Diaz v. Gau CA6

Filed 10/25/22 Diaz v. Gau CA6 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

CARLOS DIAZ, H048094 (Santa Clara County Plaintiff and Appellant, Super. Ct. No. 17CV312555)

v.

SHEMIN GAU,

Defendant and Respondent.

This appeal by the prevailing plaintiff in a personal injury jury trial calls for us to determine (1) whether a trial court may rely on a defendant’s present inability to satisfy a judgment in deciding whether a plaintiff’s offer of settlement under Code of Civil Procedure section 9981 was reasonable and made in good faith, (2) whether a claim for prejudgment interest under Civil Code section 3291 is subject to the trial court’s discretion to strike or tax costs otherwise available under section 998, and (3) whether this trial court abused its discretion in striking all expert fees based solely on the defendant’s financial condition, where the defendant declined to provide information as to the value of his home and its encumbrances. Answering the first two questions in the negative, we reverse.

1 Undesignated statutory references are to the Code of Civil Procedure.

I. BACKGROUND On July 3, 2017, Diaz sued Gau for negligence and negligence per se. Diaz alleged that on November 18, 2016, he was travelling on his motorcycle when Gau’s vehicle struck him. Diaz, then 34, suffered significant orthopedic injuries and a permanently disabling traumatic brain injury. At trial, the jury returned a verdict finding that Gau was liable for Diaz’s injuries and awarding economic damages of $3,732,550.50. The award omitted noneconomic damages, because Diaz’s own insurance policy at the time of the collision did not cover his motorcycle. Eighteen months before trial, Diaz had offered to settle with Gau for $999,999.99, with a mutual waiver of costs. In making the offer, Diaz specified that his offer was made pursuant to section 998 (998 offer); Gau did not accept. Accordingly, after trial, Diaz filed a memorandum of costs seeking to recover costs from Gau, including $586,983.88 in prejudgment interest under Civil Code section 3291 and $247,014.08 in expert fees. Diaz itemized the total fees incurred for each of 13 named experts. Gau filed a motion to strike or tax costs, contending that all costs were unnecessary, excessive, and not recoverable. Gau argued that no costs were recoverable under section 998 because (1) Diaz was on notice that the 998 offer, though otherwise reasonable, was too high for Gau to afford without selling his home; (2) Diaz knew or should have known that there was no reasonable prospect of Gau accepting it; and (3) Diaz therefore did not make the offer in good faith. Gau cited his liability insurance coverage limit of $25,000 and the failure of a pretrial attempt to secure a cash-out refinancing of his home mortgage—where the express purpose was to settle litigation other than a small-claims matter—as evidence that Diaz made his 998 offer in bad faith. Gau provided a “Declaration of Assets and No Other Insurance” in which he itemized and estimated the value of his personal property and investment accounts, with an aggregate stated value of $651,100. As to the value of his single-family residence in 2