998 Offers to Compromise Invalid without a Provision for Acceptance
Boeken v. Philip Morris USA
(2013) 217 Cal.App.4th 992
As with many areas of practice, there are uncertainties in whether the way a documents is prepared is valid. In this regard, it is generally best to err on the side of caution and be the most inclusive as possible. This holds true for CCP § 998 Offers to Compromise.
Pursuant to CCP § 998 subdivision (b), a party issuing a 998 Offer shall “[n]ot less than 10 days prior to commencement of trial or arbitration […]serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time. The written offer shall include a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted. Any acceptance of the offer, whether made on the document containing the offer or on a separate document of acceptance, shall be in writing and shall be signed by counsel for the accepting party or, if not represented by counsel, by the accepting party. (emphasis added)”
In Boeken v. Philip Morris USA, a deceased smoker’s son brought an action against Philip Morris USA for wrongful death. Judgment was entered on a special verdict for $12.8 million in favor of the son. The Court, however denied prejudgment interest on the grounds that the son’s 998 Offer to Compromise was found to be invalid as it did not include a provision allowing the manufacturer to accept the offer by signing a statement that the offer was accepted. The Fourth District Court of Appeals on July 9, 2013 affirmed the ruling. The Fourth District Court of Appeals held that the acceptance provision is mandatory and without such a provisions the offer is invalid.
In contrast, however, although not overruling Boeken, the Fourth District Court of Appeals on October 7, 2013 held in the matter Rouland v. Pacific Specialty Ins. Co., 220 Cal.App.4th 280 that as long as the offer specifies a manner in which acceptance can be made, the steps for completing the acceptance may be implicit in the identified means. In Rouland, the 998 Offer only stated “If you accept this offer, please file an Offer and Notice of Acceptance in the above-entitled action prior to trial or within thirty (30) days after the offer is made.” The 998 in question did not contain either a line for the party to sign acknowledgement of acceptance or any specific language providing each step needed to have a valid acceptance.” The Court provided that the statute merely requires an identification of a manner of acceptance and found Pacific Specialty’s 998 Offer sufficient in that manner.
Sometimes you win some and sometimes you lose. However, I would rather my 998 Offers to Compromise not be taken up for review with the Appellate Court. In an abundance of caution, I would include the signature line with acknowledgement of acceptance.
ABOUT THE AUTHOR: Ms. Ramirez is a graduate of Southwestern University School of Law. She specializes in the defense of contractors and materials suppliers in the areas of construction defect and construction related claims. Contact her at PRamirez@tysonmendes.com.
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