California’s Cost-Shifting Offer of Compromise Does Not Require Standard Form, Allows Separate Acceptance and Reasonable Offers with Some Discovery

A man under medical care died. His wife and daughters filed wrongful death and medical negligence claims against his doctor. Two months after the doctor responded to the complaint, after some discovery took place, the plaintiffs served the doctor with an offer of compromise pursuant to Cal. Civ. Proc. Code § 998. In the offer, plaintiffs agreed to resolve all claims in the complaint against the doctor in consideration of $950,000 from him and that each side was to bear its own costs. The letter also noted that if this offer were not accepted prior to trial or within 30 days after it was made, whichever occurred first, it shall be deemed withdrawn and that a judgment in favor of the plaintiffs more favorable than this offer shall bear interest at the legal rate of 10% per annum calculated from the date of plaintiffs’ offer.


Enclosed in the same envelope was a document entitled “Acceptance of Plaintiffs' Offer to Compromise Pursuant to Section 998 and Civil Code Section 3291,” which provided: “The Clerk of the Court is hereby authorized and directed to enter Judgment against the defendant on the Complaint of Plaintiffs in the amount of Nine Hundred Fifty Thousand Dollars ($950,000.00) pursuant to Plaintiffs' Offer to Compromise which is attached hereto. Costs to be submitted pursuant to cost bill filed by plaintiff[s] within ten (10) days after entry of said Judgment.” Under this recital was a place for the signature of the defendant’s attorney and the date of signing. The doctor did not accept this offer to compromise.


The Los Angeles County Superior Court entered a judgment on a special jury verdict against the defendant physician, and awarded expert fees and prejudgment interest under California’s cost-shifting offer of judgment statute. The doctor appealed the trial court’s awarding of expert fees and prejudgment interest arguing that the plaintiffs’ offer to compromise was not valid or made in good faith.


The California Court of Appeal, Second District, Division 8, affirmed the lower court. The court held that the plaintiffs’ offer to compromise was not procedurally defective, fatally ambiguous, or unreasonable. The plaintiff’s offer to compromise was not procedurally defective because, even though it did not employ the standard form, it did comply with the offer and acceptance requirements of the statute. Specifically, the offer need not have included terms of acceptance, so long as the separate document of acceptance is in writing and signed by the appropriate person.


The plaintiffs’ offer to compromise was not fatally ambiguous as to which side would bear costs because the inclusion of reference to the submission of a cost bill on the acceptance document did not indicate that the defendant would be responsible to pay costs.


The plaintiff’s offer to compromise was reasonable because sufficient discovery had taken place prior to service of the offer to allow the defendant reasonably opportunity to assess the plaintiffs’ offer. Specifically, the discovery prior to the offer revealed the decedent's annual income and the financial impacts of his death, the amount of the offer was within the physician's insurance policy limits, and the physician did not ask for more time to evaluate the offer.


See: Whatley-Miller v. Cooper, 2013 WL 151083, 13 Cal. Daily Op. Serv. 649, 2013 Daily Journal D.A.R. 729 (Cal.App. 2 Dist., January 15, 2013).