employees for the full amount of plaintiff’s damages on every cause of action in which it was named as a defendant]; Steinfeld v. Foote-Goldman Proctologic Medical Group, Inc. (1996) 50 Cal.App.4th 1542, 1544, 1549 (Steinfeld); see Flahavan et al., Cal. Practice Guide: Personal Injury, supra, ¶ 4:163.2j, p. 4-51.) In this situation, a defendant does not face uncertainty about the potential apportionment of damages. Instead, the defendant’s “principal dilemma [is] liability vel non, not apportionment of damages.” (Bihun, supra, 13 Cal.App.4th at p. 1001; accord, Steinfeld, supra, 50 Cal.App.4th at p. 1549 [unapportioned settlement offer “did not place [defendants] in an untenable position, since if they were liable at all, they were jointly and severally liable”]; see also Lakin, supra, 6 Cal.4th at p. 658 [no apportionment issue arose where plaintiff made section 998 offer “to only one defendant, and that defendant was either solely liable or jointly and severally liable for the entire judgment”].)
The validity of a section 998 offer is assessed as of the date the offer was served. (Burch, supra, 109 Cal.App.4th at pp. 547-549; see also Elrod, supra, 195 Cal.App.3d at pp. 698-699.)
D. Plaintiff’s Section 998 Offer Was Valid.
Gillis argues that plaintiff’s unapportioned section 998 offer to Gillis and Ratkovic was invalid because, as of the date the offer was served, the theories of liability in plaintiff’s complaint created a potential that Gillis and Ratkovic would be severally liable for different amounts of damages under Proposition 51. We disagree.
As noted above, plaintiff’s complaint alleged a single cause of action for motor vehicle negligence against Gillis and Ratkovic. In that cause of action, plaintiff included factual allegations that could support multiple theories of liability, including respondeat superior or agency liability, permissive use and negligent entrustment.
As Gillis concedes, plaintiff’s allegation that Ratkovic was Gillis’s employee/agent, and operated the vehicle in the course and scope of his employment/agency would, if proven, establish the defendants’ joint and several liability for plaintiff’s damages. (See, e.g., Bihun, supra, 13 Cal.App.4th at pp. 1000-1001.) Courts have held that an unapportioned section 998 offer to multiple defendants who are sued on a theory of joint or vicarious liability is valid. (See ibid.; Steinfeld, supra, 50 Cal.App.4th at p. 1544.)
Gillis contends, however, that the result should be different here, because the other theories in plaintiff’s complaint, i.e., permissive use and negligent entrustment, would not support full joint and several liability.
Negligent entrustment is an independent tort, so the negligent entrustor and the negligent driver both face primary (not vicarious) liability; accordingly, under Proposition 51, their liability for noneconomic damages is several, not joint. (Bayer-Bel v. Litovsky (2008) 159 Cal.App.4th 396, 399-400 (Bayer-Bel).) A permissive use theory does not trigger Proposition 51, because the Vehicle Code imposes vicarious liability on a vehicle owner for the driver’s negligence (Veh. Code, § 17150); however, if the driver is not an employee or agent of the owner, the owner’s vicarious liability is capped at $15,000 for an injury to one person in one accident (Veh. Code, § 17151, subd. (a)), so the owner and the driver may have varying liability. (Rashtian v. BRAC-BH, Inc. (1992) 9 Cal.App.4th 1847, 1852-1854 (Rashtian).) Accordingly, when a vehicle owner that is not the driver’s employer may be found liable only under these theories, an unapportioned section 998 offer to that owner and other defendants is invalid. (See Burch, supra, 109 Cal.App.4th at pp. 540, 550 [vehicle owner and driver’s employer were separate entities; joint offer to owner, employer and driver was invalid, because jury could find vehicle owner liable solely on basis of negligent maintenance or permissive use].)
Gillis appears to argue that plaintiff’s section 998 offer was invalid because, when plaintiff served the offer, it was still possible the jury would (1) find Gillis liable solely on the basis of the permissive use and/or negligent entrustment allegations (while rejecting the employment and agency allegations), or (2) find Gillis vicariously liable under the employment and agency allegations, but impose additional liability under the permissive use and/or negligent entrustment theories. We conclude, however, that, under the circumstances of this case, plaintiff’s alternative theories of liability did not invalidate his unapportioned section 998 offer.
First, as to the possibility the jury might reject plaintiff’s employment/agency allegations, we note initially that courts have taken different approaches as to the effect such allegations have on the validity of a section 998 offer. The Steinfeld court stated that, because the plaintiff’s complaint included general agency allegations, a potential alternative theory of liability (which the plaintiff in Steinfeld had not included in her complaint) would be “swept up” by those agency allegations, so the plaintiff’s unapportioned section 998 offer would be valid despite the alternative theory. (Steinfeld, supra, 50 Cal.App.4th at p. 1550.) However, in Burch, where the plaintiff asserted a negligence cause of action that included both agency allegations and other theories of liability, and where the defendants had not yet admitted joint and several liability at the time the section 998 offer was served, the appellate court did not find the agency allegations dispositive as to the vehicle owner. (See Burch, supra, 109 Cal.App.4th at pp. 540-541, 548-551.) Instead, the court considered the possibility that the vehicle owner would be found liable solely on the basis of other theories (permissive use or negligent maintenance) that would not result in joint and several liability for the full amount of the plaintiff’s damages. (See ibid.) The Burch court distinguished Steinfeld, finding that the complaint in that case alleged a single act of negligence rather than multiple theories of negligence. (Id. at p. 549.)
We need not decide whether, as the Steinfeld court stated, a plaintiff’s allegations of an agency relationship between multiple defendants are sufficient to establish the validity of an unapportioned section 998 offer to those defendants. Here, when plaintiff served his section 998 offer, Gillis and Ratkovic had already admitted in their case management statement the critical allegations establishing Gillis’s vicarious liability, i.e., that Ratkovic was driving a vehicle owned by Gillis in the course and scope of his employment at the time of the accident. (See Uhrich v. State Farm Fire & Casualty Co. (2003) 109 Cal.App.4th 598, 611-613 [statements made by party and her attorney in declarations and memoranda filed with court were binding admissions].) These facts established that Gillis and Ratkovic were jointly and severally liable for plaintiff’s damages. (See Bihun, supra, 13 Cal.App.4th at pp. 1000-1001.)
Gillis argues that we should not consider the case management statement in assessing the validity of plaintiff’s section 998 offer. Gillis characterizes plaintiff’s reference to the case management statement as the improper presentation of a new “theory” on appeal. Gillis claims this is unfair because it did not have the opportunity to argue in the trial court that the statements in the case management statement were taken out of context or were unauthorized.
We disagree. We do not consider plaintiff’s reference to the case management statement to be a new, separate theory as to why plaintiff’s section 998 offer is valid. In the trial court, plaintiff argued, as he does on appeal, that his offer was valid because Gillis and Ratkovic were jointly and severally liable for plaintiff’s damages. On appeal, plaintiff seeks to support that same argument by referring to defendants’ case management statement, a document in the record that defendants filed and apparently never sought to withdraw or disavow. In its orders addressing expert fees and costs and prejudgment interest, the trial court stated that it had “reviewed the records and files herein[,]” which, of necessity, included the case management statement.
Defendants note that the case management statement was not signed personally by defendants’ then-attorney, William S. Ginsburg. The statement was, however, signed “for WSG” by another person (presumably a colleague or staff member in Mr. Ginsburg’s office, given that his office served the statement on plaintiff’s counsel). Gillis has presented no evidence that defendants ever sought in the trial court (upon substitution of their current counsel or at any other time) to withdraw the case management statement or to argue that the statements in it were unauthorized.
As noted above, and as Gillis emphasizes in its appeal brief, the validity of a section 998 offer is assessed as of the date the offer was served. (See Burch, supra, 109 Cal.App.4th at pp. 547-549; see also Elrod, supra, 195 Cal.App.3d at pp. 698-699.) The case management statement that defendants filed in June 2008, prior to plaintiff’s service of his section 998 offer in July 2008, is relevant in determining which theories of liability were, or were not, still in dispute when the offer was served. At that time, Gillis’s vicarious liability for Ratkovic’s negligence was not in dispute.
We note that the contrary approach urged by Gillis—focusing solely on the theories in plaintiff’s complaint and ignoring the admissions in defendants’ case management statement—would be unfair to plaintiff, whose decision to serve an unapportioned offer may have been based in part on the fact that defendants had admitted respondeat superior liability, and had made no effort to withdraw their admission.
Gillis also argues that case management statements are only “intended to aid in the procedural management of litigation,” rather than being “directed towards substantive issues of the case.” Gillis suggests that, therefore, a party’s statements in a case management statement should have less binding effect and should be easier to withdraw (based on “further investigation and discovery”) than statements in other types of documents or settings, such as pleadings, briefs, stipulations, discovery admissions, or oral argument. However, Gillis has cited no authority supporting its suggestion that a party may simply ignore (and may require the court and opposing parties to ignore) statements the party has made on important liability issues in a case management statement. We note that defendants, in their case management statement, did not qualify their statement that Ratkovic was driving Gillis’s vehicle in the course and scope of his employment, and did not state that they needed to conduct further investigation or discovery on that issue. In any event, we need not address Gillis’s suggestion that statements made in a case management statement should be easier to withdraw than statements made in other documents, because Gillis has not shown that it ever sought to withdraw the relevant statement in its case management statement, and, even now, does not claim that the statement was inaccurate.
When defendants filed their case management statement in June 2008 (and when plaintiff served his section 998 offer in July 2008), defendants already had been involved in litigating not only the case plaintiff filed in February 2008 (Superior Court Case No. 470276), but also a prior action arising out of the same accident (Superior Court Case No. 455417).
Finally, Gillis argues that, even if respondeat superior liability was established at the time plaintiff served his section 998 offer, the offer was nonetheless invalid because there was still a possibility that the other theories in plaintiff’s complaint would lead to additional, several liability. The only theory that could have led to several liability was Gillis’s alleged negligent entrustment of the vehicle to Ratkovic. (See Bayer-Bel, supra, 159 Cal.App.4th at pp. 399-400.) But even if the parties had chosen to submit a negligent entrustment theory to the jury along with the established respondeat superior theory, the negligent entrustment allegations could only have imposed additional liability on Gillis, the owner and alleged entrustor of the vehicle. If the jury determined plaintiff’s injuries were caused partly by Ratkovic’s negligent driving (resulting in joint liability for Gillis) (see Bihun, supra, 13 Cal.App.4th at pp. 1000-1001), and partly by Gillis’s negligent entrustment of the vehicle to Ratkovic (resulting in several liability for Gillis) (see Bayer-Bel, supra, 159 Cal.App.4th at pp. 399-400), Gillis still would be liable for all of plaintiff’s damages.
As noted above, plaintiff’s remaining theory—permissive use—did not create the potential for several liability under Proposition 51; instead, it created only an additional basis for imposing vicarious, and therefore joint, liability on Gillis. (See Veh. Code, § 17150; Rashtian, supra, 9 Cal.App.4th at pp. 1852-1854.) And, here, in contrast to the situation in Burch (see Burch, supra, 109 Cal.App.4th at pp. 540, 550), Ratkovic was Gillis’s employee acting within the course and scope of his employment, so there is no statutory cap on Gillis’s vicarious liability. (Rashtian, supra, 9 Cal.App.4th at p. 1852, fn. 6; see also id. at p. 1852 & fn. 5, citing Veh. Code, § 17151, subd. (a).)
As noted above, the parties did not ultimately take this approach. Instead, Gillis stipulated to full liability; plaintiff dismissed Ratkovic as a defendant; and the trial addressed only the issues of proximate causation and damages.
This hypothetical scenario thus did not create any uncertainty for Gillis as to the amount plaintiff was seeking to recover from it—plaintiff was seeking to recover all his damages from Gillis, which would be liable for the entirety of any judgment. Accordingly, plaintiff’s unapportioned section 998 offer was “sufficiently specific to permit [Gillis] to determine the exact amount plaintiff [was] seeking from [it].” (See Taing, supra, 9 Cal.App.4th at p. 586.) Moreover, Gillis did not face any uncertainty about whether Ratkovic (who was represented by the same counsel and insured by the same insurance carrier) would unreasonably refuse to settle. (See Taing, supra, 9 Cal.App.4th at p. 585.) Finally, plaintiff’s offer created no difficulty in assessing whether the judgment obtained by plaintiff was more favorable than the offer. (See Burch, supra, 109 Cal.App.4th at pp. 540, 547-550; Flahavan et al., Cal. Practice Guide: Personal Injury, supra, ¶ 4:163.2j, p. 4-50.)
Gillis argues that the theories alleged in the complaint created the potential for still other scenarios, such as (1) a finding by the jury that Ratkovic was independently liable as an owner or entrustor of the vehicle, or for other acts that occurred before the accident and outside the scope of his employment, (2) a finding by the jury that Gillis or Ratkovic negligently maintained the vehicle, or (3) a ruling that Ratkovic had no liability because a hypothetical medical condition caused him to lose control of the vehicle. However, at the time the section 998 offer was served, defendants had admitted that Gillis (not Ratkovic) owned the vehicle, and that Ratkovic was driving it when the only accident alleged in the complaint (the February 21, 2006 accident) occurred. The complaint includes no specific allegations about negligent maintenance, negligent acts unconnected with the accident, or Ratkovic’s medical condition.
For these reasons, we conclude that, under the circumstances of this case, the possibility that Gillis would face additional, several liability, beyond its joint liability for Ratkovic’s negligence, provides no basis for invalidating plaintiff’s offer. We note that the Burch court suggested that an unapportioned section 998 offer is invalid if, as of the date of the offer, there is a possibility that any defendant will face any liability other than joint and several liability for the full amount of the judgment. (See Burch, supra, 109 Cal.App.4th at pp. 548, 550-551.) However, for the reasons discussed above, we conclude that where, as of the date an unapportioned section 998 offer is served, a defendant faces either sole liability or joint and several liability for all amounts sought by the plaintiff, the offer is “sufficiently specific” to support an award of expert fees and costs and prejudgment interest against that defendant, under section 998 and Civil Code section 3291. (See Taing, supra, 9 Cal.App.4th at p. 586 [to impose on a defendant the “penalties for nonacceptance” of a section 998 offer, the offer must be “sufficiently specific to permit that individual defendant to determine the exact amount plaintiff is seeking from [it]”]; see also Lakin, supra, 6 Cal.4th at p. 658, fn. 9 [no apportionment issue arose where defendant to whom offer was made “was either solely liable or jointly and severally liable for the entire judgment”].)
For the foregoing reasons, we conclude that plaintiff’s section 998 offer was valid. The trial court properly awarded expert fees and costs under section 998 and prejudgment interest under Civil Code section 3291.
IV. DISPOSITION
The judgment is affirmed. Plaintiff shall recover his costs on appeal.
We concur: Lambden, J., Richman, J.
Defendants also suggest that the sentence in which defendants admitted their employment relationship may have been intended only as a description of plaintiff’s allegations. But this is not a fair reading of the relevant statement, which appears in a separate sentence and paragraph from the description of plaintiff’s claims, and is not qualified by any statement that it is merely describing plaintiff’s allegations.