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Is a California Code of Civil Procedure 998 enforceable when you only reference 998 to accept instead of describing actual acceptance instructions?

September 29, 2021 Blog,Personal injury

By Eric Ganci

California Code of Civil Procedure 998 gives trial attorneys a powerful tool. If executed properly, if you 998 the other side an offer to settle…and if the other side fails to beat your 998 offer at trial, then the other side may have to pay your costs incurred after your 998.

However a 998 that does not provide a proper provision to accept the 998 may be invalid.

This was the issue with this 9/15/21 decision Finlan v. Chase (2021 WL 4186687, California Court of Appeal, Fourth District, Division 1):

Plaintiff 998s Defendants, and her 998 “letters stated that her offers were made pursuant to section 998, but said nothing about how the offers were to be accepted.” That was the problem. Plaintiff beat her 998 at trial and then filed a motion for costs per 998. Defendant fought that, saying Plaintiff’s 998 was not drafted properly as it did not include a specific way to accept.

So the Court is deciding this: “The only issue before us is whether [Plaintiff’s] offers to settle were valid under section 998—a determination that turns entirely on whether the offer letters contained the required acceptance provision.”

Finlan analyzes another case on-point: Rouland v. Pacific Specialty Ins. Co. (2013) 220 Cal.App.4th 280, where the 998 had “no further indication that the acceptance needed to be in writing or signed by the offeree’s attorney.”

Per Rouland, there is no magic language or specific format required for either an offer or acceptance under section 998, but at a minimum, the “offer’s acceptance provision simply must specify the manner in which the offer is to be accepted,” and these instructions must necessarily incorporate “a written acceptance signed by the accepting party or its counsel” according to the terms of CCP 998(b).

So here in Finlan, the Court holds Plaintiff’s 998 is not valid nor enforceable. “[A] rule that the acceptance provision could be satisfied by a simple reference to section 998 alone would undermine the particulars listed in subdivision (b) by the Legislature, and contravene the fundamental principle of statutory interpretation that ‘[c]ourts should give meaning to every word of a statute if possible, and should avoid a construction making any word surplusage.’” The Court also notes “[o]f equal concern is that such a rule would undermine the numerous and consistent prior decisions holding that section 998 offers must contain an explicit acceptance provision. As this court has succinctly observed, ‘It is well settled that if an offer fails to include an acceptance provision, the offering party may not obtain the benefits of [section 998].’”

The acceptance provision must be clear and firm, not soft. “[A] reference to the offeree ‘allow[ing] judgment to be entered’ in a letter proposing a settlement is not the same thing as providing instructions that offerees can follow if they wish to accept such an offer.”