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The last section 998 offer may be the one that counts

9/25/26

By: Mansour Chopan

A plaintiff may serve an early Code of Civil Procedure section 998 offer, beat that offer at trial, and still lose the statute’s financial benefits. In Meehan v. Aguirre, the California Court of Appeal held that when a plaintiff makes multiple valid and unrevoked section 998 offers, but the final judgment falls below the last offer, the last offer controls.

The decision reminds California litigants that a later section 998 offer can replace an earlier offer for expert fees and prejudgment interest.

The decision also reinforces a separate but equally practical lesson: parties seeking discretionary litigation costs must support them with evidence showing that the expenses were reasonable and necessary. Meehan v. Aguirre, No. B343396, was filed on September 15, 2026, by the Second District Court of Appeal, Division Three.

Four offers, one controlling benchmark

The case arose from a collision between a bicycle and a semi-trailer. Plaintiff Margaret Elizabeth Meehan claimed that the collision caused significant injuries, including a traumatic brain injury, and sued the driver and the driver’s employer.

During the litigation, Meehan served three section 998 offers for $1 million. The defendants did not accept them. After nearly four years of litigation and 29 months of open discovery, Meehan served a fourth offer for $2 million. The defendants also allowed that offer to expire.

Following a six-week bench trial, the court found defendants negligent but assigned 15 percent comparative fault to Meehan. It awarded $1.25 million before reducing the judgment to $1,062,500 based on comparative negligence. Meehan’s judgment, even after adding allowable costs, remained below her final $2 million offer.

Meehan nevertheless sought approximately $326,000 in expert witness fees and more than $313,000 in prejudgment interest calculated from the date of her first $1 million offer. She argued that her recovery exceeded the earlier offer and therefore triggered section 998 and Civil Code section 3291.

The trial court disagreed. It treated the final $2 million offer as the operative offer and denied both categories. The Court of Appeal affirmed.

The final offer replaced the earlier offers

Section 998 encourages settlement by imposing financial consequences on a party that rejects a qualifying offer and later fails to obtain a more favorable result. When a plaintiff satisfies the statute, the court may award postoffer expert witness fees. In a personal injury action, Civil Code section 3291 may also require prejudgment interest at 10 percent per year.

But those consequences depend on identifying the operative offer.

The Court of Appeal adopted the “last offer rule” for the circumstances presented. It held that when a plaintiff serves multiple valid and unrevoked section 998 offers, but the ultimate award is less favorable than the final offer, the last offer controls the plaintiff’s entitlement to section 998 benefits.

That result follows the reasoning of earlier decisions, including Wilson v. Wal-Mart Stores, Inc. and Distefano v. Hall. It provides a clear benchmark and permits parties to revise settlement positions as discovery develops. It also prevents a party from demanding more near trial while retaining the cost-shifting protection of a lower offer served earlier in the case.

A different rule could produce a distorted result. A plaintiff might decline to settle for anything below a later, higher demand, proceed through trial, and then seek statutory benefits as though the earlier, lower offer had remained the true settlement position. The last offer rule avoids that mismatch.

The same rule defeated prejudgment interest

Meehan argued that Civil Code section 3291 required a different result because it refers to interest running from the plaintiff’s “first offer” that the judgment exceeds.

The Court rejected that interpretation. Before prejudgment interest can begin running from the first qualifying offer, the plaintiff must first satisfy the applicable section 998 requirements. Because Meehan’s last and operative offer was $2 million, and the judgment did not exceed that amount, she never crossed the statutory threshold.

The distinction matters. The phrase “first offer” may determine the date from which interest is calculated once the statutory prerequisites have been met. It does not necessarily preserve an earlier offer that a subsequent offer has replaced.

The Court also distinguished cases in which the judgment exceeded both the earlier and later offers. In that situation, the plaintiff may still recover section 998 benefits measured from the earlier offer. Meehan addresses the different circumstance in which the judgment lands between the successive offers.

Trial costs require more than a large number

The opinion also addressed Meehan’s request for substantial discretionary costs under Code of Civil Procedure section 1033.5. Among other items, Meehan sought more than $175,000 in trial technician costs and costs associated with a “Day in the Life” video that was not presented at trial.

Those costs were not automatically prohibited, but neither were they automatically recoverable. A party seeking discretionary costs must show that the expenses were reasonably necessary to the litigation and reasonable in amount.

Meehan did not submit invoices substantiating the trial technician charges. She also did not provide a declaration explaining why the unused video was reasonably necessary. The trial court therefore lacked the evidence needed to evaluate the expenses and taxed the disputed costs. The Court of Appeal found no abuse of discretion.

The lesson extends beyond section 998. A memorandum of costs may establish a preliminary entitlement, but once the opposing party makes a proper challenge, the party seeking questionable or discretionary expenses should be prepared to provide invoices, declarations, and a concise explanation tying each expense to the litigation.

Practical takeaways for defense counsel and claims professionals

Meehan offers several practical lessons for California litigants:

• Track every section 998 offer. Maintain a clear chronology identifying the amount, service date, expiration date, validity issues, revocation status, and relationship between successive offers.
• Reevaluate the operative benchmark after each new offer. Do not assume an earlier offer continues to control after the same party serves a later one.
• Consider recoverable costs when comparing the offer and judgment. The relevant comparison may include properly recoverable preoffer costs, not merely the net damages award.
• Separate expert fees from ordinary costs. A plaintiff who fails to beat the operative section 998 offer may lose access to discretionary expert witness fees while remaining entitled to properly supported costs under section 1033.5.
• Challenge unsupported trial expenses. Large trial-technology, demonstrative, transcript, or exhibit-management charges should be tested for necessity, documentation, and reasonable amount.
• Document significant costs as they are incurred. A party seeking discretionary expenses should preserve invoices and contemporaneous explanations rather than attempting to reconstruct necessity after judgment.

A later demand can change the risk calculation

Meehan does not mean that every later offer will always eliminate every benefit associated with an earlier offer. The result depends on the offers’ sequence, validity, revocation status, and amount, along with the ultimate judgment

The broader lesson is straightforward. A section 998 offer is not merely a negotiating number. It can establish the benchmark governing expert fees, prejudgment interest, and posttrial exposure. Before increasing or replacing an offer, counsel should evaluate not only whether the new amount may promote settlement, but also what statutory protection the party may surrender if the eventual judgment falls between the two offers.

For more information, please contact Mansour Chopan at mansour.chopan@fmglaw.com or your local FMG Law attorney.

Information conveyed herein should not be construed as legal advice or represent any specific or binding policy or procedure of any organization. Information provided is for educational purposes only. These materials are written in a general format and not intended to be advice applicable to any specific circumstance. Legal opinions may vary when based on subtle factual distinctions. All rights reserved. No part of this presentation may be reproduced, published or posted without the written permission of Freeman Mathis & Gary, LLP.