[co-author: Victoria Boyko]

In Litt v. Eisenhower Medical Center, 2015 DJDAR 6921, the California Court of Appeal for the Fourth District ruled that CCP § 998 fees were recoverable by a defendant even though another defendant had an obligation to indemnify the party for the very same costs incurred.

The Plaintiff sued Eisenhower Medical Center (EMC) for negligence. EMC served the Plaintiff with a CCP Section 998 (CCP § 998) offer. The Plaintiff rejected the 998 offer. The Plaintiff then added another entity as a Defendant. That entity owed an indemnity obligation to EMC.

Ultimately, the jury returned a verdict in the Plaintiff’s favor and against both Defendants jointly and severally. The Defendants then jointly requested costs and expert fees. The court ruled that EMC was the prevailing party. The court, however, declined to award EMC its § 998 expert fees because the later named defendant owed EMC an indemnity obligation, including the § 998 fees. The court entered an order striking all of EMC’s costs incurred after the new entity was named a Defendant.

The court of appeal reversed that part of the trial court’s ruling. The court stated that CCP § 998 is a fee‑shifting provision that allows the court to require the plaintiff to pay “a reasonable sum to cover costs…of expert witnesses…actually incurred and reasonably necessary…” (where an offer is made by a defendant and rejected, and the plaintiff fails to obtain a more favorable judgment). The court focused on language in Code of Civil Procedure Section 1033.5, which states that “costs are allowable if incurred, whether or not paid.” The court stated that the only interpretation of that language required payment of the § 998 fees, even where an indemnity obligation covered the same costs.