The Hon. Pasco M. Bowman became Chief Judge of the United States Cour t 1 of Appeals for the Eighth Circuit on April 18, 1998.



## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 97-2463

___________ Alelia I. Stewart, * * Plaintiff - Appellee, * * Appeal from the United States v. * District Court for the * Western District of Missouri. Professional Computer Centers, Inc., * doing business as Connecting Point * Computer Centers, * * Defendant - Appellant. *

___________ Submitted: April 14, 1998 Filed: June 26, 1998

___________ Before BOWMAN, Chief Judge, McMILLIAN and MURPHY, Circuit Judges. 1

___________ MURPHY, Circuit Judge. This appeal involves whether the parties intended that an offer of judg ment under Fed. R. Civ. P. 68 was to includeattorney fees and costs. After Alelia I. Stewart filed sex and age discrimination claims, her former employer Professional Computer Centers, Inc. (doing business as Connecting Point Computer Centers), made an offer o f judgment in the amount of $4,500. Stewart accepted Connecting Point’s offer, andThe motion for fees estimated that the actual amount of the request would b e 2 $25,000, but Stewart later submitted documentation for a total of $30,969.88 in fees and costs. -2- judgment was entered. Stewart then moved for attorney fees and costs. A magistrate judge , presiding with the consent of the parties, granted the fees motion. Connecting Point appeals on the ground that its lump sum offer was intended to cover everything sought in the complaint. We reverse and remand.

Conne cting Point’s initial offer stated only that upon its acceptance judgmen t would be entered “against Defendant in the amount of FOUR THOUSAND FIV E HUNDRED AND No/100 DOLLARS ($4,500.00) as provided in Rule 68,” an d Stewar t asked that it clarify what was included in the offer. Connecting Point the n provided a somewhat fuller statement that “judgment be entered on any or all counts against Defendant in a total amount not to exceed FOUR THOUSAND FIV E HUNDRED AND No/100 DOLLARS ($4,500.00) as provided in Rule 68.” At th e time of the offer the amended complaint contained three counts, each of which pled that Stewart had “incurred li ability for attorney’s fees, costs, and other expenses” and two of which requested judgment in her favor for “[c]osts and expenses of this action , including reasonable attorney’s fees.”

On the same day that Stewart accepted the offer, she also notified Connecting Point in writing that she woul d be seeking attorney fees as “costs then accrued” under Fed. R. Civ. P. 54. She filed her fees motion soon thereafter. Connecting Poin t 2 opposed the fees motion and moved to alter or amend the judgment under Fed. R. Civ. P. 59(e) or to vacate the judgment under Fed. R. Civ. P. 60(b)(1). Connecting Point argued th at its offer of judgment included any and all attorney fees and costs and that Stewart’s motion for attorney fees should be treated as a Rule 59 motion.-3-

The dis trict court granted the motion for attorney fees and denied Connectin g Point’s postjudgment motions. The court held that Stewart was entitle d to fees and costs
as a prevailing party. It interpreted Marek v. Chesny , 473 U.S. 1, 9 (1985), to require the addition of costs to the judgment because Co nnecting Point’s offer had not specified that it included costs or an amount for co sts. The court declined to amend the judgment to include the language from the complaint requesting attorney fees and costs or t o vacate the judgment because there had been no meeting of the minds on the specifics of the offer. Connecting Point argues on appeal that its lump sum offer of judgment covered everything Stewart sought in any and all counts of her complaint and that the complaint mentioned

attorney fees as an element of recovery and specifically asked for fees an d costs in the discrimination counts. Connecting Point c laims its offer was clear and notes it specifically r

eferred to all counts pled. Alternatively it argues that if Stewart had not understood its offer included fees, there was no me eting of the minds to create a binding agree ment. It concludes that therefore the judgment should be limited to a total o f $4,500 or it should be vacated to place the parties where they were before an y misunderstanding arose.

Stewart responds that the offer of judgment did not contain a specific reference to attorney fees or costs and that the district court therefore had the discretion to award fees in addition to the $4,500 judgment. She further argues that there is no evidence in the record beyond the offer of judgment its elf regarding the intent of the parties and that Connecting Point has not established a right to relief under either Rule 59 or Rule 60. Principles of contract law are applied to test whether there has been a valid offer and acceptance under Rule 68. See R adecki v. Amoco Oil Co. , 858 F.2d 397, 399 (8th Cir. 1 988). In order to create a binding agreement there must have been an objectiv e manifestation of mutual assent. This can be inferred from external indications reflecting-4-

thoughts and intentions of the parties which show a “meeting of the minds.” See 1 Corbin on Contracts § 4.13 (Rev. ed. 1993); see also Radecki , 858 F.2d a t 400 (applying this principle to Rule 68 offers and acceptances and citing other cases). There is n o bindin g agreement if “the parties attach materially different meanings to thei r manifestations and . . . neither party knows or has reason to know the meaning attached by the other.” Restatement (Second) of Contracts § 20(1)(a) (1981).

Her e the parties had a relatively simple agreement, but one which was open t o mor e than one interpretation. When asked exactly what counts or relief the offe r cover ed, Connecting Point replied that it was offering $4,500 for entry of judgment on any and all counts, and the counts in Stewart’s complaint requested attorney fees

. Although Connecting Point argues it intended to include attorney fees in its lump sum offer of judgme nt, Stewart apparently interpreted the offer to permit her to seek fees in add ition and notified Connecting Point of this in writing on the same day that sh e accepted its offer. Cf. Trnk a v. Elanco Prod. Co. , 709 F.2d 1223, 1226 (8th Cir. 1983) (subsequent

conduct showed objective manifestation of mutual assent). No mutua l assent was shown to the same terms so there was no valid offer and acceptance under Rule 68.

Stewart seeks to prove her entitlement to fees in addition to the lump sum b y relying on language from Marek v. Chesny , 473 U.S. 1, 6 (1985):
If an of fer recites that costs are included or specifies an amount for costs, and the plaintiff accepts the offer, the judgment will necessarily includ e cost s; it the offer does not state that costs are included and an amount for costs is not specifi ed, the court will be obliged by the terms of the Rule to include in its judgment an additional amount . . . to cover costs. The cited language was not par t of the basis for the court’s holding in Marek , however, but was used to illustrate the flexibilit y a defendant has in wording a valid Rule 68 offer of judgment. Moreover, the language does not describe the facts of this case, andStewart’s motion to strike portions of appellant’s appendix and of the statement 3 of facts in its brief is dismissed as moot since these sections have not been relied on in consideration of the appeal. -5- Marek does not control the outcome. Here the offer could be read to include attorney fees because of the reference to a total payment to cover “any or all counts” of th e complaint. Cf. Rateree v. Rockett , 668 F.Supp. 1155 (N.D. Ill. 1 987). The offer did not explicitly state that fees w ere included in it, but each count in the complaint did include attorney fees and Connecting Point clarified t hat its payment covered all counts. On the other hand, Stewart announced that she would seek attorney fees on the same day she communicated her acc eptance. Under these circumstances, no manifestation of mutual assent can be found.

Since t here was no valid offer and acceptance under Rule 68, exceptiona l circumstances justify relief from the judgment under Rule 60(b) a nd the motion to vacate sho uld have been granted. See Atkinson v. Prudential Property Co. , 43 F.3d 367, 373 (8 th Cir. 1994); Buckeye Cellulose Corp. v. Braggs Elec. Construction Co. , 569 F.3 d 1036, 1038 (8th Cir. 1978). The judgment is vacated and the case is remanded to allow withdrawa lof the offer of judgment, return of the sum paid, and further proceeding s consistent with this opinion. 3
A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.