Rule 68, SCRCP: Offers of Judgment

Commonly viewed as a cost-shifting tool for Defendants, Offers of Judgment can be valuable settlement tools for Plaintiffs as well.

            Under-utilized by both sides, the use of Rule 68, SCRCP, Offers of Judgment is nevertheless often seen only as a Defense tactic, providing them a cost-shifting tool as leverage to settle cases.  The filing of these offers, however, should not be dismissed by Plaintiff’s attorneys.  The filing of an official Offer of Judgment carries benefits for the Plaintiff and come with little downside.       

            Rule 68 of the South Carolina Rules of Civil Procedure reads:

(a) Offer of Judgment. Any party in a civil action . . . may file . . . a written offer of judgment signed by the offeror or his attorney, directed to the opposing party, offering to take judgment in the offeror’s favor, or to allow judgment to be taken against the offeror for a sum stated therein, or to the effect specified in the offer.

After service of the filed offer on the opposing party, the recipient then has twenty days to file a written acceptance of the offer.  If the offer is accepted, the Court immediately issues the judgment and the clerk enters the judgment as provided.  If the party fails to act within the time period allotted, then the offer is deemed rejected.  Importantly, an intervening counteroffer does NOT count as a rejection, and the receiving party can still accept the original offer as long as it is within the twenty-day period.[1]

            Why is this mechanism important? Well, first, if it results in a settlement then it’s worth is self-evident.  The case is over and your client who approved of the offer is presumptively happy with the result.  Conversely though, if the offer of judgment is rejected, the Rule states:

(b) Consequences of Non-Acceptance.  If an offer of judgment is not accepted and the offeror obtains a verdict or determination at least as favorable as the rejected offer, the offeror shall recover from the offeree: (1) any administrative, filing, or other court costs from the date of the offer until the entry of judgment; (2) if the offeror is a plaintiff, eight percent interest computed on the amount of the verdict or award from the date of the offer to the entry of judgment; or (3) if the offeror is a defendant, reduction from the judgment or award of eight percent interest [likewise computed].

While these costs and interest may not be huge amounts, an offer of judgment may still serve an important function.  Not addressed specifically in the Rule, but probably more important, is the way that an offer of judgment can set the goal posts for a “favorable” result for the purposes of addressing a later award of attorney’s fees for the prevailing party, if allowed in your case. If a plaintiff makes an early offer of judgment which is denied and later obtains a much larger verdict at trial, the defendant’s unreasonableness becomes quite demonstrative and the prevailing party clear.  This could also be valuable tool in a bad faith action.  All of this comes with little to no downside for the plaintiff making the offer.

            When making an offer of judgment, make sure that is not ambiguous (be sure to include language citing the rule) and make sure you are not committing these mistakes:

  • Not filing or serving the offer.
  • Not accounting for and specifying whether the offer covers or does not cover potential subrogated claims in the offer, e.g. medical bills.
  • Making one offer to multiple defendants.
  • Making one offer on behalf of multiple Plaintiffs.

            Conversely, since Offers of Judgment are most commonly utilized by defendants, be mindful of the expressed details when deciding to accept or reject a Rule 68 Offer of Judgment presented your client by a defendant.  Of particular import, one should consider whether or not the offer addresses attorneys’ fees if one of your claims permits this award. 

            In Johnson ex rel. S.J. v. Hyatt Hotels Corp, 2017 WL 4473469 (D. S.C. 2017), an assault case occurring at the Hyatt Place Hotel in North Charleston.  During litigation, the plaintiff accepted the defendant’s offer of judgment to settle the case for a “total sum of $150,000” and that the offer was “inclusive of any costs.”  Following entry of the settlement by the Court, plaintiff brought an action for attorney’s fees in the amount of $264,047.52.  Because Rule 68, SCRCP, deems a party accepting an offer of judgment to be “the prevailing party” and the Rule does not specifically address attorneys’ fees as part of “costs,” the terms of offer of judgment were construed against the drafting party and, according to application of Rule 68, SCRCP anyway, the plaintiff was not prohibited by the offer of judgment from pursuing an action for attorney’s fees.[2]

            The lesson here for either party drafting an offer of judgment – make sure you specifically account for attorneys’ fees and other potential tangential costs in your filed offer.  As Johnson as shows, as a plaintiff receiving a Rule 68 Offer of Judgment, keep an eye out for potential gaps in the opposing party’s drafted offer.

[1] If you are within 20 days of a trial, the clock runs a bit differently, so be sure to review Rule 68, SCRCP, closely.

[2] Ultimately, the Court did not award the fees in this case, but only because the statute awarding fees, SCUTPA, requires a finding that the party violated the Act as a condition to the award of attorneys’ fees.  Here, the acceptance of the settlement by the Court was deemed merely a “ministerial” act and not a factual finding of a statutory violation.

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