What Is a CCP 998 Offer in California, and How Can It Impact Your Case?

A CCP § 998 offer is a written settlement offer that can be used by either the plaintiff or the defendant in a civil case. The primary goal of a 998 offer is to encourage both parties to settle by imposing financial consequences in certain cases.

Understanding how 998 offers work and when to use them can play a significant role in how your case unfolds and what you end up receiving in your case.

How a CCP 998 offer works

First, one side serves a formal written offer (clearly marked as a 998 offer), which spells out the terms and conditions of the judgment or award and a provision that allows the accepting party to indicate acceptance by signature. This offer must be presented at least ten days before commencement of trial or arbitration. After the other party gets the offer, they have 30 days—or until the first day of trial, whichever comes first—to decide whether to accept.

When a 998 offer is accepted

If the offer is accepted, the proof of acceptance is filed and the court enters judgment accordingly, concluding the case. Once the written agreement is filed with the court, it becomes enforceable.

If the offer gets no response or is rejected

If the recipient ignores the offer or rejects it within the deadline, that is considered a rejection of the offer. The case moves forward toward trial or arbitration, with the rejected offer not disclosed to the judge or jury.

Penalties if a 998 offer is rejected

Rejecting a CCP 998 offer can result in significant financial consequences. Here’s how this can play out for both sides:

Plaintiff turns down defendant’s 998 offer and does worse at trial

If you are the plaintiff and you reject the defendant’s 998 offer, and then do not secure a better result at trial than the offer, you cannot recover postoffer costs and must pay the defendant’s costs from the time of the offer. In some cases, you might also have to pay a portion of the defendant’s costs for services of an expert witness.

Defendant turns down plaintiff’s 998 offer and does worse at trial

If you are the defendant, the reverse applies. Rejecting a 998 offer from the plaintiff and then losing to a larger verdict at trial could leave you footing the plaintiff’s expert witness fees and their postoffer costs. In personal injury cases, if the defendant rejects a 998 offer and the plaintiff later obtains a more favorable judgment at trial, CCP § 3291 allows the plaintiff to recover 10% annual interest on the judgment from the date the 998 offer was served until the judgment is paid.

Provisions like these make every CCP 998 offer a tool you should consider very carefully with your personal injury lawyer.

Good-faith/reasonableness requirement

Under California law, a CCP 998 offer must be reasonable and made in good faith, meaning the offer is within the range of reasonably possible results at trial and the defendant has ample information to meaningfully evaluate the offer.

Examples of how 998 offers operate

An example of how these offers work can make it easier to understand. Consider the following:

Example 1: Plaintiff makes a 998 offer

Ellen is injured in a car accident. She files a lawsuit against the other driver, Bob. Two months before the trial is set to start, Ellen’s lawyer sends Bob’s lawyer a formal CCP 998 offer, proposing to settle the case for $85,000. The offer is based on her medical bills, lost work, and pain and suffering from the accident.

If defendant accepts plaintiff’s 998 offer

Bob reviews the offer and believes it’s a fair amount. He agrees to pay Ellen the $85,000, and both sides notify the court. The lawsuit ends right there.

If defendant rejects or ignores plaintiff’s 998 offer

Bob thinks Ellen’s case has some weak evidence and lets her offer expire. Ellen and Bob move forward with a jury trial instead of settling.

What happens if Ellen wins more than $85,000 at trial?

The jury awards Ellen $100,000 instead of the $85,000 she initially offered to the defendant. Because Bob rejected Ellen’s reasonable 998 offer and she won more than that at trial, Bob now faces extra costs:

• Bob might have to pay Ellen’s expert witness fees and other court-related expenses that came up after the offer was made.
• Bob could also be required to pay interest on court awards that started accruing from the date of the expired 998 offer.

Bob’s total payment might end up far above the ultimate jury verdict due to these penalty fees.

Example 2: Defendant makes a 998 offer

In this case, the defendant, Bob, makes the offer. They sent Ellen a 998 offer attempting to settle the case for $40,000.

If plaintiff (Ellen) accepts defendant’s 998 offer

Ellen decides that the offer is fair and agrees to settle for $40,000. They let the court know, and the case is settled.

If plaintiff (Ellen) rejects or ignores defendant’s 998 offer

Ellen believes she deserves much more than $40,000 and rejects the offer. Bob and Ellen then proceed to the trial.

What happens if Ellen wins less than $40,000 at trial?

If the jury sides with Bob and awards Ellen $25,000—less than what was offered—penalties can apply to Ellen.

• Ellen cannot collect her own court costs and expert witness fees incurred after Bob’s offer was made.
• Ellen must pay Bob’s expert witness fees and postoffer costs, which the court typically deducts from her judgment.
• If those costs eat up her $25,000 jury award, Ellen could even end up owing Bob money.

Ellen’s net recovery may wind up considerably less than if she’d simply taken Bob’s offer. She could even end up receiving nothing at all, depending on what she was awarded.

If you have any questions about a personal injury case, our firm is here to help. We have decades of experience and have successfully recovered billions of dollars for our clients. We are familiar with California law and will take every step possible to help you pursue the compensation you deserve. Contact McNicholas & McNicholas, LLP to schedule a free consultation.