Opinion ID: 2449831
Heading Depth: 3
Heading Rank: 2

Heading: We Are Unable To Assess Miller's Remaining Arguments Because Of The Lack Of Factual Findings.

Text: Miller's remaining arguments assume that the $5,900 Handle collected from VP was rightfully Miller's. The parties disputed this issue in the proceedings below. Handle argued that the $9,502 VP paid Miller settled all of Miller's claims against VP, and therefore, Miller had no right to the $5,900 that VP eventually paid Handle. Handle pointed to the explicit terms of the settlement agreement and submitted a VP representative's affidavit stating that following Miller's acceptance of the $9,502, he was entitled to no further compensation from VP. Miller submitted his own affidavit to the court asserting that the $9,502 he collected from VP was solely for the paint-defect claim, and that the remaining $5,900, in payment for the steel defect claim, was rightfully his. The superior court did not hold an evidentiary hearing. Although the superior court stated that the $9,502 was for the paint/rust claim, it made no findings as to whether the remaining $5,900 was rightfully Miller's. [13] The superior court held that the offer of judgment did not entitle Miller to an offset and that Miller was required to pay Handle the full offer of judgment amount; thus, the superior court apparently concluded that the disputed issue was not material. We disagree, and remand to the superior court for an evidentiary hearing. The central issue in this case is the meaning of the accepted offer of judgment. Specifically, we must determine whether the accepted offer warrants an offset in these circumstances. Rule 68 allows a party to make an offer of judgment [a]t any time more than 10 days before the trial begins. [14] The purpose of the rule is to encourage settlement in civil cases and to avoid protracted litigation. [15] A Rule 68 offer of judgment must specify a definite sum and must be unconditional, [16] and once the offer of judgment has been served, the offeror cannot modify or revoke it for ten days. [17] Because [a]n offer of judgment and acceptance thereof is a contract, [18] we interpret an accepted offer of judgment using our independent judgment and applying the rules of contract interpretation. [19] The goal of contract interpretation is to give effect to the parties' reasonable expectations. . . . [20] The parties' expectations must be gleaned not only from the contract language, but also from extrinsic evidence, including evidence of the parties' conduct, goals sought to be accomplished, and surrounding circumstances when the contract was negotiated. [21] Thus, in order to ascertain the meaning of Miller's accepted offer of judgment, we must determine the parties' reasonable expectations by considering the offer's express terms in light of extrinsic evidence.
As a preliminary matter, we reject Miller's argument that the offer of judgment should be interpreted in light of the communications his attorney had with Handle's attorney after the offer was made. Again, Rules v. Sturn [22] controls. There, we rejected the argument that even though the offer of judgment's terms made no mention of an offset, an offset was implied in light of the post-offer cross-counsel communication expressing the intent that the judgment be reduced by the sum of advance payments made in the years since the collision. [23] We stated that the offer would be subject to an offset if the words in the offer of judgment, when interpreted in light of all the surrounding circumstances, reasonably require[d] such a finding. [24] However, because Rule 68 offers are irrevocable for ten days and then automatically withdrawn, [25] we concluded that extrinsic evidence that comes into being after the offer is made is irrelevant to the offer's meaning. [26] The same rule applies here. Because the only extrinsic evidence a court can look to in interpreting an offer of judgment is that which existed at the time the offer was made, the post-offer communications expressing Miller's intent to collect the $5,900 from VP are irrelevant to the accepted offer of judgment's meaning. Miller contends that Rules only precludes post-offer extrinsic evidence that modifies the offer, and does not prevent courts from looking to post-offer extrinsic evidence to determine the offer's meaning. We disagree. We stated in Rules that the extrinsic circumstances to which one can refer to determine the meaning of [an] offer [of judgment] should be those existing at the time the offer is made. [27] We did not distinguish between modification and clarification there, and we decline to do so here. Miller goes on to argue that an offset is warranted because, as a result of the post-offer communications, Handle knew that Miller intended to collect the $5,900 from VP. It is true that when one party knows or has reason to know that the other party attaches a different meaning to the contract, the contract is interpreted in accordance with the second party's meaning. [28] But in this case, the extrinsic evidence giving rise to Handle's knowledge of Miller's intended meaning came into being after Miller made his offer. It is therefore irrelevant to our interpretation of the agreement. [29] Consequently, we reject this argument, and focus exclusively on the extrinsic evidence that existed at the time Miller made his offer.
Miller argues that even if post-offer extrinsic evidence is not taken into account, the offer of judgment requires an offset in these circumstances. We agree that the accepted offer of judgment would warrant an offset if the $5,900 was, indeed, Miller's money; however, because that remains a disputed issue of material fact, we remand to the superior court for an evidentiary hearing. In his Rule 68 offer of judgment, Miller offered to pay $18,000 plus add-ons in complete satisfaction of Plaintiff's claims. As Miller argues on appeal, this implies that Miller intended the $18,000 to settle all of Handle's claims against him, including the claim arising out of the steel defect. The superior court held that these circumstances did not warrant an offset because Miller failed to include an express offset term. But the superior court failed to acknowledge the terms that every offer of judgment implies. When a party makes a Rule 68 offer, he implicitly expresses his willingness to give up a specific amount of his own money in exchange for certainty that this is the only amount he will lose going forth with respect to the claims at issue. This exchange is the essence of settlement. When Miller offered $18,000 in complete satisfaction of Plaintiff's claims, he reasonably expected that Handle's acceptance would guarantee that this was the only amount of Miller's money Handle would receive for this set of damages after the offer was made. [30] If the $5,900 was Miller's money, then it was unreasonable as a matter of law for Handle to expect that it could both accept the offer of judgment and retain the $5,900 it accepted from VP on Miller's behalf. Miller did not need to include express language to that effect; if the $5,900 was indeed Miller's, this conclusion follows from the offer's implied terms, and an offset would be warranted. However, if the $5,900 was not rightfully Miller's, then Handle's acceptance of both the offer of judgment and the $5,900 would not be inconsistent with the implied terms described above, and the agreement would not entail an offset.