Civil Procedure—Offer of Judgment

Cuellar v. Vettorel, 693 Ariz. Adv. Rep. 32 (App. Div. II, August 18, 2014) (J. Kelly)

OFFER OF JUDGMENT CONTINGENT UPON SATISFACTION OF LIENS DOES NOT REQUIRE COMPUTATION OF LIEN AMOUNTS AT TIME OF OFFER TO DETERMINE IF FAILURE TO ACCEPT THE OFFER SHOULD RESULT IN SANCTIONS

Plaintiff sued for injuries in an auto accident. Defendant made a $10,000 offer of judgment “contingent on the satisfaction of all liens which attach by operation of law to the proceeds of this suit and for which [defendant] could be held liable.” The offer was not accepted. The jury returned a verdict of $41,300 apportioning 90% fault to the plaintiff thus reducing his award to $5,310.90 including $1,180.90 in costs. Plaintiff argued that his medical liens rendered the offer of judgment far less than the amount of the final judgment.  The trial court rejected this argument and awarded defendant $25,631.06 in sanctions to include double taxable costs and expert witness fees incurred after the offer was made. The Arizona Court of Appeals affirmed.   The court found that Rule 68 requires a court to compare the offer, comprised of a “specifically stated sum” that includes “all damages, taxable court costs, interest, and attorneys' fees, if any, sought in the case to the judgment finally obtained.” The rule does not provide for the subtraction of medical liens as part of this calculation and does not exclude the need to include taxable costs. The analysis must be an “apples to apples” comparison. Here to make the calculation as plaintiff argues would require a comparison of the offer of judgment less costs and the medical lien, with the judgment following trial, less costs and fees, without consideration of the medical liens. “A ‘judgment finally obtained' means ‘the sum ultimately obtained in a particular case,' and while it may include costs, interest, or attorney fees, it does not encompass any obligations a party may owe that were not litigated in the action.”