Court Opinion

ID: 9915308
Source: CourtListenerOpinion
Date Created: 2024-01-05 01:05:35.593967+00
Date Added: 2024-06-11T13:09:33.367055
License: Public Domain

140 Nev., Advance Opinion

                       IN THE SUPREME COLTRT OF THE STATE OF NEVADA

                ALEJANDRO LOPEZ AGUILAR, AN                            No. 84647
                INDIVIDUAL,
                Appellant,
                vs.                                                       MED
                LUCKY CAB CO., A NEVADA
                CORPORATION; AND ADUGNA
                DEMESASH, AN INDIVIDUAL,
                Respondents.

                ALEJANDRO LOPEZ AGUILAR, AN                            No. 85538
                INDIVIDUAL,
                Appellant,
                vs.
                LUCKY CAB CO., A NEVADA
                CORPORATION; AND ADUGNA
                DEMESASH, AN INDIVIDUAL,
                Respondents.

                           Consolidated appeals from district court orders dismissing a
                complaint with prejudice and denying costs and interest. Eighth Judicial
                District Court, Clark County; Kathleen E. Delaney, Judge.
                           Reversed and remanded with instructions.

                J. Cogburn Law and Jamie S. Cogburn and joseph J. Troiano, Henderson,
                for Appellant.

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                Lemons, Grundy & Eisenberg and Robert L. Eisenberg, Reno; Emerson Law
                Group and Phillip R. Emerson, Henderson,
                for Respondents.

                BEFORE THE SUPREME COURT, CADISH, C.J., and PICKERING and
                BELL, JJ.

                                                  OPINION
                By the Court, CADISH, C.J.:
                              Litigation concerning offers of judgment often occurs after an
                offeree rejects an offer and the offeror seeks to impose NRCP 68(g) penalties.
                That is not the case here. In this case, we instead clarify the amount an
                offeror must pay in exchange for dismissal under NRCP 68(d) when they
                convey an offer that is exclusive of allowances such as costs, expenses,
                interest, and attorney fees.    Because such an exclusive offer in effect
                promises to pay any such recoverable amounts separately from the offer
                amount, we hold that the offeror cannot obtain such dismissal of the
                complaint unless the offeror pays both the offer amount and any additional
                allowances.
                                   FACTS AND PROCEDURAL HISTORY
                              These consolidated appeals arise from a personal injury claim
                against respondents Lucky Cab Co. and Adugna Demesash (collectively,
                Lucky Cab).      Before trial, Lucky Cab conveyed an NRCP 68 offer of
                judgment to appellant Alejandro Lopez Aguilar.         In part, the offer of
                judgment stated that Lucky Cab "offers to allow [Aguilar] to take judgment
                against [Lucky Cab] in the total lump sum amount of ONE HUNDRED
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                FIFTY THOUSAND ONE AND 00/100 DOLLARS ($150,001.00) which
                amount excludes prejudgment interest, attorney's fees and all costs
                incurred to date." Aguilar accepted the offer. The following week, Lucky
                Cab sent to Aguilar both a check for $150,001 and a stipulation and order
                for dismissal. Aguilar neither processed the check nor consented to the
                stipulated dismissal, arguing that Lucky Cab did not pay the full amount of
                the offer to obtain dismissal because it had not yet paid any costs or
                prejudgment interest.     Lucky Cab filed a motion to dismiss Aguilar's
                complaint and sought to shorten time to obtain dismissal within NRCP
                68(d)(2)'s 21-day window.
                            The district court resolved the motion in two stages.         The
                district court initially granted dismissal with prejudice, reasoning that
                Lucky Cab was entitled to dismissal once it tendered payment within NRCP
                68(d)(2)'s dismissal window. It reserved the costs and interest issue for a
                later determination. Aguilar filed a motion for costs and interest, which the
                district court denied. In the district court's view, the dismissal of Aguilar's
                complaint foreclosed a separate award in addition to the $150,001 because
                it meant Aguilar was not a prevailing party.
                            On appeal, the crux of Aguilar's argument is that Lucky Cab
                effectively prornised both $150,001 and a separate award of costs and
                interest because the amount of Lucky Cab's offer was exclusive of such costs
                and interest. Lucky Cab answers that the offer only promised $150,001,
                such that it should be entitled to dismissal once it paid that amount. In
                support, it points out that NRCP 68(d)(2) does not discuss cost awards upon
                dismissal like NRCP 68(d)(3) does upon entry of judgment. It adds that any
                it exclusive" versus "inclusive" language is not relevant to NRCP 68(d)'s

                dismissal procedure and matters only at the penalty stage, where the court
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                     must compare a rejected offer of judgment to the judgment ultimately
                     obtained.
                     Standard of review
                                 We typically review cost awards for an abuse of discretion. U.S.
                     Design & Constr. Corp. v. Int'l Bhd. of Elec. Workers, 118 Nev. 458, 462, 50
                     P.3d 170, 173 (2002). We review interest awards for error. Schiff v.
                     Winchell, 126 Nev. 327, 329, 237 P.3d 99, 100 (2010). Whether NRCP 68
                     authorizes a cost or interest award raises a legal question, however, subject
                     to de novo review. Albios v. Horizon Crntys., Inc., 122 Nev. 409, 417, 132
                     P.3d 1022, 1028 (2006); Pub. Ernps.' Ret. Sys. of Neu. v. Gitter, 133 Nev. 126,
                     132, 393 P.3d 673, 680 (2017). Our review of the language of an offer of
                     judgment conveyed under NRCP 68 is also a legal question requiring de
                     novo review. See State Drywall, Inc. v. Rhodes Design & Dev., 122 Nev. 111,
                     119, 127 P.3c1 1082, 1087 (2006) (applying de novo review to the language
                     of an offer of judgment).
                                                    DISCUSSION
                                 Interpretation of Nevada's Rules of Civil Procedure begins with
                     the text. See Vanguard Piping Sys., Inc. v. Eighth Judicial Dist. Court, 129
                     Nev. 602, 607, 309 P.3d 1017, 1020 (2013). We will adhere to the text alone
                     if it reveals a "clear and unambiguous" meaning. Id. If the text is instead
                     ambiguous, we will "resort to the rules of construction." Id. Our goal is to
                     assess "what reason and public policy would indicate the [drafters]
                     intended" and construe the text harmoniously. Barbara Ann Hollier Tr. v.
                     Shack, 131 Nev. 582, 588-89, 356 P.3d 1085, 1089 (2015) (internal quotation
                     marks omitted); Canarelli v. Eighth Judicial Dist. Court, 127 Nev. 808, 814,
                     265 P.3d 673, 677 (2011).

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                            Under NRCP 68(a), "any party may serve an offer in writing to
                allow judgment to be taken in accordance with its terms and conditions."1
                While an offer of judgment may specify otherwise, the default offer arnount
                made under this rule includes costs, expenses, interest, and recoverable
                attorney fees. NRCP 68(a). In the event an offer is accepted, NRCP
                68(d)(2)-(3) gives an offeror two options: dismissal or entry of a judgment.
                NRCP 68(d)(2) provides that, within 21 days, the offeror 'may pay the
                amount of the offer and obtain dismissal of the claims, rather than entry of
                a judgment."    But "[i]f the claims are not dismissed," NRCP 68(d)(3)
                provides that "the clerk must enter judgment" in accordance with the
                accepted offer and "[t]he court must allow costs in accordance with NRS
                18.110 unless the terms of the offer preclude a separate award of costs."
                            The "amount of the offer" an offeror must pay to obtain NRCP
                (38(d)(2) dismissal turns on how the offeror drafts the offer. As noted, offers
                of judgment typically preclude a separate award of allowances, such as
                costs, expenses, interest, and attorney fees. NRCP 68(a); see also Fleischer
                v. August, 103 Nev. 242, 246, 737 P.2d 518, 521 (1987) (observing that
                "defense counsel" clarified "that the $50,000.00 offer was for a lump sum,
                which included costs"). Alternatively, offers of judgment can be drafted to
                exclude such allowances, thus allowing for a separate award of these
                allowances. See Albios, 122 Nev. at 415, 132 P.3d at 1026 (discussing an
                offer ofjudgment "for $100,000, exclusive of attorney fees and costs"). Offers
                that preclude a separate award of such allowances are said to be "inclusive"
                of those allowances; offers that allow a separate award of such allowances

                      'While this opinion generally presumes that a defendant is the offeror
                and a plaintiff is the offeree, consistent with the parties' positions below, we
                recognize that either party may make an offer of judgment.
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                      are said to be "exclusive" of those allowances. See Albios, 122 Nev. at 426,
                      132 P.3d at 1033 (explaining that an offer excluding "attorney fees and
                      costs . . . was insufficient to alert the [offerees] to the fact that prejudgment
                      interest would also be excluded" and adding prejudgment interest into the
                      NRCP 68(g) comparison as a result).
                                   To that end, the "amount of the offer" that is inclusive of all
                      allowances is exactly that number written in the offer of judgment. For
                      example, an offeree who accepts an offer of judgment for $50,000 inclusive
                      of all costs, expenses, interest, and allowable attorney fees can expect only
                      $50,000—nothing more and nothing less. See Fleischer, 103 Nev. at 245-46,
                      737 P.2d at 521 (explaining that "it was improper.... to have entered
                      judgment in excess of' $50.000 where the offer was "a lump sum of
                      $50,000.00, an amount which included costs" (emphasis omitted)). The
                      inclusive language tells the offeree that the $50,000 allocates, i.e., includes,
                      a valuation for both their claims and their costs, expenses, interest, and
                      allowable attorney fees.
                                   In contrast, the "amount of the offer" that is exclusive of all
                      allowances is not necessarily simply that number in the offer of judgment.
                      The exclusive language tells the offeree that the offer does not allocate, i.e.,
                      excludes, a valuation for their costs, expenses, interest, and allowable
                      attorney fees. It does not say that such allowances, to which judgment
                      holders are typically entitled as of course, see, e.g., NRS 17.130; NRS 18.020,
                      are waived. Thus, if that $50,000 example offer is written exclusive of all
                      costs, expenses, interest, and allowable attorney fees, the offeree who
                      accepts it can expect more than $50,000 so long as they establish that those
                      additional allowances are recoverable. See Albios, 122 Nev. at 426, 132 P.3d
                      at 1033; see also Schwickert, Inc. v. Winnebago Seniors, Ltd., 680 N.W.2d
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                79, 88 (Minn. 2004) ("The failure of the Rule 68 offer to expressly include
                prejudgment interest in the lump sum offered means that prejudgment
                interest is separately recoverable against [the offerors] as a cost and
                disbursement in addition to the lump sum."). "Recoverable," in this sense,
                refers to those allowances that the offeree would be entitled to if a judgment
                were entered based on that offer.
                             Of course, we recognize that a party whose case gets dismissed
                typically would not be entitled to costs, expenses, interest, or attorney fees.
                See, e.g., MB Am., Inc. v. Alaska Pac. Leasing Co., 132 Nev. 78, 89, 367 P.3d
                1286, 1292-93 (2016); 145 E. Harmon II Tr. v. Residences at MGM Grand
                Tower A Owners' Ass'n, 136 Nev. 115, 120, 460 P.3d 455, 459 (2020). And
                as Lucky Cab points out, we recognize that most of those allowances are
                reserved for prevailing parties. See NRS 18.010; NRS 18.020; Alaska Pac.
                Leasing, 132 Nev. at 89. 367 P.3d at 1292-93; see also Albios, 122 Nev. at
                428, 132 P.3d at 1034-35 (reviewing prejudgment interest awarded to the
                prevailing party under NRS 17.130). But NRCP 68 is a unique rule that
                alters typical litigation procedures, allowing dismissal of the claims upon
                acceptance of an offer of judgment in certain circumstances rather than
                requiring entry of a judgment against the offeror. See Quinlan v. Camden
                USA, Inc., 126 Nev. 311, 314, 236 P.3d 613, 615 (2010) (noting that "NRCP
                68 offer[s] a tool not available at common law"). In this unique context,
                acceptance of an offer effectively renders the offeree a prevailing party. See
                Delta Air Lines, Inc. v. August, 450 U.S. 346, 363 (1981) (Powell, J.,
                concurring) ("A Rule 68 offer of judgment is a proposal of settlement that,
                by definition, stipulates that the plaintiff shall be treated as the prevailing
                party.").   As a prevailing party, the offeree is entitled to recoverable
                allowances, whether those allowances are included or excluded from the
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                offer and regardless of whether the offeror pays and obtains dismissal or
                instead allows entry of a judgment. Therefore, when an offeree accepts an
                offer that excludes allowances, the offeror must separately pay the amount
                of pre-offer costs, expenses, and interest that the offeree would otherwise be
                entitled to as a prevailing party. It must also pay attorney fees, so long as
                law or contract supplies a basis for those fees.
                            Accordingly, we reject Lucky Cab's attempts to render an offer's
                exclusive or inclusive language a nullity when an offeror pays the principal
                amount of its offer within 21 days of acceptance. We will not endorse a
                reading of NRCP 68—a rule largely designed to promote settlement and
                compromise—legitimizing this loophole. See Beattie v. Thomas, 99 Nev.
                579, 588, 668 P.2d 268, 274 (1983) (noting that "the purpose of NRCP 68 is
                to encourage settlement"); see also Alaska Pac. Leasing, 132 Nev. at 89, 367
                P.3d at 1292. The rule is clearly intended to ultimately provide a judgment,
                including the allowances normally attendant thereto, to an accepting
                offeree and thereby end the case. Reading subsection (d) as adjusting the
                amount due the offeree depending on whether the offeror ultimately elects
                to obtain a dismissal rather than entry of judgrnent would ignore the rule's
                purpose and intent and invite discord with the rule's other subsections.
                Indeed, NRCP 68(g) recognizes that an offer may do one of two things:
                preclude a separate award of allowances (an inclusive offer) or provide that
                such allowances will be added by the court (an exclusive offer). Not only
                would Lucky Cab's preferred interpretation lead to inconsistent results
                under the same offer's language depending on the stage of litigation, but it
                would also allow an offeror "to have its cake and eat it too." Cf. Rateree v.
                Rockett, 668 F. Supp. 1155, 1159 (N.D. Ill. 1987) (rejecting an interpretation
                of an offer of judgment that would allow the offeror to unfairly argue that
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                 the plain language excluded fees and costs had the offeree rejected it but
                 included fees and costs once the offeree accepted it). We decline to read the
                 rule in such a dissonant manner. See Canarelli, 127 Nev. at 814, 265 P.3d

                 at 677.
                              Applying these principles here, Lucky Cab drafted an exclusive
                 offer when it conveyed an offer of judgment for $150,001, as it specified that
                 that "amount excludes prejudgment interest, attorney's fees and all costs
                 incurred to date." By this explicit language, the $150,001 amount excluded
                 and made no provision for prejudgment interest, attorney fees, and costs.
                 Aguilar was therefore permitted to accept the $150,001 and expect an
                 additional payment of pre-offer costs and interest that would be recoverable
                 had a judgment been entered.2       Lucky Cab, on the other hand, was not

                 entitled to NRCP 68(d)'s dismissal until the parties agreed to or the district
                 court resolved Aguilar's request for those allowances.
                              Critically, the use of "excludes" in this offer indicated that
                 Lucky Cab was willing to pay $150,001 for Aguilar's claims as well as a

                 separate amount for costs, interest, and attorney fees to which he may be
                 entitled. If Lucky Cab intended to pay no more than $150,001 in total for
                 both the claims and any costs, interest, and attorney fees, it should have
                 drafted an offer that included these allowances in the amount of the offer.3

                       2Aguilar points out that the offer also excluded attorney fees.    Yet,
                 Aguilar neither argued for attorney fees in his motion for costs and interest
                 below nor offered a legal basis for such attorney fees here, and thus we need
                 not address the matter. See Thornas v. City of North Las Vegas, 122 Nev.
                 82, 93-94, 127 P.3d 1057, 1065-66 (2006).

                       3The  offer also stated that it was offering a "total lump sum" of
                 $150,001, and the phrase "lump sum" can reference an inclusive offer. See
                 Fleischer, 103 Nev. at 243, 245, 737 P.2d at 519, 521. However, Lucky Cab
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                See Collins v. Minn. Sch. of Bus., Inc., 655 N.W.2d 320, 330 (Minn. 2003)
                (stating that if the offeror "did not intend to be liable for attorney fees, it
                should have drafted the offer with greater precision"). In so holding, we
                remind offerors that the language they choose to use in their offer of
                judgment is critical to both NRCP 68(g)'s penalty stage and NRCP 68(d)'s
                dismissal stage.
                                             CONCLUSION
                            An offer of judgment that explicitly excludes costs, expenses,
                interest, and attorney fees promises two sums of money if accepted: (1) the
                principal amount for the claim(s), which is specifically identified in the offer
                of judgment; and (2) a separate amount for recoverable costs, expenses,
                interest, and attorney fees. Under NRCP 68(d)(2), an offeror who drafts one
                of these exclusive offers cannot obtain dismissal unless the offer is accepted
                and the offeror pays both the principal offer and, if the parties agree or the
                offeree establishes that they would otherwise be legally recoverable, an
                additional allowance for costs, expenses, interest, and attorney fees. Here,
                however, the district court dismissed the case without Lucky Cab paying

                does not present cogent argument that the offer was too ambiguous to be
                enforceable as written, and we therefore need not consider that issue.
                Edwards v. Emperor's Garden Rest., 122 Nev. 317, 330 n.38, 130 P.3d 1280,
                1288 n.38 (2006). More importantly, notwithstanding this language in the
                offer, its arguments in district court and at oral argument made clear that
                it intended to convey an exclusive offer to get the benefits in the comparison
                with the final judgment under NRCP 68(g) if the offer was rejected. NRCP
                68(g) ("If the offer provided that costs, expenses, interest, and if attorney
                fees are permitted by law or contract, attorney fees, would be added by the
                court, the court must compare the amount of the offer with the principal
                amount of the judgment, without inclusion of costs, expenses, interest, and
                if attorney fees are permitted by law or contract, attorney fees.").
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                the pre-offer costs and interest that were promised and that Aguilar would
                otherwise be entitled to as a prevailing party.
                             We therefore reverse the district court's order dismissing
                Aguilar's complaint, vacate the order denying costs and interest, and
                remand for the district court to determine the amount of awardable pre-
                offer costs and interest and enter an order accordingly establishing the
                amount Lucky Cab must pay to obtain dismissal.4

                                                                                 , C.J.
                                                     Caclish

                We concur:

                           jektt                J.
                Pickerin

                                                J.

                      4Under the facts of this case, where Lucky Cab did tender the
                $150,001 in a timely manner and sought judicial clarification so it could
                obtain dismissal within 21 days of acceptance of the offer rather than having
                a judgment entered, we deem it appropriate to allow it to obtain dismissal
                following the district court's costs and interest determination. Insofar as
                the parties have raised any other arguments not specifically addressed in
                this opinion, we have considered the same and conclude that they either do
                not present a basis for relief or need not be reached given the disposition of
                this appeal.
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