Licudine v. Cedars-Sinai Medical Center (2019)
March 15, 2019
Horvitz & Levy obtained affirmance of a trial court order rejecting a plaintiff’s attempt to collect over $2 million in prejudgment interest on a $5.6 million judgment. In a published opinion, the Court of Appeal provided helpful directions to trial courts and litigants about the standards for evaluating whether a pretrial settlement offer is in good faith, for the purpose of determining entitlement to prejudgment interest under California Code of Civil Procedure section 998.
Under section 998, litigants who make a reasonable pre-trial settlement offer can recover certain costs (including prejudgment interest) if the offer is rejected and the offering party “beats” the offer by obtaining a more favorable result at trial. In this medical malpractice case, the plaintiff served an offer to compromise for $249,999 less than a month after the complaint had been filed and only 5 days after the answer had been filed. The defendant objected to the offer as being premature, and the offer lapsed without acceptance.
At trial, the jury awarded the plaintiff approximately $7.6 million, which was adjusted to $5.6 million upon application of California’s cap on noneconomic damages in medical malpractice cases. Having received a verdict exceeding the 998 offer, the plaintiff sought prejudgment interest. The trial court denied it, finding the 998 offer was not in good faith and thus, invalid, because it was served before the defendant had a reasonable chance to investigate the claim. The Court of Appeal (Second District, Division Two) affirmed, holding that for a 998 offer to be valid, the offeror must know that the offeree has sufficient information to intelligently evaluate it. The court identified three “especially pertinent” factors relevant to determining whether the offeror could have had a good faith belief that its offer could be intelligently evaluated: “(1) how far into the litigation the 998 offer was made; (2) the information available to the offeree prior to the 998 offer’s expiration; and (3) whether the offeree let the offeror know it lacked sufficient information to evaluate the offer, and how the offeror responded.” Because all three factors showed that the plaintiff could not have had a good faith belief that the offer in this case could be intelligently evaluated, including the fact that the offer a was made so soon after the defendant had answered the complaint, the Court of Appeal found no abuse of discretion in the trial court’s ruling that the offer was invalid.