Gray v. Stewart

In Gray v. Stewart (2002) 97 Cal.App.4th 1394, the First District concluded that a party may orally accept an offer under section 998 if the offer does not require another mode of acceptance and both parties agreed to both the terms of the offer and the fact of oral acceptance. In that case, the plaintiff served the defendants with a written section 998 offer to compromise. (Id. at p. 1396.) Ten days later, the defendants' counsel told plaintiff's counsel " 'we accept your 998 demand of $ 5,000.' " (Ibid.) "Gray's counsel conceded that the acceptance was made, was communicated in unambiguous terms, and that she heard and understood it. Nor did she attach any conditions to the acceptance or the settlement." (Ibid.) Although the attorneys "shook hands" on the deal, the following day, Gray decided to withdraw her section 998 offer, apparently believing that defendants' oral acceptance was ineffective. (Gray, at p. 1396.) The trial court granted defendants' motion for summary judgment on the grounds that Gray's action was barred by the parties' settlement under section 998. (Gray, at p. 1396.) The court affirmed, stating section 998 "does not require that the acceptance be in writing nor does it specify the manner in which acceptance must be communicated. Since the process of settlement and compromise is contractual, general principles of contract law apply when they do not conflict with the statute or defeat its purpose. Therefore, pursuant to Civil Code section 1582, any reasonable and usual mode of communication may be used to accept a section 998 offer unless a specific mode was prescribed in the offer. Contract law also requires that an acceptance be communicated in a clear and unequivocal fashion. ... A written acceptance is not called for here. Because the offer to compromise did not prescribe any specific mode of communication of the acceptance, the only requirement was that the acceptance be communicated in a clear and unequivocal fashion. Gray agrees that an acceptance of the offer was communicated, and that her counsel heard it and understood it." (Gray v. Stewart, supra, 97 Cal.App.4th at p. 1397.)