The California Court of Appeal recently issued its decision on the second appeal in the Sutter Home Winery wrongful termination lawsuit.

The Case: Siri v. Sutter Home Winery, Inc.

The Court: California Court of Appeal, First District

The Case No.: A161923

The Plaintiff: Siri v. Sutter Home Winery, Inc.

Thirty days after receiving a section 997 offer to compromise consisting of a $500,000 payment in exchange for dismissing all claims with prejudice, the plaintiff in the case, Siri, served the Trinchero Family Estates (aka Sutter Home Winery) with a “Notice of Conditional Acceptance.” The notice accepted the 998 offer while requesting that the court clarify her right to prejudgment interest. She also filed objections to the 998 offer and filed a motion asking the court to enter a judgment in her favor consistent with her conditional acceptance of the 998 offer and including prejudgment interest. The court denied the plaintiff’s motion but granted Trinchero’s motion to enforce the 998 offer.

The Defendant: Siri v. Sutter Home Winery, Inc.

Per section 998(b), the 998 offer stayed open for 30 days after Trinchero made the offer, during which the parties disagreed on whether Siri’s acceptance of the offer would trigger a right to receive prejudgment interest. On appeal, the decision was reversed, and the Court of Appeal clarified that a 998 acceptance must be “absolute and unqualified” for a binding settlement. The plaintiff’s acceptance did not fall into that category. The plaintiff’s Notice of Conditional Acceptance specified that it was conditional and introduced new terms to the bargain as proposed in the original 998 offer (the plaintiff’s right to obtain clarification from the court regarding prejudgment interest). Based on this argument, the court decided that conditional acceptance did not create a binding settlement enforceable under Section 998.

The Case: Siri v. Sutter Home Winery, Inc.

In some cases, a conditional acceptance may be a counteroffer to the original offer. If accepted, the conditional acceptance would generate a binding, enforceable settlement under section 998 as the counteroffer was accepted, and the second party agreed to the additional or altered terms. However, as the conditional acceptance here did not depend on additional terms that the second party agreed to, this does not apply in Siri v. Sutter Home Winery, Inc.

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