Errors in Defendant’s Settlement Offer Allow Injured California Driver to Avoid Paying Costs

Fine-PrintIn many walks of business (and life), you will hear people talk about “the fine print.” In legal matters, it helps to have a team on your side well-versed in identifying the little things that can make big differences in your injury case. For example, California law has a statutory section that requires plaintiffs, in some situations, to pay some of a defendant’s costs if the plaintiff received and refused a qualifying settlement offer. In the case of one injured pedestrian, she escaped paying any of the defendant’s costs because the defendant’s settlement offer did not meet the strict requirements of Section 998 of the Code of Civil Procedure.

The case involved a pedestrian who was injured in April 2013 when a driver’s vehicle struck her. The pedestrian launched a negligence lawsuit against the driver. Roughly two years into the litigation process, the defendant made a settlement offer to the plaintiff. The settlement amount was $75,000.

According to the defendant, the settlement offer was made in accordance with the terms of Section 998. That statutory section is one intended to encourage settlement of disputes. As a means to fostering that end, the statute says that if a plaintiff receives and rejects a qualifying “998 offer,” then goes on to lose at trial (or even win at trial but recover a sum less than the amount of the settlement offer,) the defendant can potentially recover the costs that she racked up after the date of the offer. Additionally, the plaintiff loses her right to recover the costs that she incurred after the date of the offer.

This plaintiff elected to reject the settlement offer. The case went to the jury and the jury returned a verdict finding the defendant negligent. The jury awarded the plaintiff damages totaling $70,000.

As the damages award was less than the amount of the settlement offer, the defendant promptly set out seeking to recover her post-offer costs (and blocking the plaintiff from recovering hers). The trial court, however, ruled against the defendant. The defendant appealed but again lost.

Why did the plaintiff prevail and escape paying any of the defendant’s costs? Because her counsel wisely identified the defendant’s offer as one that did not qualify under Section 998. California law is clear that, as part of a 998 offer, you can ask a plaintiff to sign a release, but if the release includes terms in it that extend beyond the scope of the immediate litigation action, then that makes the offer invalid under Section 998.

In this pedestrian’s case, the release she received as part of the defendant’s settlement offer required her to sign away her right to pursue “any and all claims… whether now known or unknown, suspected or unsuspected, that have existed or may have existed or which do exist, or which hereinafter can, shall or may exist.” This language was too broad to allow it to qualify under Section 998 because the range of potential claims that could be covered by the agreement could extend well beyond just the litigation covering this April 2013 accident. For example, the pedestrian also alleged that the defendant and her investigator violated the plaintiff’s privacy rights. That claim was something that was outside of this lawsuit and the pedestrian could only bring it in a separate action. However, if she had signed this release she would have lost the right to pursue that claim.

In this case, the plaintiff was never truly at risk of paying the defendant’s post-offer costs, regardless of the outcome of the trial, because the offer was not a qualifying one under Section 998. Spotting these matters in advance can be very important as you make decisions regarding settlement or continuing with litigation. The skilled San Mateo personal injury attorneys at the Law Offices of Galine, Frye & Fitting have spent many years helping injured clients as they go through every step of the process. If you’ve been injured by another’s negligence, you can count on our team to help you make the most informed decisions possible. To set up a free consultation with one of our experienced attorneys, contact us at 650-345-8484 or through our website.

More Blog Posts:

Without Clear Proof of Authorization, California Woman Isn’t Bound by Settlement and is Free to Pursue Injury Lawsuit, San Mateo Injury Lawyers Blog, Published July 6, 2016

California Appeals Court Allows Survivors of Pedestrian Victim to Sue Passenger for Encouraging Driver to Speed, San Mateo Injury Lawyers Blog, Published Dec. 15, 2015