BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1141|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 


          Bill No:  AB 1141
          Author:   Chau (D)
          Amended:  7/14/15 in Senate
          Vote:     21  

           SENATE JUDICIARY COMMITTEE:  7-0, 6/16/15
           AYES:  Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,  
            Wieckowski

           ASSEMBLY FLOOR:  48-29, 4/23/15 - See last page for vote

           SUBJECT:   Civil actions


          SOURCE:    California Defense Counsel
                     Consumer Attorneys of California 


          DIGEST:  This bill reenacts a provision allowing parties to  
          stipulate to summary adjudication of an issue that does not  
          dispose of a cause of action, upon approval of the court, as  
          specified, that sunset on January 1, 2015.  This bill also  
          removes a disparity under existing law relating to Section 998  
          settlement offers by ensuring that both plaintiffs and  
          defendants, alike, could be ordered to pay the "post-offer"  
          costs of the other party as a consequence of rejecting a Section  
          998 settlement offer and failing to ultimately obtain a more  
          favorable award.




          Senate Floor Amendments of 7/14/15 add double-jointing language  








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          to avoid chaptering out issues in the event that both this bill  
          and SB 470 (Jackson) are enacted.


          ANALYSIS:   


          Existing law:


          1)Provides that a party may move for summary adjudication in any  
            action or proceeding if it is contended that the action has no  
            merit or that there is no defense to the action or proceeding.  
             


          2)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. 


          3)Provides that, not less than 10 days before trial or  
            arbitration of a civil action, any 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, as specified.  


          4)Provides that if an offer made by a defendant is not accepted,  
            and the plaintiff fails to obtain a more favorable judgment or  
            award, the plaintiff shall not recover his or her post-offer  
            costs and shall pay the defendant's costs from the time of the  
            offer.  In addition, in any action or proceeding other than an  
            eminent domain action, 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, actual incurred and  
            reasonably necessary in either, or both, preparation for trial  
            or arbitration, or during trial or arbitration, of the case by  
            the defendant.  


          5)Provides that if an offer made by a plaintiff is not accepted  







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            and the defendant fails to obtain a more favorable judgment or  
            award in any action or proceeding other than an eminent domain  
            action, the court or arbitration, 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.  (Code Civ.  
            Proc. Sec. 998(d) (emphasis added).)


          This bill:


          1)Reenacts sunsetted provisions of the summary judgment statute  
            that authorize a motion for summary adjudication of an issue,  
            even if it would not dispose of a cause of action, an  
            affirmative defense, or an issue of duty, upon the stipulation  
            of the parties and a prior determination by the court that the  
            motion will further the interests of judicial economy by  
            reducing the time required for trial or significantly  
            increasing the ability of the parties to settle.  Also  
            reenacts sunsetted provisions that provide for the filing of  
            the stipulation, as specified.


          2)Conforms the provision requiring a plaintiff to cover the  
            defendant's "costs" (i.e. both pre-and post-offer costs) to  
            the provision requiring a defendant to cover the plaintiff's  
            "post-offer costs," only, so that both parties would only need  
            to pay the post-offer costs of the other party, if the former  
            declines an offer to settle and fails to obtain a more  
            favorable judgment or award.  


          3)Makes other make other technical, nonsubstantive changes.


          Background


          The Code of Civil Procedure contains various provisions that  
          seek to encourage settlement to avoid costly and unnecessary  







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          trials and that otherwise seek to quickly dispose of cases or  
          claims (or settle issues) where there is no triable issue of  
          fact. Two of those sections, Section 998 relating to pre-trial  
          settlement offers and Section 437c relating to summary judgments  
          and summary adjudications, are the subjects of this bill. 


          Section 998 of the Code of Civil Procedure allows for the  
          imposition of monetary sanctions against parties to civil  
          actions that decline pre-trial settlement offers and  
          subsequently fail to obtain a more favorable outcome at trial.   
          Prior to 2005, the party that declined the offer and failed to  
          obtain a better award at trial would have to pay the other  
          party's expert witness costs.  Then in 2005, amendments were  
          made to an Assembly Judiciary Committee omnibus bill, AB 1742  
          (Committee on Judiciary, Chapter 706, Statutes of 2005), wherein  
          the word "post-offer" was added to the provision requiring a  
          defendant to pay the plaintiff's expert witness costs when the  
          defendant rejects the plaintiff's settlement offer and fails to  
          do better at trial.  That word was not added to the counterpart  
          provision requiring a plaintiff to pay the defendant's costs in  
          a parallel situation, creating what is presumed to be an  
          unintended disparity in the treatment of plaintiffs and  
          defendants with regard to consequences of rejecting what would  
          have been a more favorable pre-trial settlement offer.  


          Separately, in 2011, SB 384 (Evans, Chapter 419, Statutes of  
          2011) was enacted to create court efficiencies by encouraging  
          settlement of certain issues in a case by way of summary  
          adjudication stipulations.  By way of background, pursuant to  
          Section 437c of the Code of Civil Procedure, after the filing of  
          a lawsuit, either party to an action may move for summary  
          judgment by contending that the action has no merit or that  
          there is no defense thereto.  Essentially, the party filing the  
          motion is claiming that all necessary factual issues are  
          resolved and need not be tried by the court because they are so  
          one-sided.  If the court finds that there is no triable issue as  
          to any material fact and that the moving party is entitled to a  
          judgment as a matter of law, then the motion must be granted  
          (which generally disposes of the whole case).  If an issue of  
          fact is presented, the court must permit trial thereof, though  
          it may also find that certain other issues "are without  
          substantial controversy" and grant summary adjudication as to  







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          those issues.  SB 384 added provisions to that statute to allow  
          parties to move for the summary adjudication of an issue that  
          does not completely dispose of the cause of action, affirmative  
          defense, or issue of duty, as long as both parties stipulated  
          and the court determined and ordered that the motion would  
          further the interests of judicial economy.  On January 1, 2015,  
          the summary adjudication provisions that were enacted by SB 384  
          were inadvertently allowed to sunset. 


          This bill, co-sponsored by the California Defense Counsel and  
          the Consumer Attorneys of California, corrects the above Section  
          998 disparity to ensure that a party rejecting a pre-trial  
          settlement pays the post-offer costs of the settlement-offering  
          party in a situation where the settlement-rejecting party fails  
          to obtain a better award at trial. This bill also reinstates the  
          now-sunsetted summary adjudication provisions of Section 437c,  
          indefinitely. 


          Comments


          As stated by the author, "AB 1141[:] (1) reenacts and makes  
          permanent the provisions in statute relating to summary  
          adjudication that inadvertently sunsetted and (2) creates equity  
          between defendants and plaintiffs by allowing both defendants  
          and plaintiffs to seek [ ] post offer costs for expert  
          witnesses."  With respect to the first part of this bill, the  
          author writes: 


            SB 384 (Evans, 2011) set forth the procedure for bringing a  
            summary adjudication motion.  First, the parties whose claims  
            or defenses are at issue are required to submit to the court a  
            joint stipulation setting forth the issues to be adjudicated,  
            with a declaration from each stipulating party demonstrating  
            that a ruling on the motion will further the interests of  
            judicial economy by reducing the time to be consumed at trial  
            or by significantly increasing the likelihood of settlement.  


            Next, within fifteen days of receiving the stipulations and  
            declarations, the court is required to notify the submitting  







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            parties as to whether the motion may be filed.  If the court  
            does not allow the motion to be filed, the parties may request  
            an informal conference to permit further evaluation of the  
            stipulations.  Upon such a request, the court is required to  
            conduct the informal conference. Because the parties and the  
            court have to agree to the filing of a motion for summary  
            adjudication on a legal issue or claim of damages, there is no  
            possibility for either party to file a motion for purposes of  
            delay or harassment.  Unlike the law prior to SB 384, one side  
            cannot unilaterally file a motion for summary adjudication.   
            Unfortunately, the provisions of SB 384 inadvertently  
            sunsetted on January 1, 2015 eliminating a legal tool that  
            promotes judicial economy.   


          With respect to the second section of this bill, the author  
          writes: 


            In 2005, an amendment to AB 1742 created an unintended  
            inequity between plaintiffs and defendants regarding  
            settlement offers under [Code of Civil Procedure (CCP)]  
            Section 998. As the statute currently reads, when a plaintiff  
            rejects a 998 settlement offer and fails to receive a better  
            judgment at trial, he or she can be subject to an award of  
            both pre and post offer expert fees paid by the defendant,  
            under subdivision (c)(1).  However, if the defendant rejects a  
            plaintiff's 998 offer and fails to do better at trial, the  
            plaintiff can only seek "post offer costs of the services of  
            expert witnesses." CCP [Sec.] 998, subd. (d).


            This disparity in application of CCP [Sec.] 998 can have a  
            very negative effect even in cases that never go to trial.  If  
            the parties exchange 998 settlement offers near the trial  
            date, during negotiations the plaintiff has to consider facing  
            potentially all of the defendant's expert fees, while the  
            defendant is only concerned with the plaintiff's post-offer  
            expert fees. This inequity in application of CCP [Sec.] 998  
            applies more pressure on plaintiffs to settle than [it does  
            on] defendants.  Such an application was never intended by the  
            Legislature.









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            The Supreme Court confirmed this disparity in Regency Outdoor  
            Advertising, Inc. v. City of Los Angeles, 39 Cal.4th 507, 532  
            (2006).   Following the language in the statute, the Court  
            held that defendants are entitled to both pre-offer and  
            post-offer costs under section 998(c).  Id. at 533.  The Court  
            noted in a footnote that plaintiffs could also receive expert  
            fees regardless of if they were incurred pre or post-offer up  
            until a 2005 amendment.  Id. at n. 13.  The word "post offer"  
            was inserted into subdivision (d) by AB 1742 (2005-06), and  
            was enacted as Chapter 706 of the laws of 2005. However, the  
            2005 amendment was not intended to create this inequity as the  
            change was not mentioned in the bill's analysis. AB 1141 would  
            resolve this situation by applying CCP [Sec.] 998 equally to  
            both the plaintiffs and defendants.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified7/15/15)


          California Defense Counsel (co-source)
          Consumer Attorneys of California (co-source)
          American Insurance Association  
           Association of California Insurance Companies  
           California Building Industry Association  
           California Chamber of Commerce  
           Civil Justice Association of California  
           Conference of California Bar Associations
          Cooperative of American Physicians  
           Judicial Council of California  
           Personal Insurance Federation of California  
           The Doctors Company  


           OPPOSITION:   (Verified7/15/15)


          None received

          ARGUMENTS IN SUPPORT:  The Judicial Council, in support of the  
          summary adjudication provisions of this bill, writes that "[t]he  







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          partial summary adjudication scheme is designed for cases where  
          both the parties and the court agree that such motions will  
          enhance judicial economy and/or help promote settlements.  It  
          represents an innovative and flexible approach to motion  
          practice that, in appropriate cases, may serve to speed up final  
          resolution of the case while at the same time guarding against  
          unnecessary delays by allowing the court to control its use."  
          Judicial Council has no position on the bill's proposed changes  
          to Section 998. 

          Also in support of the summary adjudication provisions are:  
          American Insurance Association; Association of California  
          Insurance Companies; California Building Industry Association;  
          California Chamber of Commerce; Civil Justice Association of  
          California; Cooperative of American Physicians; Personal  
          Insurance Federation of California; The Doctors Company.   
          Notably, due to amendments taken on June 3, 2015, these  
          organizations have removed their opposition to the portion of  
          this bill relating to Section 998 settlement offers.

          ASSEMBLY FLOOR:  48-29, 4/23/15
          AYES:  Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,  
            Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,  
            Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin,  
            Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin,  
            Nazarian, O'Donnell, Perea, Quirk, Rendon, Rodriguez,  
            Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Atkins
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,  
            Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,  
            Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes,  
            Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner,  
            Waldron, Wilk, Wood
          NO VOTE RECORDED:  Campos, Ridley-Thomas, Salas

          Prepared by:Ronak Daylami / JUD. / (916) 651-4113
          7/15/15 14:50:07


                                   ****  END  ****


          








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