BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1141|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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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
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