An Appellate Court recently held that an insurer’s liability may exceed its policy limits where its insured is liable for costs under CCP §998 and insurer has stepped into the shoes of its insured.


Plaintiff Amanda Meleski (“Plaintiff” or “Meleski”) was injured when Albert Hotlen (“Hotlen”) ran a red light and collided with her vehicle.  She attempted to sue him for her injuries, but, by the time of her lawsuit, Hotlen had passed-away. Plaintiff amended her complaint to name Hotlen’s estate as the defendant. She then served her complaint on Hotlen’s liability insurer, Allstate Insurance Company (“Allstate”), seeking payment of Hotlen’s policy limits of $100,000.

Plaintiff attempted to settle the matter before trial by making a §998 settlement offer in the amount of $99,999, one dollar less than the policy limits.  Allstate rejected the offer. Plaintiff prevailed at trial and was awarded $180,613.86.  Plaintiff moved for an award of expert witness fees and other expenses pursuant to §998. Allstate opposed, arguing its liability was limited to its $100,000 policy limits.

Trial Court

The trial court agreed with Allstate’s arguments and reduced Meleski’s award to $100,000 and denied Meleski her costs.  Allstate moved for a new trial for excessive damages.  The trial court denied the motion for a new trial, stating “there is no evidence the jury’s verdict of damages was excessive or unreasonably high given the underlying facts of the case.  Rather, judgment must be reduced, as a matter of law, under Probate Code section 554, because the judgment is enforceable only up [to] the maximum insurance coverage, in this case $100,000.”  In any event, the trial court found that §998 was applicable to the case, and that the costs submitted by Meleski were reasonable, appropriate, and that Meleski would have been entitled to the requested costs had there not been an insurance limit.

Appeals Court

On appeal, the court reversed and held that Allstate was a party for purposes of CCP §998. The court relied on Prob. Code §550, which states that “an action to establish the decedent’s liability for which the decedent was protected by insurance may be commenced or continued against the decedent’s estate without the need to join as a party the decedent’s personal representative or successor in interest.”  Additionally, pursuant to Prob. Code §552, summons shall be served on the insurer.  Further, under Prob. Code §554(a), any resulting judgment in favor of the plaintiff “is enforceable only from the insurance coverage and not against property in the estate.”

Here, by naming the estate as the defendant without joining the estate’s personal representative or filing a creditors’ claim with the estate, Meleski agreed to limit her recovery of damages against the estate to the policy limits.  Nonetheless, Allstate was a party for purposes of §998 because it controlled the litigation and made all decisions regarding the settlement.  Allstate alone rejected Meleski’s §998 offer and as such, assumed the risk if she fared better at trial. Holding Allstate accountable under §998 does not increase its liability under the insured’s policy beyond the terms of that policy.  Rather, the court reasoned that Allstate is being held accountable for its own actions in failing to accept a reasonable settlement offer before trial.


Where the insurance company controls the litigation and makes all decisions regarding settlement, it may be viewed as party under CCP §998. When rejecting a settlement offer, the insurance company should be aware that its liability may exceed its policy limits if it is  liable for additional costs under CCP §998.


Hua Jiang joined the firm in 2018 and has experience in the areas of Personal Injury, Premises Liability, Construction Defect, and Real Estate law.