Nonmonetary Provisions Not Easily Calculable Are Ones to Shun.
Over the years, we have reviewed jurisprudence under Code of Civil Procedure section 998, a costs-shifting mechanism designed to encourage settlements. We now provide tips on the type of provisions which will pass muster and those that won’t based on the § 998 case law we had a chance to examine.
Dismissal of Adverse Party’s Claims With Prejudice Rather Than Entry of Judgment. A 998 offer may properly request this. (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton, 96 Cal.App.4th 1017, 1055-1056; Wohlgemuth v. Caterpillar, Inc., 207 Cal.App.4th 1252, 1260-1263 (2012).)
Release of Specific Claims in the Lawsuit Subject to 998 Offer. A 998 offer may properly oblige the parties to execute a release of the claims at issue in the underlying action. (Linthicium v. Butterfield, 175 Cal.App.4th 259, 270; Engle v. Copenbarger &Copenbarger, LLP, 157 Cal.App.4th 165, 168-170 (2007); Goodstein v. Bank of SanPedtro, 27 Cal.App.4th 899, 907-908 (1994).) However, failure to detail the terms of the anticipated release does not render the offer ineffective because custom and practice will be used determine incidental matters as long as it would not alter or vary the terms of the agreement. (Tashvighi v. Rapid Plumbing, Inc., 2012 WL 3013529, Case No. B229037 (2d Dist., Div. 4 July 24, 2012 [unpublished].)
Release of Claims Beyond the Scope of the Action. A 998 offer requiring the plaintiff to release “any and all claims and causes of action arising out of [the claims involved in the current lawsuit]” was deemed to be invalid because the inclusion of a release of other potential claims related to the action before the court “introduced an imponderable which makes it impractical if not impossible to accurately and fairly evaluate the offer.” This suggests that inclusion of a requirement of a Civil Code section 1542 release is not a good idea. (Valentino v. Elliott Sav-On Gas, Inc., 201 Cal.App.3d 692, 696-701 (1988); Tawfik v. Hayashibara, 2004 Cal. App. Unpub. LEXIS 3576 at *28-32 (Apr. 13, 2004) [unpublished]; Chen v. Interinsurance Exh. of the Auto. Club, 164 Cal.App.4th 117, 122-123 (2008); see also Linthicium v. Butterfield, 175 Cal.App.4th at 270-272; Goodstein, 27 Cal.App.4th at 907-908 [courts enforced 998 offers stating that the parties were to execute a “general release” of claims, as the other terms of the offer showed that the release targeted only the claims at issue in the pertinent action].)
Fees/Costs Waivers. These will be enforced, with silence on these subjects meaning there are no such waivers such that the accepting § 998 offeree can seek recovery of these items.
(Engle, 157 Cal.App.4th 168-170 [adopting a “bright-line” rule];Wohlgemuth, 207 Cal.App.4th at 1259.)Confidentiality Provisions. A 998 offer containing this type of provision is likely invalid. (Barella v. Exchange Bank, 84 Cal.App.4th 793, 801 (2000).)
Provision Wanting the Inclusion of Additional Potential Nonparty and Unnamed Defendants. Inclusion of these clauses in a § 998 offer will open the offer up to an invalidity challenge. (Fassberg Constr. Co. v. Housing Auth. Of Los Angeles, 152 Cal.App.4th 720, 765 (2007); see also Valentino, 201 Cal.App.3d at 700-701.
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