When making offers to compromise under California Code of Civil Procedure Section 998, defendants seeking a dismissal must be sure to include specific terms in the Section 998 offer to that effect.  Otherwise, the court will assume that only entry of judgment is the expected result.

In Arriagarazo v. BMW of North America, LLC, 64 Cal.App.5th 742, the 3rd District Appellate Court recently faced this issue on April 30, 2021. Appellants Arriagarazo and Arriaga accepted an offer to compromise their wrongful death action against BMW for $15,000 pursuant to a 998 offer. Judgment was entered against BMW in accordance with the compromise. BMW then moved to vacate this judgment, stating that the parties never stipulated to enter judgment under the 998 offer and that they instead planned to resolve the matter by way of a general release and dismissal. At the hearing, the trial court vacated the judgment as void because the 998 offer did not specify how the case was to be finally resolved.

The appellate court reversed this decision, pointing out that the 998 offer never indicated that appellants would be required to dismiss the case in exchange for the $15,000 settlement. In making this ruling, the appellate court considered a recent holding by the California Supreme Court, which clarified that 998 offers may require plaintiffs to dismiss the action as a condition of settlement, but the expected and standard procedural result is entry of judgment.[1] This assertion is consistent with the actual language of CCP § 998, which states: “If the offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly.”[2]

The burden rested on BMW to draft its 998 offer with clear and sufficient terms indicating the intent to dispose of the case through a dismissal. And, unfortunately, no subsequent email clarifications from BMW’s counsel could change the result once the appellants unconditionally accepted the 998 offer as it was written.

Monica Marks is an Associate in the Firm’s Fresno/Central Valley office and is a member of the Firm’s employment and appellate practice groups. She can be reached at (559) 449-2600 or mmarks@ericksenarbuthnot.com.