Case Name: State Farm Mutual Automobile Ins. Co. v. Sotoodeh, et al.

Case No.: 1-12-CV-223499

Following a voluntary dismissal by Plaintiff State Farm Mutual Automobile Insurance Company, Defendants Said Askary and Chitra Sotoodeh filed and served a memorandum of costs on May 7, 2014. Plaintiff now moves for an order taxing costs by striking in its entirety the memorandum of costs, on the grounds that Plaintiff’s voluntary dismissal was made only in exchange for Defendants’ waiver of costs. Defendants oppose.

According to the declaration of Plaintiff’s counsel Jack Hull, on March 18, 2014, Defendants’ counsel sent an email to Plaintiff’s counsel inquiring whether Plaintiff would agree to dismiss the lawsuit with each party bearing their own costs. The email concludes with this language: “Please get back at your earliest convenience with your clients’ response to this proposal.” According to Mr. Hull: “After conferring with the client, it was determined that our client would allow us to dismiss this lawsuit in exchange for the Defendant’s [sic] waiving costs and Plaintiff filed a dismissal of the complaint on or about April 25, 2014.” Although in a reply declaration, Mr. Hull recites that he never rejected the offer, nowhere does he claim that he communicated an acceptance of the offer or in any way notified Defendants that Plaintiff intended to dismiss in exchange for a waiver of costs.

Defendants argue that Plaintiff never communicated an acceptance of the proposal. According to the declaration of Defendants’ counsel Aaron Dawson, Defendants received no response to their offer of March 18. After waiting more than three weeks, on April 11 Mr. Dawson called Mr. Hull’s office to confirm that the offer had been rejected, and was told that Mr. Hull was unavailable but that he (Mr. Hull) was “unwilling to dismiss the case unless there was an offer of money.” On that basis, Mr. Dawson continued to prepare for trial until April 25, when Plaintiff filed the dismissal.

Plaintiff disputes Mr. Dawson’s version of the April 11 conversation in a reply declaration by David Saldana, subrogation analyst. Mr. Saldana denies that he told Mr. Dawson that Mr. Hull was unwilling to dismiss without an offer of money. Curiously, he claims that he told Mr. Dawson “merely that State Farm had retained our firm to protect their interest”—but does not explain why he needed to say that, given that for two years the firm had represented State Farm in this case. Importantly, Mr. Saldana does not claim that he communicated a rejection of the March 18 offer or that there was any discussion at all about a waiver of costs. In any event, even crediting Mr. Saldana’s recollection, his question to Mr. Dawson as to whether Mr. Dawson was calling to make an offer is inconsistent with Plaintiff’s current position that it understood that the previous offer was still outstanding and could be accepted.

An offer remains open only for a reasonable period of time. “Even in cases where time is not the essence of the contract, acceptance must be made within a reasonable time.” (Coats & Williamson v. Moran & Co. (1924) 67 Cal.App. 46, 50.) Furthermore, an offer may specify the manner of acceptance. “When the provisions of a […] contract prescribe the particular manner in which the [contract] is to be exercised, they must be strictly followed.” (Palo Alto Town & Country Village, Inc. v. Bbtc Co. (1974) 11 Cal.3d 494, 498. See also 1 Witkin, Summary 10th (2005) Contracts, § 189, p. 223 (“The manner in which acceptance is to be communicated may be specified in the offer, in which case no other will suffice. But if the offer prescribes no means, any reasonable and usual mode may be adopted.”).)

This offer by its terms required that an acceptance be communicated. It is reasonable in these circumstances that Defendants should expect to be advised promptly as to whether or not Plaintiff was accepting the offer, so they could determine whether to expend further effort on the case. Plaintiff presents no evidence that acceptance was ever communicated, and Plaintiff’s own evidence suggests that Plaintiff itself did not think on April 11 that the March 18 offer was still outstanding. There was no meeting of the minds. The motion is DENIED.