California Court of Appeals, Second District, Eighth Division
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
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