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Legal Update: Section 998 - Offer Not Made in Good Faith

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January 2019

By: Richard J. Finn

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Legal Update:
Section 998 - Offer Not Made in Good Faith
January 2019




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Richard Finn
Richard Finn is an AV rated trial attorney who practices in the areas of environmental, business and commercial, and construction law.  He has extensive trial experience in state and federal courts including matters that have tried to verdict in California and Nevada.  Mr. Finn is regularly retained to handle litigation in jurisdictions outside of California.
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Section 998 offer not made in good faith when made five days after defendant filed its answer, defendant had very little information available, and plaintiff never responded to that concern.
L icudine v. Cedars-Sinai Medical Center, 2DCA/2 II California Courts of Appeal, No. B286350, Jan 3, 2019
Dionne Licudine underwent surgery performed by Dr. Ankur Gupta at Cedars-Sinai Medical Center.  Dr. Gupta allegedly cut a vein inside the abdominal cavity which caused internal bleeding.  Plaintiff filed a medical malpractice lawsuit against Cedars.  Licudine served Cedars an offer to compromise pursuant to California Code of Civil procedure section 998 for $249,999.00.
Cedars objected on the grounds the offer was sent five days after Cedars had filed its answer and, thus, it could not determine whether the offer was reasonable.
The trial court yielded a total verdict of $5,594.557 in favor of Licudine who sought recovery of $2,335,929.20 in prejudgment interest from the date of her 998 offer to the date of judgment.  The trial court struck plaintiff's request for prejudgment interest.
AFFIRMED:  A plaintiff who sues and prevails at trial is statutorily entitled to prejudgment interest starting from the date she makes a settlement offer under Section 998 as long as that offer is "valid", and the subsequent verdict is "more favorable" than the rejected 998 offer. A 998 offer, however, is valid if made in good faith, and only if, among other things the offeror knew that the offeree had reasonable access to the facts necessary to "intelligently evaluate the offer".  The court discussed three factors pertinent to the good faith analysis: (1) the timing of the offer relative to the state of the litigation; (2) the information available to the offeree prior to the 998 offer's expiration; and (3) whether the offeree informed the offeror that it lacked sufficient information to assess the offer and how the offeror responded.
Here, Licudine made her 998 offer just 19 days after serving Cedars with her complaint and just five days after Cedars filed its answer.  Second, Cedars had very little information available prior to the date Licudine's 998 offer expired.  Third, Cedars alerted Licudine to its concern that it was "too soon for it to make any determination as to whether" her 998 offer was reasonable, Plaintiff never responded.  Therefore, court held the 998 offer was not made in good faith.

This article is presented for informational purposes only and is not intended to constitute legal advice.