Case Title: REAL ESTATE PROS, P.C. v. BYARS

Citation: 

Docket Number: 03-86

State: wyoming

Court: Wyoming Supreme Court

Date: 2004-05-19T00:00:00Z

Document:
REAL ESTATE PROS, P.C. v. BYARS2004 WY 5890 P.3d 110Case Number: 03-86Decided: 05/19/2004
APRIL TERM, A.D. 2004

 

                                                                                                            

 

THE 
REAL ESTATE PROS, P.C., a

Wyoming 
corporation; and DEBERA S.

GIBBS, 
d/b/a REAL ESTATE PROS,

 

Appellants(Plaintiffs),

 

v.

 

DR. 
JAMES R. BYARS, JR.,

 

Appellee(Defendant).

 

 

Appeal 
from the District Court of Sweetwater County

The 
Honorable Nena James, Judge

 

Representing 
Appellant:

Andrea 
L. Richard and John A. Coppede of Rothgerber Johnson & Lyons LLP, Cheyenne, 
Wyoming. 

 

Representing 
Appellee:

            
Richard Mathey, Green River, Wyoming. 

 

 

Before 
HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

 

 

KITE, 
Justice.

 

[¶1]      Real Estate Pros, 
P.C. (Real Estate Pros) a real estate agency, sued Dr. James R.  Byars, Jr. (Dr. Byars) for breach of an 
exclusive listing contract.  After 
accepting an offer of settlement from Dr. Byars pursuant to Rule 68 of the 
Wyoming Rules of Civil Procedure, Real Estate Pros filed a motion for attorneys' 
fees, which were provided for in  
the contract.  The district court denied the motion, finding the offer, which stated it 
was "in full and final satisfaction of all claims of Plaintiffs against 
Defendant," included Real Estate Pros' claim for attorneys' fees.   
We affirm.

 

 

ISSUE

 

[¶2]      The parties agree 
the issue presented is as follows:

 

Whether 
the district court erred in denying appellants' Motion for Attorneys' 
Fees?

 

 

FACTS

 

[¶3]      On April 21, 
1997, Real Estate Pros entered into an "Exclusive Right to Sell Listing 
Contract" ("listing contract") with Dr. Byars to sell five lots that he 
owned.  The contract between the 
parties provided the breaching or defaulting party would pay all reasonable 
attorneys' fees incurred by the nonbreaching party in enforcing the 
contract.

 

[¶4]      Nearly two years 
after listing the property, Frank Pirtz expressed interest in two of Dr. Byars' 
lots.  Dr. Byars entered into a 
contract with Mr. Pirtz, under which Mr. Pirtz agreed to perform work on all 
five lots in exchange for the two lots.  
In September 2000, Dr. Byars executed a deed transferring the two lots to 
Mr. Pirtz.  Dr. Byars did not pay a 
commission to Real Estate Pros as a result of the transaction.  Consequently, Real Estate Pros filed 
suit to enforce the listing contract.  

 

[¶5]      The amended 
complaint asserted four claims: (1) breach of exclusive right to sell listing 
contract, (2) breach of oral contract, (3) breach of implied contract, and (4) 
promissory estoppel. Following discovery, both parties filed motions for summary 
judgment.  On September 23, 2002, 
Dr. Byars made a Rule 68 offer to Real Estate Pros, which stated as 
follows:

 

COMES 
NOW, James R. Byars, Jr., Defendant herein, and pursuant to Rule 68, W.R.C.P, 
hereby offers the following in full and final satisfaction of all claims of 
Plaintiffs against Defendant herein:

a.      
Judgment 
against Defendant in the amount of $9,720.00, plus costs accrued to 
date.

 

b.      
Dismissal 
with prejudice of all counterclaims presently pending herein against 
Plaintiffs.

 

[¶6]      On September 27, 
2002, Real Estate Pros accepted the offer.  
In accordance with Rule 68, the district court entered judgment against 
Dr. Byars and for Real Estate Pros in the amount of $9,720.00, plus costs.  On October 15, 2002, Real Estate Pros 
filed a motion for attorneys' fees, pursuant to the terms of the listing 
contract, seeking over $44,000.  
After a hearing, the district court denied the motion finding Real Estate 
Pros had agreed to settlement of all of its claims, including its claim for 
attorneys' fees.  This appeal 
followed.

 

 
STANDARD 
OF REVIEW

 

[¶7]      Although this 
case is an appeal from a motion denying attorneys' fees, we are not deciding 
whether or not the district court abused its discretion in determining an award 
of attorneys' fees.  Rather, we must 
consider whether or not the district court properly interpreted the Rule 68 
offer as including the claim for attorneys' fees.  An offer of judgment is generally 
treated as an offer to make a contract.  
Hennessy 
v. Daniels Law Office, 270 F.3d 551, 553 (8th Cir. 2001).  
See also 
Johnson v. Johnson, 425 S.E.2d 46 (S.C. Ct. App. 1992).  In contract litigation, when the terms of 
the agreement are unambiguous, the interpretation is a 
question of law.  Double 
Eagle Petroleum & Mining Corp. v. Questar Exploration & Production 
Co., 2003 WY 
139, ¶ 7, 78 P.3d 679, ¶ 7 (Wyo. 2003).  Whether 
a contract 
is 
ambiguous is a question of law for the reviewing 
court.  Boley v. 
Greenough, 2001 WY 
47, ¶ 10, 22 P.3d 854, ¶ 10 (Wyo. 2001).  We 
review questions of law de novo without affording deference to the 
decision of the district court.  
Id. According to our established standards for interpretation of 
contracts, the words used in the contract are afforded the plain meaning that a 
reasonable person would give to them.   Id.

 
DISCUSSION

 

[¶8]      Given the fact 
that Dr. Byars' Rule 68 offer did not mention attorneys' fees, Real Estate Pros 
claims the district court erred in concluding the claim for attorneys' fees was 
included in the offer.  Dr. Byars 
responds that because his offer was made "in full and final satisfaction of all 
claims," and Real Estate Pros' complaint included a specific claim for 
attorneys' fees, that claim was included in the offer.  Real Estate Pros' second amended 
complaint stated in pertinent part:

 

¶ 28: The 
contract provides "In the event that any party shall become in default or breach 
of any of the terms of this Contract, such defaulting or breaching party shall 
pay reasonable attorney's fees and other expenses which non-breaching or 
non-defaulting party may incur in enforcing this Contract. . . 
."

 

¶ 29: The 
Plaintiffs have incurred and will continue to incur attorney's fees in 
connection with their attempt to enforce the contract. The Plaintiffs are 
therefore entitled to recover their attorney's fees incurred in connection with 
their efforts to recover the commission due and owing from the Defendant as a 
result of the exchange of Lots 4 and 5 of the property at issue.  

 

[¶9]      The purpose of 
Rule 68 is to encourage settlement.  
Duffy v. Brown, 708 P.2d 433, 440 (Wyo. 1985); see also 
Marek v. Chesny, 473 U.S. 1, 5, 87 L. Ed. 2d 1, 105 S. Ct. 3012 
(1985).  The rule provides:  

 

At 
any time more than 60 days after service of the complaint and more than 30 days 
before the trial begins, any party may serve upon the adverse party an offer, 
denominated as an offer under this rule, to settle a claim for the money or 
property or to the effect specified in the offer, with costs then accrued. If 
within 10 days after the service of the offer the adverse party serves written 
notice that the offer is accepted, either party may then file the offer and 
notice of acceptance together with proof of service thereof and thereupon the 
court shall enter judgment. An offer not accepted shall be deemed withdrawn and 
evidence thereof is not admissible except in a proceeding to determine costs. If 
the judgment finally obtained by the offeree is not more favorable than the 
offer, the offeree must pay the costs incurred after the making of the offer. As 
used herein, "costs" does not include attorney's fees. The fact that an offer is 
made but not accepted does not preclude a subsequent offer. When the liability 
of one party to another has been determined by verdict or order or judgment, but 
the amount or extent of the liability remains to be determined by further 
proceedings, the party adjudged liable may make an offer of settlement under 
this rule, which shall have the same effect as  an offer  made  before  trial if  it  
is served  within  a reasonable 
time not less than 10 days prior to the commencement of hearings to determine 
the amount or extent of liability.

 

[¶10]   Rule 68 accomplishes its objective 
of encouraging settlement by providing an expeditious process that forces the 
parties to weigh the costs and benefits of further litigation.  Utility 
Automation 2000, Inc. v. Choctawhatchee Electric Coop., Inc., 298 F.3d 1238, 1240 (11th Cir. 2002).  Any 
party can make a firm, non-negotiable offer of judgment.  Id. Unlike traditional settlement 
negotiations in which a plaintiff may seek clarification or make a counteroffer, 
a plaintiff faced with a Rule 68 offer may only accept or 
reject the offer.  Id. An 
offer under Rule 68 must be for a definite or ascertainable amount and later 
proof cannot cure any defect in the offer since the party to whom the offer was 
made must base its decision to accept or reject solely on what is contained 
within that offer.  Snodgrass v. 
Rissler & McMurry Co., 903 P.2d 1015, 1018 (Wyo. 1995).  A Rule 68 offer is not simply an offer 
of settlement, but an offer that judgment can be entered on specified 
terms.  If the offer is accepted, 
the court automatically enters judgment in favor of the offeree; if the offer is 
refused, the case proceeds.  The 
rule encourages plaintiffs to accept reasonable offers through what is referred 
to as "cost-shifting."  It requires 
a party who refuses an offer, and then ultimately recovers less than the offer 
amount, to pay the costs incurred by the offeror from the time the offer was 
made.  The rule specifies that those 
"costs" do not include attorneys' fees.  
Through this cost shifting, "the Rule prompts both parties to a suit to 
evaluate the risks and costs of litigation, and to balance them against the 
likelihood of success upon trial on the merits."  Utility Automation, 298 F.3d  at 
1240 (citation omitted).

 

[¶11]   As a general matter, Rule 68 offers 
are interpreted according to contract law principles.  Charles Alan Wright, Arthur R. Miller 
& Richard L. Marcus, Federal Practice and Procedure Civil 2d § 3002 
at 95 (2001 Supp.)  For example, 
courts have consistently held an ambiguous Rule 68 offer of judgment 
should be construed against the offeror.  First Financial Insurance Co. v. 
Hammons, 58 Fed. 
Appx. 31, 34 (4th Cir. 2003).  See 
Nordby v. Anchor Hocking Packaging Co., 
199 F.3d 390, 391 (7th Cir. 1999)  (holding that "any ambiguities in a 
Rule 68 offer 
must be resolved against the [offeror]"); Nusom v. Comh Woodburn, Inc., 
122 F.3d 830, 833 (9th Cir. 1997) (concluding that "the 'usual rules of contract 
construction' apply to a Rule 68 offer of judgment" and 
"therefore, ambiguities are construed against the 
offeror") (citations omitted).  
Ambiguities in a Rule 68 offer "must be resolved 
against the defendant . . ., not only because the defendant drafted the offer 
but also because the plaintiff is being asked to give up his right to a 
trial."  First 
Financial Insurance Co. 58 Fed. 
Appx. at 34 (quoting Nordby, 
199 F.3d at 391-92). 

 

[¶12]   However, the dynamics of customary 
contract negotiation are altered by the operation of the rule and its cost 
shifting features.  Wright, Miller 
& Marcus, supra at 94.   
The contract law analogy is just that, an analogy - the consequences of 
rejecting a Rule 68 offer are more serious than those of rejecting an ordinary 
contract offer.  Nordby, 199 F.3d  at 392.  As a result, courts 
have considered interpretation of Rule 68 offers somewhat differently than 
contracts generally.  

 

            
Were the agreement between the parties a simple contract, we might be 
inclined to consider the history of the negotiations.  Ambiguous contract terms compel a court 
to look to extrinsic evidence, and it might fairly be said that the terms 
of [defendant's] offer create an ambiguity as to [plaintiff's] attorneys' fees. 

 

But the 
arrangement here is not a simple contract; it involves an accepted offer of 
judgment, and there is a difference.  
Courts should be much more reluctant to conclude that an offer of 
judgment is ambiguous.  If a common, 
garden-variety offer to contract is unclear, the offeree is free to reject the 
offer or attempt to clarify it.  An 
offeree who accepts an ambiguous offer is in no position to complain if a court 
called upon to interpret the contract turns to extrinsic evidence.  By contrast, a plaintiff who receives a 
Rule 68 offer is in a difficult position, because "a Rule 68 offer has a binding 
effect when refused as well as when accepted." Unless the defendant allows the 
plaintiff to resolve or eliminate ambiguities, the plaintiff will be forced to 
guess whether and how the court would interpret the extrinsic evidence.  Adherence to the language of the offer 
whenever possible alleviates this unfairness to the 
plaintiff.

 

Shorter v. 
Valley Bank & Trust Co., 678 F. Supp. 714, 
719-720 (D.C. Ill. 1988) (citations omitted). 

 

[¶13]   With regard to whether Rule 68 
offers that are silent on the issue of attorneys' fees are ambiguous, courts 
have taken two different approaches.  
Some courts require specific mention of attorneys' fees in the offer 
before acceptance of the offer would bar those claims.  See Webb v. James, 147 F.3d 617 
(7th Cir. 1998); Nusom, 122 F.3d 830; Chambers v. Manning, 169 F.R.D. 5 (D. Conn. 1996).  In 
Webb, an offer "of judgment in the above-captioned matter in the amount 
of Fifty Thousand Dollars ($50,000)" made no mention of attorneys' fees.  Webb, 147 F.3d  at 619.  The court found the offer ambiguous 
because attorneys' fees are often sought as an add-on to the judgment and 
construed it against the drafter so that the offer did not bar a later claim for 
attorneys' fees.  

 

[¶14]   In Nusom, the Ninth Circuit 
Court of Appeals found that "a Rule 68 offer for judgment in a specific sum 
together with costs, which is silent as to attorney fees, does not preclude the 
plaintiff from seeking fees when the underlying statute does not make attorney 
fees a part of the costs."  
Nusom, 122 F.3d 835.  
Likewise, in Chambers v. Manning, 169 F.R.D. 5 (D.Conn. 1996), the 
court stated, "if Defendant had intended for his offer to include fees, he could 
have said so explicitly.  His 
failure to do so will be construed against him."  Chambers, 169 F.R.D.  at 8.  Like Webb and Chambers, 
the Nusom court examined the specific language in the offer of 
judgment, and reached a similar conclusion: that the offer's silence regarding 
attorneys' fees created ambiguity with respect to whether the $15,000 sum 
included attorneys' fees.  The court 
concluded such ambiguity must be resolved against the drafter, and therefore the 
accepting party was not barred from seeking attorneys' fees Nusom, 122 F.3d  at 835.  

 

[¶15]   However, even if an offer is silent 
as to whether it includes attorneys' fees, other circumstances in the case may 
make it clear that the offer does include attorneys' fees.  Moore's Federal Practice, Civil § 68.02, 
n. 17.3 (2004 Supp. LEXIS).  For 
example, Nordby, 199 F.3d  at 391-93, involved a complaint in which one 
count claimed damages under a state law providing for an award of reasonable 
attorneys' fees.  The court held 
that the plaintiff's acceptance of a Rule 68 offer of "$56,003.00 plus $1,000 in 
costs as one total sum as to all counts of the . . . complaint" barred the 
plaintiff from later seeking an award of attorneys' fees.  While the judge affirmed the 
above-stated notion that "ambiguities in Rule 68 offers are to be resolved 
against the offerors," and even encouraged defendants to include the words 
"attorneys' fees" in their Rule 68 offers, he rejected the "magic words approach 
. . . in favor of an approach . . . that gives effect to an unambiguous offer 
even if it does not mention attorneys fees explicitly."  The court found that this offer 
unambiguously encompassed the claims made in all the counts, including the count 
that requested fees. 

 

[¶16]   The offer in Nordby was similar to 
the offer in the present case.  We 
agree with the holding in Nordby and find nothing ambiguous about an offer that 
refers to "all claims" of the plaintiff against the defendant. Dr. Byars' offer 
"in full and final satisfaction of all claims of Plaintiffs against Defendant" 
can only mean one amount for settlement of all claims made by the plaintiff, 
including the claim for attorneys' fees.  
The lack of the exact words "attorneys' fees" in Dr. Byars' offer does 
not render it ambiguous when it is considered in its entirety. 

 

 

CONCLUSION

 

[¶17]   Having concluded that attorneys' 
fees were included in Dr. Byars' Rule 68 offer, we need not address the issue of 
whether the district court erred in applying a prevailing party standard.  We affirm the district court's denial of 
Real Estate Pros' motion for attorneys' fees.