Conditioning CCP §998 Offer on Insurer’s Consent Is Valid

Thursday, January 29, 2026

Page 3

Court of Appeal:

Conditioning CCP §998 Offer on Insurer’s Consent Is Valid

Opinion Says Judge Erred in Denying Prejudgment Interest to Prevailing Plaintiffs Based on Finding That Their Pretrial Settlement Proposal Did Not Qualify as Cognizable Offer to Compromise Due to Its Restricted Nature

By a MetNews Staff Writer

Div. One of this district’s Court of Appeal held yesterday that a trial judge erred in denying prejudgment interest to a prevailing personal-injury plaintiff based on a finding that the party’s pretrial settlement proposal did not qualify as a valid offer under Civil Code §998 due to language conditioning the proposition on the consent of the defendant’s insurance carrier.

At issue is the interplay between Civil Code of Procedure §998 and Civil Code §3291. The latter provision, which is applicable in “any action brought to recover damages for personal injury,” says:

“If the plaintiff makes an offer pursuant to Section 998…which the defendant does not accept prior to trial…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….”

Sec. 998, in turn, specifies:

“Not less than 10 days prior to commencement of trial…, any party 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….The written offer shall include a statement of the offer, containing the terms and conditions of the judgment or award….”

Conditional Nature

Acting Presiding Justice Helen I. Bendix, writing for the court, acknowledged case law suggesting that §998 offers must be unconditional, but said that the rule has been “overstat[ed].” She opined:

“Defendant argues conditioning a settlement on insurer consent ‘goes beyond what is permitted by section 998,’ which contemplates that the offeree be a party to the action….Requiring that the offer be made to a party rather than the party’s insurer does not change the fact that whether or not the settlement offer expressly so states, as a practical matter there will be no settlement without insurer consent.”

Under those circumstances, she said:

“[T]he trial court erred in finding their pretrial settlement offer invalid under…section 998 because it was conditioned on the consent of defendant’s insurer….A defending insurer is not bound by a settlement to which it does not consent. Thus, a defending insurer’s consent is necessarily a condition of settlement whether or not so stated in the settlement offer. Plaintiffs’ express inclusion of that condition in their offer was redundant and did not render the offer invalid under…section 998.”

Prejudgment Interest

Then-Los Angeles Superior Court Judge Mel Red Recana (now retired) issued the May 2024 order denying prejudgment interest to plaintiffs Maynard and Tanis Matthews, who prevailed at trial on their negligence and loss of consortium claims against defendant Patrick Ryan relating to an August 2018 automobile collision that occurred on Zoo Drive in the Griffith Park area of Los Angeles.

The plaintiffs’ complaint, filed in March 2019, alleged that the defendant had negligently operated his vehicle, caused the accident, and seriously injured Maynard Matthews. Judgment was entered in their favor on Oct. 10, 2023, after a jury awarded Maynard Matthews approximately $6,536,330 and Tanis Matthews $343,750.

They moved for prejudgment interest under §3291 on Oct. 25, 2023, pointing to an April 2020 offer to settle the case for $749,999. Ryan opposed the request, arguing that the proposal was improper because it contained language indicating that the settlement “is contingent upon Mr. Ryan’s insurance carrier consent to Mr. Ryan’s acceptance of this offer.”

Unconditional Requirement

Citing jurisprudence finding that a §998 must be unconditional in order to trigger related cost-shifting obligations, Recana opined:

“Plaintiffs’ 998 offer contains a clear condition on acceptance of the offer….Ryan therefore could not merely accept the offer and have judgment entered. Instead, his acceptance and the effectiveness of the offer was conditioned on acceptance by his insurance carrier. Because 998 offers must be unconditional, Plaintiffs’ 998 offer is invalid and they are not entitled to prejudgment interest under…§3291.”

Yesterday’s decision, joined in by Justice Gregory Weingart and Justice Michelle C. Kim, reverses the order and remands for the trial court to determine whether the offer was “reasonable and in good faith” as otherwise required.

Multiple Parties

Bendix wrote:

“The trial court in the instant case cited the prohibition on offers to multiple parties when denying plaintiffs’ motion for prejudgment interest. Because plaintiffs’ ‘offer was conditioned on acceptance by [defendant’s] insurance carrier,’ the court concluded defendant ‘could not merely accept the offer and have judgment entered,’ which rendered the offer invalid under section 998. On appeal, defendant similarly argues an offer conditioned on acceptance by a party’s insurer is analogous to an offer conditioned on acceptance by multiple parties to the lawsuit.”

Saying that “[w]e reject this analogy,” she opined:

“Implicit in any settlement offer to a party defended by an insurer…is a requirement of insurer consent, because without that consent there is no settlement. Plaintiffs’ ‘condition’ was nothing more than an express, and redundant, recognition of that implicit requirement. Put another way, defendant’s insurer’s consent was required whether or not plaintiffs expressly said so in their offer.”

Acknowledging that an insured may legally accept an offer without his insured consent, she remarked:

“This is so as far as it goes, but people buy insurance so they do not have to personally pay a covered liability. The expectation is that the carrier will pay the settlement and plaintiffs make offers based on that expectation.”

The case is Matthews v. Ryan, 2026 S.O.S. 256.

Acting for the plaintiffs were Jason Paul Fowler and Jonathan Warren Douglass of the Lancaster-based Parris Law Firm as well as Gerald M. Serlin and Judith E. Posner of the Woodland Hills firm Benedon & Serlin LLP.

Representing the defendant were David M. Axelrad of the Los Angeles office of Horvitz & Levy LLP, as well as Lacey Lee Estudillo from the firm’s San Francisco location, in addition to Jay S. McClaugherty and Hayden Timothy Traver of the Monrovia-based McClaugherty & Associates.