Daily Blast August 3, 2016

Is a 998 offer valid when it requires the plaintiff to agree to a general release? In Ignacio v. Caracciolo (Aug. 3, 2016, B266930) __ Cal.App.4th __, the Second District Court of Appeal in Los Angeles issued an opinion holding that a general release exceeding the scope of the current litigation renders a settlement offer invalid under California Code of Civil Procedure section 998 (“section 998”). (Slip opn., pp. 9-10.)

The plaintiff sued the defendant for negligence in an auto versus pedestrian accident. (Slip opn., p. 2.) The defendant served a 998 offer for $75,000 plus costs in exchange for a release and dismissal of the complaint without prejudice. (Ibid.) Attached to the offer was an agreement that released the defendant from claims or liabilities “of whatever kind and nature . . . 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,” including, but not limited to, claims arising from the accident. (Id. at p. 3.) The plaintiff rejected the offer and subsequently received a judgment in her favor for $70,000. (Id. at pp. 3-4.) Because the judgment was less than the $75,000 offer, the defendant sought to recover costs under the cost-shifting provisions of section 998. (Id. at p. 4.) The plaintiff opposed, arguing that the offer was invalid under section 998. (Ibid.) Following a hearing, the trial court ruled in favor of the plaintiff and denied the defendant’s motion to tax costs. (Id. at p. 5.) The defendant appealed. (Ibid.)

On appeal, the court affirmed the trial court’s postjudment order, agreeing that the release exceeded the scope of section 998 and was thus invalid. (Slip opn., p. 10.) Specifically, the court held that the language releasing liability from all claims “including but without, in any respect limiting the generality of the foregoing, any and all claims that were, or might, or could have been alleged in connection with [the] accident” constituted a “general release” that released claims beyond the scope of the current litigation (Id. at p. 9.) The court reasoned that such releases are routinely held invalid under section 998 and this release was no exception. (Id. at pp. 6-8.) Further, the court distinguished Goodstein v. Bank of San Pedro (1994) 27 Cal.App.4th 899, reasoning that the Goodstein court construed the term “general release” more narrowly than its common meaning. (Id. at p. 9.) The Ignacio court clarified that unlike the present case, the “general release” in Goodstein did not exceed the scope of its current litigation, and thus did not invalidate the section 998 offer. (Ibid.)

Related Attorneys

Related Practices

• Appellate