998 Offers – Follow the Rules for them to be Valid!

We’ve discussed 998 offers many times in the previous blog entries(here, here, here, and here).  What happens if a 998 offer is sent but doesn’t include a specific provision for acceptance?  That was the subject of another recent case – Finlan v. Chase(2021) Cal App LEXIS 759.

Chase sexually assaulted aesthetician Finlan during a facial treatment session at a resort spa. Finlan sued Chase, and in the course of litigating her personal injury action, she sent multiple letters offering to settle for $999,000. The letters stated that her offers were made pursuant to section 998, but said nothing about how the offers were to be accepted. Chase did not respond to these offers. Finlan then prevailed at trial, receiving an award of $3,875,000.

A judgment, which included an award of prejudgment interest, was entered in Finlan’s favor. She also moved to  recover various costs. Chase responded with a motion to tax Finlan’s costs, arguing in particular that she was not entitled to recover expert witness fees because her section 998 offers failed to include an acceptance provision, making them statutorily invalid. He further moved to strike the award of prejudgment interest based on the same argument—that the 998 offers were unenforceable. (Finlan v. Chase (Sep. 15, 2021, No. D078410) ___Cal.App.5th___ [2021 Cal. App. LEXIS 759, at *2-3].)

On Appeal, the Court of Appeals agreed with Chase, holding:

[1]          Letters offering to settle did not contain a sufficient acceptance provision under Code Civ. Proc., § 998, subd. (b), and thus were invalid and could not support expert witness costs and prejudgment interest because the letters did not provide instructions on how to accept the offer, but simply referred to § 998 and to allowing judgment to be entered, which did not specify the manner of acceptance;

[2]          A valid acceptance provision required more than mere reference to a judgment because the case law had established a rule derived from the plain language of § 998 requiring that offers had to indicate how they could be accepted in writing and with the signature of the offeree’s counsel or the unrepresented offeree, which could be implicit in the identified means of acceptance but required more than a simple reference to § 998 or to entry of judgment.

998 Offers can be a very effective tool when used properly.  Be very careful to make sure you follow the rules though or they will, as in this case, be ineffective.