998 Offers

Most personal injury cases settle before ever reaching trial. Settlement is generally a good option for everyone involved. It is usually less expensive and much faster than courtroom litigation, and gives California’s overburdened court system a break. In California, a 998 offer is a cost-shifting mechanism to encourage settlement. Essentially, it means that if a settlement offer is made and rejected, the case goes to court, and the rejecting party fails to obtain a more favorable judgment in court, there is an effect on the payment of court costs.

California law provides that the prevailing party in a lawsuit is entitled to recover certain of the costs that he or she incurs during litigation. These costs include filing fees, jury fees, court reporter fees, and a few other costs. It does not include expenses such as attorney’s fees, expert witness fees, investigator’s fees, postage, or mileage.

998 offers are named after section 998 of the California Code of Civil Procedure. A 998 offer must:

• Be a reasonable offer, made in good faith;
• Be made no fewer than 10 days before the beginning of the trial;
• Be served in writing upon the other party;
• Specifically refer to section 998; and
• Be rejected by the other party.

Rejection of an offer includes qualified acceptance. If the offeree party introduces additional terms, that constitutes a counteroffer, and the original offer is now off the table.

If a valid 998 offer is made and rejected, it has an effect on who pays costs from the time of the rejected offer. Costs, in this case, means court costs, expert witness costs, and a few other costs, but not attorney’s fees. The purpose of 998 offers is to encourage settlements, so that people do not frivolously and unnecessarily take cases to court.

If:

• A defendant (alleged wrongdoer) makes a 998 settlement offer;
• The plaintiff (injured party) rejects it;
• The parties go to trial; and
• The judgment at trial is less favorable to the plaintiff, meaning the plaintiff gets less money at trial than was offered in the settlement offer;

Then the plaintiff:

• Is not entitled to recover the court costs that he or she would normally be entitled to; and
• Must pay the defendant’s costs from the time of the rejected offer.

Additionally, the court, in its discretion, may order the plaintiff to pay a reasonable sum to cover the costs of experts used by the defendant in preparation and trial.

If:

• A plaintiff makes a 998 offer;
• The defendant refuses it;
• The parties go to trial; and
• At trial, the judgment is less favorable to the defendant than the offer was;

Then, in addition to the court costs that the prevailing party is awarded, the court in its discretion may order the defendant to pay the plaintiff a reasonable sum to cover any expert witness expenses incurred after the date the offer was made. Additionally, the plaintiff may recover pre-judgment interest on the judgment, at a rate of 10 percent, beginning on date of plaintiff’s first 998 offer that is less than the judgment at trial.

If you have been injured because of another’s negligence or wrongdoing, please contact the skilled Monterey County personal injury attorneys at Corsiglia, McMahon & Allard, L.L.P. for a free consultation.

• Code of Civil Procedure - CCP