Breaking the Logjam: CCP Section 998 Offers

Lawyers have their own peculiar jargon, often using just numbers to convey positions, settlement offers, and tactics.  One of the most commonly used numbers is found in Code of Civil Procedure (CCP) Section 998, technically an “Offer to Compromise” in a dollar certain amount that settles the litigation.   An “Offer to Compromise” pursuant to CCP Section 998 can be made up to 10 days before the commencement of trial, by either side.  If that offer is not accepted, it is deemed withdrawn after 30 days have passed.  Then, if the party to whom the offer is made fails to obtain a verdict less than the amount of the 998 offer (if it was made by the plaintiff to the defendant), the losing party is exposed to paying the costs of the offering party’s experts at trial, as well as the excess judgment above the defendant’s insurance policy limits (if the 998 offer is pegged at exactly that policy limit amount).  Conversely, if the party to whom the offer is made fails to obtain a verdict greater than the amount of the 998 offer (if it was made by the defendant to the plaintiff), the losing party is exposed to the defendant’s costs of experts at trial.
The purpose of the statutory language in CCP section 998 is to put settlement pressure on the parties, with real economic consequences for the losing party.  Let’s take a typical real life example to illustrate the point.  Assume that in a motor vehicle collision case, the defendant’s liability insurance policy coverage limits are $100,000, and further assume plaintiff required surgery to treat the fractures that resulted from the incident.  If the plaintiff sent a Section 998 Offer to Compromise (“998’d the other side”) in the amount of $100,000, and defendant’s insurance carrier declined that offer, defendant could be exposed to plaintiff’s expert costs at trial (e.g., calling the treating orthopedic surgeon to testify) and defendant’s insurance carrier could be exposed to having to cover the excess verdict above the amount of any trial verdict that exceeded $100,000.  In this instance, sending the 998 offer in the exact amount of defendant’s insurance policy coverage limits is designed to put maximum pressure on the defense to seriously consider settling the case for the amount of the offer.  The dynamic for settlement pressure works in reverse as well, if a plaintiff refuses to accept a defense 998 in a case where there is real risk of failing to beat the defense offer prior to trial.
998 offers are a tool in the trial lawyer’s tool box, one frequently (and effectively) used by both sides.  The 998 offer is often the procedural move that breaks a settlement logjam.  Because it is potentially a two-way street, “reasonableness” in the offers is a touchstone for the trial court’s decision on whether to impose the penalties provide for in the 998 statutory language.  The above discussion just scratches the surface of the ins and outs of 998’s, and it is critical that an injured person have experienced trial counsel to navigate the rocky waters of litigation.  The attorneys at Janssen Malloy LLP stand ready to assist you or your loved ones in successfully positioning a personal injury case for the proper outcome.