Legal News

Recent decision on requirements of valid 998 offer, Puerta v. Torres

In Puerta v. Torres (Dec. 2011) 195 Cal.App.4th 1267, Division Three of the Fourth District Court of Appeal held that a 2006 amendment to CCP section 998 rendered defendant's 998 offer invalid because the offer did not include a written provision for the accepting party to accept the offer. In Puerta, an auto accident case, the court held that CCP 998 requires a party making an offer to compromise to include not only a written statement of the offer (which contains the terms and conditions of the judgment or award) but also a provision that "allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted."

The Puerta court acknowledged the question of whether a 998 offer to compromise was valid without a written provision for acceptance was a matter of first impression.(Indeed, there have been various appellate court decisions involving 998 offers since the 2006 amendment, none of which referred to the new requirement, for example, the 2012 decision in Bates v. Presbyterian Intercommunity Hospital, Inc.)

The appellate court emphasized that the provision which allows the accepting party to indicate acceptance of the offer in writing is mandatory:

... While there is room for interpretation as to how an appropriate statement regarding acceptance might be phrased in the offer, it is clear from the statute's language that at least some indication of how to accept is required by the amendment. The Judicial Council form section 998 offer (CIV-090), for example, includes a signature line to indicate acceptance. A sentence in the offer stating that acceptance could be indicated by return letter might be equally acceptable.

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This case ... deals with the provision that sets forth two mandatory requirements about what shall be included in a section 998 offer: the offer shall be written, and it shall contain a provision stating that the recipient can accept the offer "by signing a statement that the offer is accepted." The offer at issue here contained nothing regarding acceptance, only the terms of the offer itself and its expiration date. It was therefore invalid under the plain language of the statute, regardless of whether Puerta ever intended to accept the offer or not. We therefore reverse that portion of the judgment requiring Puerta to pay Torres's expert witness fees.

A valid CCP 998 offer, then, must include not only the terms of the offer, but must state that "the recipient can accept the offer 'by signing a statement that the offer is accepted.' " Though the statute does not designate whether the signature line must be incorporated into the 998 offer, since the Judicial Council form offer includes a signature line for the accepting party, it would make sense to add signature line for the accepting party to the end of any 998 offer in order to comply with the statutory requirement.

As for outstanding 998 offers that have been made, since CCP 998 makes the statement of acceptance a mandatory part of the offer itself, it is possible a court might find a statement of acceptance sent by the offering party subsequent to the original 998 offer, but before the last date for acceptance, as invalid under the 2006 amendment. The most conservative approach would probably be to re-issue any outstanding 998 offers with the required statement of acceptance provision.