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Derrick Millsaps v. Doehrman Company

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Butte)


April 11, 2011

DERRICK MILLSAPS, PLAINTIFF AND APPELLANT,
v.
DOEHRMAN COMPANY, INC., DEFENDANT AND RESPONDENT.

(Super. Ct. No. 124942)

The opinion of the court was delivered by: Butz , J.

Millsaps v. Doehrman

Co. CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COPY

Plaintiff Derrick Millsaps appeals from a 2010 postjudgment order granting nearly $40,000 in costs, including expert witness fees, to defendant Doehrman Company, Inc. (Doehrman). (Code Civ. Proc., § 998.)*fn1 The order represents the finalization of a February 2007 ruling by the trial court in which it granted, in part, motions to tax costs by Millsaps and plaintiff in intervention Pep Boys, Inc. (Pep Boys; collectively, plaintiffs).

On appeal, Millsaps contends Doehrman should be precluded under theories of waiver or estoppel from collecting these costs, given the inexplicable three-year delay in reducing the ruling to an order adding costs to the judgment. He also contends the section 998 offer made by Doehrman was invalid and should not have been the basis for any posttrial award of expert witness fees. We disagree and shall affirm the order.

FACTUAL BACKGROUND

This case arises out of injuries to Millsaps, an employee of Pep Boys, caused by a malfunctioning piece of equipment. Millsaps sued Doehrman for negligent installation of the equipment. Pep Boys, a self-insured employer, had paid workers' compensation benefits to Millsaps, and brought a complaint in intervention to recover those benefits.

Doehrman made a pretrial offer to compromise to Millsaps pursuant to section 998. It offered to pay Millsaps $50,000, in exchange for (among other things) Millsaps' dismissal of the action against Doehrman, and his "agree[ment] to indemnify and hold harmless DOEHRMAN COMPANY, INC. from any and all claims or liens asserted by intervenor PEP BOYS, INC."

The action proceeded to jury trial in 2006; Doehrman prevailed after a jury found it did not install the equipment that caused Millsaps' injury. Judgment was entered in Doehrman's favor on November 3, 2006.

2007: Ruling on Plaintiffs' Motions to Tax Costs

Doehrman filed a timely memorandum of costs in which it sought $50,000 in costs, including expert witness fees. Plaintiffs Millsaps and Pep Boys moved separately to strike and/or tax costs. In his motion, Millsaps argued (among other things) that Doehrman's section 998 offer was "defective" because it was "conditioned upon compromising the claims of the intervenor, and is in fact, an offer made to two parties" because it required Millsaps "to get the intervenor, Pep Boys, Inc., to accept less than its total claim."

Following a hearing in January 2007 (the transcript of which is not in the record on appeal), the trial court rejected Millsaps' argument that the section 998 offer was invalid, finding that its requirement that Millsaps agree to indemnify and hold Doehrman harmless from Pep Boys' claims "does not require Pep Boys to settle, or to cooperate in any way with the settlement." The court granted the motions to tax in part, reducing or disallowing certain costs claimed by Doehrman in specified amounts, and ordered Doehrman's counsel to reduce its nine-page written ruling to a form of order and submit it to opposing counsel as to form.

2009: The Order to Show Cause re Order Granting Costs and Amended Judgment

Doehrman did nothing more on the case for more than two years.

In July 2009, Doehrman's counsel sent to plaintiffs for their review a "long overdue" draft order based on the trial court's 2007 ruling on plaintiffs' motions to strike/tax costs and a proposed amended judgment.*fn2 Millsaps' counsel objected and refused to approve the draft order as to form or content. Counsel said he had closed the file and was not in contact with Millsaps; he also argued that the order violated the spirit, if not the letter, of section 664 and that the unexplained delay constituted a waiver by defendant of its right to seek costs and/or its collection of costs should be barred by the doctrine of equitable estoppel.

The court issued an order to show cause why it should not sign the draft order and an amended judgment also submitted by Doehrman and set the matter for hearing.

In January 2010, after considering briefing by Doehrman and Millsaps, the court signed the order granting in part and denying in part motions to strike and/or tax costs prepared by Doehrman and stated its intention to direct the court clerk to insert the costs awarded into the existing judgment.

Although it found Doehrman's submission of the form of order for costs "extremely tardy," the court found no prejudice to either party and no reliance by any party to support a claim of estoppel.

DISCUSSION

I. Doehrman's Section 998 Offer Was Valid

Section 998, subdivision (c)(1) provides in part that, if an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment, the court in its discretion may require the plaintiff to pay "a reasonable sum to cover costs of the services of expert witnesses" in addition to defendant's costs from the time of the offer.

The purpose of section 998 is to encourage pretrial settlements and avoid needless litigation. (Westamerica Bank v. MBG Industries, Inc. (2007) 158 Cal.App.4th 109, 129 (Westamerica).) It achieves this aim "'by punishing a party who fails to accept a reasonable offer from the other party.'" (Ibid., italics omitted.)

The issue of whether a section 998 offer is enforceable--and the application of section 998 to an undisputed set of facts--presents a question of law, which we review de novo. (Barella v. Exchange Bank (2000) 84 Cal.App.4th 793, 797 (Barella).) In interpreting a section 998 offer, we apply general contract principles when they neither conflict with nor defeat the statute's purpose of encouraging the settlement of lawsuits prior to trial. (Westamerica, supra, 158 Cal.App.4th at p. 129.)

Several courts have opined that a section 998 offer made to multiple parties is valid only if it is expressly apportioned among them and not conditioned on acceptance by all of them. (See Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102, 112 [and cases cited therein].) "[W]hile the statute contemplates that an offer made pursuant to its terms may properly include non-monetary terms and conditions, the offer itself must, nonetheless, be unconditional. [Citation.] Thus, for example, an offer to two or more parties, which is contingent upon all parties' acceptance, is not a valid offer under the statute." (Barella, supra, 84 Cal.App.4th at p. 799, fn. omitted.)*fn3

On appeal, Millsaps renews his argument that Doehrman's section 998 offer was "defective," and should not have been the basis for an award of expert witness fees as costs, because it represented "an offer made to two parties."

The trial court was right to reject this argument. The term of Doehrman's section 998 offer that sought Millsaps' agreement "to indemnify and hold harmless DOEHRMAN COMPANY, INC. from any and all claims or liens asserted by intervenor PEP BOYS, INC." did not require Millsaps to persuade Pep Boys to accept less than its total claim, as Millsaps argues. The challenged term only meant that Millsaps, had he accepted the section 998 offer, would also have accepted the risk--otherwise borne by Doehrman--that Pep Boys would prevail on its complaint in intervention. Nothing about that provision required Pep Boys to cooperate or agree to the settlement, or to reduce its claim. Even had Millsaps settled the underlying personal injury claim against Doehrman, Pep Boys' complaint in intervention could have proceeded to trial.

II. Doehrman Was Not Precluded from Recovering Costs by Principles of Equitable Estoppel or Waiver

"[U]nder [the] doctrine of equitable estoppel, one may not lull a party into inaction by words or deeds that lead to a false sense of security." (Sears, Roebuck & Co. v. National Union Fire Ins. Co. of Pittsburgh (2005) 131 Cal.App.4th 1342, 1351, citing Cuadros v. Superior Court (1992) 6 Cal.App.4th 671, 675.) "[F]or the doctrine of equitable estoppel to apply," however, "the party asserting estoppel must rely on the other party's conduct, to its detriment." (Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 994; Pelton-Shepherd Industries, Inc. v. Delta Packaging Products, Inc. (2008) 165 Cal.App.4th 1568, 1585.)

Whether there is an estoppel is chiefly a question of fact. (San Diego Mun. Credit Union v. Smith (1986) 176 Cal.App.3d 919, 923.)

The trial court's finding that there was no reliance by Millsaps is supported by the record. Millsaps submitted no declaration or other evidence to establish that he had relied on Doehrman's failure to act promptly to reduce its cost award to an order, or that Doehrman's failure had given him a false sense of security. Absent any evidence to support a showing of reliance, there can be no equitable estoppel.

Nor did the court err in impliedly rejecting Millsaps' assertion that Doehrman waived its right to request the addition of costs to its judgment by its failure to timely do so.

When a judgment includes an award of costs and fees, but the amount of the award is left blank for future determination, the clerk may enter the amounts on the judgment nunc pro tunc after the parties file their respective memoranda of costs and motions to tax, the trial court has made its determination of the merits of the competing contentions, and the order setting the final amount is filed. (7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 147, pp. 680-681.) Although the judgment in this action is not in the record on appeal, we assume that the judgment included an award of costs from the trial court's statement in its tentative ruling on the order to show cause that it "will direct the clerk to insert the appropriate amount in the Judgment previously signed" and the "form of Amended Judgment provided by counsel will not be needed."

Waiver is the "intentional relinquishment or abandonment of a known right" (Reid v. Google, Inc. (2010) 50 Cal.4th 512, 521, fn. 3) and nothing in the record indicates that Doehrman intended to waive its rights to have the costs awarded included in the judgment.

Millsaps correctly points out that waiver can result from the failure to act on a right in a timely fashion, citing Terzian v. California Cas. Indem. Exch. (1974) 42 Cal.App.3d 942, 949-950. Some courts have indeed found waiver to result from inaction where a party fails to act within a time limit specified for that purpose in a statute or specified in an applicable contract. (E.g., Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 30 [and cases cited therein].)

But, no such time limit governs a party's preparation of an order on a ruling granting costs. California Rules of Court, rule 3.1700 sets forth the time limits within which a prevailing party must file a memorandum of costs (rule 3.1700(a)(1)), and the time within which opposing parties must file and serve a notice of motion to strike or to tax costs (rule 3.1700(b)(1)). Rule 3.1700(b)(4) states that "After the time has passed for a motion to strike or tax costs or for determination of that motion, the clerk must immediately enter the costs on the judgment." This provision contemplates an "immediate" amendment of the judgment by the court clerk only if no motion to tax costs has been filed, or there is no postjudgment hearing. (See 7 Witkin, Cal. Procedure, supra, Judgment, § 147, p. 681.) Nothing in the California Rules of Court indicates when a party must reduce a ruling in his favor to an order.

We certainly do not condone the unexplained delay by counsel for Doehrman. But we see no justification for rewarding Millsaps' rejection of Doehrman's reasonable section 998 offer, by allowing him to avoid the sanction approved by the Legislature for recalcitrant plaintiffs. (See Westamerica, supra, 158 Cal.App.4th at p. 129.) Accordingly, we shall affirm the judgment.

DISPOSITION

The judgment is affirmed. Doehrman is awarded its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)

We concur: HULL , Acting P. J. ROBIE, J.


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