November 05, 2019 Practice Points

Making Attorney Fees and Costs a Clear and Unambiguous Part of Offers of Judgment

Attorneys that fail to clearly and unambiguously address attorney fees and costs in offers of judgment risk exposing their clients to unexpected additional liabilities.

By Nolan T. Herslebs

When making a Rule 68 offer of judgment, it is essential that the offeror clearly state whether attorney fees and costs are included in the final offer. This principle was highlighted in Louie Medina v. Gilbert Mega Furniture after the Ninth Circuit awarded the plaintiffs more than $20,000 in addition to the amount agreed upon in the defendant’s Rule 68 offer of judgment. No. CV-16-04033-PHX-SPL, 2019 WL 3778406 (D. Ariz. Aug. 12, 2019).

Plaintiffs Michael Innes and Larry Berisford filed a notice accepting defendant Gilbert Mega Furniture’s offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. Then, after the court dismissed the case, the plaintiffs sought an order to refile a motion for attorneys’ fees and costs. The defendant objected on the basis that the parties’ discussions surrounding the offer of judgment showed a mutual understanding that it would include attorney fees and costs.

The court was unconvinced by the defendant’s objection and noted that Rule 68 offer of judgments “must be clear and unambiguous” in waiving or limiting attorney fees and costs. Here, the offer of judgment was silent as to attorney fees and costs, and therefore did not preclude the plaintiffs from seeking additional costs. Additionally, the court advised that any ambiguities in a Rule 68 offer of judgment are typically construed against the offeror. With that, the court concluded  that the plaintiffs were entitled to an award of fees in the amount of $21,924.75 because the offer of judgment did not state whether attorney fees and costs were included.

The opinion explains the importance clarity and specificity. Even though the defendant presented extrinsic evidence of mutual understanding, the court relied on the “actual offer” to make a decision. Thus, this issue could have been mitigated if the Defendant incorporated all terms of their offer in writing.

Nolan T. Herslebs is a 3L at Cumberland School of Law in Birmingham, Alabama.

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