Rule v. Tobin

• Decision Date: 19 June 1998
• Docket Number: No. 97-316.,97-316.
• Citation: 719 A.2d 869
• Parties: William D. and Beverly G. RULE and Danielle Swain v. Gary G. TOBIN and City of Rutland.
• Court: Vermont Supreme Court

719 A.2d 869

William D. and Beverly G. RULE and Danielle Swain v. Gary G. TOBIN and City of Rutland.

No. 97-316.

Supreme Court of Vermont.

June 19, 1998.

Motion for Reargument Denied July 27, 1998.

Alicia L. Aiken and Herbert G. Ogden, Jr. of Liccardi, Crawford & Ogden, P.C., Rutland, for Plaintiffs-Appellants.

Shannon A. Bertrand of Reiber, Kenlan, Schwiebert, Hall & Facey, P.C., Rutland, for Defendants-Appellees.

Before AMESTOY, C.J., and DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ.

DOOLEY, Justice.

Plaintiffs, William and Beverly Rule and Danielle Swain, brought a civil rights action under 42 U.S.C. § 1983 against a Rutland police officer, Gary Tobin, and the City of Rutland alleging that Tobin unlawfully entered plaintiffs' apartment and unlawfully arrested Beverly Rule, using excessive force. A Rutland Superior Court jury returned a verdict for defendants, and plaintiffs appeal on a number of grounds, including that the trial court erred in failing to enforce a settlement agreement. We agree that the parties entered into a binding settlement agreement and reverse for entry of judgment consistent with that agreement.

This case was tried twice. On April 10, 1997, between the first and second trials, defendants' attorney sent plaintiffs an offer of judgment which read as follows:

Now comes defendants . . . and in accordance with the provisions of V.R.C.P. 68, and without prejudice to the rights of the defendant to proceed with the defense and its general denial of liability as envisioned by the rules, makes the following offer of judgment:

The defendant offers to allow the plaintiff to take judgment against it in the amount and to the extent of Four Thousand and no/100 ($4,000.00), having thoroughly reviewed the liability and damages aspect of this case.

On April 15, 1997, plaintiffs' attorney answered, purporting to accept the offer of judgment, as follows:

Assuming the defendants' 10 April Offer of Judgment does not include costs and attorney's fees pursuant to 42 U.S.C. § 1988 or any other entitlement, the plaintiffs accept the defendants' $4,000 offer.

The plaintiffs understand that attorney's fees and costs will be determined in a later hearing pursuant to V.R.C.P. 54(d).

Asserting that they intended to include attorney's fees and costs in the offer, defendants objected to plaintiffs' answer and claimed that the offer had not been accepted.

The court apparently agreed with defendants' position. Over plaintiffs' objection, the court ordered the parties to start over with a new offer and acceptance, if appropriate. It directed that the new offer explicitly cover "everything, including all attorney's fees." Thereafter, defendants submitted an offer of judgment of $7,000, including "all claims for damages, costs, attorney's fees and every other potential claim." Plaintiffs rejected this offer.

On appeal, plaintiffs argue that (1) defendants' offer cannot be interpreted to include attorney's fees, (2) plaintiffs accepted defendants' offer, and (3) the court had no discretion to set aside the resulting agreement. Defendants respond that their offer must be interpreted to include costs and attorney's fees or, alternatively, it was ambiguous and the court had the discretion to rescind it because there was no meeting of the minds. We agree with plaintiffs' position.

The offer of judgment procedure which defendants invoked by their offer is authorized and governed by Vermont Rule of Civil Procedure 68, which provides in pertinent part:

At any time more than 10 days before the trial begins or within such shorter time as the court may approve, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued. If within 10 days after the service of the offer or within such shorter time as the court may order 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.

Refusal of an offer of judgment may have adverse consequences for the plaintiff depending upon the ultimate result of the case. "If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer." Id.

Except for an irrelevant variation, the rule is identical to Federal Rule of Civil Procedure 68. We have applied this rule on only one occasion, and that precedent is not helpful to the question before us. Because our rule is identical to the federal rule, we look to the "Federal cases interpreting the Federal Rules [as] . . . an authoritative source for the interpretation" of our rule. Reporter's Notes to V.R.C.P. 1. It is particularly appropriate to look to federal law in this case because we are defining the interrelationship between Rule 68 and the attorney's fee provision of the federal Civil Rights Act.

We take the component questions in the order plaintiffs have presented them, looking first at defendants' offer. Our starting point is Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985), the definitive federal case on the interrelationship between Rule 68 and the Civil Rights Attorney's Fees Awards Act, 42 U.S.C. § 1988. In Marek, defendant made an offer of judgment, which was refused, and plaintiff obtained a favorable jury verdict. The issue was whether the offer was greater than the verdict, and, if so, whether plaintiff would lose the right to recover attorney's fees because of the effect of Rule 68. The issue required the Supreme Court to determine whether civil rights attorney's fees were "costs" under Rule 68 and, if so, whether defendants' offer included such fees.

The Supreme Court held that attorney's fees recoverable under 42 U.S.C. § 1988 are "costs" as that term is used in Rule 68.

[T]he most reasonable inference is that the term "costs" in Rule 68 was intended to refer to all costs properly awardable under the relevant substantive statute or other authority.... [A]bsent congressional expressions to the contrary, where the underlying statute defines "costs" to include attorney's fees, we are satisfied such fees are to be included as costs for purposes of Rule 68.

Id. at 9, 105 S.Ct. 3012. 42 U.S.C. § 1988 specifically provides that attorney's fees are awarded "as part of the costs." Thus, civil rights attorney's fees are costs under Rule 68. See V.R.C.P. 68.

The Court specified how Rule 68 deals with costs:

If an offer recites that costs are included or specifies an amount for costs, and the plaintiff accepts the offer, the judgment will necessarily include costs; if the offer does not state that costs are included and an amount for costs is not specified, the court will be obliged by the terms of the Rule to include in its judgment an additional amount which in its discretion it determines to be sufficient to cover the costs.

Id. at 6, 105 S.Ct. 3012 (internal citation omitted). Marek clearly states the options available to a civil rights act defendant in making an offer of judgment under Rule 68:(1) the defendant may make a lump sum offer, explicitly covering all costs, including attorney's fees; or (2) the defendant may make an offer without mentioning costs, thereby leaving them to court determination, and plaintiff will be able to recover costs in addition to the judgment amount.

The leading case on construing offers of judgment in civil rights cases after Marek is Erdman v. Cochise Cty., 926 F.2d 877 (9th Cir.1991). The court reinforced the direction of Marek for two main reasons: (1) "a settlement agreement is analyzed in the same manner as any contract, i.e., any ambiguities are construed against the drafter," id. at 880; and (2) "any waiver or limitation of attorney fees in settlements of § 1983 cases must be clear and unambiguous." Id. Other courts have also emphasized that offers of judgment put particular pressure on plaintiffs because they cannot be freely rejected without consequences; and, therefore, plaintiffs should not be put in the position where ambiguities in the offer might be construed against them. See Chambers v. Manning, 169 F.R.D. 5, 8 (D.Conn.1996); Said v. Virginia Com. Univ./Med. College, 130 F.R.D. 60, 63 (E.D.Va. 1990).

Marek and its progeny hold that failure to explicitly deal with costs, and particularly attorney's fees, in an offer of judgment means that the plaintiff is free to accept the offer and seek attorney's fees and other costs in addition to the amount specified in the offer. See Chambers v. Manning, 169 F.R.D. at 8; Webb v. James, 172 F.R.D. 311, 314 (N.D.Ill.1997); Swan v. Daniels, 917 F.Supp. 292, 298 (D.Del.1995); Sas v. Trintex, 709 F.Supp. 455, 458 (S.D.N.Y.1989); Rohrer v. Slatile Roofing & Sheet Metal Co., 655 F.Supp. 736, 738 (N.D.Ind.1987); LaPerriere v. Shrum, 721 P.2d 630, 635 (Alaska 1986). Defendants' offer in this case was silent on costs and attorney's fees. Under Marek, we must interpret the offer as allowing plaintiffs to obtain costs and attorney's fees in addition to the judgment amount specified in the offer.

We must next determine whether plaintiffs accepted defendants' offer. In general, we turn to contract law to determine whether there has been a valid offer and acceptance. See Radecki v. Amoco Oil Co., 858 F.2d 397, 399 (8th Cir.1988). Under contract law, an acceptance of an offer must be unconditional. See Benya v. Stevens & Thompson Paper Co., 143 Vt. 521, 525, 468 A.2d 929, 931 (1983). It must "substantially comply with the terms of the offer" because "[a]n acceptance that modifies or includes new terms is not an acceptance of the original offer; it is a counteroffer . . . ." Id.

Defendants argue that plaintiffs' purported acceptance of the offer of judgment was invalid because it was conditional and varied from the terms of the...