Opinion
B308923
08-17-2023
REYMOND K. OHANIAN, Plaintiff and Appellant, v. GREGORY W. WALKER, Defendant and Respondent.
Reymond K. Ohanian, in pro. per., for Plaintiff and Appellant. Niddrie Addams Fuller Singh, John S. Addams; Law Offices of Keevil L. Markham and Pamela M. Ward for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment and order of the Superior Court of Los Angeles County No. BC703112, Gregory Keosian, Judge. Affirmed.
Reymond K. Ohanian, in pro. per., for Plaintiff and Appellant.
Niddrie Addams Fuller Singh, John S. Addams; Law Offices of Keevil L. Markham and Pamela M. Ward for Defendant and Respondent.
CURREY, P. J.
INTRODUCTION
Reymond K. Ohanian sued Gregory W. Walker for property damage and personal injuries sustained in a car accident. Ohanian then sent Walker two successive Code of Civil Procedure section 998 offers to compromise. Walker accepted the second 998 offer, which provided for judgment in favor of Ohanian and against Walker in the amount of $109,562.52. Walker filed the executed document in the trial court, and on September 14, 2020, the trial court entered judgment pursuant to the terms of the accepted section 998 offer.
All further undesignated statutory references are to the Code of Civil Procedure. The relevant portion of section 998 provides: "[A]ny party may serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time....[¶] If the offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly....[¶] If the offer is not accepted prior to trial or arbitration or within 30 days after it is made, whichever occurs first, it shall be deemed withdrawn ...." (§ 998, subds. (b)(1) & (2).)
Ohanian filed three post-judgment motions: (1) a motion to vacate the judgment on the ground the second 998 offer was not validly accepted because Walker previously rejected that offer; (2) a motion to amend the judgment to add prejudgment interest; and (3) a motion for a protective order. After a hearing, the trial court denied the motions in a thorough and well-reasoned written ruling. Ohanian appeals from the judgment and the denial of his post-judgment motions. For the reasons discussed below, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The relevant facts are not in dispute. Ohanian and Walker were involved in a car accident on April 29, 2016. In April 2018, Ohanian sued Walker for negligence, seeking damages for personal injuries, property damage, medical expenses, lost wages, and loss of earning capacity.
On December 24, 2019, Ohanian served Walker with a section 998 offer for $100,000 plus costs under section 1032. Walker rejected this offer.
On August 10, 2020, Ohanian served Walker with a second section 998 offer for $100,000 for bodily injuries and $9,563.52 for property damages and loss of property use. The offer stated "[e]ach party shall bear its own costs and fees." On August 25, 2020, Ohanian sent Walker a follow-up email stating: "You were served a section 998 offer to compromise on August 10, 2020 by mail and fax. [¶] It is for the amount that you are willing to offer for settlement. [¶] For settlement you may sign and return it to me." Walker's counsel responded by email the same day, stating: "My client does not want a judgment against him. I can't sign the 998 offer. My question to you was if I can get [Walker's insurer] to agree to the additional amount for loss of use, will you sign the release?" Ohanian did not respond.
In the beginning of September, the parties exchanged correspondence regarding responses to written discovery and potential deposition dates. But on September 9, 2020, Walker's counsel notified Ohanian that he had accepted the section 998 offer the previous day, and filed the executed document with the trial court. Ohanian responded on September 11: "Didn't you reject my section 998 offer on August 25, 2020? [¶] Are you going to return my medical, financial and employment records and stipulate to protective orders?"
On September 14, 2020, the trial court entered judgment pursuant to the terms of the section 998 offer filed with the court.
As noted above, Ohanian filed three post-judgment motions. First, he moved to vacate the judgment on the ground that Walker "unequivocally rejected" the section 998 offer, thus terminating the offer. Second, Ohanian moved for an amended judgment and new trial on the issue of inadequate damages, on the ground the judgment entered contains no provision for prejudgment interest, to which Ohanian contends he is entitled under Civil Code sections 3287 and 3291. Finally, Ohanian filed a motion for a protective order, arguing Walker refused to stipulate to a protective order in violation of a previous court order. After holding a joint hearing on the motions and taking the matter under submission, the trial court issued a six-page written ruling denying each motion.
Ohanian timely appealed.
DISCUSSION
I. Motion to Vacate the Judgment
A. Statutory Framework and Standard of Review
Section 998 is "a cost-shifting statute which encourages the settlement of actions, by penalizing parties who fail to accept reasonable pretrial settlement offers." (Heritage Engineering Construction, Inc. v. City of Industry (1998) 65 Cal.App.4th 1435, 1439.) When an offer under section 998 is accepted within 30 days after it is made or before trial, whichever occurs first, "the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly." (§ 998, subd. (b)(1).) Once a section 998 offer of compromise has been made, it remains open until it is unequivocally rejected, formally revoked, or lapses due to the passage of time. (Guzman v. Visalia Community Bank (1999) 71 Cal.App.4th 1370, 1378 (Guzman).)
Under ordinary contract principles, "a manifestation of an intent not to accept, short of an unequivocal rejection," will terminate the offer. (Guzman, supra, 71 Cal.App.4th at p. 1376.) "Once this occurs, the offeree cannot later purport to accept the offer and thereby create an enforceable contract." (Ibid.) An offer is also generally terminated by a counteroffer. (See Poster v. Southern Cal. Rapid Transit Dist. (1990) 52 Cal.3d 266, 271 (Poster).) Courts have interpreted offers under section 998 differently, however, to facilitate the legislative purpose of section 998 to encourage settlements. (See id. at p. 270 ["Section 998 clearly reflects this state's policy of encouraging settlements"]; Guzman, supra, 71 Cal.App.4th at p. 1377 ["applying common law contract principles to determine whether a statutory offer has been rejected 'introduces a significant and undesirable uncertainty into the section 998 procedure'"].) Thus, in the context of a section 998 offer, "a manifestation of an intent not to accept" is not enough to terminate the offer. (Guzman, supra, 71 Cal.App.4th at p. 1376.) Rather, "in the absence of an unequivocal rejection of a section 998 offer, the offer may be accepted by the offeree during the statutory period unless the offer has been revoked by the offeror." (Id. at p. 1377 [italics added]; see also Weil &Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2023) ¶ 12:628.)
Moreover, our Supreme Court held "a section 998 offer is not revoked by a counteroffer and may be accepted by the offeree during the statutory period unless the offer has been revoked by the offeror." (Poster, supra, 52 Cal.3d at p. 272, fn. omitted; Weil &Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2023) ¶ 12:629.) In reaching this conclusion, the Poster court agreed with the Court of Appeal's reasoning: "[N]egotiation during the 30-day period provided for in section 998 is a normal occurrence and ought not to affect the right of the offeree to ultimately accept the statutory offer in a timely fashion.....[To adopt a contrary position] would affect every personal injury case where negotiations followed a statutory offer - negotiations which routinely involve the making of counteroffers" and "would have a negative effect on encouraging settlement." (Id. at p. 271.) These "bright line rules" better serve the "legislative purpose of section 998." (Id. at p. 272.)
The issue here is whether Walker's counsel's August 25, 2020 email was an "unequivocal rejection" of Ohanian's section 998 offer, or whether the offer remained open when Walker accepted it. "Because this issue involves the application of law to undisputed facts, we review the matter de novo." (Martinez v. Brownco Construction Co. (2013) 56 Cal.4th 1014, 1018 (Martinez).)
B. Analysis
Ohanian contends Walker's purported acceptance of his second 998 offer was invalid because it was preceded by Walker's counsel's unequivocal rejection of the offer. Walker counters that his counsel's August 25, 2020 email did not constitute an unequivocal rejection of the offer, but rather "explor[ed] whether a settlement for the same amount could be finalized through a release agreement." We agree with Walker.
We reject Walker's alternative contention that Ohanian forfeited this argument by not raising it is his opening brief on appeal. We acknowledge Ohanian failed to include this issue in the argument section of his brief. Ohanian also concedes in his reply brief that he "might [have] inadvertently not argued a point extensively." The issue was raised, however, in other sections of the opening brief (i.e., introduction, statement of the case, and statement of facts), and Walker addressed the argument in his brief on appeal. We therefore consider the issue on the merits. (See, e.g., Thompson v. City of Petaluma (2014) 231 Cal.App.4th 101, 109 [the court considered an issue not raised in appellant's opening brief because respondent addressed the issue in its brief and thus had an opportunity to respond to it].)
As discussed above, Walker's counsel responded to Ohanian's second 998 offer by email, as follows: "My client does not want a judgment against him. I can't sign the 998 offer. My question to you was if I can get [Walker's insurer] to agree to the additional amount for loss of use, will you sign the release?" Ohanian urges us to read the first two sentences of the email in isolation, without any reference to the third sentence. He argues the first two sentences unequivocally reject the 998 offer and the third sentence "negotiate[s] the terms of Walker's settlement agreement and release, which was separate from the . . . 998 settlement offer." But Ohanian's view of the email is too narrow. We agree with the trial court that Walker's counsel's statement that his client would not sign a judgment "was merely the preceding sentence to a counteroffer effectively adopting the terms that Ohanian proposed, but with a dismissal and release, rather than a judgment, as the proposed outcome." (See Poster, supra, 52 Cal.3d at p. 272 [a section 998 offer is not revoked by a counteroffer].) Thus, when read in context, the August 25, 2020 email was not an unequivocal rejection, but part of the negotiation process during the 30-day period provided for in section 998.
Accordingly, we conclude Walker validly accepted the 998 offer by signing the offer within 30 days after it was made. The trial court, therefore, properly entered judgment pursuant to the terms of the 998 offer and denied Ohanian's motion to vacate the judgment.
II. Motion to Amend the Judgment and For a New Trial
Next, Ohanian contends the trial court erred by denying his motion to amend the judgment to add prejudgment interest under Civil Code section 3291. Civil Code section 3291 provides, in relevant part, that prejudgment interest is recoverable when a plaintiff in a personal injury action "makes an offer pursuant to [section 998] which the defendant does not accept prior to trial or within 30 days, whichever comes first, and the plaintiff obtains a more favorable judgment...."
Here, Walker accepted the second 998 offer. Ohanian nevertheless contends he is entitled to prejudgment interest under Civil Code section 3291 because the second offer was for a larger amount than the first 998 offer (which Walker rejected), and thus Ohanian obtained a judgment in excess of his first offer. We reject this argument for two reasons. First, Ohanian's second statutory offer extinguished the first statutory offer, making the second offer the only operative offer for purposes of section 998 and Civil Code section 3291. (See Wilson v. Wal-Mart Stores, Inc. (1999) 72 Cal.App.4th 382, 392-393 (Wilson) [finding plaintiff was not entitled to prejudgment interest under Civil Code section 3291 where plaintiff prevailed at trial, and the jury awarded plaintiff damages in an amount more than the first section 998 offer but less than the second section 998 offer because the "second statutory offer extinguished the first"].)
Ohanian's reliance on Martinez, supra, 56 Cal.4th 1014 is misplaced. In Martinez, our Supreme Court held that where "a plaintiff makes two successive statutory offers, and the defendant fails to obtain a judgment more favorable than either offer, allowing recovery of expert fees incurred from the date of the first offer is consistent with section 998's language and best promotes the statutory purpose to encourage settlements." (Id. at p. 1017.) In declining to apply the last offer rule (i.e., the second offer extinguishes the first offer), it specifically recognized the "propriety of applying the last offer rule" in cases like Wilson. (Id. at p. 1026.) It held, however, that in a case where a "plaintiff made two statutory offers, and defendant failed to obtain a judgment more favorable than either," section 998's "policy of encouraging settlements is better served by not applying the general contract principle that a subsequent offer entirely extinguishes a prior offer." (Ibid. [original italics].) It explained, parties should not "be rewarded for rejecting multiple offers where each proves more favorable than the result obtained at trial." (Ibid.)
Here, unlike the facts in Martinez, Walker accepted the second 998 offer. Where a second offer is accepted, section 998's policy of encouraging settlements is better served by applying the last offer rule. If we were to hold a plaintiff is entitled to prejudgment interest when a defendant accepts a second statutory offer that is greater than the first, as Ohanian urges us to do, a defendant may be disincentivized to accept the second offer knowing he would be penalized for doing so. We, therefore, decline to extend the holding in Martinez where a defendant accepts a subsequent section 998 offer.
Moreover, even assuming arguendo that the second 998 offer did not extinguish the first, Ohanian still would not be entitled to prejudgment interest because the accepted second 998 offer expressly provided that each party would bear his own costs.
"[P]rejudgment interest awarded under Civil Code section 3291 and [ ] section 998 to a plaintiff in a personal injury action in which the defendant fails to obtain a more favorable judgment after failing to accept the plaintiff's offer to compromise, is an item of costs recoverable under [ ] section 1033.5, subdivision (a)[(16)]." (Bodell Construction Co. v. Trustees of Cal. State University (1998) 62 Cal.App.4th 1508, 1525, fn. 14.) When a section 998 offer is silent on the issue of costs, a plaintiff is entitled to recover costs under Civil Code section 3291. (See Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 263.) Where, as here, the offer expressly provides "[e]ach party shall bear its own costs and fees," however, plaintiff is precluded from seeking prejudgment interest. (See, e.g., Martinez v. Los Angeles County Metropolitan Transportation Authority (2011) 195 Cal.App.4th 1038, 1041 [holding an accepted section 998 offer, which provides each party would bear its own costs, precludes a plaintiff from seeking attorneys' fees because "the word 'costs' refers to all the costs described in section 1033.5, including attorney[s'] fees"].) Thus, Ohanian is not entitled to prejudgment interest under Civil Code section 3291, and the trial court did not err by denying Ohanian's motion to amend the judgment.
We note Ohanian also argued below that he was entitled to prejudgment interest under Civil Code section 3287. He has forfeited this argument on appeal, however. Ohanian's passing mention of the statute in his opening brief is not enough to preserve the argument on appeal. (See Shaw v. Hughes Aircraft Co. (2000) 83 Cal.App.4th 1336, 1345-1346, fn. 6 ["[A]n appellant's failure to raise an issue in its opening brief [forfeits] it on appeal"]; see also Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1303 ["Contentions on appeal are waived by a party who fails to support them with reasoned argument and citations to authority"].)
III. Motion for Protective Order
Lastly, Ohanian contends the trial court erred by denying his motion for a protective order for his subpoenaed medical and employment records.
After the trial court entered judgment pursuant to the terms of the second section 998 offer, Ohanian moved for a protective order and for an "Order to Show Cause Re: Contempt." As the trial court noted, however: "Although characterized as a motion for a protective order, [Ohanian's] [ ] motion is directed exclusively toward arguing for an [Order to Show Cause Re: Contempt] against Walker for alleged defiance of a court order." The trial court explained: "[t]here is no attempt to make a showing of good cause for the order requested except to cite to the prior order and to Walker's purported violation. This is not what is required under the Discovery Act." (See § 2031.060, subd. (b) ["The court, for good cause shown, may make any order that justice requires to protect any party or other person from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense"].) The trial court, therefore, properly denied the motion to the extent it sought imposition of a new protective order.
Turning to the order to show cause, Ohanian argues Walker violated a previous court order by failing to enter into a permanent protective order. On December 12, 2018, the trial court denied Ohanian's motion to quash Walker's deposition subpoenas served on Ohanian's medical providers and employer, but limited the time frame for records sought to ten years for medical records and five years for employment records. The court further ruled: "Based upon the parties' oral stipulation, the Court issues a temporary protective order, which will expire once the Court approves the parties' stipulation for a formal protective order. Defendants shall not disclose any of Plaintiff's medical or employment records except to attorneys working on this case, consulting experts, any witnesses (i.e., expert witnesses) who might testify about the documents, and any vendor assisting Defendants' counsel in the litigation. However, before disclosing the documents, Defendants' counsel shall inform the recipient of the terms of this temporary protective order." (Original italics.)
The motion to quash was heard by a different judge than the judge who ruled on the post-judgment motions.
The parties never stipulated to a protective order. It follows, according to Ohanian, that by allegedly refusing to agree to a formal protective order, Walker violated the trial court's December 12, 2018 order, and thus is in contempt of a court order. We disagree.
The elements of contempt based on a failure to comply with a court order are "a valid court order, the alleged contemner's knowledge of the order, and noncompliance." (Moss v. Superior Court (1998) 17 Cal.4th 396, 428.) Ohanian fails to show noncompliance with a court order. The December 12, 2018 order does not require the parties to agree to a protective order, as Ohanian contends, but rather identifies the date on which the temporary order will expire (i.e., the date the court "approves the parties' stipulation for a formal protective order"). Thus, Walker's refusal to stipulate to a protective order (while instead assuring Ohanian that his records cannot be obtained without a subpoena, of which Ohanian will be notified) is not contemptible conduct. The trial court properly denied Ohanian's motion for an "Order to Show Cause re: Contempt."
DISPOSITION
The judgment and post-judgment order are affirmed. Walker is awarded his costs on appeal.
We concur: COLLINS, J., MORI, J.