Horvitz & Levy preserved a policy limits settlement, protecting the insured and insurance carrier from a potential excess judgment.
In this auto accident case, the defendant’s insurance carrier State Farm attempted to settle the case for the defendant driver’s $15,000 policy limits, but the plaintiff did not respond. The plaintiff later served a demand for $15,000 pursuant to California Code of Civil Procedure section 998, a cost-shifting statute that encourages parties to make reasonable good-faith settlement offers before trial. Defense counsel timely responded in a signed writing, saying “State Farm” accepts the $15,000 offer. After the time to accept the offer expired, the plaintiff asserted the acceptance was invalid because it was made in the name of “State Farm” rather than in the name of defendant Jose Larios. The plaintiff insisted the case proceed to trial.
The defendant, through his counsel provided by State Farm, moved to enforce the settlement. The trial court held that the acceptance signed by defense counsel of record was valid and would be reduced to a judgment against Larios for $15,000 upon the filing of the offer and acceptance. The plaintiff appealed, arguing that just as an offer cannot be made to an insurer, an acceptance cannot be made by an insurer.
The Court of Appeal affirmed the judgment based on the section 998 offer. The only requirements for a valid acceptance under section 998 are that it be in writing and signed by defense counsel of record. Here, both requirements were met, and enforcing the settlement would promote the purpose of section 998 to preserve judicial resources for those cases that need to be tried. Further, it was clear on the record that State Farm was defending Mr. Larios, and that it had the right and duty to accept the $15,000 policy limits offer on his behalf.