California Section 998 Settlement Offers: Why Your Last Offer Can Control Costs and Interest

If you've been injured in a Los Angeles car accident, bicycle crash, or premises-liability incident, your case will almost certainly involve a written settlement offer at some point — and in California, the way that offer is drafted and timed can matter as much as the number itself. On September 15, 2026, California's Second District Court of Appeal issued a published decision in Meehan v. Aguirre that clarifies a question many injury claimants and even some attorneys get wrong: when a party makes more than one formal settlement offer under Code of Civil Procedure section 998, which offer actually controls the cost-shifting and interest consequences at trial?

The case arose from a severe bicycle-versus-delivery-truck collision in the San Fernando Valley, where the injured cyclist suffered a traumatic pelvic fracture and nerve damage requiring multiple surgeries. As is common in serious injury litigation, both sides exchanged settlement numbers more than once as the case developed — and when it went to trial and the jury returned a verdict, the losing side argued that an earlier, less favorable 998 offer should control the penalty calculation instead of the final one. The Second District disagreed, and in doing so gave Los Angeles injury claimants and their attorneys clear guidance that affects how settlement negotiations should be handled from the very first demand letter.

What Is a CCP § 998 Offer, and Why Does It Matter?

California Code of Civil Procedure section 998 is a cost-shifting statute designed to encourage realistic settlement and discourage parties from needlessly dragging a case to trial. Either side — plaintiff or defendant — can serve a formal written offer to compromise at least 30 days before trial. The statute then imposes financial consequences on the party who rejects a reasonable offer and fails to do better at trial:

• If a defendant makes a 998 offer and the plaintiff rejects it, but the trial verdict is not more favorable than the offer, the plaintiff cannot recover their own post-offer costs and may be ordered to pay the defendant's post-offer costs, including expert witness fees — which in a complex injury case with biomechanical and medical experts can run into tens of thousands of dollars.
• If a plaintiff makes a 998 offer and the defendant rejects it, but the verdict is more favorable to the plaintiff than the offer, the plaintiff is entitled to recover enhanced costs and, critically, prejudgment interest on the judgment — which can add substantial value to a final recovery, especially in cases that take years to reach trial.

These consequences exist precisely because they are supposed to be predictable. A party deciding whether to accept a settlement offer needs to know, with confidence, what the financial downside of rejecting it will be. Meehan v. Aguirre addressed what happens when that predictability is complicated by a negotiation history involving multiple offers.

The Facts in Meehan v. Aguirre

According to the published opinion, the plaintiff cyclist initially served a CCP § 998 demand early in the litigation, seeking a relatively high figure based on preliminary medical information. As discovery progressed and the full extent of the plaintiff's injuries, future surgical needs, and lost earning capacity became clear, the plaintiff's counsel served a second, revised § 998 offer months later — in this instance, a somewhat different figure reflecting the more developed record. The defendant truck company never accepted either offer, and the case proceeded to trial, where the jury returned a verdict substantially exceeding both of the plaintiff's demands.

After trial, the defendant argued that only the first offer should be measured against the verdict for purposes of calculating interest and enhanced costs — presumably because treating the first offer as controlling would have produced a different, more favorable outcome for the defense on the numbers. The trial court rejected that argument and awarded prejudgment interest and costs based on the second, superseding offer. The Second District affirmed.

The "Last Offer" Rule the Court Applied

The Court of Appeal held that when a party serves a new CCP § 998 offer that supersedes an earlier one, the earlier offer is extinguished for purposes of the cost-shifting analysis. It is the offer that was operative and unexpired at the relevant time — ordinarily the most recent one served before trial — that the jury's verdict must be measured against. A party cannot resurrect an earlier, less favorable offer after the fact simply because the math would work out better for them.

This matters enormously for Los Angeles personal injury litigation, where cases frequently evolve over 12 to 36 months between filing and trial. Medical treatment continues, surgical outcomes become clearer, wage-loss documentation is finalized, and expert reports are exchanged. It is entirely routine — and often strategically necessary — for both sides to revise their settlement positions more than once. Meehan confirms that doing so is not just permitted, but that each new offer resets the benchmark the final verdict will be compared against.

What This Means If You're Negotiating a Settlement in Los Angeles

For injury victims and their attorneys handling claims arising from car accidents, bicycle and pedestrian collisions, truck crashes, or slip-and-fall injuries anywhere in Los Angeles County, Meehan v. Aguirre has several practical implications:

1. Every Revised Offer Is a New Strategic Decision

Because a later offer supersedes an earlier one for § 998 purposes, plaintiffs and their counsel should not treat a revised demand as a casual update. Lowering a demand as settlement talks mature, or raising one after new evidence of damages emerges, changes the legal consequences that will apply if the case proceeds to verdict. Each offer should be evaluated on its own, with full knowledge of the case's realistic trial value at that moment.

2. Timing and Documentation Matter

Because the "operative" offer is generally the most recent one in effect before trial, parties need clean, well-documented records of when each offer was served, whether it was formally withdrawn or simply replaced, and what its exact terms were. Sloppy offer practice — undocumented verbal numbers, ambiguous expiration dates, or offers that were never properly served under section 998's formal requirements — can create costly disputes after a verdict is already in.

3. Insurance Companies Will Use This Too

Defense insurers in Los Angeles already use 998 offers strategically to shift financial risk onto injury victims who reject early lowball offers. Meehan does not change that dynamic — if anything, it confirms that insurers can continue revising their own offers as litigation develops, and the most recent defense offer will be the one that counts if a jury's verdict doesn't beat it. Claimants need experienced counsel evaluating each defense offer in real time, not just at the start of a case.

4. This Is Not a Reason to Rush a Decision

Some injury victims, upon learning about cost-shifting penalties, panic and consider accepting an inadequate early offer just to avoid risk. That is rarely the right move. The purpose of § 998 is to reward realistic offers on both sides — not to punish claimants who have a strong, well-documented case for pursuing fair value at trial. The plaintiff in Meehan rejected the defense's position and still recovered a verdict well above her own demands, triggering interest and enhanced costs in her favor.

How This Fits Into the Bigger Picture of an LA Injury Claim

Most personal injury claims in Los Angeles — whether they stem from a car accident on the 405 or a slip-and-fall at a Hollywood retail store — resolve before trial. But the shadow of trial, and the financial incentives created by statutes like § 998, shape nearly every settlement conversation that happens along the way. Understanding how these rules actually work helps injury victims avoid two common mistakes: settling too early out of fear of cost penalties, or failing to formally document a fair offer that could later protect their right to interest and enhanced costs if the case does go the distance.

This is also a reminder that California personal injury litigation has real procedural teeth. The statute of limitations for most personal injury claims in California is two years from the date of injury under CCP § 335.1, and if a government entity is a potential defendant — a city, county, or transit agency — a much shorter six-month government claim deadline applies before a lawsuit can even be filed. Missing either deadline can end a claim before settlement strategy is ever relevant.

Key Takeaways from Meehan v. Aguirre

• When a party serves more than one CCP § 998 offer, the most recent, unexpired offer generally controls the cost-shifting and prejudgment interest analysis — not an earlier, superseded offer.
• Revising a settlement demand or offer as a case develops is both legally permitted and often strategically necessary — but each revision carries its own legal consequences.
• Plaintiffs who reject inadequate offers and secure a better verdict at trial can recover enhanced costs and prejudgment interest calculated against their final, operative offer.
• Defendants cannot retroactively rely on an earlier, more favorable (to them) offer once it has been superseded by a later one.
• Careful documentation of offer timing, service, and terms is essential to protecting these rights after a verdict.

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