Centric-Jones Co. v. Hufnagel

Decision Date29 March 1993
Docket NumberNo. 92SA407,CENTRIC-JONES,92SA407
PartiesCOMPANY, a Colorado limited partnership; Nucon Construction Corp., a Colorado corporation; and J.A. Jones Construction Company, Petitioners, v. Judge Lynne M. HUFNAGEL, District Court Judge, and The Denver District Court, Respondents.
CourtColorado Supreme Court

Durant D. Davidson, Cogswell and Davidson, Denver, for petitioners.

Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Maurice Knaizer, Dianne E. Eret, Asst. Attys. Gen., General Legal Services Section, Denver, for respondents.

Alan E. Epstein, Eugene R. Commander, Scott T. Erickson, Hall & Evans, Denver, for intervenor Parsons De Leuw, Inc.

Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Patricia S. Bangert, Deputy Atty. Gen., Jennifer L. Gimbel, First Asst. Atty. Gen., Lynn B. Obernyer, Asst. Atty. Gen., Natural Resources Section, Denver, for intervenor Colorado Dept. of Transp.

Justice MULLARKEY delivered the Opinion of the Court.

The petitioners, Centric-Jones Company and its general partners, Nucon Construction Corporation and J.A. Jones Construction Company, have brought an original proceeding before this court pursuant to C.A.R. 21. For purposes of this opinion, we will refer to all three petitioners as Centric. Centric asks us to compel the respondent trial court to order the clerk to enter judgment for it pursuant to its acceptance of an offer of judgment under section 13-17-202(3), 6A C.R.S. (1992 Supp.). Of concern in this case is whether the trial court was correct in finding that an entry of summary judgment in favor of one of the two defendants participating in a joint offer of judgment voids the offer. We issued a rule to show cause and now make the rule absolute, finding that the trial court erred as a matter of law.

I.

In 1987, the Colorado Department of Highways, since renamed the Department of Transportation (CDOT), undertook a project involving the modification and reconstruction of certain ramps on the I-25/6th Avenue Interchange. CDOT hired a private engineering firm, De Leuw Cather & Co., since renamed Parsons De Leuw, Inc. (De Leuw), to prepare the design, as well as the plans and specifications, and review the shop drawings for this project. Centric was hired by CDOT as the general contractor to implement the plans as set forth by De Leuw.

Errors committed by De Leuw in the design and in reviewing shop drawings caused the project to fall behind schedule. As a result, in 1989, Fought & Company, Inc., Centric's subcontractor for the manufacture of the steel components needed in the project, brought suit and obtained a judgment against Centric for the damages it incurred due to the delay.

Centric then filed an independent action in 1991 against CDOT on grounds that, because of CDOT's wrongful conduct, Centric suffered damages in terms of additional costs incurred from the delay and the Fought judgment. The complaint was amended in March 1992 to include De Leuw as a defendant. In June, De Leuw filed a motion for summary judgment on the grounds that Centric's claims against it were barred by the statute of limitations. An offer of judgment was made jointly by De Leuw and CDOT on September 30, pursuant to section 13-17-202(3), 6A C.R.S. (1992 Supp.) which states in part:

At any time more than ten days before the trial begins, a party defending against a claim may serve upon the adverse party an offer of settlement to the effect specified in his offer, with costs then accrued. If within ten days after the service of the offer, the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance, together with proof of service thereof, and thereupon the clerk shall enter judgment.... 1

The offer of judgment stated:

1. CDOT and De Leuw hereby make a joint offer of settlement, including any interest and costs to which plaintiff may be entitled as a matter of law, in the total amount of Seven Hundred Fifty Thousand and No/100 Dollars ($750,000) which shall be deemed withdrawn if this offer is not accepted by plaintiffs within ten (10) days from the date hereof.

2. This offer is intended to apply to the total amount of any judgment obtained by plaintiffs against one or both of the defendants, regardless of the claims and theory(ies) asserted by plaintiffs against the defendants, and regardless of the proration of liability between the defendants with respect thereto.

Centric orally gave a counteroffer for $1.4 million, which was rejected.

On October 8, the trial court granted the motion for summary judgment in favor of De Leuw. CDOT and De Leuw immediately attempted to withdraw the offer of judgment by a telephone call on that day and by formal letter on October 9. Knowing of the summary judgment, Centric accepted the offer of judgment despite De Leuw's and CDOT's attempted withdrawal. Centric filed the necessary documents with the District Court on October 9. A motion for an order directing entry of judgment was filed by Centric, but was denied by the trial court in an oral ruling. Centric then brought an original proceeding before this court.

The facts of this case raise two interrelated issues. First is the general question whether a defendant which has made an offer of judgment pursuant to the statute may withdraw that offer within ten days of making the offer. Second is the specific question whether an offer of judgment automatically is revoked if, within the ten-day period, the trial court enters summary judgment in favor of one of the two defendants which made a joint offer of judgment pursuant to the statute. In this case, the trial court held that the defendants could not revoke the offer within the ten-day period but that entry of summary judgment for one defendant made the offer "ineffectual for all purposes." We agree that the offer was irrevocable during the ten-day period but reject the trial court's conclusion that its entry of summary judgment voided the offer.

II.

We first address a preliminary matter of jurisdiction. The respondent trial court contends that the exercise of our jurisdiction under C.A.R. 21 is inappropriate since Centric could appeal the summary judgment order subsequent to trial. Both CDOT and Centric argue in favor of this court exercising its original jurisdiction and making the rule absolute. CDOT now wants the offer of judgment enforced and contends that it cannot settle unless De Leuw is bound by the joint offer of judgment. Both CDOT and Centric argue that it would be a waste of judicial resources to force them to go to trial.

Whether to take jurisdiction over an original proceeding is entirely within this court's discretionary authority. See Halaby, McCrea & Cross v. Hoffman, 831 P.2d 902, 905 (Colo.1992) (citing White v. District Ct., 695 P.2d 1133, 1135 (Colo.1984)). An original proceeding is not a substitute for an appeal and in this case there are important reasons for exercising our original jurisdiction. Judicial economy favors the resolution of this matter on an original proceeding because, if the rule is made absolute, no trial is necessary. Further, the trial court's ruling raises substantial doubt as to the proper implementation of the statute authorizing offers of judgment. Since public policy favors the early resolution of disputes in the most expeditious and inexpensive method possible, it is appropriate to review this case promptly and to provide suitable guidance to the trial courts and the bar. Accordingly, we decline to dismiss our order to show cause.

III.
A.

Having found the exercise of our jurisdiction to be appropriate under C.A.R. 21, we now turn to the question of the revocability of an offer of judgment made pursuant to the statute. The parties to this action are in agreement that, generally, such an offer of judgment is not revocable within the ten-day period. We look for guidance to jurisdictions having similar statutes or rules in order to assess the correctness of the parties' position.

The general weight of precedents, as the parties have recognized, is in consensus that offers of judgment are irrevocable. 2 See 12 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 3004 (1973) (and cases cited therein); 7 Part 2 James W. Moore, Moore's Federal Practice p 68.05 (Rel. 89-2/91) (and cases cited therein). See also, e.g., Mallory v. Eyrich, 922 F.2d 1273 (6th Cir.1991); Greenwood v. Stevenson, 88 F.R.D. 225 (D.R.I.1980); Rules v. Sturn, 661 P.2d 615 (Alaska 1983); Smith v. Kentucky State Fair Bd., 816 S.W.2d 911 (Ky.App.1991).

We find this approach to be well-established and persuasive. Although this is the first time we have addressed this issue, prior precedent of the court of appeals has adopted the general rule. The court of appeals found that an offer of judgment, although rejected by the offeree the day after the offer was made, remains open for the entire ten-day statutory period. Whitney v. Anderson, 784 P.2d 830 (Colo.App.) cert. denied (1989). This interpretation of the statute regarding the ten-day period is convincing to us. See also 5 Robert M. Hardaway & Sheila K. Hyatt, Colorado Civil Rules Annotated § 68.1 (2d ed. 1985) (under former C.R.C.P. 68, "the offeror has no power to withdraw his offer, once made, and ... the offeree has 10 days after the offer is served upon him in which to accept, and the offer can be deemed to be withdrawn only after there has been a failure to accept it") (citing Wright & Miller, Federal Practice and Procedure § 3004, but noting that the opposite result may be reached under contract principles).

De Leuw acknowledges that offers of judgment are generally irrevocable, but argues that there are exceptions to the rule of irrevocability. It claims that, under contract principles, Centric's counteroffer operated as a rejection of the offer...

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