Opinion ID: 2364360
Heading Depth: 1
Heading Rank: 5

Heading: Should Setoffs and Settlement Offers be Considered in Determining Prevailing Party Status?

Text: The defendants further argue that the trial justice abused her discretion and erred by failing to deduct the setoff of $13,750 and the credit of $8,000 from the overall lien award in determining prevailing party status, and by failing to consider the settlement position of the parties. A setoff    becomes part of a single controversy between the parties, requiring only one verdict and one judgment according to the facts. Generally, if an established setoff or counterclaim is less than the plaintiff's demand, the plaintiff has judgment for the residue only. 20 Am. Jur. 2d Counterclaim, Recoupment, & Setoff § 88 at 294 (1995). Where setoffs asserted in mechanics' lien actions are closely related to the underlying controversy, the controversy is, in actuality, one controversy with one judgment and one verdict. Brasington Tile Co. v. Worley, 327 S.C. 280, 491 S.E.2d 244, 248 (1997). Setoffs directly affect the amount a defendant actually owes and, as part of the single verdict rendered by the trial court, should be considered in determining the prevailing party. See Parodi v. Budetti, 115 Nev. 236, 984 P.2d 172, 175 (1999) (per curiam); Ennis v. Ring, 56 Wash.2d 465, 353 P.2d 950, 954 (1959). Nonetheless, we conclude that even though the claimant obtains a net judgment, it need not always control the determination of who should be considered the prevailing party. Prosperi, 626 So.2d at 1363. Agostini's successful argument for a setoff on the amount owed to Keystone is not enough to invest it with prevailing party status. As noted previously, determining the prevailing party entails more than a mere mathematical calculation. Moreover, it is clear in this case that the trial justice considered both the setoff and credit in concluding that Keystone was the prevailing party. The defendants cite both South Carolina and Florida authorities in their argument that settlement offers should be considered when determining the prevailing party. The Rhode Island mechanics' lien statute is distinct from the South Carolina statute, however, because the South Carolina statute expressly enumerates the impact of settlement negotiations on determining prevailing party status for purposes of awarding attorneys' fees. See S.C.Code Ann. § 29-5-10 (Law. Co-op 1990). The Florida Supreme Court has held that to qualify as a prevailing party entitled to attorneys' fees in a mechanics' lien action, the party must have recovered an amount exceeding that which was earlier offered in settlement of the claim. C. U. Associates, Inc. v. R.B. Grove, Inc., 472 So.2d 1177, 1179 (Fla.1985). Though the Florida statute does not require consideration of settlement offers, the court interpreted legislative intent to add this requirement. Id. at 1178. We see no basis, however, for attributing a similar intent to our Legislature on this issue, and decline to do so. Moreover, even if defendants' settlement offer of $6,000 is considered, Keystone obtained a net judgment. Although defendants say that they were prepared to offer up to $10,000, the only amount proffered was $6,000.