Reported / Citable
Background
Maynard and Tanis Matthews sued Patrick Ryan for negligence and loss of consortium after Ryan’s vehicle collided with Mr. Matthews’s vehicle, causing severe injuries. Plaintiffs served a pretrial settlement offer for $749,999.99 under Code of Civil Procedure section 998. The offer was conditioned on the consent of Ryan’s insurer. Ryan did not accept.
At trial, plaintiffs prevailed: a jury found Ryan 100% at fault and awarded Mr. Matthews more than $6.5 million and Mrs. Matthews $343,750. Plaintiffs sought prejudgment interest under section 998 and Civil Code section 3291. The trial court denied that motion, finding the section 998 offer invalid because it was conditioned on insurer consent. The trial court also denied plaintiffs’ motion for cost-of-proof sanctions under Code of Civil Procedure section 2033.420. Ryan appealed the judgment, challenging the trial court’s voir dire procedure, and plaintiffs cross-appealed the postjudgment denials.
The Court’s Holding
The Court of Appeal affirmed the judgment, denied Ryan’s voir dire challenge as forfeited, and reversed the prejudgment-interest denial. On the section 998 issue, the court held that a defending insurer is not bound by a settlement to which it does not consent. Because insurer consent is necessarily a condition of settlement with an insured defendant whether or not stated in the offer, plaintiffs’ express inclusion of that condition was redundant rather than disqualifying. The condition did not invalidate the offer.
The court therefore reversed the order denying prejudgment interest under section 998 and Civil Code section 3291. Because the trial court had not addressed Ryan’s separate contention that the offer was unreasonable and made in bad faith, the court remanded for the trial court to consider that issue and recalculate any prejudgment interest accordingly.
On the voir dire issue, the court held Ryan forfeited his challenge by failing to object to the trial court’s procedure (asking for volunteers to sit in the jury box rather than strict random selection) when it was used. In the unpublished portion of the opinion, the court rejected plaintiffs’ arguments under section 2033.420.
Key Takeaways
- Conditioning a Code of Civil Procedure section 998 offer on the defendant’s insurer’s consent does not invalidate the offer; insurer consent is implicitly required in any settlement with an insured defendant.
- Trial courts that reject section 998 offers on insurer-consent grounds may be reversed; counsel should preserve their entitlement to prejudgment interest by seeking it.
- Whether a section 998 offer was unreasonable or in bad faith is a separate question; trial courts must address it independently.
- Voir dire-procedure challenges must be made at the time of jury selection or are forfeited on appeal.
- Prejudgment interest under Civil Code section 3291 can be a substantial recovery for personal-injury plaintiffs who beat their section 998 offers; counsel should plan their offers strategically.
Why It Matters
The decision is significant for California personal-injury and other civil litigators who use Code of Civil Procedure section 998 offers strategically. By holding that an explicit insurer-consent condition does not invalidate an otherwise proper section 998 offer, the Second District has removed a procedural trap that defense counsel had at times exploited. Plaintiffs’ counsel can include insurer-consent language without fear of losing prejudgment-interest entitlement.
For defense counsel and insurers, the case is a useful reminder that the substantive reasonableness and good-faith analyses are still available defenses to a prejudgment-interest motion — and that trial courts must address those questions on remand. Both sides should treat section 998 offers seriously, because the prejudgment-interest exposure can be very large, especially in cases with multimillion-dollar verdicts.