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Fernandez v. Espanola Public School District8/8/2005
797 (1988) (not allowing fees as costs for two experts who did not testify but attended a hearing that was vacated). I write separately to express my concern that Section 38-6-4(B) provides an awkward fit for a plaintiff such as this who enters into a settlement agreement, particularly after being ordered by the district court to summarize the anticipated testimony of his expert witnesses. For policy reasons, I think our courts need a rule that provides trial judges with discretion to award costs even when parties do not engage in full-blown litigation.
Our rule for an offer of settlement, which was formerly called the offer of judgment rule, directs that a party shall be awarded costs if the party makes an offer of settlement that is not accepted and later obtains a more favorable judgment. See Rule 1-068(A) NMRA 2005 (as amended 2003). While a cost award is mandatory under the conditions specified in Rule 1-068(A), it is subject to Rule 1-054 NMRA 2005, which now expressly limits expert witness fees according to Section 38-6-4(B). See Rule 1-054(D)(2)(g) (as amended 2000). Thus, parties who rely on the offer of settlement rule may only recover expert witness fees as costs if the witnesses testify at trial or by deposition. Even though the purpose of awarding costs in Rule 1-068 is to provide additional incentive to settle, nothing in our rules allows parties to recover costs when they settle and avoid reaching more advanced stages of litigation.
While I understand that our courts view Section 38-6-4(B) as limiting the district court's discretion, I am concerned that this rigid approach in the context of settlement agreements may actually hinder the policy of reducing the burdensome cost of litigation. A party who has reasonably and necessarily incurred considerable expense in preparation for trial may choose not to accept an offer of settlement for the sole reason that the party has no chance to recover costs for expert witness fees, costs that might be prohibitive, short of going to trial.
I see no harm in a rule that allows more flexibility by allowing costs for expert witness fees to be awarded within the trial court's discretion for the work that went into reaching a compromise and avoiding litigation. Recognizing such discretion seems consistent with the legislative intent in Section 38-6-4 to allow additional compensation for expert witnesses beyond per diem and mileage expenses to include "a reasonable fee to compensate the witness for the time required in preparation or investigation prior to the giving of the witness's testimony." At present, that additional compensation is only allowed "for any witness who qualifies as an expert and who testifies in the cause in person or by deposition." Section 38-6-4(B). This rule, therefore, only contemplates awarding costs at advanced stages of litigation and does not account for settlement agreements.
By only allowing costs when a witness testifies by deposition or at trial, we may actually encourage litigation contrary to the intent of the Legislature and the policy of this Court. In Dunleavy, we observed that the district court should carefully scrutinize all costs submitted by the prevailing party "in the interest of `reducing insofar as possible the burdensome cost of litigation.'" 116 N.M. at 363, 862 P.2d at 1222. This same expression of policy should apply in settlement agreements. In my mind, allowing the district court discretion to award costs as part of a settlement is consistent with the policy of promoting offers of settlement, allowing liberal discovery, and discouraging litigation. "The district court's exercise of sound judicial discretion in taxing expenses as costs thus should be informed by cons
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