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Mostafavi Regulation Group, APC v. Larry Rabineau, APC, et al., 2021 WL 803685 (March 3, 2021); Second Appellate District Court docket of Enchantment, Division 4, Case No. B302344 (March 3, 2021).
California Code of Civil Process part 998 Presents to Compromise are an efficient and widely-used settlement instrument in litigation. The principle goal of a Part 998 Supply “is to encourage settlement by offering a robust monetary disincentive to a celebration – whether or not it’s a plaintiff or a defendant – who fails to realize a greater consequence than the occasion might have achieved by accepting his or her opponent’s settlement provide.” Financial institution of San Pedro v. Sup. Ct., 3 Cal.4th 797, 804 (1992). Within the occasion an offeree rejects a Part 998 Supply and fails to realize a greater consequence at trial, Part 998 shifts sure prices to the offeree, together with the offeror’s affordable professional prices. This case solutions whether or not acceptance of a Part 998 Supply, served with no required acceptance provision, provides rise to a sound judgment. It doesn’t.
Plaintiff Amir Mostafavi (“Mostafavi”) and his regulation agency, Mostafavi Regulation Group (“MLG”), sued defendants Larry Rabineau (“Rabineau”) and Larry Rabineau, APC (“LR”; collectively, “Defendants”) for defamation, amongst different claims. Following an unsuccessful mediation, Defendants served a Part 998 Supply to MLG for $25,001. The Supply, nevertheless, didn’t comprise an acceptance provision.
MLG tried to simply accept the Supply. It responded to the Supply by handwriting its acceptance onto the Supply, and filed a Discover of Acceptance with the trial court docket. Rabineau initially informed MLG that, previous to remitting cost, he would put together a settlement settlement below which every occasion would bear their very own attorneys’ charges and prices. Within the meantime, the trial court docket entered judgment on the Supply in favor of MLG. Thereafter, the events disputed the enforceability of the judgment.
Rabineau filed a movement to put aside the judgment on the premise that the Part 998 Supply was void within the absence of an acceptance provision. The court docket agreed and granted the movement.
On enchantment, MLG argued that the judgment was legitimate as a result of the Supply was unambiguous, and MLG accepted the Supply in writing. Based on MLG, requiring an categorical acceptance provision to be able to implement an in any other case accepted 998 Supply could be inconsistent with the statute’s aim of “encouraging settlement.” MLG additionally argued that prior case regulation didn’t management, as a result of these circumstances didn’t determine whether or not a judgment following acceptance of a Part 998 provide, regardless of the absence of an categorical acceptance provision, was void.
Puerta v. Torres 195 Cal.App.4th 1267 (2011) and its progeny beforehand addressed the validity of a Part 998 Supply with out an acceptance provision for functions of triggering the statute’s cost-shifting provisions. Puerta held that Part 998(b) requires a statutory provide: (1) to be written; and (2) to comprise a provision for acceptance. Thus, a Part 998 Supply missing an acceptance provision is invalid, and an offeree’s failure to simply accept it doesn’t set off Part 998’s cost-shifting provisions. Making use of Puerta’s reasoning, the Court docket of Enchantment decided that, if the failure to simply accept a suggestion missing an acceptance provision doesn’t set off Part 998(c)-(e)’s cost-shifting penalties, then acceptance of such a faulty provide likewise shouldn’t give rise to an enforceable judgment.
The Court docket additionally disagreed with MLG’s competition {that a} rule requiring Part 998 Presents to incorporate an acceptance provision defeats the statute’s targets of “eliminating uncertainty” and “encouraging settlement.” Quite the opposite, adopting a bright-line rule provides consistency and predictability to Part 998’s operation, thereby selling settlement.
Lastly, the Court docket rejected MLG’s arguments based mostly in ideas of contract and fairness. First, contract ideas shouldn’t apply the place they battle with the necessities of Part 998. Second, ideas of fairness didn’t assist enforcement of the judgment. Though Rabineau made a number of drafting errors, together with failing to incorporate an acceptance provision and failing to direct the provide to each plaintiffs, the judgment shouldn’t be enforced just because Rabineau, because the offeror, was liable for these errors.
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