Litigators in California Learn New Rules for 2016

California litigators must learn a number of new procedural rules that took effect this year making significant changes to a number of litigators’ favorite procedural tools: demurrers, 998 offers and summary adjudication.

New Rules for Demurrers
New section Cal. Code Civ. Proc. 430.41(a)(2) mandates a meet and confer meeting at least five days before filing any demurrer, so as to encourage good-faith litigation, produce well-pleaded complaints and answers, and reduce the waste of court time and party resources.  Under this new section, the demurring party can get an automatic 30-day extension within which to file a responsive pleading by filing and serving (by the initial demurrer deadline) a declaration explaining why the meet and confer did not occur and stating that it made a good faith attempt to meet.

In addition, § 430.41(b) states that a party demurring to an amended pleading that was previously amended due to a prior demurrer cannot now demur to the amended pleading on any grounds that could have been raised in the earlier demurrer. This will eliminate a common waste of time and resources by requiring demurrers to raise all available grounds the first time.

New section 430.41(e)(1) places limits the number of times a pleading may be amended in response to demurrer:  No complaint or cross-complaint may now be amended more than three times in response to a demurrer, absent a showing of additional facts to be pled such that there is a reasonable possibility the defect can be cured.  Additionally – and underscoring the goal of encouraging good-faith litigation and the creation of well-pleaded complaints and answers – new section 430.41(c) allows the court, after it has sustained a demurrer and granted leave to amend, to order a conference of the parties before the amended pleading may be filed.

Under the prior rules a party could avoid demurrer by filing an amended pleading without leave of court up until the eve of the hearing even after the opposition to the demurrer was due. To curtail this practice, SB 383 also amended section 472 so that, a party now may only amend without leave of court if it files its amendment before the date that any opposition to demurrer is due, unless the parties stipulate to a later date.

These are significant changes and both plaintiffs and defendants should study these new rules closely.

998 Offers
Section 998 of the Cal. Code Civ. Proc. incentivizes litigants to accept pre-trial settlement offers so as to avoid being ordered to pay an opponent’s expert witness costs if the final trial award is less favorable than the offer. This can be a severe penalty and is designed to encourage serious evaluation of case value and reasonable settlement offers.

A 2005 amendment, however, inserted the word “postoffer” into subdivision (d) of section 998, dealing with rejection of an offer made by a plaintiff—but not into subdivision (c), which deals with rejection of an offer made by a defendant.

This created what appeared to be an unintended inequity between defendants and plaintiffs related to the discretionary authority of a trial court to award expert witness costs after one party’s rejection of a 998 settlement offer:  if the plaintiff rejected a defendant’s 998 offer and then failed to receive a better award at trial, the court could, in its discretion, require the plaintiff to pay the defendant’s pre and post-offer expert witness costs.  Conversely, if the defendant rejected the plaintiff’s 998 offer and subsequently failed to receive a more favorable judgment or award at trial, the court had discretion to order the defendant to pay only the plaintiff’s “postoffer” expert witness costs.  This created an incentive for a defendant to delay making a 998 offer until expert costs have been incurred because the penal nature of the statute was not tied to the timing of the offer.

Changes were proposed by the plaintiffs’ and defense attorneys’ associations and both sides of the bar lobbied hard about the how to amend the law. As a result, after January 1, 2016 both plaintiffs and defendants may recover only expert witness costs incurred after a section 998 settlement offer has been made.  With this change, parties are encouraged to make (and accept) reasonable 998 settlement offers earlier in litigation.  Defense litigants in particular should be aware of this change, as it otherwise limits costs they previously might have recovered.

Summary Judgment
The latest amendments to the summary judgment/adjudication rules in Cal. Code Civ. Proc. 437c affect the timing and effect of evidentiary objections.

First, a new section 437c(q) was added to clarify that a court is only required to rule upon objections to evidence that it deems material to the given summary judgment or summary adjudication motion and that any evidentiary objection not ruled on by the court shall be preserved for appellate review.

Second, the bills added section 473c(t), effectively reenacting the prior subsection (s) (which had been inadvertently allowed to sunset on January 1, 2015.)  Under the “new” section 437c(t), parties to California litigation can again bring a motion to summarily adjudicate an issue that does not completely dispose of a cause of action, affirmative defense, or issue of duty.  Procedurally, the §437c(t) that took effect January 1, 2016 is the same as the old §437c(s) that lapsed a year ago.

Section 437c(t) allows a party to file a motion for summary adjudication that does not completely dispose of a cause of action, affirmative defense, or issue of duty under specific circumstances – specifically, when the parties whose claims or defenses are put at issue by the motion jointly stipulate as to the issue(s) to be adjudicated, and declare that a ruling on the motion would further the interest of judicial economy.  The court has discretion to summarily adjudicate the stipulated issues, and non-stipulating parties (whose claims and/or defenses are not directly implicated) can object to the filing.

Under new section 437c(t) the party seeking to bring such partial summary adjudication must first seek leave of the court to file the motion.  Specifically, they must provide a joint stipulation stating the issue or issues to be adjudicated, including a declaration from each stipulating party that the motion will further the interest of judicial economy by decreasing trial time or significantly increasing the likelihood of settlement.  See § 437c(t)(1)(A)(i-ii)  The moving party must then serve the joint stipulation on any party to the action who is not also a party to the motion.  See § 437c(t)(1)(B)  Those parties not stipulating to the motion then have 10 days from the submission of the stipulation to object.  See § 437c(t)(2).

Within 15 days of receipt of the stipulation, the court must notify the parties as to whether the motion may be heard.  In making its decision, the court may consider objections by non-stipulating parties that were made within 10 day period.  Id.

If the court chooses, in its discretion, not to permit the motion be filed, the stipulating parties may request—and the court must then conduct—an informal conference to permit further evaluation of the notice.  See § 437c(t)(3)

If the court does allow the motion, the notice of motion must be signed by all parties to the motion and must contain a statement indicating that the “motion is made pursuant to subdivision (t) of section 437c of the Code of Civil Procedure. The parties to this motion stipulate that the court shall hear this motion and that the resolution of this motion will further the interest of judicial economy by decreasing trial time or significantly increasing the likelihood of settlement.”  See § 437c(t)(4)(A-B)

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