Responding to Untimely and Premature CCP § 998 Offers to Compromise
In Licudine v Cedars-Sinai Medical Center, the California Court of Appeal affirmed the trial court’s ruling that a California Code of Civil Procedure § 998 Offer was not made in good faith. The Plaintiff served the defendant with the statutory offer to compromise just 19 days after serving the defendant with the complaint, only five days after the defendant filed its answer, and when the defendant had very little information available. Plaintiff failed to respond to the defendant's concerns regarding the offer and the trial court determined that the Plaintiff was precluded from recovery of interest and expert costs pursuant to § 998. The appellate court affirmed the order of the trial court which denied $2,335,929.20 in prejudgment interest (from a June 11, 2013 date of offer to the time of the August 4, 2017 judgment). Plaintiff’s offer to defendant was to settle for $249,999.99 plus legal costs. The ultimate judgment was for $5,594,557. The appellate court stated that there are three factors that are especially pertinent in determining whether the offeree had enough facts to evaluate the offer, and thus whether it was made in good faith:
How far into the litigation the §998 offer was made;
The information available to the offeree prior to the §998 offer’s expiration; and
Whether the offeree let the offeror know that it lacked sufficient information to evaluate the offer and, how the offeror responded.
The lesson learned from Licudine is that counsel for defendants should not simply disregard premature § 998 offers. Rather, counsel should carefully scrutinize early and untimely §998 offers and draft well-articulated objections in a reasonable and timely manner. Failure to do so could undermine post-judgment arguments that a § 998 offer was untimely and not made in good faith.