While California Law strongly favors settlements of civil disputes, and has codified Statutory Offers To Compromise in Code of Civil Procedure § 998 (which imposes penalties when an offer is not accepted and a less favorable award occurs at trial), questions have arisen as to what non-monetary terms may be included in a valid Statutory Offer. In that regard, case law on point provides that non-monetary terms can be included in a Statutory Offer, so long as the offer is unconditional. See, Barella v. Exchange Bank (2000) 84 Cal.App.4th 793, 799–800. However, questions have arisen in regard to the inclusion of a settlement agreement in the Statutory Offer (i.e. that the accepting party must agree to execute a settlement agreement). Such a condition has been criticized by some practitioners because the terms of the settlement agreement are not set forth in the Statutory Offer and disputes can arise as to what terms should or should not be included in any settlement agreement.
The California Court of Appeal, First District, has now answered that question. In Sanford v. Rasnick (Ct. of Appeal, 1st App. Dist., No. A145704) (“Sanford case”) the First Appellate District ruled that a Code of Civil Procedure § 998 Statutory Offer to Compromise which required the plaintiff in a personal injury lawsuit to execute a release and enter into a separate settlement agreement was invalid.
The Sanford case involved a motorcycle accident involving 17 year old Jacy Rasnick, who, when driving her father’s car, ran a stop sign and struck Charles Sanford who was operating his motorcycle. Sanford filed suit against Jacy Rasnick and her father, William Rasnick, for personal injuries and property damage. Prior to trial, the Rasnicks served a Statutory Offer which required, among other things, the “notarized execution and transmittal of a written settlement agreement and general release” from Sanford.
Following a trial which resulted in an award to Sanford which was (slightly) less favorable than the amount of the Rasnicks’ Statutory Offer, the trial court awarded certain post offer costs and fees to the Rasnicks based on their