If I dismiss Defendant from my civil case, am I liable for Defendant’s CCP 998 costs?

By Eric Ganci

Research by Martha Klak

Let me repose the question: if Defendant serves you with a CCP 998 offer to settle, if you do not accept this offer, and then if you later dismiss Defendant from your civil action…are you liable to pay Defendant’s 998 costs?

A huge thank you to Martha Klak, a 3^rd year law student at USD School of Law, who researched this topic for us.

First, let me say all this applies to California law, Code of Civil Procedure section 998.

Well…and first-first (a pre-first?), let me also say CCP 998 offers is a deep legal discussion. One I will not get into inside this blog, but I have blogged re 998 offers below at:

Can you add conditions when accepting a CCP 998 offer?

When can you file a demand to settle against the other party?

Ok, so onto the issue at hand: if you dismiss Defendant after this Defendant has served you with a 998 offer, to which you did not accept…and then if you dismiss this Defendant, may you be liable to pay Defendant’s 998 costs?

That question brings us to the 2013 case Mon Chong Loong Trading Corp. v. Superior Court.* In this case Defendant served Plaintiff with a 998, Plaintiff later dismissed Defendant, then “Defendant filed its cost bill in this matter following the voluntary dismissal, without prejudice, of the complaint of plaintiff….”

As Mon states (while quoting another case): “Here, however, there has been no judgment, only a dismissal, and the entry of dismissal by the clerk is a ‘ministerial, not a judicial, act….’”

And hence, the formal question posed by the Court: “This case does present such an issue: whether a plaintiff’s voluntary dismissal without prejudice constitutes a failure to obtain a more favorable judgment or award and triggers cost-shifting under section 998.” The Court holds Plaintiff dismissing Defendant, yes, does trigger Plaintiff’s liability to Defendant’s 998.

Per 998 law: “If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award… the court or arbitrator … in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses … actually incurred and reasonably necessary in…preparation for trial or arbitration….” This is 998(c)(1). And that’s the key language for this ruling: “and the plaintiff fails to obtain a more favorable judgment or award….” If you dismiss a Defendant, then you have failed to obtain a more favorable judgment over that Defendant’s 998 offer to you.