Source: http://hughwood.blogspot.com/2011/02/georgias-offer-of-settlement-statute.html
Timestamp: 2017-10-22 17:03:38
Document Index: 552974002

Matched Legal Cases: ['§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§1', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 51', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 52', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 1983', '§ 1988', '§ 1988', '§ 9', '§ 768', '§ 768', '§ 1983', '§1983', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 9', '§ 51', '§ 51', '§ 9', '§ 9', '§ 17', '§ 552', '§ 15', '§ 77', '§ 2060', '§ 4304', '§ 911', '§ 300', '§ 19731', '§ 1988', '§ 6104', '§ 1710', '§ 553', '§ 1686', '§ 2014', '§ 11705', '§ 11710', '§ 2607', '§ 168', '§ 1918', '§ 2618', '§ 3608', '§ 640', '§ 1132', '§ 928', '§ 5412', '§ 9612', '§ 1349', '§ 1631', '§ 11711']

Hugh Wood: Georgia's Offer of Settlement Statute (OCGA § 9-11-68): Does It Foster Settlements or Encourage "Betting the Line?"
Georgia's Offer of Settlement Statute (OCGA § 9-11-68): Does It Foster Settlements or Encourage "Betting the Line?"
This Paper Was Presented at The Georgia "Abusive Litigation," CLE at the State Bar of Georgia Headquarters. February 2011. ICLEGA
This paper will: 1) review the mechanics of OCGA § 9-11-68, 2) it will review the subparts of the statute, 3) it will review the “good faith” portion of the statute and the jury driven homologue to OCGA § 9-15-14, 4) it will review whether OCGA § 9-11-68 is merely a statutory scheme of “Betting the Spread,” 5) it will review recent Georgia cases decided under OCGA § 9 11 68, and 6) it will review whether Offers of Settlement reduce litigation? Then this paper will review separately Rule 68 of the Federal Rules of Civil Procedure: 1) it will review The Rule, 2) it will review that the underlying federal statute must authorize fees, 3) it will review recent Federal (Georgia District) cases, 4) it will review the necessary terms that must be inserted in a federal Offer of Judgment and 5) it will review how OCGA § 9-11-68 will be applied in Federal Court.
I. OCGA § 9 11 68, GEORGIA'S OFFER OF SETTLEMENT STATUTE
A. The Offer of Settlement Statute: OCGA § 9 11 68
(2) Damages awarded may include reasonable and necessary attorney´s fees and expenses of litigation; and(3) A party may elect to pursue either the procedure specified in this subsection or the procedure specified in Code Section 9-15-14, but not both. History. Amended by 2006 Ga. Laws 589, §1, eff. 4/27/2006.
B. The Mechanics of the Statute
OCGA § 9-11-68(a): The statute applies only to tort cases. While this author is certain that some creative practitioners will attempt to expand the scope of this charming statute to probate, hybrid-contract actions and other actions, it by its language, presently only applies to “tort” actions. Thus, your case must have the prerequisite of a tort claim to be able to make an Offer of Settlement. [1]
With regard to timing, the offer may only be made thirty (30) days after the service of the summons and complaint (Note: it does not refer to the Answer, but only service) and not less than thirty (30) days before trial.
Assuming that your case has a tort claim and the offer is made within the proper timing parameters (thirty (30) days after service or thirty (30) days before trial) then it must contain the following elements:
OCGA § 9-11-68(a)(1): It must be in writing and it must specifically state that it is made under the Offer of Settlement statute 9-11-68;
OCGA § 9-11-68(a)(2): It must particularly identify which parties are making the offer [assuming that there are multiple parties in addition to a simply plaintiff and defendant]; it must also identify the target of the offer;
OCGA § 9-11-68(a)(3): It must identify, generally, the claim or claims concerning which the Offer desired to settle; [2]
OCGA § 9-11-68(a)(4): The offer must “state with particularity any relevant conditions.” What is the legal meaning of “relevant conditions?” This definition escapes this author.
OCGA § 9-11-68(a)(5): The offer must state the total dollar ($) amount of the proposal.
OCGA § 9-11-68(a)(6): The offer must state with particularity the amount that offeror proposes to settle any punitive damage claim;
OCGA § 9-11-68(a)(7): The offer must state specifically whether it includes “attorney’s fees” and/or other expenses and whether attorney’s fees or other expenses are part of the underlying legal claim;
OCGA § 9-11-68(a)(8): The offer must include a certificate of service and be served by certified or statutory overnight delivery (read that UPS or FedEx) in the form required by OCGA § 9-11-5.
Under Section OCGA § 9-11-68 (c) any offer made must remain open for Thirty 30 days unless withdrawn in writing served on the Offeree prior to acceptance. [3]
OCGA § 9-11-68(b). Liability for a Rejected Offer. It is somewhat difficult to state the liability for a rejected offer, however:
If defendant makes an Offer and it is rejected, plaintiff must beat the offer at trial by, at least, 75% of the rejected offer or pay defendant’s attorney’s fees.
If plaintiff makes an Offer and it is rejected, defendant is not liable for plaintiff’s attorney’s fees unless plaintiff beats the rejected offer by 125% of the amount of the offer.
The statute appears to allow the trial Court, upon motion of the non prevailing party under an Offer of Settlement, to request that the Court find that Offeror knew that Offer of Settlement was not made “in good faith”. OCGA § 9-11-68(d)(2). If the Court finds the offer was not made in good faith, then the Offer of Settlement is just considered either void or null.
D. The Jury Version Homologue of OCGA § 9-15-14
OCGA § 9-11-68(e). The 1987 enactment of OCGA § 9-15-14 motion for attorney’s fees for frivolous litigation and claims was supposed to be the remedy enacted by the legislature which merged all common law claims of malicious abuse and malicious use of prosecution into one statute. However, since the enactment of OCGA § 9-15-14, we have seen the enactment of OCGA § 51-7-80 through 85 and now a jury-driven version of OCGA § 9-15-14. Under subparagraph (e) of OCGA § 9-11-68 a prevailing party at the end of a jury trial may move the Court to allow the jury (then impaneled) to hear a bifurcated discussion of whether the claims advanced by the non prevailing party were frivolous, lacked substantial justification or were not made in good faith.
If the jury finds that those claims were made during trial were frivolous then and in that event the jury may proceed to award damages against the non-prevailing party pursuant to OCGA § 9-11-68(e). It is possible that a motion under subparagraph (e) may be made to the judge; however, it is clear that the General Assembly wanted to give the prevailing party the opportunity to present frivolous claims to the jury then impaneled.
A prevailing party may not use both OCGA § 9-15-14 and OCGA § 9-11-68(e) for the same factual conduct by the non-prevailing party.
II. GEORGIA’S OCGA § 9-11-68 OFFER OF
SETTLEMENT STATUTE: “GAMING ON THE FUTURE?”
OR “BETTING THE SPREAD?”
A. The History of Spread Betting
Betting on future outcomes is perhaps as old as human history itself. However, “spread betting” is a method of betting on a future “buy” or “sell” price to be determined at a future date based on an established known “fixed” price. That is, in spread betting, the gambler knows the current fixed price and bets according to whether he or she believes that the market will move to a fixed higher or lower price on a set future date.
Spread betting, in modern times, began in earnest in 1974 when an unemployed stock broker in London by the name of Stewart Wheeler came upon the idea of trading a gold index or a gold price futures index. At that time it was illegal in the United Kingdom to own gold. Thus, he and a select group of friends met at a merchant banker’s office, the Offices of N.M. Rothschild at Newport, every week to learn the prices the Bank of England had established as that week’s benchmark price for gold. Once Stewart Wheeler and his friends knew the fixed benchmark price of gold they began a secondary market of allowing investors to bet against the next “to be set” benchmark price of gold.
That is (on a simplistic basis) some investors thought that the price of gold to be set by the Bank of England would fall by ten (£10) pounds at the next benchmark whereas other investors thought it would rise by ten (£10) pounds at the next benchmark. The investors who picked correctly made money and investors who did not pick the future benchmark lost money. Thus, at least in terms of betting on what came to be known as the International Gold Index (IG Index) investors won or lost based the “accuracy,” of their bet – not on the value of the gold itself. Richardson, A., Financial Spread Betting: A Trader’s Guide, London (2010).
Even though that seems like a fairly complex process to determine how to bet on the future benchmark of gold, it is far easier than attempting to make “a bet” under Georgia’s OCGA § 9-11-68 Offer of Settlement statute. In OCGA § 9-11-68, counsel for the client choosing to bet on a future benchmark does not have the benefit of the current fixed value of the case. Thus, in betting under the OCGA § 9-11-68 statute plaintiff or defendant’s counsel must first attempt to establish what they believe is the proposed “value” of the case is at the time they choose (or receive) and Offer of Settlement. Then once they come to an established determination of the present value of the case counsel (betting party) must then predict, with some certainty, the future outcome of the case post jury verdict. Not only must the predicting party bet on the future outcome, he or she must pick the successful parameter of the outcome to “win,” the bet. Pre-permitting the details of the statute, a plaintiff making an Offer of Settlement must predict a proposed Offer of Settlement by which plaintiff believes it can achieve 75% percent of its offer or suffer the full weight of defendant attorney’s fees.
Conversely, a betting defendant in making an Offer of Settlement must place an offer with confidence that it believes plaintiff cannot achieve an outcome in excess of 125% percent or it bear the full weight the plaintiff’s attorney’s fees. Unlike the gold index market where (assuming the sun comes up on a day in the future) the betting parties have a known fixed benchmark from which to begin and have the certainty that a new value will be set at a future day. Neither plaintiff nor defendant have any certainty that a jury determination will ever occur. Hundreds of obstacles and motions and events may occur to prevent the outcome from coming about. Generally, that would cut against plaintiff in a betting situation. Because plaintiff would always risk the position of a defense verdict whereas a defendant making an Offer of Settlement never risks a similar outcome that a default by the defendant constitutes plaintiff’s victory.
If one does not agree with the analogy that OCGA § 9-11-68 is nothing more than “betting the spread,” then how do you explain Madam Chief Justice Hunstein’s Commentary in Footnote 14 of Smith, et al. v Baptiste, et al., 287 Ga. 23, 694 S.E.2d (2010), that a prevailing party may be punished not on the strength or weakness of their claim, but rather their, “failure to see into the future so as to calculate the precise amount a factfinder may award them . . . ?”
B. New Impetus for High/Low Agreements
It may be that tort cases that generate substantial attorney’s fees on both plaintiff and defendant’s positions pose too must risk to employ any Offer of Settlement pursuant to OCGA § 9-11-68. That in the minds of counsel some cases will shift too much risk to a proposed jury outcome. While there appear to be no commentators that have discussed this in the context that OCGA § 9-11-68 in Georgia (because perhaps the statute is too new and was only found constitutional in 2010) a new impetus may develop for the use of “high/low, agreements in the future. The high/low agreement drafted in the face of an unpleasant OCGA § 9-11-68 Offer of Settlement would (to make any sense under this statute) have to contain the agreement that neither side would pay the other side’s attorney’s fees under a high/low outcome. That is, the parties would enter in to a garden variety high/low agreement with the caveat that they would pay the high/low agreement and each party would bear its own attorney’s fees.
While this author is unaware of any particular statute that authorizes the use of high/low agreements in Georgia, they are clearly discussed and acceptable to the Courts as contracts attempting to settle litigation. See, Kuhl v. Shepherd, 226 Ga. App. 439, 487 S.E. 2d 68 (1997) referring to the enforceability of a high/low agreement presented to an arbitrator in a personal injury suit. See also, Dziwura v. Broda, 297 Ga. App. 1, 676 S.E. 2d 400 (2009), allowing for a set-off (previously denied by the trial Court) based on an enforceable high/low agreement entered while jury deliberations were occurring in DeKalb State Court.
C. Potential Issues of Malpractice Associated with OCGA § 9-11-68
OCGA § 9-11-68 Offer of Settlement sets out a new legal malpractice exposure for attorneys practicing in Georgia and representing clients with tort based claims. The risk of legal malpractice seems, unfortunately, to be more heavily weighted toward plaintiffs counsel’s error than defense counsel error.
Consider the potential hypothetical where there is a million dollars at risk in a lawsuit. As the case matures through two years of pretrial discovery and motions both the plaintiff’s attorney and defense attorney have run up $200,000.00 of attorney’s fees respectively. Assume that offers have been made and refused on behalf of plaintiff and defendant. Since plaintiff is required to achieve at least 75% percent plus $1.00 of its demand or suffer defendant’s attorney’s fees, plaintiff may be at risk for any type of adverse dismissal causally related to plaintiff’s counsel’s error.
It would appear (unless we missed something in this analysis) that defendant’s counsel would not be subject to the same risk.
Possible Coming Attractions to Georgia. There is a legal malpractice case in Connecticut that turned on, partially, a legal malpractice suit against the attorney for failing to assert an “Offer of Judgment,” in Federal Court in Connecticut pursuant to the Connecticut Offer of Judgment Rule, Conn. Gen. Stat. Ann. § 52-192(a). Connecticut law (which is substantive law to be applied in federal court) allowed the recovery of attorney’s fees. Since the Connecticut lawyer forgot to make the demand and did not recover the extensive attorney’s fees expended, he got sued. The client won the legal malpractice case and the lawyer ended up owning the client in excess of the phantom of the $200,000 of fees not collected in the underlying federal case. Kregos v. Stone, 88 Conn.App. 459, 872 A.2d 901 (2005).
D. An Agreement Not to Use an OCGA § 9-11-68 Offer of Settlement
It is unclear where the future of the settlement statutes such as Offer of Settlement will develop in the future in Georgia. As is shown, infra, in the discussion on Offers of Judgment presented at the Symposium at Mercer Law School in 2006, the use of offers of judgment may develop into “[A] game of mutual assured destruction (“MAD”).” The author, Yoon, cites: Wolfgang, K. H. Panofsky, The Mutual Hostage Relationship Between Russia And America, 52 Foreign Affairs 109 (1973). 57 Mercer L. Rev. 825, 828 (2006).
If the parties in a significant tort based claim are aware that their use of the Georgia Offer of Settlement rule will become a game of Mutually Assured Destruction unrelated to the merits of the case, it is possible that sane, forthright and able counsel may simply enter into an agreement pre-litigation to not use OCGA § 9 11 68 in any portion of the proceeding to be filed.
E. Reinventing the E&O Paradigm to Mitigate the Effects of OCGA § 9-11-68
Like the existing risk of legal malpractice that is presently insured by a handful of E&O carriers in Georgia, OCGA § 9-11-68 the Offer of Settlement rule injects yet another risk into the practice of law. While there is no particular insurance policy that this author knows of that would particularly or specifically bear the risk associated with OCGA § 9-11-68, it may be that some insurance company will offer some form of coverage against this risk. Or, it may be that this risk is simply an inherent risk of any current lawyer’s E&O policy. However, the risk of loss or making an incorrect “bet” on the future is probably not due to the “negligence of counsel.” It is more akin to the inability of human beings to predict the future outcome of a jury verdict within the parameters established by the Georgia General Assembly (75 % to 125 % of the jury verdict outcome). Whether this potential risk is currently covered by E&O carriers or whether a secondary market will develop as reinsurance on top of existing E&O carriers is something that the future will reveal.
F. Shifting the Risk of OCGA § 9-11-68 to the Client
For the first time post the Supreme Court’s finding of OCGA § 9-11-68 both constitutional and enforceable in Smith, et al. v. Baptiste, et al., 287 Ga. 23, 694 S.E. 2d 83 (2010), this author’s firm has included a clause in its firm’s fee agreement specifically shifting the risk of an adverse outcome under OCGA § 9-11-68 to the client. It would appear that both under the State Bar Rules and current extant case law in Georgia, a law firm is allowed to shift the risk of an adverse outcome of an OCGA § 9 11 68 Offer of Settlement as long as all of the parameters are disclosed to the client and (the firm additionally) shifts the burden of an adverse outcome to the client. While this does nothing to mitigate the potential exposure to the underlying clients with regard to OCGA § 9-11-68, it does, perhaps, limit counsel’s exposure to the effects of OCGA § 9-11-68.
III. RECENT GEORGIA CASES INTERPRETING OCGA § 9-11-68
A. Small Jury Verdict for Plaintiff
Equals Judgment for the Defendant
Abraham v. Hannah, Court of Appeals of Georgia Fourth Division, Case No. A10A0902 (November 9, 2010), is a case that has a truly shocking outcome under OCGA Code § 9-11-68. While Abraham was reversed on appeal because the plaintiff did not have notice of the OCGA § 9-11-68 hearing, it shows how a plaintiff may win and then lose under OCGA § 9-11-68.
Abraham (Plaintiff) recovered $850.00 in a jury verdict (this author admits that it's in a tiny sum); however, prior to the jury verdict Hannah (defendant) had offered $2,500.00 to Abraham to settle the case. After the jury verdict in Abraham's favor of $850.00, the trial Court held a hearing and granted attorney's fees, pursuant to OCGA § 9-11-68, to Hannah in the amount of $2,425.00. Once the jury verdict of $850.00 was subtracted from that amount the defendant (though the defendant lost at trial) had a judgment in its favor against the successful plaintiff, Abraham, of $1,575.00.
While this case was reversed for lack of notice, it displays in stark contrast the painful reality of an unaccepted offer in the face of a small jury verdict.
B. Punitive Damages Count Toward the 75% - 125%
In Wildcat Cliffs Builders, LLC v. Hagwood, 229 Ga. App. 244, 663 S.E.2d 818 (2008), (This case was decided under prior law), plaintiff in the underlying action, Hagwood, recovered a $90,000.00 compensatory award, $100,000.00 punitive damage award and $14,688.56 in OCGA § 9-11-68 attorney’s fees.
The facts most favorable to Hagwood showed that Wild Cliffs Builders knowingly encroached upon Hagwood’s property, built a retaining wall, refused to remove it and then offered Hagwood only $10,000.00 in an effort to purchase an easement and a complete release of liability. A jury awarded to Hagwood the amounts stated above. Though decided under prior law, an interesting nuance out of the Wildwood Builders case is that defendant/appellant’s took the position on appeal that punitive damages should not be counted in calculating the 9-11-68 award. Although it is unclear whether the Georgia Court of Appeals simply said that they would or would not consider the inclusion of punitive damages, they held that it was “moot” once they affirmed the punitive damage award. Wildcat Cliffs, at 822.
In sum, the evidence showed that Wildcat had no interest in remedying or lessening the run-off problem or compensating Hagwood for the property damage he had sustained. Rather, it was amenable only to paying Hagwood for an easement and a release from all liability arising from the retaining walls it had constructed on Hagwood's property. The foregoing evidence was sufficient to authorize the jury's conclusion that, after it learned of its trespass onto Hagwood's property and its creation of a continuing nuisance thereon, Wildcat acted with a conscious indifference to the consequences of its conduct. See, Tyler v. Lincoln, 272 Ga. 118, 120-121(1), 527 S.E.2d 180 (2000); Sumitomo Corp. of America v. Deal, 256 Ga.App. 703, 706-707(2), 569 S.E.2d 608 (2002); Baumann v. Snider, 243 Ga.App. 526, 530-531, 532 S.E.2d 468 (2000).
Hagwood requested and received attorney fees and expenses pursuant to OCGA § 9-11-68(b)(2). Prior to trial, Hagwood offered to settle the case for $110,000. After the jury awarded him a total of $190,000 in damages, he was, therefore, statutorily entitled to recover his attorney fees and expenses.
On appeal, Wildcat argued that this award must be overturned, because, in the absence of the punitive damages award, Hagwood did not recover greater than 125% percent of his Offer of Settlement. The Court of Appeals held that since it sustained the award of punitive damages, that argument is moot.
It affirmed the entry of judgment against Wildcat in favor of Hagwood, including the award of $100,000 in punitive damages and $14,688.56 in attorney fees and expenses.
C. A Dismissal Without Prejudice Did Not Trigger the Award
In McKesson Corporation, et al. v. Green, et al., 286 Ga. App. 110, 648 S.E.2d 457 (2007), (decided under prior law), the Court of Appeals declined to award OCGA § 9-11-68 attorney’s fees where a demand had been made but plaintiff took a dismissal without prejudice (OCGA § 9-11-41) prior to proceeding to trial. While the McKesson case turned on complex issues associated with stockholdings, RICO allegations concerning stockholdings and plaintiff’s apparent lack of an expert immediately prior to trial, the OCGA § 9 11-68 issue was resolved by the Court of Appeals in that a voluntary dismissal does not constitute the type of judgment or final judgment which will invoke liability under the OCGA § 9-11-68 statute. The Court of Appeals wrote in that regard as follows:
McKesson contends that the trial Court erred in denying its motion for attorney’s fees under OCGA § 9-11-68(b)(1). That code section provides that a defendant whose settlement offer is rejected shall recover attorney’s fees and expenses of litigation “if the final judgment is one of no liability or the final judgment obtained by the plaintiff is less than 75 percent of such Offer of Settlement.” The trial Court in this case entered no final judgment within the meaning of the statute, and therefore did not err in denying this motion. A right to dismiss voluntarily without prejudice would be meaningless if doing so would trigger the payment of defendant’s attorney’s fees. Without explicit language establishing that the legislature intended to excise a plaintiff’s right to dismiss in this manner, this Court will not engraft such an intention into the statute. McKesson, at 462.
D. OCGA § 9-11-68 found Constitutional
Smith et al. v. Baptiste, et al., 287 Ga. 23, 694 S.E.2d 83 (2010), stands for the proposition that the Supreme Court of Georgia found OCGA § 9-11-68 to be constitutional.
The Baptistes filed a complaint for damages against Chuck Smith and the radio station WQXI 790 AM after WQXI broadcast defamatory statements about the Baptistes. While the case was pending and pursuant to OCGA § 9-11-68(a), Smith and WQXI offered to settle the case for $5,000.00. The Baptistes did not respond to the offer which was deemed a rejection under OCGA § 9-11-68(c). The Court granted summary judgment.
Smith and WQXI moved for attorney’s fees pursuant to OCGA § 9-11-68(b)(1); however, after a hearing, the trial Court denied Smith and WQXI’s motion for attorney’s fees and found that the scheme enacted under OCGA § 9-11-68 was unconstitutional and violated various provisions of the Georgia constitution.
In the Baptiste Opinion, Mr. Justice Carley sketched out the background of OCGA § 9-11-68. He wrote that OCGA § 9-11-68 was enacted as part of the Tort Reform Act of 2005. The scheme enacted under OCGA § 9-11-68(a) specifies that in a tort claim either party may serve on the other party a written demand or offer to settle that tort claim. If the settlement demand or offer is rejected, that party may be entitled to recover attorney’s fees pursuant to OCGA § 9-11-68(b).
Mr. Justice Carley opined that the Court previously found that OCGA § 9-11-68 may not be applied retroactively in Georgia.
The Georgia Supreme Court overturned the trial Court on the finding that OCGA § 9-11-68 violated the “uniformity” clause of the Georgia constitution. The trial Court apparently found that OCGA § 9-11-68 was non-uniform in that it applied only to tort cases and not to civil cases including contract claims or other claims. That is, because it did not apply to the entire class of civil cases but only to tort claims inside civil cases it was therefore (in the trial Court’s opinion) unconstitutional.
The Georgia Supreme Court wrote that “our state Constitution only requires a law to have uniform operation across all laws.” Baptiste, at 88.
Because the Supreme Court found that OCGA § 9-11-68 applied uniformly across the state to all similarly situated tort claims, it was a general law and was therefore uniform across those types of claims. It was therefore constitutional. Id.
IV. DO OFFERS OF SETTLEMENT AND OFFERS
OF JUDGMENT REDUCE LITIGATION?
A. Empirical Study of New Jersey’s Offer of Judgment Rule 4:58
While Georgia statute, OCGA § 9-11-68, is too new to provide any statistical review concerning whether the Offer of Settlement statute will, in fact, reduce litigation some analogies may be drawn from other states. In a detailed empirical study of the impact of an Offer of Settlement and an Offer of Judgment statute on the outcome of litigation, the results were mixed.
Albert Yoon professor at Northwestern Law School and Tom Baker, professor University of Connecticut Law School, did an extremely detailed empirical study of the impact of New Jersey Court Rule 4.58 (“Rule 4:58”) on litigation. [4]
While the New Jersey Offer of Judgment Rule had been effect since 1971, the New Jersey Legislature put teeth into it in 1994. Professor Yoon and Thomas’ empirical study showed that Rule 4:58 appeared to reduce tort litigation by approximately 7% percent. That is, on a statistical basis with New Jersey automobile tort cases used as a baseline from the 1994 changes in the New Jersey Court Rule 4:58 resulted in an approximate differential of 7% percent shorting in time to resolution. Albert Yoon and Tom Baker, Offer of Judgment Rules and Civil Litigation: An Empirical Study of Automobile Litigation in the East, 59 Vand. L. Rev., 155 (2006).
In their empirical study, holding all other variables equal, New Jersey Court Rule 4:58 appears to have had a discernible effect on insurance-based litigation. Id., at 185. The empirical study showed that the New Jersey the Offer of Judgment rule reduced the length of litigation by approximately 7% percent (2.3 months out of an average of 34.3 months) and caused an approximate 20% percent reduction to New Jersey insurers own counsel's attorney fees. Id., at 186.
Yoon and Thomas indicated that no data was available to base a control in a reduction of potential plaintiff's attorney fees, because there was no central reporting for plaintiff's fees. Curiously, while the data show that there was a small decrease in the length of a tort case in New Jersey and a 20% percent reduction in defense fees, a review of the numerical dollar amount of damage awards showed no statistical change. Yoon and Thomas wrote that while "both [length of time and reduction of insurance counsel fees] were statistically significant at the same time, damage awards, which had a modest relative decrease in New Jersey, did not change in any significant amount.” Id.
In a symposium that Professor Yoon participated in at Mercer Law School in 2006 he indicated to the symposium panel that the results reviewed from New Jersey "while statistically significant, were modest." One interpretation is that revised Rule 4:58 expedites the bargaining not during the initial stages, but later on, typically after the parties have invested in discovery." Symposium on FRCP 68: Lessons from New Jersey [New Jersey Court Rule 4:58] by Albert Yoon. 57 Mercer L. Rev. 825 (2006).
In the same symposium, Professor Yoon, discusses that his findings led him to the conclusion that rules such as Offer of Settlement and Offer of Judgment that shift large burden of attorney's fees end up forcing the parties to engage in a game of "mutual assured destruction ("MAD"). Id., at 828.
He writes of his study in New Jersey (at the symposium in Macon):
How does Rule 4:58 expedite the time to resolution? Unfortunately, the insurer data does not reliably tell us the manner in which the claim resolved (e.g., settlement, dismissal, or trial). We can therefore only hypothesize from the known results. The average claim took nearly three years to resolve, and revised Rule 4:58 shortened that by roughly 2.3 months, or approximately seven percent. The reduction, while statistically significant, was modest. One interpretation is that revised Rule 4:58 expedites the bargaining not during the initial stages, but later on, typically after the parties have invested in discovery.
Our preliminary hypothesis is that Rule 4:58 forces the parties to engage in a game of mutual assured destruction ("MAD"). Here is the intuition: in most civil litigation, the incurring of attorney fees provides positive but diminishing returns to the actual outcome. At some point, the net expected return is negative (e.g., when the amount the plaintiff would spend on attorney fees exceeds the anticipated damage award). In the absence of an offer-of-judgment rule, litigants cannot convince their adversaries that they will spend an amount on attorney fees that exceeds the anticipated damage award. It is irrational, and therefore, not a credible commitment.
However, with an offer-of-judgment rule, this commitment to greater attorney expenditures now becomes credible: upon making a pre-trial offer, offerors may shift their attorney fees to the offerees if fee-shifting occurs (e.g., if the outcome at trial is less favorable than the pre-trial offer). Because Rule 4:58 allows both sides to make repeated offers, litigants could engage in an escalating series of commitments to spend higher amounts on attorney fees to prevail at trial by invoking the fee-shifting. At the same time, litigants realize that such behavior, if carried through, would negatively affect both sides. Therefore, they decide it is better to resolve their dispute prior to trial. As with MAD in the Cold War context, the game does not occur: each side elects not to exercise the "nuclear" option of going to trial. Id.
Thus, what are we in Georgia to derive from many years of statistical evidence in New Jersey with regard to this statute? The New Jersey Rule has had apparently a modest effect on the length of time a litigation stays in court, a 20% percent reduction in auto insurance fees for the defense in New Jersey and “no effect” on the dollar damage claim rendered. However, the parties involved in each and every one of the New Jersey actions now had to determine whether their "bet" on the outcome was within 20% percent of the final money judgment (80% to 120%), or the losing party paid the other side of the Offer of Judgment’s reasonable attorney’s fees.
In Georgia, litigants will now be required to predict the final jury outcome within a range of 75% to 125% accuracy or risk paying the opponents fees-- not because one did not prevail -- but because one did not “beat the spread.” It seems to this author that we have injected a great deal of uncertainty into the judicial process for a statistically insignificant movement of timing, legal fees and outcome of the litigation.
B. Nevada's Offer of Judgment Rule: A Descent Into Gaming
If you ever wonder how far the outer limits of an Offer of Judgment statute are, you may need look no further than Nevada's Offer of Judgment rule. Nevada Revised Statute NRS 17.115 and Nevada Rules of Civil Procedure ("NRCP") 68. [5] While a copy of NRS 17.115 is displayed the endnotes, suffice it to say it gives new meaning to "gaming" litigation. Our statute (Georgia) may seem simplistic in relation to the litigation and court opinions that have arisen simply attempting to interpret Nevada's Offer of Judgment Rule.
In drafting an Offer of Judgment in Nevada a party can make a joint offer; a party can include or exclude pre-judgment interest and costs, and a party can include or exclude attorney's fees in the offer. The Offer must be served more than 10 days before trial. However, Nevada has a special rule on serving offers at different times before bifurcated trials. Plaintiffs and defendants both get to challenge the timing of the offer; the get to challenge whether the offers were brought in “good faith” or whether the offer was “grossly unreasonable” or presented in bad faith; and, apparently, the trial court in Nevada get to pass upon, by motion, whether the rejection of an offer was grossly unreasonable or done in bad faith. This author is offended that a court would pass on whether our client “should have,” accepted or rejected an offer.
In Nevada, the court has to pass on whether it finds that attorney's fees were included or not included properly in the offer. The court must determine whether to award pre offer costs and interest or to not award them. The court must pass on whether the proper party made an offer to the proper defendant for third party defense. The prevailing party in an Offer of Judgment may proceed to take his or her judgment 20 days after the entry of a final order in the Nevada District Court (the District Court is a plenary court similar to our Superior Court). However, no fees on an Offer of Judgment or Offer of Settlement run (in Georgia) through our Georgia Court of Appeals or Georgia Supreme Court timeframe. That is not correct in Nevada. In Nevada the non prevailing party on an Offer of Settlement not only bears the burden of the lost case and the potential attorney's fees through the end of the District Court case, that party must prevail or win on appeal or the appellate fees are automatically added to the Offer of Settlement in the District Court case.
Apparently a cottage industry of local practitioners has arisen to provide advice on how to make “successive offers of judgment.” In Nevada a successive offer will defeat a prior offer and knock out any fees between the prior offer and a successive offer. So, an informal method of preserving the initial offer has cropped up in Nevada. Litigators will make an initial Offer of Judgment in writing and memorialize the first Offer of Judgment. They will simply then dance around their other settlement negotiations without "memorializing” them in order not to revoke the very first offer in the case. Echols, Michas and Fox, Erik W., Offers of Judgment in Nevada: Best Friends Or Worst Enemy?, Nevada Lawyer, Nov. 2010 at 25 – 31.
V. FEDERAL RULE OF CIVIL PROCEDURE 68: OFFER OF JUDGMENT
The Federal Rules of Civil Procedure replaced the Field Code on September 16, 1938. Fed. R. Civ. P. 68 or Rule 68, “Offer of Judgment,” appeared in its near current form on December 27, 1946.
Originally Rule 68 required that a defendant make an Offer of Judgment at least ten (10) days before the date set for trial. In a revamp to the entire timing sequence of all Federal Rules, the timing in Rule 68 was changed in sub paragraph (a) to require that an Offer of Judgment must be made at least “14 days before the date set for trial.” An Offer of Judgment must now be served at least fourteen (14) days before the date set for trial.
In a case where liability has already been determined but the extent of liability must still be determined by the trial, the party at risk for liability must serve an Offer of Judgment at least fourteen (14) days before the hearing to determine the extent of the offering party’s liability. Additionally, the change in the Rule now allows fourteen (14) days for the party receiving the offer to accept the Offer of Judgment by serving a written notice of acceptance. Silverman and DeFranco, 2009 Amendments to Federal Rules of Civil Procedure, The Checkoff, Florida Bar Labor & Employment Law Section, Vol. 69, No. 3 (January 2010).
Fed. R. Civ. P. 68 Offer of Judgment Rule reads as follows:
As amended through December 1, 2010
(c) Offer After Liability Is Determined. When one party's liability to another has been determined but the extent of liability remains to be determined by further proceedings, the party held liable may make an Offer of Judgment. It must be served within a reasonable time-but at least 14 days-before the date set for a hearing to determine the extent of liability.
(d) Paying Costs After An Unaccepted Offer. If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made. History. As amended Dec. 27, 1946, eff. Mar. 19, 1948; Feb. 28, 1966, eff. July 1, 1966; Mar. 2, 1987, eff. Aug. 1, 1987; Apr. 30, 2007, eff. Dec. 1, 2007; Mar. 26, 2009, eff. Dec. 1, 2009.
B. The Underlying Federal Statute Must Authorize Fees
While this author is somewhat reticent to comment on a United States Supreme Court case that is six (6) pages in the majority and fifty (50) some pages in the Dissent, I will wade into that pond. The 1985 case of Marek v. Estate of Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985), provides a helpful overview of the workings of Fed. R. Civ. P. 68.
Marek, supra, concerned the application of an Offer of Judgment where the underlying federal statute provided for an award of attorney’s fees. That analysis differs with the Georgia Offer of Settlement statute because the Georgia statute applies attorney’s fees to any tort case, whereas the Federal Rule does not.
In Marek, supra, Petitioner police officers (Marek) answered a domestic disturbance and unfortunately shot and killed Chesny, respondent’s, adult son. Chesny as Administrator for his son’s estate filed suit in federal district court (Chicago, Illinois) under 42 U.S.C. § 1983 and Illinois state law. Prior to trial, the police officers offered $100,000.00 and Chesny declined to accept it. At trial, Chesny recovered approximately $60,000.00 which was $40,000.00 less than the Offer of Judgment made by the police officers. Since Chesny prevailed at trial, his attorneys filed a request for fees pursuant to 42 U.S.C. § 1988 [Proceeding in Vindication of civil rights which provides for an allowance of attorney’s fees to the successful party]. It was denied by the Illinois Federal District Court but granted by the 7th Circuit. Chesny v. Marek, 720 F.2d 474 (7th Cir. 1983).
The Police officers then petitioned United States Supreme Court to determine whether they were required to pay attorney’s fees (couched as “costs” under Rule 68) for the period of time after Chesny rejected the Offer. The Seventh Circuit found that under 42 U.S.C. § 1988 the police officers were required to pay the prevailing attorney’s fees. 720 F.2d 480. The United States Supreme Court in Marek, 473 U.S. 1, Chief Justice Burger, reversed and indicated that the attorney’s fees were not part of the costs after the Offer. 473 U.S. at 9 – 12.
While the mechanics of Rule 68 are obvious to any reasonably skilled practitioner employing them, actually obtaining an award granting attorney’s fees is another matter. The dissent in Marek, 473 U.S. 14, is interesting in that it provides a laundry list of 63 federal statutes that specifically include attorney’s fees in the Rule 68 scheme for the collection of “costs.” Marek, 473 U.S. at 44 48. [6]
Additionally, Marek, 473 U.S. at 48-51, provides, in the dissent, a list of 49 federal statutes that specifically exclude attorney’s fees as part of the costs. [7]
Thus, while initially one might view the word “costs” as filing fees and perhaps expenses and deposition fees, it may very well include “attorney’s fees” under the particular federal statute. Unlike the Georgia scheme where all reasonable attorney’s fees would be included in an OCGA § 9-11-68 Offer of Settlement, the federal Rules require the practitioner to look to the specific federal statute and determine whether fees are available to be shifted pursuant to that statute and then apply that fee shifting mechanism through Rule 68.
C. Federal (Georgia) Rule 68 Cases
The number of cases interpreting Fed. R. Civ. P. 68 in the 11th Circuit is certainly not expansive. Unless the research has failed us, there appear to only be 12 cases cited from 1983 to the present focusing on the meaning of Fed. R. Civ. P. 68.
A search for "Offer of Settlement," in the 11th Circuit and in the F. Supp. will take the reader, generally, to an interpretation of the Florida statute. The federal court has found that the Florida Offer of Settlement statute, is substantive law and may be applied in federal court. Menchise v. Senterfitt, et al., 532 F.3d 1146 (11th Cir. 2008). The number of Florida citations outnumber Georgia citations (and this is a rule of thumb) approximately 20 to 1. The Florida statute, while not particularly relevant here, is Florida Statute § 768.79 (Offer of Settlement and Demand for Judgment) and its companion rule Florida Rule of Civil Procedure 1.442 (Proposals for Settlement). That statute and its companion civil rule provide the mechanism in Florida for obtaining legal fees and costs when a party in Florida rejects a formal offer to settle the case.
Florida Statute § 768.79 is a homegrown minefield. If you or your client find yourself on either side of a Florida offer for judgment, this author strongly suggest you retain competent counsel familiar with presenting and defending Offers of Judgment in Florida.
1. Ekeberg v. Donny Shook (2010)
The language and terms of a federal offer are crucial. In Ekeberg v. Donny Shook-Brown and Stanley Richardson, Defendants the United States District Court for the Northern District of Georgia – Gainesville Division, Civil Action File No. 2:08 CV 0195 RWS (April 15, 2010), Hon. Richard W. Story struggled with an issue on which there was no 11th Circuit authority. Ekeberg, supra, concerned a 42 USC § 1983 allegation of a prisoner who alleged she was strip searched and fondled in the Towns County Jail. Toward the end of discovery, the defendants made a Fed. R. Civ. P. 68 Offer of Settlement. The offer stated as follows:
COMES NOW the defendants, and, pursuant to Rule 68 of the Federal Rules of Civil Procedure, hereby offer to allow judgment to be taken by plaintiff in the amount of $10,500.00 to discharge all claims against all defendants. This offer is in compromise of strongly disputed and doubtful claims." Ekeberg, Order of April 15, 2010 at 1.
Apparently, the offer was mailed regular mail during a period of time that plaintiff was engaged in a day by day extensive discovery involving depositions. The economic difference in attorney's fees between the date the offer was mailed and the date plaintiff eventually accepted the offer was many tens of thousands of dollars of additional attorney's time. Judge Story struggled with the ambiguity under Fed. R. Civ. P. 68 concerning whether the offer made by the defendants stopped the running of all costs and fees or whether the attorney's fees and costs (which were allowed under 42 U.S.C. §§1983 and 1988) continued through the date of the acceptance of the offer. Judge Story finally resolved this in favor of the plaintiff by providing reference to the old maxim that, “the drafter of the offer was the master of his offer.” Since it was ambiguous concerning whether costs and attorney's fees would be extended through the date of acceptance, he found against the drafter concerning the ambiguity. Id.
2. Utility Automation (2002)
The specific language included in the drafting of the offer is crucial under Fed. R. Civ. P. 68. In Utility Automation 2000, Inc., v. Choctawhatchee Electric Cooperative, Inc., et al., 298 F.3d 1238 (11th Cir. 2002), the 11th Circuit appears to have allowed an additional $61,000.00 of attorney's fees on top of an accepted Offer of Settlement under Fed. R. Civ. P. 68 for only $45,000.00. [Note: The additional $61,000.00 was remanded for a determination of whether it was reasonable and the record does not show what the District Court did on remand.]
In Utility Automation 2000, (the organization, “UA 2000”) sued Choctawhatchee Electric Cooperative for misappropriation of trade secrets, breach of contract and intentional interference with business and contractual relationships. Near trial, defendants made a Fed. R. Civ. P. 68 Offer of Settlement to UA 2000. It stated:
Defendants … hereby make the following Offer of Settlement pursuant to Fed. R. Civ. P. 68; that defendants shall pay plaintiff [UA 2000] the sum of $45,000.00 and 00/$100.00 ($45,000.00) with costs accrued, and the defendant, Chelco Services, Inc., shall refrain from competing with the plaintiff for a period of thirty (30) days from the date of acceptance of this offer. 298 F.3d 1239, 1240.
UA 2000 accepted the offer and then subsequent to the acceptance brought a motion for its attorney's fees on top of the $45,000.00. Its theory was that the $45,000.00 constituted payment for a violation of the Trade Secret Act and that it was entitled to fees as the "prevailing party" for the $61,000.00 it took to get the $45,000.00 award. Defendant Choctawhatchee Electric Cooperative took the position that the $45,000.00 included the fees.
The 11th Circuit said the issue was ambiguous and struggled to determine whether these were or were not included. The 11th Circuit's analysis is lengthy, however it found that the Defendants' offer did not preclude a review of additional fees to the Plaintiff because the offer didn’t specifically prohibit it. The 11th Circuit found that it had the authority to review it under Marek v. Estate of Chesny, supra, but it really didn’t want to wade into that issue. Finally, it found that the Trade Secret Act specifically allowed for attorney's fees by statute and that Plaintiff had successfully pled for that relief. It further found that by the offer of the $45,000.00 by defendant and acceptance of the $45,000.00 by Plaintiff, Plaintiff became the "prevailing party" under the Trade Secret Act. Therefore, the 11th Circuit found that the additional attorney's fees or $61,000.00 of attorney's fees necessary to obtain the award should be awarded. While the "reasonableness," was remanded to the District Court, the 11th Circuit wrote in warning to all practitioners who draft Fed. R. Civ. P. 68 offers of judgment the following:
We note, as have other Courts, that defendants can easily preempt the dispute exemplified here, as well as others, by clearly stating their intent in the Offer of Settlement. We echo the 7th Circuit in cautioning that '[t] the prudent defendant … will mention [attorney's fees] explicitly, in order to head off the type of appeal that we are wrestling with here. Nordby, v. Anchor Hocking Packaging Company, 199 F.3d 390, 393 (7th Cir. 1999). Lastly, we have not had occasion to determine whether the amount UA 2000 requests for attorney's fees – approximately $61,000.00 – is in fact a reasonable sum. Therefore, in remanding to the District Court, we do so with the expectation the District Court will determine a suitable amount of attorney's fees. 298 F.3d. 1240.
Both Ekeberg, being only a district order, and Utility Automation 2000, surpa, strongly caution against the drafting of an ambiguous offer in federal Court. If the practitioner wishes to make an offer that includes attorney's fees and costs in the Fed. R. Civ. P. 68 offer, the United States District Court for the Northern District of Georgia and the 11th Circuit strongly encourage the practitioner to state with specificity the inclusion or non inclusion of attorney's fees in its offer.
3. OCGA § 9 11 68 is Substantive Law in Federal Court
Wheatley v. Moe's Southwest Grill, LLC, et al. 580 F. Supp. 2d 1324 (N.D. Ga. 2008), sheds light on some of the difficulties of the enforcement of OCGA § 9 11 68 (the Georgia Offer of Settlement) in Federal Court. While many parts of this long and messy case go beyond a simple discussion of OCGA § 9 11 68, it turned on an offer of 50,000 shares of stock in Moe's and related corporations [Mama Fu's Noodle House, Inc. and Raving Brands Holding, Inc.] when Plaintiff, Wheatley, was promoted from employee to company vice president with an equity share. When Wheatley resigned from the corporation, she sought the 50,000 shares by written certificate. Because of the lack of writing and ambiguity, litigation arose concerning whether the shares had to be issued.
An award of OCGA § 9 11 68 attorney's fees may not be had for the attorney's fees incurred from an appeal from the District Court through the 11th Circuit and on remittitur back to the District Court. Attorneys for Moe's Southwest moved for $49,000.00 of attorney's fees incurred while the case was appealed from the District Court through the 11th Circuit and back on remand to District Court. The United States District Court for the Northern District of Georgia, the Honorable Timothy C. Batten, Sr., gave a short shrift to the request for attorney's fees on appeal in federal Court and wrote: "The motion that seeks attorney's fees and expenses of litigation incurred on appeal is meritless. The statute expressly limits the award of attorney's fees and expenses to those incurred from the date of the rejection of the Offer of Settlement to the date of entry of judgment … " 580 F. Supp. 2d 1326.
It is unclear, from Wheatley and similar cases, how practitioners are to deal with cases that are a combination of contract claims, tort claims and hybrid claims. In Wheatley, the Plaintiffs contended they were suing on contract for the 50,000 shares. The defendants contended that it was a meritless tort suit, suit on breach of fiduciary duties, conversion and other counts. The federal Court struggled with the question concerning whether an OCGA § 9 11 68 Offer of Settlement could properly be made to a case that had some contract claims buried in amongst tort claims. 580 F. Supp. 2d 1325 1327.
While Judge Batten did not resolve this area of the law, he found that the statute applied to any suit that involved a "tort claim" in the action. Thus, perhaps reading between the lines, one can make an Offer of Settlement if any portion of Plaintiff's complaint includes a well-defined "tort" claim. 580 F. Supp. 2d 1327. Perhaps the most important determination out of Wheatley, supra, is that the Court specifically and unequivocally held that OCGA § 9 11 68 offers apply as substantive law in federal Court. While the Plaintiff argued that the Georgia statute was merely procedural and could not be applied in federal Court, the Court found otherwise. Citing, Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L. Ed. 1188 (1938) and its progeny, the Court found that it could (and perhaps was obliged to) apply state substantive law on this particular issue. Id.
The Wheatley case goes on to show that it certified three (3) questions to the Georgia Supreme Court. Research reveals that while the record was transferred to the Georgia Supreme Court and the issues were placed before the Supreme Court, the parties settled their claims and the Supreme Court allowed the case to return to the District Court on remittitur without answering the certified questions posed in Wheatley. See, the Order of the Supreme Court of Georgia dated April 28, 2009 and Wheatley, returning the file to the United States District Court for the Northern District of Georgia without an answer. Document 173 in United States District Court Northern District of Georgia Case. No. 1:05 CV 02174 TCB.
The Georgia Offer of Settlement statute OCGA § 9-11-68 is a powerful tool to shift an opponent off the status quo and toward a resolution of the case. This paper has shown that the drafter of the Offer must carefully follow the statute. A plaintiff must recover more than 75% percent of a rejected offer or bear the defendant's fees and a defendant must be confident that a plaintiff can recover no more than 125% percent of a rejected offer or risk paying plaintiff’s counsel’s fees. This paper has reviewed the theoretical aspects concerning whether the Offer of Settlement statute is simply “betting the line,” and has reviewed its potential for legal malpractice if an Offer is not made or not employed correctly. It has reviewed the recent finding of constitutionality of the statute and looked at additional recent cases.
This paper has also reviewed the similar Offer of Judgment rule in federal court: Fed. R. Civ. P. 68. It has contrasted the Georgia rule to the Federal Rule and shown that while attorney’s fees may be recovered in federal court the recovery in federal court may turn on the federal statute in litigation in federal court as opposed to merely using the federal Offer of Judgment. Finally, the paper has shown that the Georgia Offer of Settlement has been determined to be substantive law in the federal court and it has reminded practitioners of the importance of being accurate in making a federal Offer of Judgment or having that Offer declared meaningless for its vagueness.
In 1989 the Georgia General Assembly, in its wisdom, gave us OCGA §§ 51-7-80 through 51-7-85. In that abusive litigation/malicious prosecution scheme we, as practitioners, had to stay within the confines of two paragraphs of OCGA § 51 7 84 to write a cogent and enforceable notice by certified mail to be able to enforce a claim after the end of the suit. The General Assembly, in its wisdom, has now given us twenty-three (23) paragraphs under OCGA § 9-11-68 to make an appropriate Offer of Settlement during a case.
What if the Complaint, is part in tort and part in contract? May one submit an OCGA § 9-11-68 Offer of Settlement for the tort portions of the action? The United States District Court, Northern District of Georgia struggled with this issue in Wheatley v. Moe’s Southwest Grill, LLC, et al., 580 Fed. Supp. 2d 1324 (2008). Unfortunately, there is no clear answer from that case. The Federal Court certified the question to the Georgia Supreme Court; however, the case then settled without an answer. Wheatly, supra, contains and interesting “chart,” delineating “tort,” causes of action from “contract,” causes of action. 586 Supp. 2d 1324, 1326. This author’s personal opinion, though is that this expands litigation and makes the offers unwieldy and unfair, but “yes,” one can make Offers of Settlement to the tort claims (inside) a larger complaint or petition.
There are substantial nuances in the concerning the making of an Offer of Settlement with regard to a counter-offer and nuances with regard the effect of the withdrawal of an Offer on the collection of on attorney’s fees. These are beyond the scope of this article.
New Jersey Court Rule 4:58-1.
Time and Manner of Making and Accepting Offer
(a) Except in a matrimonial action, any party may, at any time more than 20 days before the actual trial date, serve one adverse party, without prejudice, and file with the court, an offer to take a monetary judgment in the offeror's favor, or as the case may be, to allow judgment to be taken against the offeror, for a sum stated therein (including costs). The offer shall not be effective unless, at the time the offer is extended, the relief sought by the parties in the case is exclusively monetary in nature.
(a) If the offer of a claimant is not accepted and the claimant obtains a money judgment, in an amount that is 120% of the offer or more, excluding allowable prejudgment interest and counsel fees, the claimant shall be allowed, in addition to costs of suit: (1) all reasonable litigation expenses incurred following non-acceptance; (2) prejudgment interest of eight percent on the amount of any money recovery from the date of the offer or the date of completion of discovery, whichever is later, but only to the extent that such prejudgment interest exceeds the interest prescribed by R. 4:42-11(b), which also shall be allowable; and (3) a reasonable attorney's fee, which shall belong to the client, for such subsequent services as are compelled by the non-acceptance.
NRS § 17.115. Offer of Judgment. (Nevada)
1. At any time more than 10 days before trial, any party may serve upon one or more other parties a written offer to allow judgment to be taken in accordance with the terms and conditions of the Offer of Judgment.
2. Except as otherwise provided in subsection 7, if, within 10 days after the date of service of an Offer of Judgment, the party to whom the offer was made serves written notice that the offer is accepted, the party who made the offer or the party who accepted the offer may file the offer, the notice of acceptance and proof of service with the clerk. Upon receipt by the clerk:
(a) The clerk shall enter judgment according to the terms of the offer unless:
(1) A party who is required to pay the amount of the offer requests dismissal of the claim instead of entry of the judgment; and
(2) The party pays the amount of the offer within a reasonable time after the offer is accepted.
(b) Regardless of whether a judgment or dismissal is entered pursuant to paragraph (a), the court shall award costs in accordance with NRS 18.110 to each party who is entitled to be paid under the terms of the offer, unless the terms of the offer preclude a separate award of costs. Any judgment entered pursuant to this section shall be deemed a compromise settlement.
3. If the Offer of Judgment is not accepted pursuant to subsection 2 within 10 days after the date of service, the offer shall be deemed rejected by the party to whom it was made and withdrawn by the party who made it. The rejection of an offer does not preclude any party from making another offer pursuant to this section. Evidence of a rejected offer is not admissible in any proceeding other than a proceeding to determine costs and fees.
4. Except as otherwise provided in this section, if a party who rejects an Offer of Judgment fails to obtain a more favorable judgment, the court:
(a) May not award to the party any costs or attorney's fees;
(b) May not award to the party any interest on the judgment for the period from the date of service of the offer to the date of entry of the judgment;
(c) Shall order the party to pay the taxable costs incurred by the party who made the offer; and
(d) May order the party to pay to the party who made the offer any or all of the following:
(1) A reasonable sum to cover any costs incurred by the party who made the offer for each expert witness whose services were reasonably necessary to prepare for and conduct the trial of the case.
(2) Any applicable interest on the judgment for the period from the date of service of the offer to the date of entry of the judgment.
(3) Reasonable attorney's fees incurred by the party who made the offer for the period from the date of service of the offer to the date of entry of the judgment. If the attorney of the party who made the offer is collecting a contingent fee, the amount of any attorney's fees awarded to the party pursuant to this subparagraph must be deducted from that contingent fee.
5. To determine whether a party who rejected an Offer of Judgment failed to obtain a more favorable judgment:
(a) If the offer provided that the court would award costs, the court must compare the amount of the offer with the principal amount of the judgment, without inclusion of costs.
(b) If the offer precluded a separate award of costs, the court must compare the amount of the offer with the sum of:
(1) The principal amount of the judgment; and
(2) The amount of taxable costs that the claimant who obtained the judgment incurred before the date of service of the offer. As used in this subsection, "claimant" means a plaintiff, counterclaimant, cross-claimant or third-party plaintiff.
6. Multiple parties may make a joint Offer of Judgment pursuant to this section.
7. A party may make to two or more other parties pursuant to this section an apportioned Offer of Judgment that is conditioned upon acceptance by all the parties to whom the apportioned offer is made. Each party to whom such an offer is made may serve upon the party who made the offer a separate written notice of acceptance of the offer. If any party rejects the apportioned offer:
(a) The action must proceed as to all parties to whom the apportioned offer was made, whether or not the other parties accepted or rejected the offer; and
(b) The sanctions set forth in subsection 4:
(1) Apply to each party who rejected the apportioned offer.
(2) Do not apply to any party who accepted the apportioned offer.
8. If the liability of one party to another party has been determined by verdict, order or judgment, but the amount or extent of the liability of the party remains to be determined by further proceedings, the party found liable may, not later than 10 days before commencement of the proceedings to determine the amount or extent of his liability, serve upon the party to whom he is liable a written Offer of Judgment. An Offer of Judgment made pursuant to this subsection shall be deemed to have the same effect as an Offer of Judgment made before trial.
9. The sanctions set forth in subsection 4 do not apply to:
(a) An Offer of Judgment made to multiple defendants unless the same person is authorized to decide whether to settle theclaims against all the defendants to whom the offer is made and:
(1) There is a single common theory of liability against all the defendants to whom the offer is made;
(2) The liability of one or more of the defendants to whom the offer is made is entirely derivative of the liability of the remaining defendants to whom the offer is made; or
(3) The liability of all the defendants to whom the offer is made is entirely derivative of a common act or omission by another person.
(b) An Offer of Judgment made to multiple plaintiffs unless the same person is authorized to decide whether to settle the claims of all the plaintiffs to whom the offer is made and:
(1) There is a single common theory of liability claimed by all the plaintiffs to whom the offer is made;
(2) The damages claimed by one or more of the plaintiffs to whom the offer is made are entirely derivative of an injury to the remaining plaintiffs to whom the offer is made; or
(3) The damages claimed by all the plaintiffs to whom the offer is made are entirely derivative of an injury to another person.
History. (Added to NRS by 1971, 1129; A 1979, 829; 1987, 1027; 1999, 1102; 2005, 116)
2. Privacy Act of 1974, 5 U.S.C. §§ 552a(g)(2)(B), 552a(g)(4)(B)
11. Hart-Scott-Rodino Antitrust Improvements Act of 1976, 90 Stat.
1394, 1396, as amended, 15 U.S.C. §§ 15c(a)(2), 26.
14. Trust Indenture Act of 1939, 53 Stat. 1171, 1176, 15 U.S.C. §§ 77ooo(e), 77www(a).
17. Consumer Product Safety Act, 86 Stat. 1218, 1226, as amended,
15 U.S.C. §§ 2060(c) and (f), 2072(a), 2073.
20. National Cooperative Research Act of 1984, 98 Stat. 1817,
15 U.S.C. §§ 4304(a) and (b)(1982ed., Supp. III).
25. Semiconductor Chip Protection Act of 1984, 98 Stat. 3353,
17 U.S.C. § 911(f) (1982 ed., Supp. III).
37. Safe Drinking Water Act, 88 Stat. 1690-1691, as amended,
42 U.S.C. §§ 300j-8(d), 300j-9(2)(B)(i) and (ii).
38. Voting Rights Act of 1965, 79 Stat. 445, as amended, 42 U.S.C. § 19731(e).
39. The Civil Rights Attorney's Fees Awards Act of 1976,
90 Stat. 2641, 42 U.S.C. § 1988.
46. Comprehensive Older Americans Act Amendments of 1978,
92 Stat. 1555, 42 U.S.C. § 6104(e)(1).
57. Shipping Act of 1984, 98 Stat. 3132, 46 U.S.C.App. § 1710(h)(2) (1982 ed., Supp. III).
59. Cable Communications Policy Act of 1984, 98 Stat. 2779,
47 U.S.C. §§ 553(c)(2), 605(d)(3)(B) (1982 ed., Supp. III)
60. Natural Gas Pipeline Safety Act, 90 Stat. 2076, as amended, 49 U.S.C.App. § 1686(e).61. Hazardous Liquid Pipeline Safety Act of 1979, 93 Stat. 1015, 49 U.S.C.App. § 2014(e).
62. Interstate Commerce Act, 49 U.S.C. §§ 11705(d)(3), § 11710(b).
6. Federal Credit Union Act, 84 Stat. 1010, as amended, 12 U.S.C. 1786(p).
8. Real Estate Settlement Procedures Act of 1974,
88 Stat. 1728, as amended, 12 U.S.C. § 2607(d)(2)(b).
15. Consumer Credit Protection Act, 84 Stat. 1134, 15 U.S.C. §§ 168m(3), 1681o(2).
20. Motor Vehicle Information and Cost Savings Act,
86 Stat. 955, 963, as amended, 15 U.S.C. §§ 1918(a), 1989(a)(2).
21. Toxic Substances Control Act, 90 Stat. 2039, 2041-2042,
15 U.S.C. §§ 2618(d), 2619(c)(2), 2020(b)(4)(C).
23. Condominium and Cooperative Abuse Relief Act of 1980,
94 Stat. 1677, 1679, 15 U.S.C. §§ 3608(d), 3611(d).
25. Navajo and Hopi Indian Relocation Amendments Act of 1980,
94 Stat. 934, 25 U.S.C. § 640d-27(b).
33. Employee Retirement Income Security Act of 1974,
88 Stat. 891, as amended, 29 U.S.C. § 1132(g).
36. Longshoremen's and Harbor Workers' Compensation Act,
44 Stat. 1438, as amended, 33 U.S.C. § 928(a).
43. Mobile Home Construction and Safety Standards Act,
88 Stat. 706, as amended, 42 U.S.C. § 5412(b).
44. Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 94 Stat. 2792, 42 U.S.C. § 9612(c)(3).
45. Outer Continental Shelf Lands Act Amendments of 1978,
92 Stat. 658, 682, 43 U.S.C. §§ 1349(b)(2), 1818(c)(1)(C).
46. Alaska National Interest Lands Conservation Act,
94 Stat. 2430, 43 U.S.C. § 1631(c).
49. Household Goods Transportation Act of 1980,
94 Stat. 2016, as amended, 49 U.S.C. §§ 11711(d) and (e).
Posted by Hugh Wood at 7:24 PM
Labels: "Hugh Wood" "9-11-68" "spread betting" "attorney's fees" Georgia OCGA "Offer of Settlement" "Offer of Judgment"