Ignacio v. Caracciolo

         APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC511878 Charles Palmer, Judge.

          Mark R. Weiner & Associates and Kathryn Albarian for Defendant and Appellant.

          Layfield & Barrett, Philip J. Layfield, and Christopher M. Blanchard for Plaintiff and Respondent.

          RUBIN, J.

         Yolanda Lachi Ignacio, the plaintiff in a personal injury action, was offered $75, 000 by defendant Marilynne Caracciolo to settle the action under certain terms, including that plaintiff execute a release. Plaintiff rejected the offer, and subsequently obtained a judgment against defendant for $70, 000. Defendant sought to tax plaintiff’s costs, and obtains her own costs, pursuant to Code of Civil Procedure section 998.^[1] The trial court concluded defendant’s settlement offer was invalid under section 998, and denied her the cost-shifting benefits of that statute. Defendant appeals. Because the release defendant submitted to plaintiff as part of her settlement offer sought to release defendant and others from claims outside the scope of the current personal injury action, it rendered the offer invalid under section 998. We therefore affirm.

         FACTUAL AND PROCEDURAL BACKGROUND

         On April 10, 2013, plaintiff was injured in an “auto versus pedestrian” accident; she was struck by defendant’s vehicle. On June 11, 2013, plaintiff filed suit against defendant, alleging causes of action for motor vehicle and general negligence.^[2]

         On March 20, 2015, counsel for defendant conveyed to counsel for plaintiff a settlement offer under section 998. Defendant offered to settle for $75, 000 plus costs incurred as of the date the offer was served, “in exchange for a release (exemplar attached for purposes of identifying material terms of the release) and dismissal without prejudice of the complaint filed by... [plaintiff].”

         Attached to the offer was a document entitled “RELEASE OF ALL CLAIMS, ” which was two pages long, single spaced. The first paragraph provides as follows: “For and in consideration of the sum of $75, 000.00, paid by draft issued by State Farm... [1] to [plaintiff], [plaintiff], on behalf of herself and her dependents, heirs, executors, administrators, and assigns (hereinafter collectively referred to as ‘Releasors’), [2] hereby fully and forever release and discharge [defendant], each of her partners, employees, agents, personal representatives, insurers, attorneys, successors or predecessors in interest, assigns, subsidiaries, past and present, any other person while using [defendant]’s vehicle within the scope of consent of [defendant] on or about April 10, 2013, and any other person or organization who is or might be liable for [defendant]’s alleged negligent use of a vehicle on or about April 10, 2013 (hereinafter collectively referred to as ‘Releasees’), [3] from any and all claims, demands, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, controversies, debts, costs, expenses, damages, judgments, orders, and liabilities of whatever kind and nature in law, equity, or otherwise, whether now known or unknown, suspected or unsuspected, that have existed or may have existed or which do exist, or which hereinafter can, shall or may exist, [4] including but without, in any respect, limiting the generality of the foregoing, any and all claims that were, or might, or could have been alleged in connection with an accident that occurred on or about April 10, 2013, and are the subject of the lawsuit entitled Ignacio v. Caracciolo, filed in the Los Angeles Superior Court, bearing case number BC511878 (‘Lawsuit’).”^[3] (Italics added.)

         Another provision of the release waived the protections of Civil Code section 1542, which provides that a general release does not extend to claims not known or suspected at the time of execution of the release. That provision also provided, “Releasors agree the Release of All Claims shall constitute a full release in accordance with its terms and acknowledge and agree that this waiver [of Civil Code section 1542] is an essential and material term of this Release of All Claims and the settlement that led to it, and that without such waiver, the settlement would not have been entered into.”

         Plaintiff did not accept the offer, and the case proceeded to trial. At trial, the jury concluded plaintiff’s damages were $100, 000, but that she was 30 percent comparatively negligent, while defendant was 70 percent responsible. This resulted in a judgment in plaintiff’s favor for $70, 000.

         Because the $70, 000 judgment was less than the $75, 000 offered, defendant believed the section 998 cost-shifting procedures applied. In contrast, plaintiff believed defendant’s settlement offer was invalid under section 998, and that plaintiff was entitled to her costs as the prevailing party. Competing cost memoranda and motions to tax costs were filed.^[4]

         Plaintiff challenged the validity of defendant’s settlement offer on three bases: (1) as it offered a dismissal without prejudice, it did not offer a final resolution equivalent to a judgment; (2) it attached only an “exemplar” release, leaving plaintiff to guess at the actual release terms sought by defendant; and (3) it sought a general release of claims beyond the scope of the current litigation.

         At the hearing on the first motion addressing the issue of the validity of defendant’s offer, defendant’s counsel argued that the offer was limited only to the claims that arose out of plaintiff’s complaint. Plaintiff’s counsel responded that the release would have encompassed other potential claims, suggesting as an example a claim for invasion of privacy against defendant, her investigator, and her attorney, on the basis that they had “potentially invaded [plaintiff’s] privacy and had potentially violated certain eavesdropping statutes.” Plaintiff’s counsel argued that plaintiff was not prepared to release that claim as part of the proffered settlement, but the exemplar release would have required her to release it. Defendant’s counsel was unable to clearly state whether the release would have encompassed the identified privacy claim, leading the court to question whether the scope of the release was ambiguous. The following day, on the hearing on the next motion, defendant’s counsel stated that the release absolutely would not reach the invasion of privacy claim, because “our general release... absolutely tailors it to anything arising out of the accident. [¶] The investigation, the sub rosa investigation is an entirely different matter.”

         The trial court took the matters under submission, and ultimately ruled in favor of plaintiff, concluding that defendant’s settlement offer was invalid under section 998. The court struck defendant’s cost memorandum, and ...