Section 998: Section 998 Offer Was Valid Because It Identified Accepting Party, Was Not Overbroad On Requested Releases, And Referenced An Attached Settlement Agreement

Case Shows How Litigants Should Structure 998 Offers So As To Escape Enforcement Challenges.

            We commend practitioners to read Auburn Woods I Homeowners Assn. v. State Farm Ins. Co., Case No. C085749 (3d Dist. Sept. 29, 2020) (unpublished) when it comes to structuring an effective CCP § 998 pretrial settlement offer in several respects.

            The settlement offer, as detailed in the appellate opinion, proceeded along the following lines: “Prior to the trial, State Farm and Lewis made a written settlement offer under section 998 to HOA. The offer explained how HOA may accept State Farm and Lewis’s offer: ‘If you accept this offer, please: [¶] a) Date and sign the Agreement attached hereto as Exhibit A; [¶] b) Have your legal counsel execute a Request for Dismissal in a form identical to that attached hereto as Exhibit B; [¶] c) Send the signed Agreement and signed Request for Dismissal to counsel for defendants, who will then file the Request for Dismissal with the Court; and [¶] d) Execute, by and through your counsel, the statement of acceptance of this offer that appears below and return the same to attorneys for defendants indicating that the Offer to Compromise is accepted pursuant to the terms and conditions outlined above.” The offer included a document which read, “STATEMENT OF ACCEPTANCE OF OFFER TO COMPROMISE [¶] In accordance with Code of Civil Procedure section 998, subdivision (b), plaintiff Auburn Woods I HOA hereby accepts Defendants’ Offer to Compromise pursuant to the terms and conditions set forth in that offer.’ The statement concluded with a signature block for counsel for HOA.”

            This section 998 offer survived numerous challenges.  First, contrary to what the challenger said, the offer did sufficiently identify the accepting party based on the signature line for accepting party to simply sign.  Second, there was no overbreadth or ambiguity with respect to the claims to be released, because they were limited to claims relating to the lawsuit (with section 1542 waivers not dictating a different result).  Third, the offeror did attach a proposed settlement agreement for acceptance such that there was no indefinite extraneous agreement to be guessed at when it came to deciding what to do with respect to the 998 offer—determined to be valid on appeal.

BLOG UPDATE: We can now report that the 998 discussion was partially certified for publication on October 28, 2020.