BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1141


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1141 (Chau)


          As Amended  July 14, 2015


          Majority vote


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          |ASSEMBLY:  |      | (April 23,    |SENATE: |40-0  | (August 24,     |
          |           |48-29 |2015)          |        |      |2015)            |
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          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  








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            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.  








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             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  








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          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  








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          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