BILL ANALYSIS Ó
AB 1141
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Date of Hearing: April 21, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 1141
(Chau) - As Amended April 6, 2015
SUBJECT: CIVIL ACTIONS
KEY ISSUES:
1)SHOULD THE STATUTE THAT ALLOWED A COURT TO ISSUE SUMMARY
ADJUDICATION OF PARTIAL ISSUES IN A CAUSE OF ACTION OR
AFFIRMATIVE DEFENSE THAT IMPROVED JUDICIAL EFFICIENCY AND
WHICH WAS INADVERTANTLY ALLOWED TO SUNSET BE REENACTED?
2)SHOULD THE TREATMENT OF EXPERT WITNESS COSTS IN CODE OF CIVIL
PROCEDURE SECTION 998 SETTLEMENT OFFERS BE EQUALIZED SO THAT A
PLAINTIFF, LIKE A DEFENDANT, IS ABLE TO RECOVER HIS OR HER
COSTS OF THE PRE-OFFER, AS WELL AS THE POST-OFFER, SERVICES OF
AN EXPERT WITNESS AFTER THE DEFENDANT'S REJECTION OF THE
PLAINTIFF'S SETTLEMENT OFFER?
SYNOPSIS
This bill makes two procedural corrections to the Code of Civil
Procedure. (All further statutory references are to California
Code of Civil Procedure, unless otherwise indicated.) First,
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the bill reenacts and makes permanent a summary adjudication
statute that was inadvertently allowed to sunset. Section
437(c) allowed for the summary adjudication of a cause of
action, affirmative defense, or issue of a case, even when the
ruling would not be dispositive of the entire case or claim if
both parties stipulated in advance that a ruling on the motion
would further the interest of judicial economy, and if the court
granted the motion. This statute assisted in the promotion of
judicial efficiency, but its provisions were inadvertently
allowed to sunset on January 1, 2015 because no legislation was
enacted to reauthorize its provisions.
The second procedural correction that this bill seeks to make is
to equalize the treatment of expert witness costs when a
settlement offer is rejected under section 998 of the Code of
Civil Procedure (commonly referred to as a "998 settlement
offer"). It appears that in a 2005 non-controversial omnibus
bill by this Committee, the word "postoffer" was inserted into
subdivision (d) of section 998 of the Code of Civil Procedure.
This amendment created what appears to be an unintended inequity
between defendants and plaintiffs relating to the discretionary
authority of a trial court to award expert witness costs after
one party's rejection of a 998 settlement offer. Currently, if
the plaintiff rejects a 998 settlement offer made by the
defendant and fails to receive a better award at trial, the
plaintiff may, at the court's discretion, be required to pay the
defendant's pre and post-offer expert witness costs. However,
if the defendant rejects the plaintiff's 998 settlement offer
and fails to receive a more favorable judgment or award at
trial, the court only has the discretion to order the defendant
to pay the plaintiff's post-offer expert witness costs. By
removing the word "postoffer" from Section 998 (d) of the Code
of Civil Procedure, this bill allows both a plaintiff and a
defendant to recover pre and post expert witness costs after the
opposing party rejects a 998 settlement offer and receives a
less favorable result at trial. This bill is co-sponsored by
Consumer Attorneys of California and the California Defense
Counsel. There is no formal opposition to the bill, but the
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California Chamber of Commerce and the Civil Justice Association
of California have expressed concerns with removing the term
"post-offer" from Section 998 (d).
SUMMARY: Makes two procedural corrections to the Code of Civil
Procedure. Specifically, this bill:
1)Reenacts and makes permanent the former summary adjudication
statute, Code of Civil Procedure section 437(c), that was
inadvertently allowed to sunset on January 1, 2015.
2)Equalizes the treatment of expert witness costs that are
awarded to a defendant and a plaintiff after the other side's
rejection of a settlement offer made pursuant to section 998
of the Code of Civil Procedure so that a court can order a
defendant, like a plaintiff, to pay the other side's costs of
the pre-offer, as well as the post-offer, services of an
expert witness.
EXISTING LAW:
1)Provides that a motion for summary adjudication shall be
granted only if it completely disposes of a cause of action,
an affirmative defense, a claim for damages, or an issue of
duty. (Code of Civil Procedure (CCP) Section 437(c)(f)(1).)
2)Provides that the court has the discretion to require that the
following costs are paid by the unsuccessful party who refused
to compromise:
a) If the plaintiff rejects a 998 settlement offer by the
defendant and fails to obtain a more favorable judgment or
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award at trial, the plaintiff cannot recover any postoffer
costs and shall be required to pay the defendant's costs
from the time of the offer. In addition, the court may
require the plaintiff to pay the defendant's costs for pre
and post-offer expert witness services. (CCP Section 998
(c)(1).)
b) If the defendant rejects the plaintiff's settlement
offer pursuant to Section 998 and fails to receive a more
favorable judgment or award at trial, the defendant may, in
the court's discretion, be required to pay the plaintiff's
costs for post-offer expert witness services. (CCP Section
998(d).)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: This bill, co-sponsored by the Consumer Attorneys of
California and the California Defense Counsel, reenacts and
makes permanent provisions that were formerly in statute
relating to summary adjudication of partial issues, and which
were inadvertently allowed to sunset on January 1, 2015.
Furthermore, this bill creates equity between defendants and
plaintiffs by allowing both defendants and plaintiffs to obtain
pre-offer expert witness costs, as well as post- offer expert
witness costs when the opposing side rejects their Section 998
settlement offers.
The author explains:
The first section of AB 1141 reenacts a sunsetted provision
of 437(c) of the code of civil Procedure. These provisions
were enacted by SB 384 (Evans, 2011). SB 384 allowed a
motion for summary adjudication of a legal issue or claim
for damages that will not be completely dispositive on that
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issue or claim. However, the significant distinguishing
feature of this proposal is that it required the consent
and stipulation of all the parties and the court as a
pre-condition for the motion being filed.
The second section of the bill amends Code of Civil
Procedure Section 998. In 2005, an amendment to AB 1742
(Committee on Judiciary), inserted the word "postoffer"
into subdivision (d) of CCP Section 998. AB 1742 was a
noncontroversial omnibus bill and there is no record in the
legislative history of the bill explaining the intent of
this amendment. The amendment created an unintended
inequity between plaintiffs and defendants regarding
settlement offers under CCP Section 998. This disparity in
application of CCP 998 can have a very negative effect even
in cases that never go to trial. This inequity [places]
more pressure on plaintiffs to settle[,] while also
creating an incentive for defendants to prolong the case
until substantial expert [witness] costs have been
incurred.
Definition of summary adjudication. Summary adjudication in
California courts happens when a court, upon motion of a party,
makes a ruling on one or more major issues in a case in order to
resolve the entire cause of action or affirmative defense.
(Section 437(c)(f)(1).) If the ruling requested will not be
dispositive of the entire cause of action or affirmative
defense, the court is not authorized by law to hear the motion.
However, because of a change in the law in 2011 that amended
subdivision (c) of Section 473 of the Code of Civil Procedure,
courts were allowed, from January 1, 2012 until December 31,
2014, to summarily adjudicate portions of major causes of action
or affirmative defenses, without resolving the entire cause of
action or affirmative defense in the case. This change in the
law required that both parties stipulate that the resolution of
the issue by the court would either: 1) reduce the time of
trial; or 2) significantly increase the ability of the parties
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to resolve the case by settlement. According to an article in
the California Bar Journal, To Summarily Adjudicate or Not
Adjudicate: The Recent Amendments to Section 437c, the amended
statute provided necessary and long-awaited benefits to both
defense and plaintiff attorneys.
( www.calbarjournal.com/march2012 ). Unfortunately, the amended
statute expired on January 1, 2015. This bill would reenact the
summary adjudication statute, allowing courts to grant motions
to resolve some issues in a cause of action, thereby improving
judicial economy, reducing the duration of trials, and
encouraging pre-trial settlements.
Code of Civil Procedure 998 settlements. The primary purpose of
CCP section 998 is to encourage parties to settle their disputes
prior to trial. One incentive for the parties to accept
pre-trial settlement offers is to avoid being ordered to pay the
expert witness costs of the other party, as a court may order,
if he or she is awarded less than the amount of the pre-trial
settlement offer amount at trial. As explained by one court,
the policy of a 998 settlement is to encourage settlement and
provide a severe penalty for failing to settle when the result
after trial is less favorable than the offer that was made to
settle the case before trial. (Bank of San Pedro v. Superior
Court (1993) 3 Cal.4th 797, 804.) The policy of 998 settlements
is a good one: to encourage settlements in order to save court
time and reduce court congestion because courts are already
overburdened.
The need for equity in the court's discretion to award expert
witness costs after the rejection of a 998 offer to settle.
This bill addresses the inequity in treatment of expert witness
costs upon rejection of a settlement offer. It is unclear why
the word "post-offer" is in subdivision (d) of Section 988,
describing the expert witness fees which a defendant must pay if
he or she rejects the plaintiff's pre-trial settlement offer and
is awarded a lower amount after trial. It appears that in 2005,
this Committee introduced a non-controversial omnibus bill, AB
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1742, and an amendment to the bill inserted the word
"post-offer" into subdivision (d) of Section 998. There was no
intent language in AB 1742, so there is no way to determine
whether the amendment was made intentionally, or as the result
of an error. Considering the commitment of this Committee to
maintain a level playing field for all parties, to encourage
pre-trial settlement, and to ensure fairness in legislation, it
is difficult to imagine why the Committee would provide an
inequitable and disadvantaged result for plaintiffs, as this
amendment does.
Granting one party a more favorable result than another seems
especially unfair, considering that the distinction appears to
be the result of an inadvertent drafting error. The Committee
has been unable to locate any materials indicating that the
addition of the word "postoffer" to subdivision (d) of Section
988 was intentional and is not aware of any reason why the
Legislature would want to treat the parties differently in terms
of their ability to recover expert witness costs if their good
faith pre-trial settlement offers are rejected. This bill
provides the remedy by equalizing the costs for both plaintiffs
and defendants in 998 settlement situations.
ARGUMENTS IN SUPPORT: This bill enjoys support from a range of
attorney groups. According to the co-sponsor, the California
Defense Council (CDC), "The summary adjudication language
inadvertently sunsetted at the end of 2014, and the language in
AB 1141 restores the prior language in its entirety. The
provision helps contribute to judicial economy and efficiency,
so important in our currently overburdened civil courts.
Restoration of the language is non-controversial."
Other advocates, including the co-sponsor, California Consumer
Attorneys, states that, "The bill makes two positive procedural
corrections to the Code of Civil Procedure ("CCP"). AB 1141
reenacts and makes permanent summary adjudication statutes that
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inadvertently sunsetted and equalizes treatment of expert costs
upon rejection of a CCP section 998 settlement."
Prior Legislation: SB 384 (Evans) Chap. 419, Stats. 2011 amended
the summary adjudication statute to allow for summary
adjudication of partial issues, with stipulations of judicial
economy, required from both parties to the action.
AB 1742 (Committee on Judiciary) Chap. 706, Stats. 2005 amended
CCP 998 to allow an unsuccessful plaintiff to recover postoffer
expert witness costs.
REGISTERED SUPPORT / OPPOSITION:
Support
Consumer Attorneys of California (co-sponsor)
California Defense Counsel (co-sponsor)
Conference of California Bar Associations
Judicial Council of California
Opposition
None on file
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Analysis Prepared by:Khadijah Hargett / JUD. / (916) 319-2334