Wednesday, July 14, 2004
C.A.: Sec. 998 Offer Need Not Contain ‘Magic Language’
By DAVID WATSON, Staff Writer
An offer to compromise under Code of Civil Procedure Sec. 998 need not contain “magic language” explaining how acceptance will result in termination of the action, this district’s Court of Appeal ruled yesterday.
The offer also need not be made in a separate document or be formally served to be valid, Justice Paul Boland said in an opinion for Div. Eight.
An offer to “settle this case for $225,000,” made in the final paragraph of a three-page letter from a plaintiff’s lawyer to a defendant’s in a medical malpractice litigation, was clear and specific enough to meet the statutory requirements, Boland explained. The offer referenced Sec. 998, but did not specify that if it were accepted judgment against the defendant dentist in that amount would be entered.
Sec. 998 provides that parties may “serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time....”
Defense lawyer Burdick M. Ray of Neal, Haushalter & Ray in Santa Ana, who represented dentist Ronald L. Darden, never responded to the letter, though he told his client he thought it was not a valid Sec. 998 offer. The plaintiff in the case, Erika A. Berg, represented by Pasadena attorney Arlan A. Cohen of Cohen & Rudd, later won a $524,000 jury verdict.
Boland said Los Angeles Superior Court Judge Michael L. Stern was wrong to find the offer was ineffective. Stern denied Berg’s motion to recover expert witness expenses, litigation costs, and prejudgment interest under the statute.
On remand, the justice said, Stern should decide if the offer was reasonable and made in good faith.
Boland conceded that it would be “in the best interests of the parties and the court” for Sec. 998 offers to be more detailed than Berg’s.
“Berg’s settlement offer undoubtedly could have been more formal (sent independently, and not included merely as the last paragraph of a letter addressed to other issues), and could have been stated with more precision (specifically identifying entry of judgment against Darden as the proposed final disposition),” the justice observed.
But he cited American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017 and Goodstein v. Bank of San Diego (1994) 27 Cal.App.4th 899, cases in which offers not specifically mentioning entry of judgment were upheld as valid under the statute.
“No different result is required here,” Boland declared. “So long as it is clear that the written offer of compromise is made under section 998 and, if accepted, will result in entry of judgment—the expected and standard procedural result unless specific terms and conditions stated in the offer provide otherwise—the offer need not identically track the language of the statute under which it is made.”
“[W]e hold that a statutory offer of compromise need not contain any ‘magic language,’ so long as it is clear the offer, which must be written, is made under section 998 and, if accepted, will result in the entry of judgment or an alternative final disposition of the action legally equivalent to a judgment. In the absence of a specific alternative disposition stated in the written offer, a section 998 offer, such as the one at issue here, which does no more than refer to the statute and proposes finally ‘to settle the case’ against a particular defendant for a specified sum will, if accepted, result in a ‘judgment [being] taken’ against the offeree by the court.”
Boland acknowledged that the faxed copy of the letter Ray admitted receiving was insufficient to constitute service of the offer, since the parties had not agreed to service by fax under Sec. 1013(e). But he noted that Cohen’s assertion he also mailed the letter the same day was uncontroverted.
“In any event, there is no dispute Ray actually received and read the letter, and understood it to be a statutory offer of compromise made under section 998 which he discussed with his client and chose to ignore,” the justice pointed out.
He rejected Darden’s contention that a formal proof of service was necessary for the offer to be effective.
Under Sec. 1013(b), he said, an affidavit or certificate of mailing is only one means by which a date of service by mail may be established. It is also sufficient if the “notice or other paper served” bears “a notation of the date and place of mailing,” he noted.
Cohen’s letter was dated and included his business address, meeting the statutory requirement, Boland said.
The case is Berg v. Darden, B171741.
Copyright 2004, Metropolitan News Company