Siri v. Sutter Home Winery, Inc.

82 Cal.App.5th 685

298 Cal.Rptr.3d 576

Says SIRI, Plaintiff and Appellant,

v.SUTTER HOME WINERY, INC., Defendant and Appellant.

A161923

Court of Appeal, First District, Division 4, California.

Filed August 25, 2022

Counsel for plaintiff and appellant: BENEDON & SERLIN, LLP, Kelly Riordan Horwitz, Woodland Hills, Kian Tamaddoni

Counsel for defendant and appellant: LITTLER MENDELSON, P.C., Constance E. Norton, Lisa Lin Garcia, San Francisco, Amelia A. McDermott, San Diego

POLLAK, P. J.

Says Siri appeals from a judgment of dismissal entered after the trial court granted a motion by Sutter Home Winery, Inc., doing business as Trinchero Family Estates (Trinchero) to enforce a settlement agreement pursuant to Code of Civil Procedure section 998 ( section 998 ). Siri contends the judgment must be reversed because the court exceeded its authority by purporting to adjudicate whether the parties’ offer and acceptance formed a binding agreement. While it may be that in an appropriate procedural context the formation of a binding settlement agreement can be established–—an issue we do not decide—the trial court erred in holding that such an agreement had been reached pursuant to the procedures of section 998.

Therefore, the judgment of dismissal must be reversed.

Factual and Procedural History

This is the second appeal in this case; our opinion in Siri v. Sutter Home Winery, Inc. (2019) 31 Cal.App.5th 598, 242 Cal.Rptr.3d 750 sets forth the underlying facts and procedural history. For present purposes, suffice it to say that the prior decision enabled Siri to pursue a cause of action against her former employer Trinchero for wrongful termination in violation of public policy. On remand, in October 2019, Trinchero served an offer to compromise pursuant to section 998. The offer was to pay Siri $500,000 in exchange for her dismissal with prejudice of all claims. The offer stated that it "may be accepted by signing the below Notice of Acceptance," and it was accompanied by a page so captioned, with signature lines for Siri and her lawyer.

During the 30-day period in which Trinchero's section 998 offer remained in effect, the parties’ lawyers communicated about whether Siri's potential acceptance would trigger a right to prejudgment interest.¹ Siri had served Trinchero with a section 998 offer for $499,999 at the outset of litigation in 2012, which had not been accepted, and Siri claimed that her acceptance of Trinchero's 2019 offer for a higher sum would trigger the cost-shifting provisions of Civil Code section 3291,² entitling her to recover prejudgment interest of approximately $379,000. Trinchero's lawyer maintained that Siri's acceptance of the offer would not result in a judgment in her favor or entitle her to prejudgment interest. Siri apparently indicated she would accept the offer if amended to allow her to move for prejudgment interest and "let the chips fall where they may." Two days after Trinchero advised that it would not modify the offer, Siri served, but did not file, "objections" to the section 998 offer, contending it was defective because it did not address the availability of pre- or postjudgment interest on the proposed $500,000 payment.

Five days later, Siri's lawyer served a document titled "Notice of Conditional Acceptance of [Trinchero's section] 998 Offer." It stated, "Subject to clarification by the court in regard to [Siri's section] 998 offer dated May 12, 2012, entitling her to prejudgment interest, and subject further to clarification by the court in regard to the scope of [Trinchero's section] 998 offer dated October 29, 2019, and clarification in regard to entry of the proposed judgment tendered by [Siri], [Siri] gives formal notice of her conditional acceptance of [Trinchero's section] 998 offer to compromise, in the amount of $500,000, dated October 29, 2019."

The next day, Siri filed the objections to Trinchero's section 998 offer that she had served a week earlier, together with a motion asking the court to enter a judgment in her favor that would be "consistent with [her] conditional acceptance" and include prejudgment interest. Soon afterward, Trinchero filed a "Notice of Plaintiff's Acceptance of [ Section] 998 Offer." The notice, to which a copy of the conditional acceptance was attached, stated that "Although [Trinchero] does not waive any right to file an opposition to separately respond to the substantive issues raised in [Siri]’s motion requesting entry of judgment pursuant to ... section 998, ..., [Trinchero] notes [that] the ‘conditions’ [Siri] addresses in the motion and partially sets forth in her acceptance of [Trinchero]’s [section] 998 offer are simply requests that the court clarify post-resolution questions." Trinchero requested that the court "vacate the trial date and all related deadlines ..., pending entry of the dismissal of the action with prejudice, while retaining jurisdiction to hear [Siri]’s motion" The court did so.

Subsequently, the court issued a minute order denying Siri's motion for entry of judgment. The court reasoned that if Siri had accepted the section 998 offer, she would not be entitled to an order entering judgment in her favor, but would be obliged to dismiss her claims with prejudice, which she had not done. The court noted that issues regarding the effect of Siri's "conditional acceptance," and whether the parties had entered a binding settlement, were not yet before it.

Thereafter, Trinchero filed a motion pursuant to section 998 to enforce the purported settlement agreement, supported by a declaration from its lawyer describing her negotiations with plaintiff's lawyer. Siri filed an opposition and evidentiary objections. The court sustained the objections but granted the motion.

In its minute order, the court found that Siri's service of her conditional acceptance created a binding settlement, while adding that its finding was supported by Trinchero's notice of acceptance. The court quoted that notice's observation that "the conditions [Siri] ... sets forth in her acceptance ... are simply requests that the court clarify post-resolution questions," and noted that Siri "did not object to any aspect of the notice of acceptance, including its characterization of the apparent meaning of [her] acceptance." The court held that despite its title, the "conditional acceptance" was absolute: "While [Siri] uses the term ‘conditional,’ the court finds no conditions set forth in [her] acceptance. Rather, that document's plain language simply makes the acceptance subject to the court's determination of three specific issues. Importantly, the Siri acceptance does not condition acceptance on any particular finding by the court. Put another way, it is not made subject to the court's making any specific finding on any of the three issues. Rather, it is simply subject to the court's ongoing authority to hear those issues."

The court declined Trinchero's request to rule that Siri was not entitled to prejudgment interest, instead making a "limited" finding that Siri "accepted [Trinchero]’s [section] 998 offer_[,_] creating a binding settlement agreement" that required Trinchero to make a payment of $500,000 "in consideration for and conditioned upon [Siri]’s dismissal, with prejudice, of all claims brought ... in [this] matter." The court scheduled a hearing on an order to show cause regarding dismissal.

Siri then filed a motion seeking pre- and postjudgment interest. The court denied her request, in an order Siri does not challenge on appeal. The court entered a judgment of dismissal, and Siri filed a timely notice of appeal.

Discussion

Section 998 states that "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.... [¶] (1) If the offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly." ( § 998, subd. (b).) Subdivisions (c) through (f) of section 998 specify the consequences of failing to accept a valid section 998 offer if the offeree does not ultimately obtain a more favorable outcome, shifting certain litigation costs to the offeree. Subdivision (b) states that an offer under its provisions must contain the terms and conditions of the proffered judgment "and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted." The acceptance must be in writing, signed by counsel for the accepting party (or the party if not represented by counsel). (Ibid .) "If the offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly." ( § 998, subd. (b)(1).)

The process of making and accepting offers pursuant to section 998 is contractual in nature. General principles of contract law apply insofar as "such principles neither conflict with nor defeat [the statute's] purpose." ( T.M. Cobb Co. v. Superior Court (1984) 36 Cal.3d 273, 280, 204 Cal.Rptr. 143, 682 P.2d 338.) We review de novo the court's legal conclusions. ( Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 173, 185 Cal.Rptr.3d 151 ; Whatley-Miller v. Cooper (2013) 212 Cal.App.4th 1103, 1113, 151 Cal.Rptr.3d 517.)

To form a binding settlement, an offeree's acceptance of a section 998 offer must be " ‘absolute and unqualified.’ " ( Bias v. Wright (2002) 103 Cal.App.4th 811, 820, 127 Cal.Rptr.2d 137, quoting Civ. Code, § 1585 ; Gray v. Stewart (2002) 97 Cal.App.4th 1394, 1397, 119 Cal.Rptr.2d 217.) A qualified or conditional acceptance does not form a contract, but constitutes a counteroffer. ( Civ. Code, § 1585.) At common law, such a counteroffer terminates the offer; in the section 998 context, however, the statute's pro-settlement purpose dictates that a counteroffer does not terminate a section 998 offer but leaves the offer in effect until it expires or is revoked. ( Poster v....