Opinion ID: 1159929
Heading Depth: 3
Heading Rank: 1

Heading: Was Xerox's Offer of Judgment Invalid?

Text: The Hayeses rely upon this court's rule that joint offers of settlement are generally excluded from the penal cost provisions of Civil Rule 68. Brinkerhoff v. Swearingen Aviation Corp., 663 P.2d 937, 943 (Alaska 1983). Xerox argues that its offer of judgment was severable and not conditional upon both plaintiffs' acceptance. Xerox's offer of judgment provides: Pursuant to Civil Rule 68, Defendants offer to allow entry of judgment against them for each individual Plaintiff as follows: 1. James C. Hayes in the amount of Ninety-one Thousand Five Hundred and 00/100 ($91,500.00) Dollars, plus costs and attorney's fees. 2. Murilda C. Hayes in the amount of Twenty-three Thousand Five Hundred and 00/100 ($23,500.00) Dollars, plus costs and attorney's fees. The above offers are each made as additional money offers over and above monies already paid by Defendants, which are intended by this offer to act as a setoff against any ultimate verdict which might be rendered in this case in the present amounts of $959.95 to James C. Hayes and $4,631.21 to Murilda C. Hayes. These amounts will not act as setoffs to this offer if accepted, but only as additional damage items which should be added to the total for the purpose of determining the Rule 68 affect of this offer if a jury verdict is rendered. The superior court held that this was not a joint offer because [a]ny one reading the offer of judgment can easily determine the amount that is being offered to James C. Hayes and the amount which is being offered to Murilda C. Hayes. Plaintiffs could easily have accepted one offer and gone to trial on the other case. Because an offer of a lump sum presents problems of apportionment between offerees, it is treated as a joint offer and excluded from the penal cost provisions of Rule 68. Brinkerhoff, 663 P.2d at 943; Randles v. Lowry, 4 Cal. App.3d 68, 84 Cal. Rptr. 321, 325 (1970) (court held lump sum offer of judgment to three plaintiffs invalid since offer did not designate how it should be divided between plaintiffs, making it impossible to say any one plaintiff received a less favorable result than he would have under the offer). The offer in this case clearly does not present apportionment problems. An offer will also be considered joint if it requires both plaintiffs to accept it. In Hutchins v. Waters, 51 Cal. App.3d 69, 123 Cal. Rptr. 819, 822 (1975), the problem of apportionment was solved but the court held that an offer containing an express proviso that it had to be accepted by both plaintiffs was a conditional offer which would not trigger the penal cost provision of the California rule. The California Court of Appeal stated that the language of the statute did not contemplate a conditional settlement offer requiring joint acceptance. Hutchins, 123 Cal. Rptr. at 821. In addition, one plaintiff might think his or her offer is fair while the other may not and it would not only be unfair to require joint acceptance but also would frustrate the chances of settlement which is the purpose behind Civil Rule 68. The Hayeses argue that Xerox's offer of judgment required the Hayeses' joint acceptance and therefore under the Hutchins principle it is invalid. The Hayeses claim that they and their attorney understood the offer to require joint acceptance. Relying upon basic principles of contract law, the Hayeses contend that the understanding of the parties to the settlement agreement is probative of the meaning of an offer of judgment. This court has stated that an offer of judgment and acceptance thereof is a contract. Davis v. Chism, 513 P.2d 475, 481 (Alaska 1973). While a party's understanding of a contract is probative we have also held that interpretation of words in a contract is a matter for the court. Rules v. Sturn, 661 P.2d 615, 617 n. 3 (Alaska 1983) citing Tsakres v. Owens, 561 P.2d 1218, 1222 (Alaska 1977). In order to give legal effect to the parties' reasonable expectations, the court examines the written agreement itself and also extrinsic evidence regarding the parties' intent at time the contract was made. Norton v. Herron, 677 P.2d 877, 880 (Alaska 1984) (citations omitted). Examining the words of the offer and the extrinsic evidence of the parties' intent, we conclude that Xerox did not make a joint offer of judgment. Unlike the offer in Hutchins, here the offer does not contain a proviso mandating joint acceptance. On its face, the offer is consistent with Judge Blair's construction permitting one plaintiff to accept and the other to go to trial. Moreover, the extrinsic evidence also suggests that the offer was severable. Xerox sent a letter with the offer of judgment that stated: We have enclosed offers of judgment to your clients which, if the attorneys' fees are computed pursuant to Civil Rule 82 as a case without trial the total offer intended for James C. Hayes is $99,000, and for Murilda C. Hayes is $26,000. We are willing to settle for either those round figures, or if you wish to accept the offers of judgment formally, then of course you must proceed to apply for attorneys' fees to the Court. The language enclosed offers of judgment and we are willing to settle for either those round figures shows that the offer was not conditional upon joint acceptance. The Hayeses also argue that the offer of judgment is invalid because it was not sufficiently definite with respect to the amount or calculation of attorney's fees offered. In Davis v. Chism, 513 P.2d 475, this court noted that the determination of proper attorney's fees may require a certain amount of fact finding but normally these fees would be computed under the Civil Rule 82 schedules. Id. at 482 n. 6. In Rules v. Sturn, 661 P.2d 615, we read an offer of judgment with a provision for attorney's fees stating, and an attorney's fee based upon Civil Rule 82, as specifying a definite sum plus Civil Rule 82 attorney fees. Id. at 617. The offer itself and Xerox's letter indicate that attorney's fees could be calculated by using Civil Rule 82 or by having the court determine the fees after a certain amount of fact finding. Davis, 513 P.2d at 482 n. 6. [7] We conclude that Xerox's offer of judgment was not invalid as a joint offer or as indefinite with respect to an amount of attorney's fees.