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The Importance of Acceptance Provisions in a 998 Offer

We’ve discussed 998 offers in the past(here, here, and here).  What happens if a 998 offer is sent but doesn’t include a specific provision for acceptance?  What happens if the attorney that receives this purported 998 offer wants to accept and, writes in an acceptance line, and returns it to the offering party?  Is it a valid 998 offer and acceptance?  This is precisely what happened in a recent case (Mostafavi Law Group, APC v. Larry Rabineau, APC (Mar. 3, 2021, No. B302344) ___Cal.App.5th___ [2021 Cal. App. LEXIS 183].)

Larry Rabineau, APC, and Larry Rabineau (collectively, “Rabineau”) served plaintiff and appellant Mostafavi Law Group (MLG) with a statutory offer to compromise. The offer did not specify how MLG could accept it. Nevertheless, MLG’s counsel hand-wrote MLG’s acceptance onto the offer itself and filed a notice of acceptance with the trial court. Thereafter, the court entered judgment in favor of MLG pursuant to section 998, subdivision (b)(1).

Rabineau (the party that drafted and sent the 998 offer) filed a motion to vacate the judgment under section 473, subdivision (d). He argued his section 998 offer (that he created and served) was invalid because it lacked an acceptance provision.

Consequently, Rabineau contended, the judgment stemming from the offer’s acceptance was void and should be set aside.

The trial court agreed and granted Rabineau’s motion.

On appeal, MLG contended the trial court erred by vacating the judgment because its ruling:

(1) lacks support in caselaw;

(2) contradicts the policies and purposes underlying section 998; and

(3) violates principles of contract law and equity.

The Court of Appeal found the trial court correctly found the judgment was void and affirmed, holding:

  1. A purported acceptance of an offer to compromise that lacked an acceptance provision did not give rise to an enforceable judgment under Code Civ. Proc., § 998, subd. (b)(1) because a bright-line rule set forth in the case law treated the statutory language that an offer shall include an acceptance provision as a mandatory requirement for a valid offer, whether rejected or accepted, thus adding consistency and predictability to the statute’s operation;
  2. Arguments based on general contract principles and equity were not persuasive because contract principles could not be applied in contravention of plain statutory language, nor could the rule of construction against the drafter under Civ. Code, § 1654, be applied in the absence of ambiguity, and whether or not equitable estoppel could be applied under these circumstances, its elements were not shown to have been satisfied.

What do you think?  Was this a fair ruling?  Do you think it is right that Rabineau sent what was purported to be a 998 offer to MLG, allowed MLG to write in an acceptance and have judgement entered by the Court thereon, THEN, go to the Court and argue that the 998 offer they sent was defective and could not have been accepted by the party they sent it to?

In this instance, perhaps the Court should have found the arguments sounded in equity, brought by MLG to be persuasive.

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Mr. Serrano has been admitted to practice before California State and Federal Courts. He was named to the Super Lawyers’ 2012, 2013, 2014, 2015, and 2016 Southern California Rising Stars List, an honor awarded to no more than 2.5% of attorneys in Southern California each year. View Attorney Jean-Simon Serrano's Attorney Bio Here.

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