Voluntary Dismissal Exposes Plaintiff To CCP Section 998 Penalties

In Mon Chong Loong Trading Corp. v. Superior Court , the Second Appellate District confronted an issue of first impression; whether a voluntary dismissal subjects a plaintiff to CCP section 998 penalties.  The court concluded that it did. 

A plaintiff may fail to obtain a more favorable judgment or award by failing to obtain any award at all, as in the case of voluntary dismissal.  The law already recognizes this fact.  Indeed, voluntary dismissal of a lawsuit is always conditioned “upon payment of costs,” even if the dismissal is without prejudice and the potential exists, as in this case, for a refiling of the same action.  (§ 581 subd. (b)(1); § 1032 subd. (a)(4); Cano v. Glover, supra 143 Cal.App.4th at p. 331; Cal. Rules of Court, rule 3.1700(a)(1)). 

While a lawsuit may be concluded by a voluntary dismissal, the price of such a dismissal is the payment of costs under section 1032.  In our view, section 998 expands those costs to include the discretionary award of expert witness fees.  Even though there may remain the possibility (or existence) of a second lawsuit, both justice and judicial economy require that the award of costs be swiftly and simply concluded following the dismissal.  Such award cannot be predicated or dependent upon the possible future result of related (or even identical) separate litigation that may itself never progress to a judgment or award