## Facts

- Marie Guzman, a bank employee laid off in a reduction in force, sued Visalia Community Bank for sex discrimination and hostile work environment.
- While the bank’s summary judgment motion was pending, the bank served a California Code of Civil Procedure § 998 offer to compromise for $60,000.
- Guzman’s counsel made disparaging remarks about the offer in phone calls (e.g., “insulting and demeaning”) but did not clearly communicate acceptance or rejection.
- On June 11, after the court issued a tentative ruling granting summary judgment for the bank, Guzman’s counsel first faxed notice she would appear to argue against the motion.
- Later that night, still within the statutory acceptance period, Guzman’s counsel faxed a written acceptance of the § 998 offer.
- The trial court found counsel’s remarks and litigation conduct constituted a rejection, refused to enforce the § 998 settlement, and granted summary judgment for the bank.
- Guzman appealed; the Court of Appeal addressed the § 998 enforcement issue and treated the summary judgment challenge as moot if a binding settlement existed.

## Issues

1. Whether disparaging comments about a CCP § 998 offer and continued litigation activity constitute an unequivocal rejection that terminates the offeree’s power to accept before the offer expires.
2. Whether a written acceptance of a CCP § 998 offer, communicated within the statutory period and before any revocation, must be enforced.

## Decision

- The Court of Appeal reversed the order refusing to enforce the § 998 offer.
- The court held the attorney’s negative comments and continued prosecution of the case did not amount to an unequivocal rejection.
- Because the bank did not revoke the offer and Guzman delivered a written acceptance within the statutory period, the acceptance formed a binding settlement that the trial court was required to enforce.
- Enforcement of the settlement rendered the appeal of the underlying summary judgment moot.

## Legal Principles

- CCP § 998 offers are interpreted using general contract principles, applied consistently with § 998’s settlement-promoting purpose.
- An offeree’s power to accept a § 998 offer is terminated only by an effective revocation by the offeror or an unequivocal rejection by the offeree.
- Mere criticism, disparagement, negotiation posture, or continued litigation activity is insufficient to constitute rejection of a § 998 offer.
- A § 998 offer remains open until accepted, revoked, or it expires by statute; a timely written acceptance is effective even if made after an adverse tentative ruling.

## Conclusion

A CCP § 998 offer is not rejected by disparaging comments or ongoing litigation conduct absent an unequivocal rejection; when the offeror does not revoke and the offeree delivers a written acceptance within the statutory period, the resulting settlement is enforceable and can moot further litigation.


Guzman v. Visalia Cmty. Bank, 71 Cal. App. 4th 1370, 84 Cal. Rptr. 2d 581 (Ct. App. 1999)