Mediation Message No. 97



Rouland v. Pacific Specialty Ins. Co. (2013) 220 Cal.App.4th 280 clarified the required wording for acceptance of a Code of Civil Procedure section 998 offer to compromise. In Rouland, defendant Pacific Specialty offered to pay the two plaintiffs $5,000 and $30,000 in exchange for general releases and dismissals with prejudice and then stated, “If you accept this offer, please file an Offer and Notice of Acceptance in the above-entitled action prior to trial or within thirty (30) days after the offer is made.” (In relevant part, section 998, subd. (b) provides “The written offer shall include … a  provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted. Any acceptance of the offer, whether made on the document containing the offer or on a separate document of acceptance, shall be in writing and shall be signed by counsel for the accepting party or, if not represented by counsel, by the accepting party.”) The Roulands did not accept the offers. After a defense verdict, Pacific Specialty moved to recover its expert witness fees. In opposing the motion, the Roulands contended that Pacific Specialty’s offer to compromise did not satisfy section 998’s language because it had no line for them to accept the offers and had no language stating that they shall accept the offers by signing a statement that the offers are accepted.

The trial court granted the Roulands’ motion to tax Pacific Specialty’s expert fees since the section 998 demand lacked a signature space for the Rouland’s acceptance. The Court of Appeal reversed the trial court’s order because the statute does not require that “an offer to include either a line for the party to sign acknowledging its acceptance or any specific language stating the party must accept the offer by signing an acceptance statement. … The offer’s acceptance provision simply must specify the manner in which the offer is to be accepted (citations), and the only statutory requirements for a valid acceptance mandate a written acceptance signed by the accepting party or its counsel.” (Id. at p. 288.) The Court found Pacific Specialty’s offers satisfied section 998’s language “because they informed the Roulands how to accept the offers (file an “Offer and Notice of Acceptance” with the trial court).” (Ibid.) Moreover, although the offers did not expressly require a written acceptance signed by the Roulands’ counsel, “that requirement is implicit in the offers’ identified means of acceptance because any acceptance the Roulands sought to file with the court necessarily would have to be in writing and signed by their counsel.” (Ibid.)

MDM’s helpful hint: While Rouland provides that the acceptance language in a section 998 offer to compromise need not strictly comply with the terms of the statute, do not tempt an adverse ruling by too loosely applying those terms. Instead, attempt to strictly adhere to the statute’s language and use Rouland if, for some reason, opposing counsel believe, nonetheless, that the statute has not been followed.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, April 2014

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