The Offer of Judgment can be an effective tool in getting an opposing party to seriously consider the settlement of a case. Rule 68 of the Nevada Rules of Civil Procedure and Nevada Revised Statute §17.115 provides that any party may serve an Offer of Judgment to any other party at any time more than 10 days before trial begins. The purpose of an Offer of Judgment is to "save time and money for the court system, the parties, and the tax payer by rewarding the party who makes a reasonable offer and punishing the party who refuses to accept such an offer..." Albios v. Horizon Communities, 122 Nev. 409 (2006).
Once an Offer of Judgment is made, it stays open for 10 days and cannot be withdrawn by the offering party. If the Offer of Judgment is not accepted within 10 days, the offer is automatically withdrawn. The Parties may stipulate to keep the Offer of Judgment open for longer than 10 days, which may help in facilitating settlement negotiations.
However, if the party who rejects an Offer of Judgment fails to obtain a more favorable judgment than the Offer of Judgment, the refusing party may be liable for the fees and costs incurred by the offering party from the date the Offer of Judgment is served.
Example No. 1: A Defendant makes an Offer of Judgment to a Plaintiff in a negligence lawsuit to settle for $50,000.00. Plaintiff rejects the Offer and takes the matter to trial. At trial, Plaintiff obtains a judgment of $40,000.00. Since the judgment is not "more favorable" to the Plaintiff than the Offer of Judgment, then the Plaintiff could potentially be liable for Defendant's fees and costs incurred from the date the Offer of Judgment is made.
Example No. 2: A Defendant makes an Offer of Judgment to Plaintiff in a negligence case in the amount of $100,000.00. Plaintiff rejects the Offer and takes the matter to trial. At trial, Plaintiff obtains a judgment of $125,000.00, but Plaintiff is also found to be 30% contributorily negligent. Since Nevada is a modified comparative negligence jurisdiction, Plaintiff's judgment is reduced by 30% of $125,000.00, leaving $87,500.00. Since the resulting judgment is not "more favorable" to the Plaintiff than the amount of the Offer of Judgment, the Plaintiff may potentially be liable for Defendant's fees and costs incurred from the date the Offer of Judgment is served.
Example No. 3: A Plaintiff makes an Offer of Judgment to Defendant in a Negligence case in the amount of $50,000.00. Defendant rejects the Offer and takes the matter to trial. At trial, Plaintiff obtains a judgment in the amount of $75,000.00. Since Defendant failed to obtain a judgment that is "more favorable" than the previously served Offer of Judgment, the Defendant could potentially be liable for Plaintiff's fees and costs incurred from the date the Offer of Judgment was served.
Other Considerations in Making an Offer of Judgment
- The last valid Offer of Judgment in time extinguishes all prior offers of judgment. In other words, if multiple Offers of Judgment are made during the course of litigation to the same party, the last Offer of Judgment in time extinguishes all prior Offers and will serve as the Court's baseline.
- Unapportioned Offers of Judgment are typically invalid unless the damages are derivative of the plaintiff's injuries or there is a single common theory of liability claimed by all plaintiffs to whom the offer is made. NRS §17.115(9)(b).
- Consider whether you want to include or exclude costs and prejudgment interest from your Offer of Judgment. Unless specifically excluded, the Court will include pre-offer prejudgment interest along with the principal judgment amount when comparing the judgment obtained and an Offer of Judgment. McCrary v. Bianco, 122 Nev. 102, 109 (2006).
When considering serving an Offer of Judgment, it is therefore important to consider the opposing party's likelihood of success at trial, what the opposing party may reasonably settle for, and what you are reasonably willing to offer for an out of court settlement of your case. Offers of judgments remain a good strategy in motivating an opposing party to engage in settlement negotiations.
Merielle Enriquez is an associate with Kring & Chung, LLP's Las Vegas office. She can be contacted at (702) 260-9500 or menriquez@kringandchung.com.
