61 Cal.App.5th 614
Cal. Ct. App.2021Background
- Plaintiff Mostafavi Law Group (MLG) sued Larry Rabineau (and his firm) and litigated for years; claim included defamation per se.
- On May 31, 2019 Rabineau served a Code of Civil Procedure §998 "Statutory Offer to Compromise" for $25,000.01 that did not include the statute-required acceptance provision or direct the offer to one of the two named plaintiffs.
- On June 20, 2019 MLG’s counsel hand-wrote “Plaintiff Mostafavi Law Group, APC accepts the offer,” filed a notice of acceptance, and served it on Rabineau.
- The clerk entered judgment for MLG under §998(b)(1); Rabineau then conditioned payment on MLG signing a separate settlement agreement and refused payment.
- Rabineau moved under CCP §473(d) to set aside the judgment, arguing the §998 offer was invalid because it omitted the required acceptance provision; the trial court granted the motion.
- MLG appealed; the Court of Appeal affirmed, holding the judgment void because the underlying §998 offer failed to include the mandatory acceptance provision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether acceptance of a §998 offer that omits the statute-required acceptance provision can give rise to an enforceable judgment | MLG: Offer terms were clear and unambiguous and MLG gave a written, unqualified acceptance, so the omission is harmless and contract principles control | Rabineau: The statute mandates an acceptance provision; an offer without it is invalid, so any judgment premised on acceptance is void | The Court: Offer without the required acceptance provision is invalid; acceptance of a defective offer cannot produce a valid §998 judgment (affirmed) |
| Whether general contract principles can validate a defective §998 offer | MLG: Apply ordinary contract law — mutual assent and written acceptance create a binding agreement | Rabineau: Contract principles cannot override the statute’s mandatory requirements | The Court: Contract principles yield to the statutory scheme; they cannot be used to circumvent §998’s mandatory elements |
| Whether equitable doctrines (estoppel/fairness) bar Defendant from challenging the defect | MLG: It would be inequitable to permit Rabineau to benefit from his drafting error; he should be estopped | Rabineau: Statutory requirements cannot be negated by equity; no estoppel elements shown | The Court: Equity and estoppel do not overcome the statute’s mandatory requirements; estoppel not established |
Key Cases Cited
- Puerta v. Torres, 195 Cal.App.4th 1267 (Cal. Ct. App. 2011) (statutory "shall" is mandatory; offer lacking acceptance provision invalid)
- Perez v. Torres, 206 Cal.App.4th 418 (Cal. Ct. App. 2012) (adopts bright-line rule invalidating offers that omit statutory acceptance provision)
- Boeken v. Philip Morris USA Inc., 217 Cal.App.4th 992 (Cal. Ct. App. 2013) (confirms offers without acceptance provision do not comply with §998)
- Saba v. Crater, 62 Cal.App.4th 150 (Cal. Ct. App. 1998) (acceptance of an offer that fails to meet §998’s formal requirements cannot produce a valid judgment)
- Bigler-Engler v. Breg, Inc., 7 Cal.App.5th 276 (Cal. Ct. App. 2017) (offers lacking acceptance provision fail to satisfy §998 and cannot trigger its consequences)
- Martinez v. Brownco Construction Co., 56 Cal.4th 1014 (Cal. 2013) (general contract principles may inform §998 matters but cannot conflict with the statute)
- Bank of San Pedro v. Superior Court, 3 Cal.4th 797 (Cal. 1992) (explains §998’s policy: encourage settlement by imposing cost consequences)