Opinion
CA NO. 01-3098 SECTION "L" (5)
July 24, 2002
ORDER REASONS
Before the Court is Plaintiff's motion for attorney's fees and costs and to reconsider (Doc. No. 20). For the following reasons, the motion is DENIED.
I. BACKGROUND
This case, originally filed on August 29, 2001, in the 24th Judicial District Court for the Parish of Jefferson, stems from a dispute over the terms of Plaintiff's lease agreement with Royal imports, Inc. ("Royal"). Plaintiff alleges that in September of 1998 he entered into a lease agreement with Royal for the 42-month lease of a 1998 Mitsubishi Montero Sport. Plaintiff claims that when his employer transferred him to Puerto Rico in September 2000, he contacted the assignor of his lease, Defendant Mitsubishi Motor Credit of America ("Mitsubishi"), pursuant to the lease agreement, to obtain Mitsubishi's consent to "garage the vehicle more than 30 days outside the United States." Mitsubishi allegedly denied this request, citing company policy. In November 2000, Mitsubishi allegedly notified Plaintiff, by letter, that his vehicle had been repossessed due to a default in the contract of lease and would be sold at private sale within the lease contract. $14,639.25.
Plaintiff filed suit in the 24th Judicial District Court for the Parish of Jefferson, asserting a wide variety of claims under state and federal law, including violations of Louisiana Civil Code articles 1953 through 1958, "the Uniform Commercial Code (UCC) as written in Louisiana," title 9, section 3318 of the Louisiana Revised Statutes, the Louisiana Consumer Protection Act, as well as the federal Consumer Leasing Act and Fair Debt Collection Practice Act. Plaintiff sought "actual damages, statutory damages, attorney fees and costs with compound interest . . . together with all other general and equitable relief as the law and the facts may warrant."
Defendants removed this suit to this court on October 12, 2001. In November of 2001, Plaintiff purported to resolve its claims against Royal, Mitsubishi, and MIC Property and Casualty, Royal's insurer, for $2,000 pursuant to a Rule 68 Offer of Judgment. This Offer of Judgment provided:
Defendant, Mitsubishi Motor Credit of America, Inc. (MMCA), offers to waive its counterclaim (in the amount of S5,669.04, along with judicial interest by contract and all allowable attorney fees, as well as costs of expenses) associated with this action against Plaintiff, Joseph Basha). In addition, Defendants MMCA, Royal Imports, Inc. d/b/a Royal Mitsubishi and MIC Property and Casualty Insurance Company offer to pay plaintiff $2,000.
On November 27, 2001, the Court entered judgment, pursuant to the order submitted by Plaintiff, adding that "[e]ach party [is] to bear its own costs." On April 18, 2002, Plaintiff submitted the pending motion for attorney's fees and costs, arguing that Plaintiff is entitled to an additional award of fees and costs, because Defendants did not "explicitly state that fee [sic] and cost were included" in the offer of judgment.
Additional claims are pending against First Credit Service Inc., d/b/a Account Receivable Technologies, Inc., the New Jersey-based company that allegedly attempted to collect Plaintiff's debt on behalf of Mitsubishi Motor Credit, and First Credit's insurer, Northland Insurance Company. On March 7, 2002, Plaintiff moved for entry of judgment against Account Receivable, again pursuant to a Rule 68 Offer of Judgment. The Court denied the motion for entry of judgment, citing concerns that the proposed judgment addressed only some of the claims, did not quantify damages, and left the issue of attorney's fees and costs open-ended. Plaintiff now claims that "the Court did not have the authority to do that which it did" and appears to request that the Court reconsider the denial.
II. LAW AND ANALYSIS
Plaintiff now moves for an award of approximately $22,000 in legal fees from Defendants Mitsubishi Motor Credit of America, Inc., Royal Imports and MIC Property and Casualty. In support of its motion, Plaintiff cites Hennessy v. Daniels Law Office, 270 F.3d 551, 554 (8th Cir. 2001), in which the Eighth Circuit Court of Appeals held that "[s]ince [the Defendanti drafted the offer, and the parties offered no extrinsic evidence with respect to the meaning of the offer, we construe the ambiguity in the contract against [the Defendant] and hold that [the Defendant] is liable for attorney's fees." Plaintiff also asks that the Court reconsider its addition to the judgment relative to costs (i.e. "each party is to bear its own costs"), because, according to Plaintiff, costs were not included in the offer and should be awarded separately.
In opposition, Defendants maintain that "a single offer was made in this case ., . . to settle plaintiff's lawsuit for a lump sum nuisance value of $2,000." Defendant cite several cases, including Broadcast Music, Inc. v. Dano's Restaurant Systems, Inc. 902 F. Supp. 224 (M.D. Fla. 1995) in which courts have upheld similar "lump sum offers" and denied subsequent fee requests. Defendants also argue that other extrinsic evidence suggests that Plaintiff's counsel was aware that acceptance of this offer would "conclude the case" and settle the matter "fully." Defendants emphasize the fact that Plaintiff's counsel actually prepared and submitted the judgment, with no mention of fees. Finally, Defendants argue that in light of the "nuisance" settlement, Plaintiff is not a "prevailing party" and is not entitled to attorney fees under the relevant statutes. In the event the Court finds the Plaintiff is entitled to fees, Defendants also dispute the $22,000 amount Plaintiff's counsel now seeks.
A. Rule 68 Offer of Judgment
Federal Rule of Civil Procedure 68 provides that "[a]t any time more than 10 days before the trial begins 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." See Fed.R.Civ.P. 68 (emphasis added). Under the rule, "[i]f 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." See Id. The clear purpose of the rule is to encourage settlement and avoid litigation. See Johnson v. Penrod Drilling Co., 803 F.2d 867, 869 (5th Cir. 1986).
In Marek v. Chesney, 473 U.S. 1, 6 (1985), the Supreme Court specifically held that Rule 68 does not "require that a defendant's offer itemize the respective amounts being tendered for settlement of the underlying substantive claim and for costs" but that "[a]s long as the offer does not implicitly or explicitly provide that the judgment not include costs, a timely offer will be valid." The Court further held that "absent congressional expressions to the contrary, where the underlying statute defines `costs' to include attorney's fees . . . such fees are to be included as costs for the purposes of Rule 68." Id. at 9. In this case, however, the statutes at issue do not "define costs to include attorney's fees" as the statute at issue in Marek, 42 U.S.C. § 1988, does. See Marek, 473 U.S. at 9 (explaining that under § 1988, "a prevailing party may be awarded attorney's fees "as part of the costs'"); see also Aynes v. Space Guard Prods., Inc., 201 F.R.D. 445, 449 (S.D. Ind. 2001) (noting that "in a Title VII action attorney's fees are expressly categorized as costs").
Courts that have grappled with ambiguous Rule 68 offers involving statutes that do not "define attorney's fees as part of costs" have arrived at conflicting results. In Nusom v. Comh Woodburn, Inc., 122 F.3d 830, 832 (9th Cir. 1997), the Ninth Circuit recognized that while, "in general, defendants making a Rule 68 offer contemplate a lump-sum judgment that represents their total liability," it is nevertheless "incumbent on the defendant making a Rule 68 offer to state clearly that attorney fees are included as part of the total sum . . . if the defendant wishes to avoid exposure to attorney fees in addition to the sum offered plus costs." See id. at 834; see also Minnick v. Dollar Fin. Group, Inc., No. Civ. A. 02-1291, 2002 WL 1023101, at *7 (E.D. Pa. May 20, 2002) (citing Nusom and finding Plaintiff may recover attorney's fees where offer of judgment is silent); Foster v. Kings Park Cent. Sch. Dist., 174 F.R.D. 19, 25 (E.D.N.Y. 1997) ("[I]f the [defendant] intended that its offer of judgment would operate as a bar to a subsequent application for attorney's fees, it should have expressly and clearly stated such intentions.").
The Seventh Circuit Court of Appeals, however, has expressly rejected the "magic words approach" suggested in Nusom, "in favor of an approach . . . that gives effect to an unambiguous offer even if it does not mention attorney's fees explicitly." See Nordby v. Anchor Hocking Packaging Co., 199 F.3d 390, 393 (7th Cir. 1999) (the Nordby court also warned that "[t]he prudent defendant, however, will mention them explicitly', in order to head off the type of appeal that we have been wrestling with here"); see also Blumel v. Mylander, 165 F.R.D. 113, 116 (M.D. Fla. 1996) (finding a valid lump sum offer of judgment and noting that "[a]warding plaintiff] attorney's fees and costs post-settlement would result in a complete windfall to his lawyer and subject [the defendant] to unforeseen liability"). The Eleventh Circuit has similarly held that under Marek, "costs" awarded under Rule 68 only include attorney's fees if the underlying statute "defines costs to include attorney's fees," if it does not, the district court may not subsequently award additional attorney's fees. See Arencibia v. Miami Shoes, Inc., 113 F.3d 1212, 1214 (11th Cir. 1997).
Courts generally agree that "principles of contract law are applied to test whether there has been a valid offer and acceptance under Rule 68." See Stewart v. Prof Computer Centers, Inc., 148 F.3d 937, 938 (8th Cir. 1998). To create a binding agreement, there must be a manifestation of mutual assent." See id. There can be no binding agreement if "the parties attach materially different meanings to their manifestations and . . . neither party knows or has reason to know the meaning attached by the other." See id. (quoting Restatement (Second) of Contracts § 20(l)(a)(1981)).
The Royal, Mitsubishi, and MIC Offer of Judgment
In this case, Defendants Royal, Mitsubishi, and MIC Property and Casualty collectively "offer[ed] to pay plaintiff $2,000." The evidence strongly suggests that the Defendants intended this figure to represent a "lump sum" offer, inclusive of costs and attorney fees. First, correspondence directed to Plaintiff's counsel dated November 7, 2001, indicates that Defendants agreed to "pay an additional $2,000 in exchange for a full settlement of this matter with prejudice against these entities and a defense and indemnification as to any remaining parties to this lawsuit." See Correspondence attached as Exhibit "A" to Royal's Memorandum in Opp. Additional correspondence, exchanged after Plaintiff's acceptance of the offer of judgment, also reflects Defendants understanding that this offer of judgment would "conclude this case as to our clients." See Correspondence attached as Exhibit "B." Second, Defendants propounded the offer of judgment in early November, 2001, less than one month after removal, three months after the suit was originally' filed in state court, and before any discovery was initiated. Finally, as Defendants point out, the judgment was prepared and submitted by Plaintiff's counsel, with "no mention of any right to attorney"s fees." See Royal's Memorandum in Opp., at 5.
In contrast, Plaintiff maintains that "it was his opinion that the offer of judgment . . . did not include attorney fees and costs since it was silent on those facts" because "usually the issue of attorney fees and cost are something that is handled separate and apart from the substantive law issues." See Affidavit, attached as Exhibit "A" to Plaintiff's Motion for Attorney' Fees. Plaintiff also asserts that "if it had been his thought that the offer of judgment of $2,000.00 included attorney fees that he would not have accepted it since it is entirely to [sic] low See id.
The Court finds that the offer of judgment in this case was not ambiguous and represented a valid, lump sum offer. "Rule 68 does not require a laundry list of the elements of relief included within an offer or a specific mention of attorney fees, and it runs counter to the purpose of Rule 68 to assume that forms of relief not mentioned are to be included within the sum offered." See Radecki v. Amoco Oil Co., 858 F.2d 397, 401 (8th Cir. 1988). Both the offer itself and the additional evidence submitted overwhelmingly indicate that all parties understood that this offer was to resolve the case fully as to these defendants. The Court recognizes that defendants "have an obligation to make [a Rule 68 offer] as clear and unambiguous as possible, " but finds in light of the circumstances in this case, the Defendants' unambiguous offer, as accepted by the Plaintiff and submitted to the Court, did contemplate and encompass costs and attorney fees.
The Court recognizes that Rule 68 offers must include "money or property. with costs then accrued." See Fed.R.Civ.P. 68. The Court finds that Defendants lump sum offer included costs, thus the Court's notation, "each party to bear its own costs" was unnecessary and redundant. See Marek, 473 U.S. at 6 ("[I]t is immaterial whether the offer recites that costs are included . . . or, for that matter, whether it refers to costs at all."); see also Webb, 147 F.3d at 620 (noting that "the district court has no discretion to modify or alter the parties' agreement").
Account Receivable's Offer of Judgment
Plaintiff also seeks reconsideration of the Court's denial of the Offer of Judgment propounded by Defendant Account Receivable Technology. This offer purported to "be in total settlement of any and all claims" but provided that "Plaintiff, Joseph Basha, has alleged that he has suffered "actual damages' . . . this offer of judgment envisions the attorneys for the parties agreeing upon reasonable compensation for Plaintiff's claimed "actual damages, ' and that said amount is added to this offer of judgment." See Motion for Entry of Rule 68 Judgment, at 5.
In general, "Rule 68 operates automatically" and "removes discretion from the clerk or trial court as to whether to enter judgment upon filing of the accepted offer." See Webb v. James, 147 F.3d 617, 621 (7th Cir. 1998); see also Mallory v. Eyrich, 922 F.2d 1273, 1279 (6th Cir. 1991) (noting that "Rule 68 also leaves no discretion to the district court to do anything but enter judgment once an offer has been accepted"). In this case, however, Account Receivable's offer of judgment purports to "settle all claims" but does not quantify damages. Although a defendant may leave costs and attorney fees for later resolution by the court, "[t]he offer must specify a definite sum or other relief for which judgment may be entered, which plaintiff can either accept or reject." See 12 Charles Alan Wright et al., Federal Practice and Procedure, ¶ 3002, at 92 (2d ed. 1997); see also Gavoni v. Dobbs House, Inc., 164 F.3d 1071, 1076 (7th Cir. 1999) ("There must . . . be a clear baseline from which plaintiffs may' evaluate the merits of their case relative to the value of the offer."); Arkla Energy Res. v. Roye Realty Developing, Inc., 9 F.3d 855, 867 (10th Cir. 1993) (noting that "the offeree must know what is being offered in order to be responsible for refusing the offer"); Tansey v. Transcon. W. Air, Inc., 97 F. Supp. 458, 459 (D.D.C. 1949) ("[D]efendant's offer of judgment does not specify a definite sum to be entered as judgment which plaintiff can either accept or reject and therefore the offer will not prevent consideration by the court of plaintiffs costs hereinafter incurred."). Because the parties in this case did not agree on a material term of settlement, i.e., the amount of actual damages, there was no "meeting of the minds" and rejection of the proposed judgment was appropriate.
See also the unreported decision of the United States Sixth Circuit Court of Appeals in Fultz v. Auto. Retail Concepts, Inc., 2001 WL 69210, at *3 (6th Cir. Jan. 16, 2001), in which the court held that "the district court was not compelled to enter Defendant's Offer of Judgment where the parties had not agreed upon the terms of the agreement."
III. CONCLUSION
For the foregoing reasons, Plaintiff's motion for attorney's fees is DENIED. Plaintiff's motion for reconsideration of the denial of the Motion for Entry of Judgment is DENIED.