Oral acceptance of a section 998 offer is valid if it is undisputed and
written proof of the acceptance follows. However, oral acceptance will not be valid if it adds or modifies the terms of the original 998 offer.
Statutory offers to compromise are powerful tools in resolving litigated
matters. This case reminds us of the procedural issues associated with the
acceptance of the statutory offer. Parties making a settlement offer prior
to trial pursuant to section 998 may specify the method of acceptance
required. Absent a specific method of acceptance, oral acceptance is valid
as long as it is unequivocal and unqualified. However, oral acceptance
which adds or modifies a term in the settlement offer will not be
considered a valid acceptance of a 998 offer and the court will not be
permitted to enter judgment under these circumstances.
FACTUAL AND PROCEDURAL BACKGROUND:
On November 28, 2000, Plaintiff Bias served a section 998 offer on
Defendant Wright, offering to settle Plaintiff’s claim for the sum of
$15,000.00. There was no reference to costs made in the settlement offer.
In addition, the offer did not require a specific method in which the
acceptance had to be communicated. The parties agreed that the deadline for
acceptance of the offer was January 4, 2001.
On January 4, 2001, counsel for Wright, Bryson, instructed his secretary to
call Bias’ counsel, Sheaks, to accept the offer. Bryson’s secretary did so
and was asked to send a written confirmation of the acceptance. A notice of
acceptance was sent on Wright’s behalf, stating that Bias’ offer was
accepted and that “each party bear their own respective costs.”
On January 5, 2001, Sheaks informed Bryson that Wright’s acceptance was not
valid due to the fact that an additional term regarding costs had been
added. Subsequently, the notice of acceptance and the section 998 offer
were filed with the court. However, judgment was not entered.
On April 24, 2001, Wright moved to enforce the settlement agreement and
requested that the court enter judgment pursuant to the terms of the
purported settlement. In support of its motion, Wright included the
declarations of Bryson and Bryson’s secretary regarding the oral acceptance
of the offer on January 4, 2001. Bias opposed Wright’s motion, stating that
her intention was to recover costs along with the $15,000.00 settlement and
that the oral communication of January 4, 2001 was an unqualified
acceptance. The trial court entered judgment in favor of Bias in the sum of
$15,000.00 plus recoverable costs, holding that Wright’s supporting
declarations were proof of acceptance of Bias’ offer. The Court of Appeal
Section 998 expressly requires settlement offers made pursuant to this
section to be in writing. However, section 998 does not have a parallel
provision requiring acceptances to be in writing. The only requirement is
that proof of acceptance must be filed with the court. Therefore, parties
making a section 998 offer are free to specify the method in which
acceptance must be communicated. Section 998 offers and acceptances are
governed by general contract principles. When no method of communication is
specified, oral acceptance is valid as long as it is unequivocal and
written proof of the acceptance is subsequently filed with the court.
However, oral communication which modifies or adds the terms of the
settlement offer is not considered a valid acceptance. Instead, this is a
Under section 998, a court’s duty to enter judgment is merely ministerial.
Therefore, a court may only conduct this ministerial act when acceptance is
absolute and unequivocal. When a court is faced with a dispute regarding
terms of a settlement offer, the court is forced to adjudicate the disputed
facts. Such adjudication is not permitted under section 998.
In the instant case, Bias’ offer did not specify the manner in which
acceptance was to be communicated. Therefore, Wright was free to accept the
offer in any manner that comported with general contract principles.
Wright’s purported acceptance of Bias’ offer which added a term regarding
costs was a counteroffer rather than an acceptance. Faced with this dispute
regarding the terms of the settlement agreement, the trial court was not
permitted to adjudicate the dispute under section 998. Therefore, the Court
of Appeal held that the trial court erred by considering the contradictory
evidence regarding the terms of the settlement and entering judgment.