Sign Here

by Archer Norris PLC
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In 2006 the Legislature amended Code of Civil Procedure section 998 to state that "The written offer shall include . . . a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted."  In 2013, we are still seeing cases in which failure to include the acceptance provision invalidates an otherwise successful 998 offer.  The latest is Boeken v. Philip Morris, decided on July 9.  In Boeken, failure to comply with the statute cost the plaintiff 10% interest from the date of the 998 offer--on a $12.8 million award.  The decision does not elaborate on when the offer was made, but with that size of award, we're probably talking real money here. 

As background, note that in addition to shifting post-offer expert witness fees (see section 998 subdivision (d)), plaintiffs in personal injury cases can also obtain prejudgment interest under Civil Code section 3291.  Section 3291 states, among other things, that "If the plaintiff makes an offer pursuant to Section 998 . . . which the defendant does not accept . . . and the plaintiff obtains a more favorable judgment, the judgment shall bear interest at the legal rate of 10 percent per annum calculated from the date of the plaintiff's first offer . . . which is exceeded by the judgment . . ."  

In Boeken, the plaintiff argued that the word "shall" in the acceptance provision language should not be interpreted as mandatory.  But that argument had already been rejected by the Fourth Appellate District, Division Three, in Puerta v. Torres.  As that court put it, the amendment is targeted at eliminating oral acceptances and all the confusion such acceptances might sew.  "It is clear from the statute's language that at least some indication of how to accept is required by the amendment."  Puerta v. Torres (2011) 195 Cal.App.4th 1267, 1273.  The Fifth Appellate District reached the same result in Perez v. Torres (2012) 206 Cal.App.4th 418, 425-426. And in Boeken, the Second Appellate District, Division 5, citing Puerta and Perez, comes to the same conclusion. 

There is no horizontal stare decisis in the California Court of Appeal.  For that reason, I suppose those failing to include an acceptance provision in litigation arising in other appellate districts may well continue to argue that the acceptance provision language is not mandatory, etc. Those arguments will continue to fail and for some, especially where real money is lost, a new kind of case may arise.  Instead, why not just include a provision in the 998 offer that at least says, "To accept, sign here."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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