To promote settlement, the California Code of Civil Procedure codified section 998. 998 offers and acceptance…and what legal ramifications come if you do not accept them…is a deep legal discussion. One I’ll take a pass on in this current blog, although you can see another blog post I wrote re 998s at California Civil Code Section 998 – The Settlement Code.
However, what I will discuss here is this recent decision Siri v. Sutter Home Winery, Inc. It was decided 8/25/22 by the Court of Appeal, First District, Division 4, California, and is cited right now as 2022 WL 3655342.
One party served a CCP 998 offer to the other side to settle. The accepting party (or best understood for this case as the “accepting” party), gave a conditional acceptance. Basically an “I accept this 998 if this happens” acceptance. The actual conditional acceptance was “Subject to clarification by the court in regard to [Siri’s section] 998 offer dated May 12, 2012, entitling her to prejudgment interest, and subject further to clarification by the court in regard to [two other issues], [Siri] gives formal notice of her conditional acceptance of [Trinchero’s] section 998 offer….”
The quick answer is no, it does not. “To form a binding settlement, an offeree’s acceptance of a section 998 offer must be “ ‘absolute and unqualified.’”
As the Court says here “Siri’s ‘conditional acceptance’ was precisely that—an ‘acceptance’ conditioned on the addition of new terms to the bargain proposed in the section 998 offer.”
The Court holds “[t]he acceptance thus did not create a binding settlement enforceable under section 998.”
There is more to understand with 998 offers.
With this case, riddle me this: does a counteroffer invalidate a 998 offer for 998 purposes? The answer is no. As the Court explains, 998 offers and general common-law contract offers differ: “A qualified or conditional acceptance does not form a contract, but constitutes a counteroffer. (Civ. Code, § 1585.) At common law, such a counteroffer terminates the offer; in the section 998 context, however, the statute’s pro-settlement purpose dictates that a counteroffer does not terminate a section 998 offer but leaves the offer in effect until it expires or is revoked.”
Back to Siri, the Court, while it does not decide or make a ruling re this, finds the settlement of the 998 contract may have been an actual valid offer. But just not for 998 purposes. “[W]e do not preclude the possibility that an enforceable settlement agreement may be found to exist utilizing procedures other than section 998.”