Do not overwork to be rich;
Because of your own understanding, cease!
Will you set your eyes on that which is not?
For riches certainly make themselves wings;
They fly away like an eagle toward heaven.
-Proverbs
What is a 998 offer? It’s a settlement offer with teeth.
A 998 offer allows a party to shift certain costs to the other party. It’s based on CCP § 998. The 998 offer is generally only good for 30 days. From the Plaintiff side, it also allows you to claim prejudgment interest calculated at 10 percent annually after the date of the offer; interest accrues until the judgment is satisfied. See CC § 3291.
Parties who prevail at trial are entitled to have the losing side pay some of their litigation costs. Not to overcomplicate things, but CCP § 1032 gets you CCP § 1033.5 costs such as filing fees, deposition costs, process server fees. CCP § 1032 does not get you, the prevailing part, expert costs. CCP § 998 can. But note that recoverable expert costs are costs incurred after the 998 offer was made.
You make a 998 offer by using the required statutory language under CCP § 998 and related case law.
Here’s how it works from the Plaintiff side:
- Plaintiff sends Defendant a $50,000 998 offer on June 1.
- Defendant doesn’t accept the offer by July 1 (30 days later). The 998 offer is now closed.
- Plaintiff prepares for trial, spending $15,000 in expert costs.
- Plaintiff goes to trial and wins. The jury awards Plaintiff $55,000.
- Plaintiff has “beat” the $50,000 998. Plaintiff should be able to recover some (possibly all) of the $15,000 in expert costs, subject to the court’s discretion.
- Plaintiff gets 10% interest from the date of the offer.
If, however, Defendant accepted the $50,000 998 offer before July 1, then the case should be over.
Here’s how it works from the Defendant side:
- Defendant sends Plaintiff a $10,000 998 offer on June 1.
- Plaintiff doesn’t accept the offer by July 1 (30 days later). The 998 offer is now closed.
- Defendant prepares for trial, spending $15,000 in expert costs.
- Defendant goes to trial and wins. The jury awards nothing to Plaintiff.
- Defendant has “beat” the $10,000 998. Defendant should be able to recover some (possibly all) of the $15,000 in experts costs.
- Also, Plaintiff is no longer entitled to CCP § 1033.5 costs even if Plaintiff is the prevailing party (e.g. Plaintiff won less than $50,000 at trial).
- And Plaintiff must pay the Defendant’s post-offer costs.
If, however, Plaintiff accepted the $10,000 998 offer before July 1, then the case should be over.
Of course, it can become complicated. (e.g. if there are multiple plaintiffs and defendants, joint and several liability, calendar extensions, whether the 998 offer was in “good faith,” whether there’s been a “more favorable judgment,” etc).
What’s important to know is that a 998 offer is a settlement offer with teeth because it allows a party to shift certain costs to the other party.
Questions? Contact Me for a free consultation.
