Key Decisions

June 2012 – Section 998 Must Include Statement

(filed under: | June 16, 2012)

Other Cases Of Interest

To Be Effective To Trigger Its Cost Shifting Provisions, An Offer To Compromise Under Section 998 Must Include A Statement That It Can Be Accepted By Signing

Perez v. Torres
(Cal. Ct. of App., 5th Dist.), filed May 24, 2012 

Marta Perez was injured when the vehicle in which she was riding was struck by a vehicle driven by Gustavo Torres. During the course of the lawsuit that followed, Torres made a settlement offer. Perez did not accept the offer. Although Perez won the lawsuit, the jury awarded her less than the amount of Torres’ settlement offer. As a result, Torres sought an award of costs pursuant to Code of Civil Procedure section 998.

Under Section 998 where the plaintiff refuses the defendant’s offer and then fails to obtain a more favorable judgment, the plaintiff is precluded from recovering his or her costs incurred after the offer was made, and the defendant is entitled to recover his or her costs incurred after the offer was made. However, for this to happen, the offer must be a valid one.

Section 998 requires the offer to 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.”

Torres’ offer did not include a statement saying it could be accepted by signing a statement that the offer is accepted. As a result, the court held that Torres was not entitled to costs.