Our own Second District Court of Appeal in PO-JEN CHEN et al, v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB Case No. B194345 held today that the following language contained in an offer to compromise under California Code of Civil Procedure 998 was ineffective:  

[Respondent] offers to compromise the above-entitled action for both plaintiffs in the total amount of $251,000.00. [¶] . . . [¶] This offer is conditioned upon
plaintiffs executing a dismissal with prejudice of the action, as well as a general release of all claims in lieu of an entry of judgment against defendants.

Why?

Because a claim not part of the litigation at hand had been made against the insurance carrier making this statutory offer to compromise.  Therefore, the requirement for a "release of all claims" improperly included within the offer's ambit a claim not subject of the litigation. 

As the Court explained, a 998 offer may not attempt to 

dispose of any claims beyond the claims at issue in the pending lawsuit. (Valentino v. Elliott Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692, 696-697 (Valentino).) That limitation exists because of the difficulty in calculating whether a jury award is more or less favorable than a settlement offer when the jury’s award encompasses claims that are not one and the same with those the offer covers. (Valentino at p. 698; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group) ¶ 12:595, p. 12(II)-18 [“To trigger the potential § 998 penalties, the terms and conditions must be sufficiently certain to be capable of valuation. Otherwise, it may not be possible to determine whether any recovery at trial is ‘more favorable.’ [Valentino v. Elliott Sav-On Gas, Inc., [supra], 201 CA3d 692, 700-701, 247 CR 483, 488–$15,000 offer was conditioned on release of claims other than those being litigated: value of those claims was uncertain, rendering $15,000 offer uncertain].”)

Hey!  Let's be careful out there!