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Apodaca v. AAA Gas Co.3/11/2003
ree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer.
(Emphasis added.) AAA Gas made three offers of judgment. The first two were proffered while the case was pending in Valencia County on July 22, 1999, and January 19, 2000. The third offer was extended on March 30, 2000, after the Valencia County case was dismissed and Plaintiffs refiled their claims in Bernalillo County. AAA Gas requested an award of post-offer costs totaling $32,825.11. Although AAA Gas argued to the trial court that an award of costs under Rule 1-068 was mandatory, the court referred only to its discretionary authority to deny costs under Rule 1-054(D) and did not address the effect of the mandatory language of Rule 1-068 on its decision.
AAA Gas argues that the award of costs is mandatory whenever the Rule 1-068 offer exceeds the judgment, whether the judgment is for or against Plaintiffs. Plaintiffs respond that the Rule should be harmonized with Rule 1-054 which grants the trial court discretion to award costs to a prevailing party. We agree with Plaintiffs, but that is not where our inquiry begins.
The threshold question is whether Rule 1-068 applies where judgment is entered in favor of the defendant-offeror. Delta Air Lines, Inc. v. August, 450 U.S. 346, 350 (1981). Our Supreme Court in Dunleavy v. Miller, 116 N.M. 353, 355, 862 P.2d 1212, 1214 (1993) recognized three outcomes when an offer of judgment is refused under Rule 1-068: (1) a judgment in favor of plaintiff exceeds the offer, (2) plaintiff does not receive an award, and (3) a judgment in favor of plaintiff is less than the offer. In Dunleavy, however, the Court addressed only the third scenario-where plaintiff's judgment is less than the offer. Whether the Rule applies when a judgment is entered in favor of the defendant is a question of first impression. "The interpretation of a [rule] is an issue of law that is subject to de novo review." State v. Cleve, 1999-NMSC-017, 7, 127 N.M. 240, 980 P.2d 23 (internal quotation marks omitted).
"In construing Rule 1-068, which is identical to its federal counterpart, this Court may look to federal law for guidance." Pope v. The Gap, Inc., 1998-NMCA-103, 10, 125 N.M. 376, 961 P.2d 1283; see also Shelton v. Sloan, 1999-NMCA-048, 24, 127 N.M. 92, 977 P.2d 1012. The Supreme Court has held that under the plain language of Rule 1-068, the Rule does not apply where the judgment is entered against plaintiff-offeree and in favor of a defendant-offeror. Delta Air Lines, Inc., 450 U.S. at 351 (reading "judgment finally obtained by the offeree . . . not more favorable than the offer" to exclude situations where judgment is not obtained by the offeree) (internal quotation marks omitted). The Court went on to conclude that this reading was consistent with the Rule's purpose-to encourage settlements. Id. at 352. It was also consistent with Rule 1-054(D), which grants the court discretion to award costs to a prevailing defendant. If Rule 1-068 were mandatory in that situation, any offer by the defendant, no matter how small, would eliminate the trial court's discretion under Rule 1-054(D). Delta Air Lines, Inc., 450 U.S. at 352-53. A literal reading of Rule 1-068, the Court concluded, is evenhanded in its effect. It allows the trial judge to retain its Rule 1-054(D) discretion where a defendant prevails or where a plaintiff prevails and the judgment is greater than the offer; the Rule is mandatory only where the judgment for plaintiff is less than the offer. Id.
The Court's reasoning is consistent with our decisions that make Rule 1-068 mandatory where a judgment for a plaintiff is less than the offer. See, e.g., Dunleavy,
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