CCP § 998 Offers Revisited

CCP § 998 Offers Revisited

In 2012, I wrote an article for this publication regarding the nuts and bolts of Code of Civil Procedure § 998. In the intervening five years, the article has consistently been one of the more widely-read pages on the CCCBA’s website. I have also received dozens of calls from attorneys from around the state who found my article online and wanted to pick my brain on their 998 conundrums.

As much as I would like to think my eloquent prose and profound insight drove this internet traffic, the truth is that § 998 offers remain one of the more perplexing issues facing civil litigators, with ever-evolving, and sometimes contradictory, case law interpreting the relatively sparse language of the statute.

For the uninitiated, § 998 is a cost-shifting device that allows a party to make a settlement offer with heightened consequences if the offer is not accepted and the offering party later achieves a more favorable result (judgment or award). In that case, the party that did not accept the offer may be ordered to pay costs in excess of those enumerated under CCP § 1032 (standard prevailing party costs), most notably expert witness costs. The purpose of the statute is to encourage settlements by raising the stakes of settlement offers.

In this article, I will be summarizing some of the more interesting developments regarding § 998 offers since my first foray into the subject. If you are seeking a basic understanding of § 998 offers, you can read my previous article here:

The Legislature Evens the Playing Ground

A common past grievance of plaintiff’s attorneys like me was the inherent inequality of cost-shifting in the statute depending on which side of the v. made the offer. Previously, § 998 entitled plaintiffs who achieved more favorable results than their offers to be awarded post-offer expert witness costs, while prevailing defendants could be awarded expert costs from the beginning of litigation. Thus, a defendant could make an offer on the eve of trial and be awarded costs incurred months, or even years, prior to the rejected offer.

As of January 1, 2016, the California Legislature equalized the statute such that both plaintiffs and defendants are only entitled to post-offer expert witness costs, acknowledging the prior discrepancy was a legislative oversight.

It bears reminding that expert costs are always a discretionary award by the court and must be “reasonable,” with courts occasionally taxing (reducing) costs memoranda under this ambiguous standard.

You’re Doing It Wrong

An interesting tension running through § 998 cases is the general interest of courts in upholding § 998 offers to promote the statute’s intended purpose of encouraging settlements, while striking down offers deemed irredeemably defective.

In the ‘spirit of the law’ category, a court upheld a § 998 from a contractor in which its offer to settle was for “Forty Nine Thousand Nine Hundred and Ninety Nine and No Cents ($39,999.00).” Gilotti v. Stewart (2017) 11 Cal.App.5th 875. The court affirmed that it was an “obvious typographical error” of a $49,999 offer and was not fatally ambiguous, particularly since the offeree could have sought clarification of the discrepancy.

One defect that is not tolerated concerns one of the simplest aspects of the statute: the § 998 offer must include an acceptance provision that the accepting party can sign.

In Boeken v. Philip Morris USA, Inc. (2012) 217 Cal.App.4th 992, the son of a deceased smoker obtained a jury verdict for $12.8 million. The judgment exceeded his $4.95 million § 998 offer to Philip Morris and the plaintiff moved for prejudgment interest from the time of the offer (10% per the statute). The only problem? Plaintiff’s counsel failed to include an acceptance provision in the § 998 that the defendant could sign. The court held the statute’s requirement to include such a provision—in  essence, no more than a single sentence and a signature line—was mandatory and held the § 998 offer was invalid. The court was unmoved by the argument that the defect was a technicality and that the highly-experienced Philip Morris lawyers knew full well how to accept the offer.

Similarly, a court invalidated a § 998 offer to a prevailing plaintiff in a medical malpractice case who exceeded her $1 million offer due to the failure to include an acceptance provision. Bigler-Engler (2017) 7 Cal.App.5th 276.

For the sake of the plaintiffs’ attorneys in the preceding two cases, one hopes the sizable verdicts dissuaded subsequent legal malpractice suits.

What Terms Can a § 998 Offer Include?

One key pillar of § 998 enforceability is that the offer cannot include terms incapable of valuation.

In Sanford v. Rasnick (2016) 246 Cal.App.4th 1121, the court struck down a § 998 offer that conditioned acceptance by the plaintiff upon executing a settlement agreement. The Sanford court noted, “the terms of a settlement agreement can be the subject of much negotiation” and the plaintiff would have “no understanding what he would have to agree to.”

Other non-monetary terms in § 998 offers that were invalidated include:  the requirement of the car at issue in a ‘lemon law’ suit be returned “in an undamaged condition” (MacQuiddy v. Mercedes-Benz USA, LLC (2015) 233 Cal.App.4th 1036); that the settlement be approved in a good-faith-settlement motion (Toste v. Calportland Construction (2016) 245 Cal.App.4th 362); and that the plaintiff sign an overly broad release that would encompass claims not at issue in the litigation (Ignacio v. Caracciolo (2016) 2 Cal.App.5th 81).

While seemingly at odds with the Ignacio holding, the court in Calvo Fisher & Jacob v. Lujan (2015) 234 Cal.App.4th 234 upheld a § 998 offer that included a condition for the accepting party to sign a general release. Reconciling these cases is an exercise in counting how many angels can dance on the head of a pin. The § 998 offer in Ignacio included the actual release with the offending language, whereas the § 998 offer in Calvo Fisher did not incorporate the release. In other words, conditioning acceptance by a plaintiff upon signing a not-yet-created release is generally acceptable, but if the release is incorporated, it can only dispose of the claims at issue.

Another non-monetary term that was upheld was a § 998 offer that required the accepting party to affirm that the amount constituted the full insurance policy. Markow v. Rosner (2016) 3 Cal.App.5th 1027. The court found that the plaintiff merely conditioned the offer “on the accuracy of the information supplied by the offeree in discovery.”

Joint § 998 Offers

Another sticky issue that often arises with § 998 offers concerns joint offers involving multiple parties. The key inquiry regarding the enforceability of these offers is whether it can be determined if the prevailing party or parties achieved a more favorable result.

In McDaniel v. Asuncion (2013) 214 Cal.App.4th 1201, a single offer to multiple wrongful death plaintiffs was upheld because of the unique nature of wrongful death actions in which there is a single, lump sum award to all plaintiffs.

Similarly, a joint, unapportioned offer to a married couple is valid because an action for damages is community property and thus an indivisible asset. Farag v. Arvinmeritor, Inc. (2012) 205 Cal.App.4th 372.  Interestingly, the Farag decision highlights another quirk relating to married plaintiffs: either of the spouses can accept the joint § 998 offer over the other’s objection. In other contexts, a joint § 998 offer conditioned upon acceptance by all parties is invalid.

A joint offer from multiple defendants to a single plaintiff can also be valid, but the judgment must be compared to the aggregate of all offering defendants to determine if the result was “more favorable” than the offer. Kahn v. The Dewey Group (2015) 240 Cal.App.4th 227.  In other words, if 10 defendants make a joint $1 million offer to a single plaintiff, and the verdict is for $1,000,001 as to one defendant and the other nine are found not liable, the plaintiff has ‘beaten’ the § 998 offer.  The nine non-liable defendants cannot enforce the § 998 offer since they were all part of the joint offer.


Like other areas of law, § 998 jurisprudence demonstrates a tenet perhaps more familiar with quantum theorists than lawyers: anything that can happen will happen over time. Every conceivable scenario touching on the enforceability of § 998 offers seems to surface, with courts continuously providing additional guidance to litigants on statutory offers. While the infinite outcomes of litigation partly explains the vast body of § 998 case law, the other force at work is the penchant of many attorneys to ‘push the envelope’ and craft § 998 offers to fit their specific litigation objectives, despite these goals occasionally running at odds with the statute.

If there is one overarching guideline in handling § 998 offers in your practice, it is to keep it simple. The more a § 998 offer includes, the more likely a court will find something wrong with it. As a corollary, when receiving a § 998 offer, it is always safer to treat the offer as valid and enforceable. It is a dangerous game to assume a § 998 offer is invalid, then have a court come to a contrary decision if you fail to obtain a more favorable result.

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