Alternative-Choice Offer Not Categorically Barred by CCP §998

Friday, August 7, 2026

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California Supreme Court:

Alternative-Choice Offer Not Categorically Barred by CCP §998

Opinion Says Proposal Suggesting Multiple Avenues for Resolution May Trigger Cost-Shifting Measures If Structure Is Clear, One Option Is Sufficiently Certain to Allow Courts to Make Concrete Valuation

By Kimber Cooley, associate editor

The California Supreme Court held yesterday that a settlement proposal that permits an offeree to choose between two alternative options for resolution may qualify as a valid “offer” for purposes of the cost-shifting measures set forth in Code of Civil Procedure §998 if the structure is clear and concrete valuation is possible as to at least one of the choices.

Sec. 998 creates an exception to the general rule, set forth in Code of Civil Procedure §1032, that a “prevailing party” is entitled to recover costs, including attorney fees, “in any action or proceeding.” The statute specifies the requirements for making and accepting a valid offer for which the filing of “proof of acceptance” will trigger the entry of judgment in accordance with its terms.

Subd. (c) further provides:

“If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover their postoffer costs and shall pay the defendant’s costs from the time of the offer.”

Choice Between Alternatives

Yesterday’s unanimous opinion, authored by Justice Carol A. Corrigan, declares:

“[W]e hold that a statutory offer of compromise presenting an offeree with a choice between two alternative sets of terms is not categorically barred by section 998. When asked to determine the validity of an alternative-choice 998 offer on a motion for cost shifting, the trial court first determines whether the offer is structured to make the provided sets of terms clear and the manner of selection between them evident.”

She continued:“Once it determines that the alternative choice 998 offer is sufficiently clear in structure, the trial court then considers whether either set of terms is sufficiently certain to permit valuation at the time the offer was made and whether that value of at least one valid alternative is higher than judgment or award ultimately achieved. The rebuffed offeror seeking cost shifting bears the burden of showing its 998 offer was valid, meaning it was sufficiently certain.”

The question arose after Vadim Gorobets filed a complaint against Jaguar Land Rover North America LLC in 2019, asserting claims under California’s lemon law, the Song-Beverly Consumer Warranty Act, which is codified at Civil Code §1790 et seq. He alleged that he leased a new 2016 Land Rover LR4 from the defendant in October 2015, and the company was unable to resolve steering, engine, and other defects that surfaced almost immediately.

Settlement Proposal

On Oct. 15, 2020, the defendant made an offer to settle the case, proposing two alternative sets of settlement terms. The first option proposed to resolve the dispute for a lump-sum payment of $85,000 and the return of the vehicle.

Defendant alternatively offered to “reimburse” the plaintiff for recoverable expenses under the act, including “transportation,” “loan interest,” and other items such as “incidental or consequential damages.” This second choice provided that any dispute as to “legal entitlement and/or the amounts recoverable” would be resolved by the court.

Both choices provided that the defendant would waive costs and pay either $7,500 or, at the plaintiff’s election, attorney fees in an amount to be determined by the court. Gorobets was directed to check a box next to the alternative selected should he wish to accept the offer; the plaintiff did not accept either set of terms and the offer expired.

In March 2022, a jury found Land Rover liable and awarded the plaintiff $76,155.27 in damages. After judgment was entered, Gorobets sought more than $76,000 in costs plus $543,413.34 in fees as the “prevailing party,” and the defendant requested approximately $14,000 in post-offer expenses.

Valid Offer

Then-Los Angeles Superior Court Judge Monica Bachner (now in private mediation) ruled that the defendant’s §998 offer was “valid” and, because the judgment in his favor was ultimately less than the amount offered by Land Rover in 2020, she found that the plaintiff was only entitled to recover pre-offer expenses in the amount of $5,238.22 as well as $22,492 in attorney fees, representing work performed before the proposal was made.

The defendant, in turn, was awarded post-offer costs in the amount of $14,591.77.

Div. Two of this district’s Court of Appeal affirmed, in a divided opinion filed in 2024, saying that §998 does not allow a party to make “multiple offers to the same party at the same time.”

However, the majority opined that the defendant’s second suggested alternative for resolution was “independenly invalid” because it was not sufficiently amendable to valuation at the time it was made. As a result, the court ruled that the order imposing the cost-shifting penalty was proper since only one valid offer was made.

Corrigan rejected the plaintiff’s assertion that the statute’s references to “the offer” in the singular indicates a legislative intent to prohibit alternative-choice proposals. She pointed out that Code of Civil Procedure 17(a) “makes clear” that “[t]he singular number includes the plural” and said:

“Nothing in th[e] statutory language prohibits a valid offer from proposing two alternative sets of terms, either of which an offeree may choose to accept.”

She declared that “general contract principles” may be used to interpret the terms of a §998 offer and applied the “well-established principle” that the acceptance of one alternative proposal constitutes a binding agreement. The jurist remarked:

“The 998 offer at issue neatly fits this description. Plaintiff had the choice between two self-contained, mutually exclusive sets of contractual terms: a lump sum payment or a more complex alternative….As presented, if plaintiff wished to accept either alternative, counsel was to check a box next to the set of terms accepted and sign the offer. The offer did not give plaintiff the right to mix and match terms to create a new set of his preferred alternatives. On these facts, his statutorily compliant acceptance of either set of the terms presented would have formed an enforceable contract between the parties and been filed with the court for entry of judgment as the statute provides.”

Saying that “[a] 998 offer’s terms must be sufficiently certain” to “enable the offeree to meaningfully” assess it and to “allow a court to subsequently determine whether the secured judgment or award is more favorable than the offer,” she took issue with the Court of Appeal’s determination that the defendant’s proposal was “two simultaneous offers.” She wrote:

“[A]n offer that permits an offeree to accept by selecting between two discrete alternatives is best understood as a single offer for section 998 purposes. Viewing it as a single offer, however, should not inhibit a trial court from independently analyzing each alternative set of terms even though they are presented concurrently.”

She opined:

“In ruling on a contested section 998 motion involving an alternative-choice offer, the court’s first step is to determine whether the alternative-choice 998 offer is clearly presented and calls for the offeree to select between expressly delineated alternative choices. In other words, the offer must be structured to present an unambiguous choice between the alternative sets of terms.”

The justice continued:

“If structural validity of the offer as a whole is established, the court will then separately consider whether each alternative presented is sufficiently certain to permit a fair valuation at the time the offer was made. If the court can place a fair value on at least one of the proposed alternatives, and a rejecting offeree secures a judgment or award that exceeds the highest valued, valid alternative, section 998 does not permit cost shifting, and the general rule under section 1032 applies.”

Corrigan added:

“It matters little if the offeree also rejected a set of valid settlement terms of lower value….An offeree who rejects that valid set of terms and elects to continue with litigation has placed itself in precisely the situation section 998 was designed to disincentivize. Requiring the offeree to obtain a better result than the highest value set of valid terms is most consistent with the text and purpose of the statute.”

She declared:

“We affirm that portion of the judgment affirming the trial court’s award. We reject and overturn its holding that section 998 categorically prohibits alternative-choice offers.”

The case is Gorobets v. Jaguar Land Rover North America LLC, 2026 S.O.S. 2411.