Court of Appeal holds that 998 offers must include provision stating how to accept the offer, even if the other party communicated acceptance of the offer

2021 case review: Mostafavi Law Group, APC v. Larry Rabineau, APC

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In this case the Court of Appeal decided whether a 998 offer that did not include a provision specifying how to accept the offer resulted in a judgment where the party receiving the offer communicated acceptance by signing the offer itself, and filing the signed offer with the trial court. Defendant filed a motion to vacate the judgment arguing that the 998 offer of $25,000.01 to settle a defamation claim he authored and served was invalid for failure to include an acceptance provision. The trial court ultimately agreed with the motion and vacated the judgment relying on the language of Code of Civil Procedure section 998 which specifically requires for the offer to be valid that it include a provision stating how the offer may be accepted.

The Court of Appeal agreed with the trial court, holding that the failure to include the acceptance provision meant that the offer failed to comply with Code of Civil Procedure section 998, was therefore not a valid offer pursuant to that section and could not be the basis for a judgment. The Court reasoned that a “bright-line rule will eliminate confusion and uncertainty and encourage settlement.” When making a 998 offer the utmost care must be taken to comply with every requirement of the statute.