§68.5 Purpose and Procedure

• Jurisdiction: Washington

§68.5 PURPOSE AND PROCEDURE

The purpose for and procedure under CR 68 and FED. R. CIV. P. 68 are discussed below.

(1) Purpose

CR 68 allows a defending party to extend one or more pretrial offers that judgment be taken against him or her. If damages are the sole issue for trial, a defending party may only make an offer specifying damages. The rule is designed to encourage early settlements and avoid protracted litigation by penalizing with defense costs a plaintiff who rejects a reasonable offer. Wallace v. Kuehner, 111 Wn.App. 809, 823, 46P.3d823 (2002); Dussault v. Seattle Pub. Schs., 69 Wn.App. 728, 732,850P.2d581 (1993), review denied, 123 Wn.2d 1004 (1994);Lietz v. HansenLaw Offices,P.S.C., 166 Wn.App. 571,581,271 p.3d899 (2012).

The use of CR 68 by a defendant is not limited to cases that proceed to trial. It may be invoked prior to a summary judgment hearing. Estep v. Hamilton, 148 Wn.App. 246,260,201P.3d331 (2008), review denied, 166 Wn.2d 1027 (2009). It can also be used as leverage at critical points in litigation that may reveal "bad facts" about the plaintiff's case, such as document production or prior to a deposition.

(2)Procedure

Procedures under CR 68 are set out below.

(a)Operation and effect

If the defense offer is not accepted, and the ultimate judgment is not more favorable than what was offered, the claimant who rejected the offer is liable for taxable costs accruing after the date of the offer. See §68.6(2), below. "Rule 68 bites only when the plaintiff wins but wins less than the defendant's offer of judgment." Amati v. City of Woodstock, 176 F.3d 952, 957-58 (7th Cir.), cert, denied, 528 U.S. 985 (1999) (Court upheld defendant's offer of $2,000 to each of multiple plaintiffs, conditioned on acceptance by all plaintiffs, as permissible under rule, stating the form of offer promoted objective of rule 68. Plaintiffs have no right to demand a rule 68 offer and no right to dictate how it is formulated).

The ultimate judgment is the "judgment awarded as a result of the trial ...." McConnell v. Mothers Work, Inc., 131 Wn.App. 525, 533-34, 128 P.3d 128 (2006) (citing State v. Costich, 152 Wn.2d 463, 476, 98 P.3d 795 (2004)). For example, prejudgment interest may be added to a jury award resulting in the judgment exceeding the settlement offer. McConnell, 131 Wn.App. at 534.

(b)Terms and contents of offer

An offer of judgment must specify a definite sum or other specific consideration affording the relief sought to be entered as the judgment. The offer must be unconditional. "The 'usual rules of contract construction' apply to offers of judgment." Lietz, 166 Wn.App. at 585 (quotingNusom v. Comh Woodburn, Inc., 122 F.3d 380, 833 (9th Cir. 1997)).

A CR 68 offer must include "costs then accrued" at the time of the offer. Marek v. Chesny, 473 U.S. 1, 6, 105 S. Ct. 3012, 87 L. Ed. 2d 1 (1985). Although not explicitly stated, the offer including "costs then accrued" must mean costs then accrued to the claimant that would normally be included in the prevailing claimant's recovery. An offer need not specify inclusion of costs and will be valid provided that there is nothing in the offer to indicate that it does not include costs. Id.

How the phrase referring to costs in CR 68 is interpreted may be pivotal when a statute provides for actual attorney fees. See §68.6(2)(b), below.

The U.S. Supreme Court in Marek held the form of offer valid even though it lumped the offerors' proposal for damages with its proposal for costs. The Court held that the offer of settlement, which provided "for a sum, including costs now accrued and attorney's fees, of ONE HUNDRED THOUSAND ($ 100,000) DOLLARS," constituted a valid offer under FED. R. CIV. P. 68 even though it lumped substantive damages and costs together. Marek, 473 U.S. at 3-4, 10. The Court rejected the offerees' argument that CR 68 required that a defendant's offer itemize the respective amounts being tendered for settlement of the substantive claim and for costs. Id. at 6.

Stewart v. Prof'l Computer Ctrs., Inc., 148 F.3d 937 (8th Cir. 1998). The court vacated a FED. R. CIV. P. 68 judgment pursuant to FED. R. CIV. P. 60(b) upon finding that there was no meeting of the minds as to whether costs and attorney fees were included in the offer. The defendant offered judgment "on any or all counts against Defendant in a total amount not to exceed ... $4,500 ...."Id. at 938. The counts of the complaint included damages for attorney fees and costs incurred. After accepting the offer, plaintiff moved for fees and costs; defendant argued fees and costs were included in the $4,500 offer. The court concluded that the parties attached materially different meanings to their manifestations, therefore there was no mutual assent and no valid contract.

See also Webb v. James, 147 F.3d 617 (7th Cir. 1998) (discussed in §68.5(g), below).

Under CR 68, the Washington Court of Appeals has held that ambiguities must be construed against the drafter. Lietz., 166 Wn.App. at 586. Similarly, it appears that in federal cases ambiguities will be construed against the drafter. In Gavoni v. Dobbs House, Inc., 164 F.3d 1071 (7th Cir. 1999), the...