1998 -NMCA- 103, Pope v. Gap, Inc.

• Decision Date: 18 June 1998
• Docket Number: No. 17529,17529
• Citation: 125 N.M. 376,1998 NMCA 103,961 P.2d 1283
• Parties: , 1998 -NMCA- 103 Robert POPE, as guardian and personal representative of Chandler Pope, a minor, Plaintiff-Appellant, v. THE GAP, INC., a Delaware corporation, d/b/a Gap Kids, Defendant-Appellee.
• Court: Court of Appeals of New Mexico

Page 1283

961 P.2d 1283

125 N.M. 376, 1998 -NMCA- 103

Robert POPE, as guardian and personal representative of Chandler Pope, a minor, Plaintiff-Appellant, v. THE GAP, INC., a Delaware corporation, d/b/a Gap Kids Defendant-Appellee.

No. 17529.

Court of Appeals of New Mexico.

June 18, 1998.

Randi McGinn, William B. Towle, McGinn & Associates, P.A., Albuquerque, for Appellant.

Luis G. Stelzner, Craig T. Erickson, Sheehan, Sheehan & Stelzner, P.A., Albuquerque, for Appellee.

OPINION

FLORES, Judge.

¶1 In this appeal, we examine the meaning of an offer of judgment under Rule 1-068 NMRA 1998. Specifically, we address two issues: (1) whether, in making and accepting an offer of judgment under Rule 1-068, the parties, Plaintiff Robert Pope (Pope) and Defendant The Gap, Inc. (The Gap), agreed to the form of judgment entered by the trial court, and (2) whether a Rule 1-068 judgment that is silent on the issue of liability can constitute a determination of liability or an admission of liability which may be used against the offeror in other litigation. For the reasons discussed herein, we hold that the parties did not agree to the form of judgment entered by the trial court. That form of judgment contains language expressly negating The Gap's liability and Pope's damages. Rather, we conclude that The Gap is contractually bound to the form of judgment proposed by Pope, which contains no express disclaimer of liability. In so concluding, however, we hold that a Rule 1-068 judgment, which is silent regarding liability, cannot constitute a judicial determination or admission of liability that may be used against The Gap in other litigation. We reverse the trial court's judgment and remand with instructions to enter Pope's proposed form of judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

¶2 The underlying dispute is a product liability action in which Pope, as guardian and personal representative of his infant daughter, Chandler Pope, alleges that his daughter's legs were permanently scarred by a pair of "Baby Gap" socks purchased from The Gap. The complaint was filed June 10, 1994. Discovery in the case was extensive and protracted until settlement negotiations began in March 1996.

¶3 On March 18, 1996, The Gap served on Pope an offer of judgment under Rule 1-068. The offer provided:

Pursuant to Rule 1-068 of the New Mexico Rules of civil Procedure, Defendant The Gap, Inc., offers to allow judgment to be taken against it in this action in the sum of ELEVEN THOUSAND FIVE HUNDRED FIFTY DOLLARS ($11,550.00) which includes costs accrued to date. This offer of judgment is made for the purposes specified in Rule 1-068, and is not to be construed either as an admission that Defendant is liable in this action or that the Plaintiff has suffered any damages.

No proposed form of judgment accompanied the offer. However, the language of the offer, including the disclaimer in the last sentence, essentially tracked the language in the standard form of offer of judgment provided in 3 Moore's Manual --Federal Forms, Form No. 11:545 (1997) [hereinafter Moore's]. That form of offer is commonly used by defendants in connection with making offers of judgment under Federal Rule of Civil Procedure 68, which is identical to state rule 1-068. See 1A Federal Procedural Forms, § 1:2992 (offer of judgment, stating that evidence of offer is admissible only as to costs), § 1:2995 (form of judgment, stating nothing regarding liability) (1993); 3A Bender's Federal Practice Forms, 68:1 (offer of judgment, stating no admission of liability or damages), 68:20 (form of judgment) (1995); 4A West's Federal Forms, § 5391 (offer of judgment, stating nothing regarding liability), § 5394, (judgment, stating nothing regarding liability) (1992); 15 Am.Jur. Pleading and Practice Forms, Judgment Form 111 (offer of judgment, stating nothing regarding liability), 119 (judgment, stating nothing regarding liability) (1997). On March 28, 1996, Pope tendered his acceptance of the offer of judgment, along with a proposed form of judgment. The acceptance stated:

Please take notice that the plaintiff accepts the offer of judgment served by defendant on March 18, 1996, allowing plaintiff to take judgment in this action for ... [ ] $11,550 [ ], which amount includes costs accrued up to the making of said offer.

The acceptance was silent regarding the issue of The Gap's liability, but also tracked the language in the standard form of acceptance under the offer of judgment rule. See id., Form No. 11:546. The proposed form of judgment also made no mention of The Gap's liability, stating in the decretal clause only "that judgment is entered against the defendant and that plaintiff [will] recover from the defendant the amount of ... [ ] $11,550 [ ] on his claims." Like the offer of judgment and acceptance, the proposed form of judgment was consistent with the Moore's form and contained no language either admitting or denying liability. See id., Form No. 11:547.

¶4 By accepting the offer of judgment, Pope rejected a separate offer of settlement by The Gap for $12,500, which, in addition to the higher dollar amount, included the condition that the parties enter into a confidentiality agreement. This offer apparently was not made pursuant to Rule 1-068, or at least, did not contain any language referring to the rule or the rule's language. Rather than be bound by the confidentiality provision, Pope accepted The Gap's offer of judgment for $11,550, understanding it to mean that a public judgment of liability would be entered against The Gap. The offer of judgment and acceptance were subsequently filed with the trial court.

¶5 The Gap refused to approve the form of judgment proposed by Pope because it omitted language that the judgment was not to be construed as an admission of liability by The Gap or that Pope had suffered any damages. The Gap proposed its own form of judgment which included the disclaimer, and which Pope rejected.

¶6 On May 1, 1996, the trial court held a presentment hearing. After hearing argument from counsel, the trial court entered The Gap's form of judgment, with the language expressly disclaiming liability. Pope appeals the judgment.

II. DISCUSSION

¶7 Pope contends that the trial court erred in entering The Gap's form of judgment because it fails to reflect the agreement of the parties. Pope argues that based on the plain language of the offer and acceptance, the use of form language in the offer and acceptance, and the operation of Rule 1-068, the disclaimer of liability applied only to the act of making the offer of judgment, and was not intended to be an express condition of the final judgment entered against The Gap. Pope also argues that a judgment under Rule 1-068 has the effect of being a judicial determination and admission of liability that can be used against the offeror in other litigation. The Gap contends that the trial court correctly entered the form of judgment with the language expressly disclaiming The Gap's liability, and that a judgment under Rule 1-068 need not include a finding of liability in order to be valid and enforceable.

¶8 We first examine whether the form of judgment entered by the trial court accurately reflects the agreement of the parties. Concluding that it does not and that The Gap is contractually bound by the form of judgment submitted by Pope, we next consider whether Pope's form of judgment, which is silent on the issue of liability, amounts to a determination or admission of liability that can be used against The Gap in other litigation. We hold that it does not.

A. Did the Parties Agree to the Form of Judgment Entered by the Trial Court?

¶1 Standard of Review; Application of Contract Principles.

¶9 In this case, the parties do not dispute the facts; rather, their arguments center on the application of the law to the facts. This is an issue we review de novo. See Medina v. Sunstate Realty, Inc., 119 N.M. 136, 138, 889 P.2d 171, 173 (1995); C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 510, 817 P.2d 238, 244 (1991); Sinclair Oil Corp. v. Scherer, 7 F.3d 191, 193 (10th Cir .1993).

¶10 In construing Rule 1-068, which is identical to its federal counterpart, this Court may look to federal law for guidance. See Dickenson v. Regent of Albuquerque, Ltd., 112 N.M. 362, 363, 815 P.2d 658, 659 (Ct.App.1991) (citing Benavidez v. Benavidez, 99 N.M. 535, 539, 660 P.2d 1017, 1021 (1983)). Under federal law, courts apply ordinary contract principles in determining what was intended in an offer of judgment and whether there was a valid offer and acceptance under Federal Rule of Civil Procedure 68. Guerrero v. Cummings, 70 F.3d 1111, 1113 (9th Cir.1995); Goodheart Clothing Co. v. Laura Goodman Enters., 962 F.2d 268, 272 (2d Cir.1992); Whitaker v. Associated Credit Servs. Inc., 946 F.2d 1222, 1226 (6th Cir.1991); Radecki v. Amoco Oil Co., 858 F.2d 397, 400 (8th Cir.1988); Johnson v. University College of the Univ. of Ala., 706 F.2d 1205, 1209 (11th Cir.1983). This case requires us to apply contract principles of offer and acceptance and, in particular, rules of mutual assent, to The Gap's offer of judgment.

¶2 Mutual Assent.

¶11 For an offer and acceptance to create a binding contract, there must be an objective manifestation of mutual assent by the parties to the material terms of the contract. Trujillo v. Glen Falls Ins. Co., 88 N.M. 279, 280-81, 540 P.2d 209, 210-11 (1975). Federal courts have applied this fundamental principle of contract law to offers and acceptances under Federal Rule of Civil Procedure 68. See, e.g., Whitaker, 946 F.2d at 1226; Radecki, 858 F.2d at 400; Johnson, 706 F.2d at 1209; see also Boorstein v. City of N.Y., 107 F.R.D. 31, 33-34 (S.D.N.Y.1985) (comparing offers of judgment to contract offers and discussing mutual assent requirement).

¶12 In the case before us, Pope and The Gap had different understandings of the meaning of the offer of judgment. Pope understood the offer...