Offers of Compromise in Civil Actions in Connecticut: Excessively Punitive and Disparate Sanctions
| Jurisdiction | Connecticut,United States |
| Citation | Vol. 94 Pg. 169 |
| Pages | 169 |
| Publication year | 2023 |
| Date | 01 January 2023 |
OFFERS OF COMPROMISE IN CIVIL ACTIONS IN CONNECTICUT.EXCESSIVELY PUNITIVE AND DISPARATE SANCTIONS
BY JAMES R. FOGARTY [*]
I. INTRODUCTION
The economic condition of our state is much different today than it was in 1976 or even 2005. Our statutes and rules of procedure governing offers of compromise have not adequately kept pace with this change. This article proposes a simple legislative change which would (a) lessen the punitive effect of the sanction imposed upon a defendant who fails or refuses to accept a plaintiffs offer of compromise; (b) make that same sanction bilateral so that it is equally available to a defendant; and (c) convert it from being based upon an per annum interest rate extending for years into a one-time percentage increase or decrease of the amount recovered, which would have favorable income tax consequences for those plaintiffs' recoveries based upon personal physical injuries or physical sickness or principal due on debt. The purpose of the proposal is not to assist just one side - plaintiff or defendant - but to assist both sides, as well as the judicial branch, by making our rules more fair and reasonable, by generating more settlement attempts and by encouraging proactive participation of the defense bar.
Offers of compromise,[1] formerly known as offers of judgment,[2] have had a disparate, two-track history in Connecticut. On the first track, the history of offers of compromise filed on behalf of defendants began no later than 1849 when sections 93 through 96 of Title 1 of the Revised Statutes were enacted. Remarkably, the all-important sanction provision, which states the consequence of a failure or refusal of a plaintiff to accept an offer when the amount eventually recovered by a plaintiff is less than that stated in the offer, is virtually the same today as it was in 1849. For all of these 172 years, with one trivial exception[3] the legislative sanction imposed, is that "...the plaintiff shall recover no costs accruing after the plaintiff received notice of the filing of such offer, but shall pay the defendant's costs accruing after the plaintiff received notice." General Statutes Section 52-195(b).
On the second track, plaintiffs' offers of compromise are of more recent vintage, first created by Public Act 76-316 Section 2, codified as General Statutes Section 52-192a. The plaintiffs' offer of compromise has a powerful sanction, providing that if a plaintiff ".has recovered an amount equal to or greater than the sum certain specified in the plaintiffs offer of compromise, the court shall add to the amount so recovered eight per cent annual interest on said amount."[4]
For more than twenty-five years, our Supreme Court has acknowledged that the statutory sanction available to plaintiffs is "punitive in nature" and has condoned its use as a matter of course, holding:
Section 52-192a encourages fair and reasonable compromise between litigants by penalizing a party that fails to accept a reasonable offer of settlement.. In other words, interest awarded under § 52-192a "is solely related to a defendant's rejection of an advantageous offer to settle before trial and his subsequent waste of judicial resources."[5]
[A]n award of interest under § 52-192a is mandatory, and the application of § 52-192a does not depend on an analysis of the underlying circumstances of the case or a determination of the facts..The statute is admittedly punitive in nature..It is the punitive aspect of the statute that effectuates the underlying purpose of the statute and provides the impetus to settle cases.[6]
Further, our Supreme Court has acknowledged the disparity of the statutory sanctions available to plaintiffs as opposed to defendants, stating:
Although we recognize that the defendant's sword may not have the same cutting edge that offer of judgment interest has, it is the defendant who holds the key to the settlement process when a reasonable offer is made by the plaintiff.[7]
The latter portion of the foregoing quotation does not mention the reciprocal part of the settlement equation, i.e., it is the plaintiff who holds the key to the settlement process when a reasonable offer is made by the defendant. Yet, there is no reason to point a finger of blame toward either side. We all know that settlement is inherently a bilateral process, requiring the voluntary and knowledgeable consent of two or more adverse parties. It would seem desirable then to furnish the adverse parties with similar tools, so that together, they might achieve the objective of reaching a settlement.
The difference between the sanctions available to plaintiffs versus those available to defendants has had a profound effect upon the monetary consequences of the offers of compromise, the frequency of their use on behalf of plaintiffs versus defendants and the attention given to the statutes by both the legislative and judicial branches of our state government. In terms of monetary consequences, interest awards to plaintiffs under Section 52-192a are often substantial. When added to prejudgment interest, punitive damages and/or attorneys' fees, it is not rare for the interest attributed solely to the offer of compromise to exceed the compensatory damages awarded on the underlying judgment. In 2018, the U.S. District Court in Connecticut (Underhill, J.) added $36 million as interest under Section 52-192a, on an underlying judgment of $8 million compensatory damages and $8 million punitive damages.[8] For defendants, the monetary consequences under Section 52-195 are only nominal. Not only are they limited, in the first place, to taxable costs, which are infamously paltry in Connecticut;[9] in addition, only those taxable costs "accruing" subsequent to a defendant's offer of compromise can be shifted. And "accruing" has been construed in a way that significantly reduces the amount of a potential award in favor of a defendant. Even worse, a plaintiff's acceptance of a defendant's offer of judgment can result in a claim for attorneys' fees on behalf of a plaintiff as a prevailing party.[10]
In terms of attention the statutes have received, Sections 52-193 through 52-195 have been amended only five times subsequent to 1976. In the same time period, Section 52-192a has been amended thirteen times. In preparing this article, a Lexis-Advance search of Connecticut cases citing any of the three statutes providing for defendants' offers of compromise revealed 88 cases, trial and appellate, while a search of Connecticut cases citing Section 52-192a revealed 627 cases.
In terms of frequency of use, our state court statistics[11]look like this:
The statistics of the U.S. District Court for the District of Connecticut[12] are similar to those of our state court in terms of greater frequency of use by plaintiffs, as opposed to defendants, shown as follows:
Offer of Compromise/Judgment Statistics: 12 Month Periods Ending 3/31
Total
Accepted
Not Accepted
4/1/17-3/31/18
100
0
0
CGS-52-192a
86
2
84
CGS-52-193
14
2
12
FRCP 68
0
0
0
All Closed CV:
2324
0
0
4/1/18-3/31/19
39
0
0
CGS-52-192a
26
5
21
CGS-52-193
9
0
9
FRCP 68
3
0
3
Unknown
1
0
1
All Closed CV:
2374
0
0
4/1/19-3/31/20
54
0
0
CGS-52-192a
39
3
36
CGS-52-193
14
2
12
FRCP 68
1
1
0
All Closed CV:
2233
0
0
II. THE CONNECTICUT STATUTES AND PRACTICE BOOK PROVISIONS
Because the rules governing offers of compromise straddle substantive and procedural law, both the legislative and judicial branches of our government have fully participated in the rule-making process in accordance with their respective constitutional powers and duties. The Judicial Branch has acceded to provisions enacted by the legislature, adopting virtually the same provisions in the Practice Book and amending them from time to time to reflect amendments to the statutes. In this article, reference will be made to the statutes. On infrequent occasions there have been shortterm differences, as referred to infra at note 25.
General Statutes Section 52-192a[13] deals with offers of compromise filed by plaintiffs, including counterclaim plaintiffs, and provides for eight percent annual interest on rejected offers computed from various dates.[14] Offers of compromise filed by defendants are dealt with in General Statutes Sections 52-193 through 52-195, which do not provide for an award of interest on rejected offers.[15]
III. CONSTITUTIONALITY OF STATUTES
Claims challenging the constitutionality of the statutes providing for offers of judgment or offers of compromise have been soundly rejected in a variety of underlying causes of action. Black v. Goodwin, Loomis & Britton, Inc.[16] originated as a wrongful death case arising out of an employee's fatal injury in which the liability insurer of the defendant employer refused to defend based upon alleged nonpayment of premium. The plaintiff administrator entered into a stipulated judgment with the employer in the amount of $500,000 plus interest, agreeing to accept an assignment of the employer's rights under the liability policy in full release of all claims against the employer. A subsequent action was then brought against the insurer for breach of contract and other claims, in which an O.J. was filed in the amount of...
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