Woodland Hills personal injury lawyer Barry P. Goldberg is a huge advocate of using the Code of Civil Procedure § 998 Offer to Compromise in every case that is in litigation or going to trial. In addition, it should be used as a “cost shifting” tool even in Uninsured Motorist and Underinsured Motorist Arbitrations. In fact, by “beating” your Offer to Compromise, a verdict can be supplemented by a cost order requiring the opposing party to pay tens of thousands of dollars in expert fees and trial-related costs not otherwise recoverable. It can turn a good verdict into a great verdict.
As simple as the 998 statute is, lawyers cannot seem to just follow the simplicity and are always finding new ways to screw up a substantial award of post-trial costs. The most common mistake that we encounter is that the 998 Offer to Compromise does not apportion the offer between defendants (or parties). As stated in Barella v. Exchange Bank (2000) 84 Cal.App.4th 793, 799–800:
“In interpreting section 998, this court has placed squarely on the offering party the burden of demonstrating that the offer is a valid one under section 998. [Citation.] The corollary to this rule is that a section 998 offer must be strictly construed in favor of the party sought to be subjected to its operation. [Citation.] Further, while the statute contemplates that an offer made pursuant to its terms may properly include nonmonetary terms and conditions, the offer itself must, nonetheless, be unconditional. [Citation.] Thus, for example, an offer to two or more parties, which is contingent upon all parties’ acceptance, is not a valid offer under the statute. [Citations.] Finally, our Supreme Court has held that the legislative purpose of section 998 is generally better served by ‘bright line rules’ that can be applied to these statutory settlement offers—at least with respect to the application of contractual principles in determining the validity and enforceability of a settlement agreement. [Citations.]”(Fn. omitted.) (Also see Taing v. Johnson Scaffolding Co. (1992) 9 Cal.App.4th 579, 585 [“[t]he burden of assuring that the offer complies with section 998 falls on the offeror”]; Chen v. Interinsurance Exchange of Auto. Club (2008) 164 Cal.App.4th 117, 122 [“we interpret against [the offeror] any ambiguity in the [section 998] offer”].)
Recently, in an unreported decision, we saw that a lawyer inserted a provision into a 998 Offer that required the receiving party to enter into “settlement agreement and general release” as a condition of the settlement. While there is some case law which allowed “releases”, there is no authority for requiring a “settlement agreement.” Therefore, the 998 Offer was void and unenforceable.
It is very understandable why a lawyer would want a settlement agreement as opposed to the entry of a judgment against a client. In fact, our office regularly converts an “acceptance” of a 998 into a settlement and release agreement as a courtesy and convenience to the paying party. In most cases, there is no need to obtain a judgment in order to be paid.
Unfortunately, the sender of a 998 Offer cannot require a settlement agreement because it is in direct conflict with the wording of the statute. Lawyers should trust the statutory language precisely—-then, rely on the courtesy of a legal colleague to do the right thing and avoid the unnecessary entry of a judgment. Woodland Hills personal injury lawyer Barry P. Goldberg advises pro pers and other counsel to both read the C.C.P. § 998 and follow well established forms—-without trying to tinker with a good thing!
