Code of Civil Procedure § 998 – Offer to Compromise
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Code of Civil Procedure § 998 – Offer to Compromise
Code of Civil Procedure – CCP
PART 2. OF CIVIL ACTIONS [307 – 1062.34]
( Part 2 enacted 1872. )TITLE 14. OF MISCELLANEOUS PROVISIONS [989 – 1062.34]
( Title 14 enacted 1872. )CHAPTER 3. Offers by a Party to Compromise [998- 998.]
( Chapter 3 added by Stats. 1969, Ch. 570. )California Law
998.
(a) The costs allowed under Sections 1031 and 1032 shall be withheld or augmented as provided in this section.
(b) Not less than 10 days prior to commencement of trial or arbitration (as provided in Section 1281 or 1295) of a dispute to be resolved by arbitration, any party may serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time. The written offer shall include a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted. Any acceptance of the offer, whether made on the document containing the offer or on a separate document of acceptance, shall be in writing and shall be signed by counsel for the accepting party or, if not represented by counsel, by the accepting party.
(1) If the offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly. In the case of an arbitration, the offer with proof of acceptance shall be filed with the arbitrator or arbitrators who shall promptly render an award accordingly.
(2) If the offer is not accepted prior to trial or arbitration or within 30 days after it is made, whichever occurs first, it shall be deemed withdrawn, and cannot be given in evidence upon the trial or arbitration.
(3) For purposes of this subdivision, a trial or arbitration shall be deemed to be actually commenced at the beginning of the opening statement of the plaintiff or counsel, or, if there is no opening statement, at the time of the administering of the oath or affirmation to the first witness, or the introduction of any evidence.
(c) (1) If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover their postoffer costs and shall pay the defendant’s costs from the time of the offer. In addition, in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover postoffer costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the defendant.
(2) (A) In determining whether the plaintiff obtains a more favorable judgment, the court or arbitrator shall exclude the postoffer costs.
(B) It is the intent of the Legislature in enacting subparagraph (A) to supersede the holding in Encinitas Plaza Real v. Knight, 209 Cal.App.3d 996, that attorney’s fees awarded to the prevailing party were not costs for purposes of this section but were part of the judgment.
(d) If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the defendant to pay a reasonable sum to cover postoffer costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the plaintiff, in addition to plaintiff’s costs.
(e) If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the costs under this section, from the time of the offer, shall be deducted from any damages awarded in favor of the plaintiff. If the costs awarded under this section exceed the amount of the damages awarded to the plaintiff the net amount shall be awarded to the defendant and judgment or award shall be entered accordingly.
(f) Police officers shall be deemed to be expert witnesses for the purposes of this section. For purposes of this section, “plaintiff” includes a cross-complainant and “defendant” includes a cross-defendant. Any judgment or award entered pursuant to this section shall be deemed to be a compromise settlement.
(g) This chapter does not apply to either of the following:
(1) An offer that is made by a plaintiff in an eminent domain action.
(2) Any enforcement action brought in the name of the people of the State of California by the Attorney General, the Insurance Commissioner, a district attorney, or a city attorney, acting as a public prosecutor.
(h) The costs for services of expert witnesses for trial under subdivisions (c) and (d) shall not exceed those specified in Section 68092.5 of the Government Code.
(i) This section shall not apply to labor arbitrations filed pursuant to memoranda of understanding under the Ralph C. Dills Act (Chapter 10.3 (commencing with Section 3512) of Division 4 of Title 1 of the Government Code).
(Amended by Stats. 2024, Ch. 444, Sec. 2. (SB 577) Effective January 1, 2025.)
California Law Summary
This statute governs statutory offers to compromise in civil litigation. It allows either party to serve a written offer to settle the case prior to trial or arbitration. If the offer is not accepted and the opposing party fails to obtain a more favorable judgment or award, the rejecting party may face cost-shifting penalties, including:
Payment of the offering party’s post-offer costs,
Expert witness fees, in the court’s discretion.
Purpose
To encourage early settlement of disputes and reduce the burden on courts by creating financial incentives for parties to make and accept reasonable settlement offers. It deters unnecessary litigation by imposing potential cost consequences on parties who reject reasonable offers.
Application
This provision applies in any civil action or arbitration where a party seeks to:
Make a pretrial offer to compromise,
Establish a right to recover costs and fees if the offer is rejected and not beaten at trial.
Key procedural requirements include:
The offer must be in writing, state the terms and conditions, and indicate that it is made under § 998.
The offer must be served at least 10 days before trial or arbitration.
If not accepted within 30 days, the offer is deemed withdrawn and cannot be accepted thereafter.
