G044751 Super. Ct. No. 30-2008-00114177
Pivo, Halbreich, Martin, Wilson & Amo and Scott A. Martin for Plaintiff and Appellant. Waters, McCluskey & Boehle and Gregg W. Brugger for Defendant and Respondent Anaheim Arena Management.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Appeal from a postjudgment order of the Superior Court of Orange County, Kirk H. Nakamura, Judge. Affirmed.
Pivo, Halbreich, Martin, Wilson & Amo and Scott A. Martin for Plaintiff and Appellant.
Waters, McCluskey & Boehle and Gregg W. Brugger for Defendant and Respondent Anaheim Arena Management.
Plaintiff and appellant Luz Elena Cano, M.D., appeals from a postjudgment order denying her motion to tax costs and awarding defendant and respondent Anaheim Arena Management, LLC, aka Honda Center (Arena Management) expert witness fees under Code of Civil Procedure section 998. (All statutory references are to the Code of Civil Procedure unless otherwise noted.) Under section 998, Arena Management offered to settle Cano's personal injury claims for $100,001 and a costs waiver, but Cano rejected that offer. After the trial court granted its summary judgment motion, Arena Management filed a memorandum of costs seeking $18,957 in expert witness fees because Cano failed to obtain a judgment more favorable than the section 998 settlement offer.
Cano contends the trial court abused its discretion in awarding Arena Management expert witness fees because the serious injuries she suffered made the settlement offer unreasonable. Cano, however, failed to show any likelihood Arena Management would have been held liable for her injuries or that Arena Management's offer bore no relation to the monetary damages she suffered. Accordingly, we find no abuse of discretion and affirm the trial court's ruling.
On our own motion, we judicially notice the record in Cano's appeal from the trial court's decision granting Arena Management's summary judgment motion (Cano v. Staff Pro, Inc., et al. (Feb. 6, 2012, G044408) [nonpub. opn.] (Cano v. Staff Pro)). (Evid. Code, §§ 452, subd. (d), 459; Richardson v. Superior Court (2008) 43 Cal.4th 1040, 1043, fn. 2; Chambers v. Superior Court (2007) 42 Cal.4th 673, 678, fn. 4.)
Cano attended a Bruce Springsteen concert at the Honda Center in Anaheim. During the concert, defendant Andrew Hoel was climbing the stairs to his seat when he fell backwards and landed on Cano's head. Arena Management administers the Honda Center's operations.
Cano sued Hoel and Arena Management for her injuries, including permanent blindness in her left eye that required her to close her medical practice. Cano asserted claims for assault, battery, and negligence against Hoel, alleging he fell on her because he was grossly intoxicated. Cano asserted multiple negligence claims against Arena Management because it failed to protect her from Hoel. Specifically, Cano alleged Arena Management failed to provide adequate security and negligently allowed Hoel to enter the arena despite appearing grossly intoxicated when he passed through security. Hoel died from a heart condition six months after the concert.
Cano also sued Staff Pro, Inc., alleging it failed to provide adequate security for the concert. Arena Management contracted with Staff Pro, Inc., to provide supplemental security services, but Staff Pro, Inc., is not a party to this appeal.
Arena Management moved for summary judgment, arguing it did not breach any duty of care it owed to Cano because it adequately screened each concertgoer before admitting him or her into the Honda Center and received no reports or complaints about Hoel from security personnel or other concertgoers before Hoel fell on Cano. The trial court continued the hearing on Arena Management's motion several times so Cano could conduct additional discovery, including deposing Hoel's widow, who attended the concert with him.
Hoel's widow testified he appeared "totally calm, totally normal" as he passed through security screening outside the arena and "[y]ou would never think by looking at him that he drank . . . ." She further testified there were no outward signs that would put someone on notice Hoel might be intoxicated as he entered the arena. Finally, Hoel's widow characterized him as a functional alcoholic and described how he successfully interviewed for a job after drinking.
Two weeks after the parties deposed Hoel's widow, Arena Management served Cano with a section 998 offer to settle Cano's claims for $100,001 and a costs waiver. Cano rejected the offer.
At the hearing on Arena Management's summary judgment motion, Cano argued there was a triable issue of fact because it could be inferred Hoel appeared grossly intoxicated when he entered the Honda Center based on evidence Hoel was intoxicated when he later fell on Cano. Cano did not dispute the testimony by Hoel's wife regarding his appearance as he passed through security screening. The trial court granted Arena Management's motion, finding Arena Management adequately screened all concertgoers before entering the arena and the evidence did not support Cano's inference that Hoel appeared grossly intoxicated when screened by security personnel. We affirmed that ruling in a separate opinion. (Cano v. Staff Pro, supra.)
After the trial court entered judgment in its favor, Arena Management filed a memorandum of costs seeking $18,957 in expert witness fees based on Cano's failure to obtain a judgment more favorable than Arena Management's section 998 settlement offer. Cano filed a motion to tax these expert witness fees, arguing the settlement proposal was a "token offer" made without any reasonable expectation Cano would accept it and therefore could not support an award of expert witness fees under section 998.
Cano did not challenge the approximately $6,000 in ordinary costs Arena Management sought in its memorandum of costs.
The trial court denied the motion and awarded Arena Management its expert witness fees. The court explained, "Dr. Cano, I really feel for you in terms of what happened here. [¶] But based on the case law, I can't say that almost under any circumstance $100,000, plus, is a token offer. I don't think that's what the Court of Appeal defines as a token offer, and particularly when they held in certain situations that a waiver of costs can, in certain circumstances, be a legitimate offer which would entitle the prevailing defendant to expert fees under CCP 998." Cano timely appealed.
A. Legal Principles Governing Recovery of Expert Witness Fees Under Section 998 Section 998 grants the trial court discretion to award expert witness fees to a defendant when the plaintiff rejects the defendant's reasonable pretrial settlement offer and fails to obtain a more favorable judgment. (§ 998, subd. (c)(1).) Section 998's purpose is to encourage pretrial settlements "'"by providing a strong financial disincentive to a party . . . who fails to achieve a better result than that party could have achieved by accepting his or her opponent's settlement offer." [Citation.]' [Citation.]" (People ex rel. Lockyer v. Fremont General Corp. (2001) 89 Cal.App.4th 1260, 1270-1271 (Fremont); Hartline v. Kaiser Foundation Hospitals (2005) 132 Cal.App.4th 458, 471 (Hartline).)
Section 998, subdivision (b)(1), provides as follows: "If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, . . . the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover 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 defendant."
"To effectuate the purpose of the statute, a section 998 offer must be made in good faith to be valid. [Citation.] Good faith requires that the pretrial offer of settlement be 'realistically reasonable under the circumstances of the particular case. normally, therefore, a token or nominal offer will not satisfy this good faith requirement, . . .' [Citation.] The offer 'must carry with it some reasonable prospect of acceptance. [Citation.]' [Citation.] One having no expectation that his or her offer will be accepted will not be allowed to benefit from a no-risk offer made for the sole purpose of later recovering large expert witness fees. [Citation.]" (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1262-1263 (Jones).)
A section 998 offer's reasonableness must be judged by examining the circumstances existing at the time the offer was made. (Hartline, supra, 132 Cal.App.4th at p. 471.) "Whether an offer to compromise is made in good faith, however, cannot be measured by the amount of claimed damages or a party's subjective belief in the case's value. An offer to compromise may be 'realistically reasonable' and justify cost shifting even though the party receiving the offer is unlikely to accept it as a consequence of the party's skewed valuation of the case." (Essex Ins. Co. v. Heck (2010) 186 Cal.App.4th 1513, 1530 (Essex).) "'[W]hen a party obtains a judgment more favorable than its pretrial offer, [the offer] is presumed to have been reasonable and the opposing party bears the burden of showing otherwise.' [Citations.]" (Id. at p. 1528.)
"'"Whether a section 998 offer was reasonable and made in good faith is left to the sound discretion of the trial court." [Citation.] "In reviewing an award of costs and fees under . . . section 998, the appellate court will examine the circumstances of the case to determine if the trial court abused its discretion in evaluating the reasonableness of the offer or its refusal." [Citation.] "'["]The burden is on the party complaining to establish an abuse of discretion, and unless a clear case of abuse is shown and unless there has been a miscarriage of justice a reviewing court will not substitute its opinion and thereby divest the trial court of its discretionary power." [Citations.]'" [Citation.]' [Citation.]" (Essex, supra, 186 Cal.App.4th at pp. 1528-1529.) B. Cano Failed to Establish the Trial Court Abused Its Discretion in Awarding Arena Management Expert Witness Fees
Arena Management offered to settle Cano's claims for $100,001 and a costs waiver. In determining whether the trial court abused its discretion when it concluded Arena Management made a reasonable offer, we must consider the value of Arena Management's offer to waive its costs, including the nearly $19,000 in expert witness fees at issue on this appeal and the approximately $6,000 in ordinary costs described in its memorandum of costs. (Essex, supra, 186 Cal.App.4th at p. 1529 ["A defendant's offer to waive costs may carry significant value to the plaintiff because, if accepted, it eliminates the plaintiff's exposure to expert witness costs"]; Jones, supra, 63 Cal.App.4th at p. 1263 [defendant's section 998 settlement offer to waive its claim for $5,440 in expert witness fees and $9,115.46 in ordinary costs had "significant monetary value" and therefore was not a token offer].) These costs bring the total value of Arena Management's section 998 offer to $125,000.
Cano contends Arena Management's settlement proposal was merely a token offer that lacked good faith. According to Cano, Arena Management knew she would not accept the offer because of her debilitating injuries and tendered the offer solely to make itself eligible to recover expert witness fees under section 998. Cano's serious injuries, however, do not establish Arena Management's offer was unreasonable or lacked good faith because she failed to show any likelihood that Arena Management would be held liable for those injuries or that Arena Management's offer bore no relation to the monetary damages she suffered in treating her injuries.
In evaluating the reasonableness of a section 998 settlement offer, courts must look to how well the offer approximates the amount the defendant would pay if found liable, discounted by an appropriate factor for the plaintiff's likelihood of success. (Thompson v. Miller (2003) 112 Cal.App.4th 327, 339, fn. 4.) "[A] '"modest settlement offer" may be in good faith if it is believed the defendant has a significant likelihood of prevailing at trial.' [Citation.]" (Essex, supra, 186 Cal.App.4th at p. 1529.) For example, a defendant's offer to waive costs can be a reasonable, good faith settlement offer under section 998 when a plaintiff's claims have little likelihood of success. (See, e.g., Essex, at pp. 1528-1530; Jones, supra, 63 Cal.App.4th at pp. 1263-1264; Hartline, supra, 132 Cal.App.4th at pp. 471-473.)
Here, Arena Management maintained throughout the litigation that it had no liability because it did not breach any duty of care it owed Cano. Arena Management served its section 998 settlement offer nearly five months after serving a summary judgment motion that presented evidence showing it had no liability and included an expert declaration opining Arena Management provided adequate security for the concert. Moreover, just two weeks before Arena Management served its section 998 offer, Hoel's wife testified at deposition that he appeared "totally calm, totally normal" as he passed through security screening and "[y]ou would never think by looking at him that he drank . . . ."
Thus, at the time Cano received the settlement offer, she knew her claims faced significant obstacles that reduced her likelihood of success. Indeed, she knew Arena Management disputed liability and the only direct evidence regarding Hoel's appearance as he passed through security screening showed he did not appear intoxicated. Moreover, the trial court's later decision granting Arena Management's summary judgment motion is prima facie evidence that Arena Management's settlement offer was reasonable. (Jones, supra, 63 Cal.App.4th at p. 1264.) Cano makes no attempt to address her likelihood of success despite bearing the burden to show the trial court abused its discretion in finding the offer was reasonable. (Essex, supra, 186 Cal.App.4th at p. 1529; Jones, at p. 1264.)
Cano also makes no attempt to explain how a $125,000 offer could be a token offer in this particular case. she contends the offer was unreasonable because she suffered devastating injuries that left her blind in one eye and forced her to close her medical practice. Arena Management's experts, however, disputed that Cano's eyesight problems were caused by Hoel because these problems did not surface until three months after the incident, which supported their claim Cano suffered from a preexisting eye condition. Moreover, Cano failed to present any evidence regarding the amount of monetary damages she suffered due to her injuries. She also failed to identify the amount of any demand she may have made on Arena Management. Without something to compare to Arena Management's offer, we cannot say the offer was a token one lacking in good faith.
The reply Cano filed in the trial court asserted her medical bills exceeded $100,000, but she presented no evidence to support that contention. Moreover, medical bills of $100,000 do not make a settlement offer worth $125,000 unreasonable.
simply put, a settlement offer worth $125,000 is a significant offer and Cano cites no authority that concludes an offer comparable to Arena Management's amounted to a token offer. To the contrary, at least one case found a settlement offer comparable to Arena Management's was made in good faith. In Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102, the Court of Appeal found the trial court did not abuse its discretion when it awarded expert witness fees based on a $100,000 settlement offer, despite the plaintiff's claim of more than $900,000 in economic damages: "[T]he mere fact that [plaintiff] claimed projected economic losses of over $900,000 does not mean that defendants' $100,000 offer was unreasonable or unrealistic. Defendants contended that they had no liability to [plaintiff] at all, and the jury ultimately agreed. Moreover, defendants contended that the damage estimates by plaintiffs' expert were greatly excessive . . . ." (Id. at p. 118.) Santantonio is readily analogous to this case.
To support her contention Arena Management's offer was unreasonable, Cano cites Wear v. Calderon (1981) 121 Cal.App.3d 818 (Wear) and Pineda v. Los Angeles Turf Club, Inc. (1980) 112 Cal.App.3d 53 (Pineda). Wear and Pineda are credited with establishing the requirement that a section 998 settlement offer must be reasonable and in good faith to support an award of expert witness fees. In applying these general principles, however, subsequent cases have repeatedly emphasized the specific facts in each case may lead to a different conclusion. (See, e.g., Essex, supra, 186 Cal.App.4th at p. 1529; Fremont, supra, 89 Cal.App.4th at pp. 1272-1273; Jones, supra, 63 Cal.App.4th at p. 1263; Culbertson v. R. D. Werner Co., Inc. (1987) 190 Cal.App.3d 704, 708-710 (Culbertson).) Similarly, the facts here are readily distinguishable from those in Wear and Pineda.
In Wear, the Court of Appeal reversed an award of expert witness fees because it found a nominal $1 settlement offer lacked good faith when compared to the plaintiff's $18,500 in damages. (Wear, supra, 121 Cal.App.3d at p. 821.) In Pineda, the Court of Appeal affirmed the trial court's conclusion a $2,500 settlement offer was a token offer when compared to the $10 million the plaintiffs sought. (Pineda, supra, 112 Cal.App.3d at pp. 62-63.) Both courts stressed that they based their decision on "the circumstances of the particular case." (Wear, at p. 821; Pineda, at p. 63.) Unlike Wear and Pineda, we have no information regarding the amount of Cano's damages or any demand she made on Arena Management. Furthermore, Arena Management's $125,000 offer is not comparable to the nominal offers at issue in Wear and Pineda.
Finally, Cano contends the trial court abused its discretion in finding Arena Management's offer was reasonable and made in good faith because the court ignored Arena Management's timing, purpose, and lack of any reasonable expectation that Cano would accept the offer. Because Arena Management did not make the offer until after the parties completed virtually all depositions and after Arena Management incurred nearly all of its expert witness fees, Cano argues Arena Management had no reasonable expectation she would accept the offer and the offer did not serve section 998's purpose of encouraging early settlements. Cano, however, waived this argument by waiting until her reply brief to raise it. (Karlsson v. Ford Motor Co. (2006) 140 Cal.App.4th 1202, 1216 [arguments raised for the first time in the reply brief are waived].)
Moreover, the argument lacks merit. Section 998's purpose is to encourage pretrial settlements regardless of whether the settlements are reached early or late in the litigation. Section 998 authorizes a party to make a settlement offer subject to its terms "[n]ot less than 10 days prior to commencement of trial." (§ 998, subd. (b).) If section 998 was limited to early settlements, it would not authorize settlement offers on the eve of trial. Language to the contrary that Cano cites in Culbertson, supra, 190 Cal.App.3d at p. 711, is taken out of context and does not limit section 998's cost shifting to "early" settlement offers.
Often parties cannot make a reasonable settlement offer until after they conduct discovery and investigate the underlying facts. Here, Arena Management made its offer less than two weeks after deposing the only known witness who observed Hoel pass through security screening. Nothing about Arena Management's timing, purpose, or expectation of acceptance suggests its offer was unreasonable or lacking in good faith.
Cano bore the burden to show the trial court abused its discretion in finding Arena Management's offer was reasonable and made in good faith. Cano's conclusion her devastating injuries made the offer unreasonable does not meet that burden because she failed to show any likelihood Arena Management would have been held liable for those injuries or that Arena Management's offer bore no relation to the monetary damages she suffered due to her injuries. We therefore affirm the trial court's ruling.
The postjudgment order is affirmed. Arena Management shall recover its costs on appeal.
ARONSON, J. WE CONCUR: MOORE, ACTING P. J. FYBEL, J.