SC Lawyer, May 2005, #3. Beyond the Bar - Offers of Judgment.

• Author: By Warren Moise

South Carolina Lawyer

2005.

SC Lawyer, May 2005, #3.

Beyond the Bar - Offers of Judgment

South Carolina Lawyer May 2005

Beyond the Bar - Offers of JudgmentBy Warren MoiseOffers of judgment in South Carolina date back to1873, many years before the federal courts adopted Rule 68. Federal Rule of Civil Procedure 68 controls offers of judgment in district courts. State Rule 68 is patterned after prior statutes regulating practice in the state circuit courts. Section 22-3-220 applies to offers in state magistrate's courts, and § 29-5-10 to mechanic's liens.

A new statute, § 15-35-400, part of the recent tort reform legislation, creates a new procedure for offers of judgment regarding claims arising after July 1, 2005. This statute neither mentions nor repeals any of the other types of state offers of judgment. Section 15-35-400 broadly applies to "any civil action" (except domestic litigation) where a party asks for relief based on a contract or for recovery of money damages. A welcome change, § 15-35-400 allows the defendant and the plaintiff to make offers.

Public policy

The policy underlying offers of judgments is simple: turn up the heat and avoid protracted litigation.

In federal courts, offers of judgment have been more effective because judges can award greater "costs" on behalf of the prevailing party. State Rule 68 more often than not is a toothless tiger. Many, if not most, successful claimants may recover no attorney's fees, and the amount a successful party can receive in costs is minuscule. But cf. Murphy v. NationsBank, N.A., 607 S.E.2d 80 (S.C. 2004) (Waller, J.) (party required to attend deposition entitled to witness and mileage fees).

The new statute, § 15-35-400, raises the stakes in some scenarios. A plaintiff shall receive eight percent interest on the amount of the verdict (from the date of the offer) if the plaintiff matches or betters the offer at trial. If the defense makes the offer and the plaintiff does not match or better the offer, the verdict must be reduced by eight percent interest calculated from the date of the offer. A third alternative allows recovery of administrative, filing or other court costs dating from the offer.

Rule 68 and the magistrate's court statute specifically provide that if the plaintiff fails to meet or better the amount stated in the offer of judgment, "he cannot" or "shall not" recover costs. Section 15-35-400 lacks this language. Thus, one might argue that even when the plaintiff gets a verdict less than the offer of judgment, the plaintiff might still be able to recover costs (and attorney's fees, if otherwise awardable) under procedural Rule 54(d) as the "prevailing party." We shall see.

Making and accepting the offer

Under Rule 68, an offer of judgment must be written, unconditional, properly served after litigation has begun pursuant to Rule 5(b), Clark v. Sims, 28...