Opinion ID: 2630877
Heading Depth: 1
Heading Rank: 7

Heading: Successive offers of judgment

Text: Horizon served the Albioses with three successive offers of judgment, all of which the Albioses rejected. Horizon argues that its second and third offers of judgment were more favorable than the Albioses' verdict and, therefore, the Albioses are not entitled to attorney fees under NRCP 68 and NRS 17.115. We have never addressed whether successive offers of judgment extinguish previous offers of judgment or whether all offers of judgment control. [24] Thus, before we can compare the Albioses' verdict to Horizon's offers, we must first decide which of Horizon's offers is controlling. Both NRCP 68 and NRS 17.115 contain a provision that allows a party to serve more than one offer of judgment. [25] However, both are silent regarding the effect of successive offers. [26] Other states are split on whether successive offers of judgment extinguish previous offers of judgment or whether all offers served are controlling. Generally, it is a policy decision. After examining both positions, we conclude the better rule is that the most recent offer of judgment extinguishes all prior offers of judgment. California adopts the position that successive offers extinguish previous offers. California's theory is that the process of settlement and compromise is a contractual one, and the applicable principles are those relating to contracts in general. [27] The general contractual rule on offers is that any new offer communicated prior to a valid acceptance of a previous offer, extinguishes and replaces the prior one. [28] Further, there is an evolutionary aspect to lawsuits and the law, in fairness, must allow the parties the opportunity to review their respective positions as the lawsuit matures. The litigants should be given a chance to learn the facts that underlie the dispute and consider how the law applies before they are asked to make a decision that, if made incorrectly, could add significantly to their costs of trial. [29] Most importantly, California concludes that the legislative purpose of offers of judgment statutes is generally better served by a bright line rule in which the parties know that any judgment will be measured against a single valid statutory offeri.e., the statutory offer most recently rejectedregardless of offers made earlier in the litigation. [30] And interpreting the offer of judgment rule otherwise encourages a party to maintain a higher settlement demand on the eve of trial and refuse to settle a case that should otherwise be settled if the [party] finds comfort in the knowledge that, even if [the party] receives an award less than his or her last demand, [the party] might still enjoy the cost reimbursement benefits ... so long as the award exceeded a lower demand made by the [party] some time during the course of the litigation.... Rolling the dice then becomes somewhat less risky and we note that lawsuits are not often settled by reducing the risk of trial. [31] Notably, California's offer of judgment rule, California Code of Civil Procedure section 998, contains two important differences from NRCP 68 and NRS 17.115. First, section 998 does not expressly permit successive offers of judgment. Second, California has interpreted, again under general contract principles, that section 998 offers are revocable prior to acceptance. [32] Contrary to section 998, NRCP 68 and NRS 17.115 textually provide for successive offers and, converse to general contract principles, offers of judgment are irrevocable in Nevada. [33] These differences notwithstanding, we conclude that California's position regarding successive offers better effectuates the purpose of offers of judgment. We note that other courts conclude that successive offers of judgment do not extinguish previous offers, reasoning that once a plaintiff rejects an offer within the statutory time period, the defendant has acquired a statutory right to recover attorney fees and costs if the plaintiff does not obtain a more favorable verdict. [34] Although a valid position, California's policy lends greater finality to the offer-of-judgment process and is more easily applied. Additionally, we reject, for two reasons, other courts' reliance on FRCP 68's advisory committee note, [35] which states that all offers remain valid, so that settlements are encouraged. First, our Rule 68 differs substantially from the federal rule. Second, as previously discussed, we conclude that reducing the risk of trial by allowing multiple offers of judgment to control does not encourage settlement. Thus, we adopt the reasoning of our sister state California and hold that the most recent offer of judgment extinguishes all prior offers of judgment and is controlling for purposes of NRCP 68 and NRS 17.115. [36] Therefore, Horizon's third offer of judgment in the amount of $100,000, exclusive of attorney fees and costs, is controlling. The Albioses were awarded $100,000, reduced by 5 percent for comparative negligence, resulting in a judgment of $95,000. Although this amount does not exceed Horizon's third offer of judgment, we recently held that pre-offer prejudgment interest must be added to the judgment when comparing it to the offer of judgment, unless the offeror clearly intended to exclude prejudgment interest from its offer. [37] When, as here, the offer is silent regarding prejudgment interest and the intent of the offeror cannot be determined, we will presume that the offer includes prejudgment interest. [38] Although Horizon's offer excluded attorney fees and costs, this exclusion was insufficient to alert the Albioses to the fact that prejudgment interest would also be excluded. However, because Horizon expressly excluded attorney fees and costs, only pre-offer prejudgment interest awarded on the $95,000 damages awarded can be considered. Thus, when $12,983.46 in pre-offer prejudgment interest [39] is added to the $95,000 verdict, the Albioses' trial recovery was more favorable than Horizon's third offer of judgment. As such, the Albioses were entitled to their attorney fees and costs. [40]