Expert Witness Fee Award “Premature”
A $90,000 award of expert witness fees under CCP §998 has been found premature by the California Court of Appeals, which reversed the award and remanded the construction contract dispute to the trial court.
In JMR Construction Corp. v. Environmental Assessment etc., (Cal. Ct. App. 2015), the general contractor JMR brought suit against one of its subcontractors, Environmental Assessment and Remediation Mgt., Inc. (EAR), and the subcontractor's surety, Surtec Insurance Company. JMR was the general contractor to the Army Corps of Engineers for the construction of a dental clinic at the Presidio of Monterey, and JMR contracted electrical and plumbing work to EAR. JMR notified EAR about delays, improper work, deficient and late submittals, retaining funds due to EAR. After the late completion of the project, JMR sued EAR and SureTech for breach of contract and for foreclosure of the bonds. EAR and Surtec filed cross-complaints to recover the retained funds.
The court of appeals dismissed EAR's challenges to the testmony of John Elmer, JMR's construction management expert with expertise in scheduling (eg., construction delays expert witness) and JMR's construction damages expert witness, Juan Perez.
Prior to trial, JMR offered to settle for $375,000, and at trial was awarded $315,631, plus an undetermined amount of attorney fees and $90,644.07 in expert witness fees. JMR was ordered to calculate the amount of recoverable attorney fees, those incurred before the filing of EAR's cross-complaint. In awarding the expert witness fees under CCP §998, the trial court assumed that JMR's total recovery ($315,631 plus the undetermined attorney fees) would exceed the pretiral settlement offer, thus providing for recovery of the expert witness fees.
EAR and SureTec made seven arguments in its appeal of the trial court's decision, including the court's use of the Eichleay method in calculating damages, its method of calculating JMR's disruption and delay damages, its finding EAR liable under the performance bonds, its conclusion on formal notice of co-defendant's default being unnecessary, as well as separate motions for a new trial and to strike/tax costs, including striking the award of expert witness fees.
The court of appeal denied EAR and SureTec's motions and affirmed the trial court's judgment in all but the award of expert fees. As there had been, at the date of the appeal, no award of a defined amount of attorney fees, the total judgment at the time of appeal was less than the pretrial settlement offer. The appeal court reversed award of expert witness fees without prejudice and remanded the case to the trial court to determine, after rendering an attorney fee award, whether JMR would be entitled to an award of expert witness fees.
While expert witness fees are never legally dependent upon whether courts award recovery of them, the payment of contested expert fees has often been delayed, sometimes for years.