Court Opinion

ID: 9850092
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:52:06.784213+00
Date Added: 2024-06-11T09:20:31.699407
License: Public Domain

BROUSSARD, J.
I dissent.
The language of Code of Civil Procedure section 998, historical considerations, prior authority, and sound public policy require the conclusion that offers made pursuant to the code section are irrevocable and may be accepted until deemed withdrawn under the terms of the statute.
Section 998, subdivision (b) provides: “Not less than 10 days prior to commencement of the trial as defined in subdivision 1 of Section 581, any party may serve an offer in writing upon any other party to the action to allow judgment to be taken in accordance with the terms and conditions stated at that time. If such offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly. If such offer is not accepted prior to trial or within 30 days after it is made, whichever occurs first, it shall be deemed withdrawn, and cannot be given in evidence upon the trial.”
Other provisions of the section state that if an offer is made by defendant and not accepted and the plaintiff fails to obtain a more favorable judgment, the plaintiff will be denied recovery of costs, shall pay defendant’s costs from the time of the offer, and may be compelled to pay all of defendant’s costs, including expert witness costs. If plaintiff’s offer is not accepted and defendant fails to secure a more favorable judgment, defendant may be required to pay expert witness costs.*
1
*285In construing statutes, courts should ascertain the intent of the Legislature so as to effectuate the purpose of the law. In doing so the court looks first to words of the statute. (Martinez v. Traubner (1982) 32 Cal.3d 755, 758 [187 Cal.Rptr. 251, 653 P.2d 1046]; Moyer v. Workmen’s Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230 [110 Cal.Rptr. 144, 514 P.2d 1224].) Although the language does not expressly provide that the offer made pursuant to the section may not be revoked, this clearly is the contemplation of the provisions of the statute. The statute provides that once an offer is made pursuant to the statute there are two alternatives. If the offer is accepted, a judgment is to be entered. If the offer is not accepted within the statutory period, the offeror is entitled to an opportunity to obtain the cost benefits set forth in the statute.
To conclude, as the majority do, that an offer may be revoked so as to preclude acceptance within the statutory period either requires a wholesale rewriting of the code section or permits an anomalous result, providing an opportunity for chicanery. The word “offer” as used in the section may not be read as meaning a revocable offer, because such a reading would produce an anomalous result. For example, if the word “offer” in subdivision (c) is read as revocable offer, the subdivision would provide: “If [a revocable] offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment, the plaintiff shall not recover his costs and shall pay the defendant’s costs from the time of the offer. ...” Under the literal wording of the provision, the defendant would be entitled to an opportunity to obtain the cost benefits even though he revokes his offer before acceptance. The defendant could obtain the benefits of the section by making an offer and revoking it a few hours later prior to acceptance, obviously an anomalous result which could not have been intended by the Legislature. To avoid the anomalous result while reaching the majority conclusion that the offer is revocable it is necessary to add a third alternative to the section, providing that if an offer is revoked within the period described in the statute *286the offeror will not be entitled to an opportunity to obtain the cost benefits set forth in the statute.
To avoid the anomaly, the majority conclude that “an offer that is revoked prior to acceptance no longer functions as an ‘offer’ for purposes of the cost benefit provisions.” (See ante, at p. 283, fn. 13.) The result is that the first four times “offer” is used in section 998 it is given its ordinary meaning, the fifth time a special meaning, the sixth time the ordinary meaning, and the seventh time the special meaning. (See fn. 1.) “It is well settled that a word or phrase should be given the same scope or meaning when it appears in separate parts of a statute.” (People v. Mirmirani (1981) 30 Cal.3d 375, 382, fn. 6 [178 Cal.Rptr. 792, 636 P.2d 1130].) While the settled rule is not inflexible and will not be applied where the legislative intent to provide different meanings is clear (People v. Hernandez (1981) 30 Cal.3d 462, 468 [179 Cal.Rptr. 239, 637 P.2d 706]), the majority do not claim that the legislative intent is clear but to the contrary argue that the language of the code section is unclear. (Ante, at p. 278.)
The provision that the offer is “deemed withdrawn” after 30 days also shows that offers under the statute are irrevocable. If statutory offers are irrevocable there is reason for the automatic termination—otherwise the offer would remain open indefinitely. However, no substantial reason appears for the cutoff if the offer is revocable. Considering that the obvious purpose of the statute is to promote settlements, the purpose would best be served, if offers are revocable, by leaving the offer open until the offeror chose to revoke it, a period which often might be in excess of the 30-day period set forth in the statute.
The predecessor of section 998 providing for an opportunity to obtain costs on the basis of a settlement offer was first enacted in 1851. (Stats. 1851, ch. 5, § 390, p. 113.) The section was substantially the same as the New York Code of Procedure, section 385 which was derived from the Field Code (First Rep. to the Com. on Prac. & Pleadings, Code Proc., § 338 (1848)) except that the New York provision allowed ten days for acceptance, while the California provision allowed five.
As originally drafted, the California provision applied only to offers by defendant, set a five-day period of acceptance beyond which the offer was deemed withdrawn, and provided for entry of judgment by the clerk. The New York courts early established that the statutory offer to compromise was not revocable. The cases reasoned that the code expressly allows the plaintiff 10 days to consider the offer, that the code provision represents a regulation of procedure rather than a contract, that the offer to compromise is in the nature of an option with consideration in the form of an opportunity to avoid costs, and that, if the statute were construed to permit revocation of offers, it would become an instrument “of trifling and chicane.” (Pom*287eroy v. Hulin (1852) 7 How. Pr. 161, 162-163; Walker v. Johnson (1853) 8 How. Pr. 240, 241; Herman v. Lyons (1877) 10 Hun. 111; McVicar v. Keating (1897) 19 App.Div. 581, 582 [46 N.Y.Supp. 298]; Hackett v. Edwards, Merrill & Co. (1898) 22 Misc. 659, 660 [49 N.Y.Supp. 609].) The earlier New York cases were cited with approval in Scammon v. Denio (1887) 72 Cal. 393, 396-397 [14 P. 98] where the court stated that plaintiff shall have five days to consider the offer. Federal Rules of Civil Procedure, rule 68 (28 U.S.C.) has also been construed to provide that offers to compromise are irrevocable. (See Udall, May Offers of Judgment Under Rule 68 Be Revoked Before Acceptance? (1959) 19 F.R.D. 401; see also Mubi v. Broomfield (1972) 108 Ariz. 39 [492 P.2d 700, 702].)
The short period for acceptance, the automatic entry of a judgment by the clerk leaving no room for determination whether an offer may have been revoked, and the reasoning of the New York cases compel the conclusion that the statutory offers are irrevocable for the statutory period. There is nothing to indicate that when the Legislature provided for the longer 30-day period (Stats. 1969, ch. 570, § 1, p. 1200), it intended that the offers become revocable.
Consideration of the legislative purpose also supports the view that offers made pursuant to the section are irrevocable. “The purpose of this section is to encourage the settlement of litigation without trial. (Distefano v. Hall (1968) 263 Cal.App.2d 380, 385 [69 Cal.Rptr. 691].) Its effect is to punish the plaintiff who fails to accept a reasonable offer from a defendant. ” (Brown v. Nolan (1979) 98 Cal.App.3d 445, 449 [159 Cal.Rptr. 469]; Pineda v. Los Angeles Turf Club, Inc. (1980) 112 Cal.App.3d 53, 63 [169 Cal.Rptr. 66]; Shain v. City of Albany (1980) 106 Cal.App.3d 294, 299 [165 Cal.Rptr. 69].) When, as in the instant case, the plaintiff makes an offer under the section, the effect of the statute is to punish the defendant who fails to accept a reasonable offer.
It is apparent that if the offeror is permitted to revoke the offer within the statutory time and before acceptance, the settlement will be defeated. The settlement period established by the Legislature is short and provides an offeree a reasonable period to cogitate and make a decision. If the offer is permitted to be revoked before an adequate time has passed to consider and respond to the offer, the legislative policy of encouraging settlements is frustrated.
The statute does not require a party to litigation to offer to settle but gives any party that option on specified terms and provides potential benefits for the offeror. By making the offer, the offeror must accept the burdens of the offer with its benefits.
*288For these reasons the court in Lum v. Superior Court (1983) 141 Cal.App.3d 952 [190 Cal.Rptr. 599] concluded that offers made pursuant to section 998 are irrevocable for the statutory period. We should follow Lum.
The majority urge that the settlement will be furthered by permitting the statutory offers to be revoked because, knowing that they may revoke the offers, parties will make more offers to settle. However, the approach is conjectural and unrealistic. A party contemplating making a statutory offer must be aware that the other party may accept the offer in which case, even under the majority view, it would be too late to withdraw. If the party is afraid that he will be locked in to his offer, he is not going to make it, and I do not believe that making the offer revocable will significantly encourage offers and increase settlements. Rather revocability, as occurs in this case, will frustrate would-be settlements.
The majority also urge that the policy of compensating injured parties is promoted by holding the statutory offer revocable. It is apparent that the policy is not served by today’s majority holding because the majority have upset a settlement with the possibility that the injured plaintiffs will go uncompensated after trial. Settlements assure that injured plaintiffs will be compensated, and I fail to see how voiding settlements will increase the number of compensated plaintiffs when some no doubt will lose at trial.
The majority reason that contract law should control and that the general contract rule is that offers may be revoked prior to acceptance. In my view it is immaterial whether contract law applies. As pointed out above the language of the statute, historical considerations, prior authority, and sound public policy require that the statutory offer be irrevocable for the short period established by the statute. But even if we assume that contract law should apply, we would reach the same result.
It is true that as a general rule an offeror may revoke at any time prior to the communication of acceptance and that in the absence of consideration the offeror may revoke notwithstanding his promise that the offer will remain open for a specified time. (Thomas v. Birch (1918) 178 Cal. 483, 489 [173 P. 1102]; Bellasi v. Shackelford (1962) 201 Cal.App.2d 265, 267 [19 Cal.Rptr. 925]; 1 Witkin, Summary of Cal. Law (8th ed. 1973) Contracts, § 122, p. 122.) However, there is an equally well-settled exception to the general rule for options for consideration. (E.g., Palo Alto Town & Country Village, Inc. v. BBTC Company (1974) 11 Cal.3d 494, 502-503 [113 Cal.Rptr. 705, 521 P.2d 1097]; Dawson v. Goff (1954) 43 Cal.2d 310, 315 et seq. [273 P.2d 1]; Warner Bros. Pictures v. Brodel (1948) 31 Cal.2d 766, 772-773 [192 Cal.Rptr. 949, 3 A.L.R.2d 691]; 1 Witkin, supra, *289§§ 122, 126-128, pp. 122, 124-126.) The consideration in the instant case for making an irrevocable offer open for the statutory period is conferred by the statute itself—by making the offer the offeror obtains a benefit, namely, costs in the event the offeree fails to obtain a more favorable judgment. (See Mubi v. Broomfield, supra, 492 P.2d 700, 702; McVicar v. Keating, supra, 19 App.Div. 581, 582.)
The majority do not dispute that there is sufficient consideration. Rather the majority position is that there is no irrevocable option because assertedly there is a lack of mutual assent in that plaintiffs when they made the offer did not know that the offer was irrevocable. However, this analysis ignores the facts that the offer is made pursuant to a statute and that the statute sets forth the term of the offer.
California follows the objective theory of mutual assent. The terms of the agreement are ordinarily established, not by the undisclosed intentions of the promisor, but by words or conduct justifying the promisee in understanding the promisor intended to make a promise. (E.g., Horacek v. Smith (1948) 33 Cal.2d 186, 193-194 [199 P.2d 929].) Any party is bound even if he misunderstood the terms of a contract and actually had a different undisclosed intention. (Blumenfeld v. R. H. Macy & Co. (1979) 92 Cal.App.3d 38, 46 [154 Cal.Rptr. 652].) The construction of the contract must be one that will make it reasonable, operative and lawful (Civ. Code, §§ 1643, 3541), the contract may be explained by references to the circumstances under which it was made (Civ. Code, § 1647, Code Civ. Proc., § 1860), and all applicable laws in existence become a part thereof as fully as if incorporated by reference (Mulder v. Casho (1964) 61 Cal.2d 633, 637 [394 P.2d 545]; 1 Witkin, supra, § 530, p. 452).
Plaintiffs could have made a settlement offer without regard to the statute. They chose, however, to make their offer under the statute; their obvious purpose was to secure the benefit of the cost provisions of the statute. As we have seen, to obtain those benefits the offer had to be left open for the statutory period. Implied in the agreement was the statutory provision that the offer would be deemed withdrawn in 30 days or at the commencement of trial, whichever occurs first. Under the objective theory of contracts, plaintiffs must be deemed to have intended that the offer of settlement would be open for the statutory period or until acceptance because only in this manner could they obtain the full benefits of their offer. To conclude that plaintiffs did not intend that the offer would run for the full statutory period is to attribute a secret intention which has never even been asserted.
In the absence of consideration plaintiffs could have revoked their offer no matter how long they expressly or impliedly stated it would remain open. *290But, as we have seen, there was consideration, and plaintiffs should not be permitted to claim lack of mutual assent or to revoke in view of their implied representation.
I Would issue a peremptory writ of mandate directing the superior court to vacate its order striking the acceptance and to grant the motion to enter judgment in accordance with the offer.
Mayer, J.,* concurred.

Section 998 provides: “(a) The costs allowed under Sections 1031 and 1032 shall be withheld or augmented as provided in this section.
“(b) Not less than 10 days prior to commencement of the trial as defined in subdivision 1 of Section 581, any party may serve an offer in writing upon any other party to the action to allow judgment to be taken in accordance with the terms and conditions stated at that time. If such offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly. If such offer is not accepted prior to trial or within 30 days after it is made, whichever occurs first, it shall be deemed withdrawn, and cannot be given in evidence upon the trial.
“(c) If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment, the plaintiff shall not recover his costs and shall pay the defendant’s costs from the time of the offer. In addition, in any action or proceeding other than an eminent domain action, the court, in its discretion, may require the plaintiff to pay the *285defendant’s costs from the date of filing of the complaint and a reasonable sum to cover costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, the preparation or trial of the case by the defendant.
“(d) If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment, the court in its discretion may require the defendant to pay a reasonable sum to cover costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, the preparation or trial of the case by the plaintiff, in addition to plaintiff’s costs.
“(e) Police officers shall be deemed to be expert witnesses for the purposes of this section; plaintiff includes a cross-complainant and defendant includes a cross-defendant. Any judgment entered pursuant to this section shall be deemed to be a compromise settlement.
“(f) The provisions of this chapter shall not apply to an offer which is made by a plaintiff in an eminent domain action.
“(g) The costs for services of expert witnesses for trial under subdivisions (c) and (d) shall not exceed those specified in Section 68092.5 of the Government Code.”

 Assigned by the Chairperson of the Judicial Council.