Court Opinion

ID: 9915094
Source: CourtListenerOpinion
Date Created: 2024-01-04 17:05:49.793763+00
Date Added: 2024-06-11T13:17:10.784888
License: Public Domain

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140 Nev., Advance Opinion |

IN THE SUPREME COURT OF THE STATE OF NEVADA

ALEJANDRO LOPEZ AGUILAR, AN
INDIVIDUAL,

Appellant,

VS.

LUCKY CAB CO., A NEVADA
CORPORATION; AND ADUGNA
DEMESASH, AN INDIVIDUAL,

Respondents.

ALEJANDRO LOPEZ AGUILAR, AN
INDIVIDUAL,

Appellant,

vs.

LUCKY CAB CO., A NEVADA
CORPORATION; AND ADUGNA
DEMESASH, AN INDIVIDUAL,

Respondents.

No. 84647

FILED

ELIZARE-TH A. B01
CLER#. O Ss RE OURT

BY

1EF DEPUTY CLERK

No. 85538

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.

24-00 307

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, CwJ.:

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 promised 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
“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 Cmtys., Inc., 122 Nev. 409, 417, 132
P.3d 1022, 1028 (2006); Pub. Emps.’ Ret. Svs. of Nev. v. Gitter, 133 Nev. 126,
132, 393 P.8d 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.3d 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. Highth 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.” Jd. 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.”!
While an offer of judgment may specify otherwise, the default offer amount
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
68(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 of judgment “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 Albitos, 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, 1.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, 1.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, Lid., 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 FE. Harmon IT 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 judgment 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. U1. 1987) (ejecting 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.” 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.?

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 Thomas v. City of North Las Vegas, 122 Nev.
82, 93-94, 127 P.3d 1057, 1065-66 (2006).

8The 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

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

2

(ob. Cd,

Cadish
We concur:
Py
Preboneng od.
Pickering J
Bell C#

‘Under 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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Ti