BILL ANALYSIS Ó AB 1141 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1141 (Chau) As Amended July 14, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | | (April 23, |SENATE: |40-0 | (August 24, | | |48-29 |2015) | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: JUD. 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 (CCP) Section 437 (c) that was inadvertently allowed to sunset on January 1, 2015, including the recent amendments to CCP Section 437 (c) by SB 470 (Jackson) of the current legislative session. 2)Equalizes the treatment of expert witness costs that are awarded to a defendant and plaintiff after the other side's rejection of a settlement offer made pursuant to CCP Section 998 (998 settlements) so that a court may order a defendant or plaintiff to pay the opposing party's postoffer expert witness AB 1141 Page 2 costs. The Senate amendments: 1)Update this bill's provisions to be consistent with the amendments to CCP Section 437 (c) that are contained in the provisions of SB 470; 2)Add double-joining language to avoid chaptering out issues in the event that both this bill and SB 470 are enacted; 3)Include the post-offer limitation into this bill's provisions, allowing a court to order a plaintiff to pay their opposing party's postoffer expert witness costs, instead of the pre-offer and postoffer expert witness costs. 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. 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 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 postoffer expert witness services. AB 1141 Page 3 b) If the defendant rejects the plaintiff's settlement offer pursuant to 998 settlements 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 postoffer expert witness services. FISCAL EFFECT: None 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, including the recent amendments to CCP Section 437 (c) by SB 470. Furthermore, this bill creates equity between defendants and plaintiffs by allowing the court to order defendants or plaintiffs to pay their opposing party's postoffer expert witness costs when the opposing side rejects their 998 settlement offer and receives a more favorable judgment or award at trial. 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. 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 CCP Section 473 (c), 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 to resolve the case by settlement. According to an article in the California Bar Journal, To Summarily Adjudicate or Not AB 1141 Page 4 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. 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 "postoffer" is in CCP Section 988 (d), 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, the Assembly Judiciary Committee introduced a non-controversial omnibus bill, AB 1742 (Judiciary Committee), Chapter 706, Statutes of 2005, and an amendment to this bill inserted the word "postoffer" into CCP Section 998 (d). 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 the Assembly Judiciary Committee AB 1141 Page 5 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 Assembly Judiciary 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 Assembly Judiciary Committee has been unable to locate any materials indicating that the addition of the word "postoffer" to CCP Section 988 (d) 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. Analysis Prepared by: Khadijah Hargett / JUD. / (916) 319-2334 FN: 0001273