A Code of Civil Procedure section 998 offer in California is the topic of this blog post.
A Code of Civil Procedure section 998 offer in California is also known as an offer to compromise.
An offer to an opposing party in litigation under Code of Civil Procedure section 998 can be a very powerful tool in convincing the opposing party to agree to a settlement. The offer is so powerful because California law imposes drastic penalties for failing to accept a reasonable good faith offer under Code of Civil Procedure section 998.
An offer under section 998 is basically a written offer that is served by one party to another party to the litigation to offer to allow judgment to be taken according to the terms and conditions specified in the section 998 offer.
A Code of Civil Procedure section 998 offer to compromise remains open for 30 days or the date of the trial, whichever occurs first, unless it is served very close to the trial date. You must serve an offer to compromise no less than 10 days before the trial date. Code of Civil Procedure § 998(b.)
Serving an offer under section 998 of the Code of Civil Procedure may be a good idea in situations where you are concerned that there is a possibility that you might lose the case at the trial and you want to apply some pressure to the other party to convince them to accept a settlement.
If you are the defendant in the case and you serve an offer to compromise on the plaintiff but they fail to accept the offer and they do not achieve a better result at the trial the plaintiff is barred from recovering any post-offer costs and must pay your post-offer costs. "Costs" includes many litigation expenses, like court filing fees, jury fees, court reporter fees, messenger fees, photocopying costs, and other out of pocket expenses incurred. The Court may also award expert witness fees. Code of Civil Procedure § 998(c)(1).
However any award of costs will not include attorney's fees unless there is an agreement or statute to award attorney's fees to the prevailing party. That is why you should carefully review your case to determine whether attorney's fees are available in your case.
Once of the main advantages of serving a section 998 offers is in cases where you are the defendant and are sued by someone. You serve your section 998 offer to compromise as early in the litigation as possible. We will assume for the sake of argument that you offer the sum of $10,000 with a complete waiver of all fees and costs. If they accept your offer a judgment will be entered and the lawsuit will be over. Of course you will legally owe the plaintiff the sum of $10,000.
If however the plaintiff ignores your offer to compromise and is only awarded a sum less than $10,000 then you could achieve a partial win even if you lose the case. Because if that happens you can file a motion to recover your litigation costs from the date that you send the offer until the trial is completed. If your litigation costs are more than $10,000 the plaintiff may wind up owing you money even if you technically lost the case.
If you are considering sending an offer under section 998 it is generally a good idea to send it as early as possible and to make the offer to compromise larger than what you estimate to be your maximum litigation exposure, including pre-offer fees and costs. In fact if an offer to compromise is well thought out it can actually turn out to be an insurance policy of sorts in the event that your case does go to trial.
Attorneys or parties in California that would like to view a portion of a sample offer to compromise under Code of Civil Procedure section 998 created and sold by the author of this blog post can use the link shown below.
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The author of this blog post, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995. For licensed attorneys and law firms that need assistance with any California or Federal litigation matters, Mr. Burman is available on a freelance basis. Mr. Burman may be contacted by e-mail at DivParalgl@yahoo.com for more information. He accepts payments through PayPal which means that you can pay using most credit or debit cards.
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Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.
The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.