What are the Legal Aspects of Offers of Judgment in Nevada?

In Las Vegas accident and injury cases, there are two types of settlement offers. One is generally used before a lawsuit is commenced. These are just regular offers to settle your personal injury case and are simple offers, where you can accept, reject or submit a counter settlement offer. However, after a lawsuit has been filed, a regular offer of settlement can be transformed into a more formal settlement offer. These formal offers of settlement are called “Offers of Judgment”. 

Offers of Judgment must be submitted to the other side in writing and at least 10 days prior to trial. What makes an Offer of Judgment different from a regular offer, is the legal effect if the Offer of Judgment is rejected. There are legal penalties if Offer of Judgment is rejected and it turns out after a trial that it would have been a better financial decision to accept the Offer of Judgment. The trial court has discretion to award attorney’s fees and costs incurred by the party who submitted the Offer of Judgment, from the time the offer is made, through trial.

For example, let’s say an injured party submitted an Offer of Judgment for $10,000 to the at-fault party. However, the at-fault party rejects the offer and the case goes to trial. A jury determines that the injured party was entitled to $12,000. Since it would have be better to just accept the Offer of Judgment, there are legal penalties for the at-fault party failing to accept the Offer of Judgment. This law is in place, to encourage parties to settle, so that everyone could have avoided the time and expense of trial.

There are many laws governing these formal offers. The first of these laws is Nevada Revised Statute, (“NRS”) §17.115.  NRS §17.115, states in relevant part:

   NRS 17.115  Offer of judgment.
      1.  At any time more than 10 days before trial, any party may serve upon one or more other parties a written offer to allow judgment to be taken in accordance with the terms and conditions of the offer of judgment.
      2.  Except as otherwise provided in subsection 7, if, within 10 days after the date of service of an offer of judgment, the party to whom the offer was made serves written notice that the offer is accepted, the party who made the offer or the party who accepted the offer may file the offer, the notice of acceptance and proof of service with the clerk. ..Upon receipt by the clerk:
      (a) The clerk shall enter judgment according to the terms of the offer unless:
             (1) A party who is required to pay the amount of the offer requests dismissal of the claim instead of entry of the judgment; and
             (2) The party pays the amount of the offer within a reasonable time after the offer is accepted.
      (b) Regardless of whether a judgment or dismissal is entered pursuant to paragraph (a), the court shall award costs in accordance with NRS 18.110 to each party who is entitled to be paid under the terms of the offer, unless the terms of the offer preclude a separate award of costs.
 Any judgment entered pursuant to this section shall be deemed a compromise settlement.
      3.  If the offer of judgment is not accepted pursuant to subsection 2 within 10 days after the date of service, the offer shall be deemed rejected by the party to whom it was made and withdrawn by the party who made it. The rejection of an offer does not preclude any party from making another offer pursuant to this section. Evidence of a rejected offer is not admissible in any proceeding other than a proceeding to determine costs and fees.
      4.  Except as otherwise provided in this section, if a party who rejects an offer of judgment fails to obtain a more favorable judgment, the court:
               . . . .
      (d) May order the party to pay to the party who made the offer any or all of the following:
             (1) A reasonable sum to cover any costs incurred by the party who made the offer for each expert witness whose services were reasonably necessary to prepare for and conduct the trial of the case.
             (2) Any applicable interest on the judgment for the period from the date of service of the offer to the date of entry of the judgment.
             (3) Reasonable attorney’s fees incurred by the party who made the offer for the period from the date of service of the offer to the date of entry of the judgment. If the attorney of the party who made the offer is collecting a contingent fee, the amount of any attorney’s fees awarded to the party pursuant to this sub-paragraph must be deducted from that contingent fee.

A similar rule, this time in Nevada Rules of Civil Procedure (“NRCP”), is laid in Rule 68.  NRCP, Rule 68, states in part:
RULE 68.  OFFERS OF JUDGMENT
      (a) The Offer.  At any time more than 10 days before trial, any party may serve an offer in writing to allow judgment to be taken in accordance with its terms and conditions.
                ….
 
      (e) Failure to Accept Offer. If the offer is not accepted within 10 days after service, it shall be considered rejected by the offeree and deemed withdrawn by the offeror. Evidence of the offer is not admissible except in a proceeding to determine costs and fees. The fact that an offer is made but not accepted does not preclude a subsequent offer. With offers to multiple offerees, each offeree may serve a separate acceptance of the apportioned offer, but if the offer is not accepted by all offerees, the action shall proceed as to all. Any offeree who fails to accept the offer may be subject to the penalties of this rule.

      (f) Penalties for Rejection of Offer. If the offeree rejects an offer and fails to obtain a more favorable judgment,

             (1) the offeree cannot recover any costs or attorney’s fees and shall not recover interest for the period after the service of the offer and before the judgment; and

             (2) the offeree shall pay the offeror’s post-offer costs, applicable interest on the judgment from the time of the offer to the time of entry of the judgment and reasonable attorney’s fees, if any be allowed, actually incurred by the offeror from the time of the offer. If the offeror’s attorney is collecting a contingent fee, the amount of any attorney’s fees awarded to the party for whom the offer is made must be deducted from that contingent fee.

      (g) How Costs Are Considered. To invoke the penalties of this rule, the court must determine if the offeree failed to obtain a more favorable judgment. Where the offer provided that costs would be added by the court, the court must compare the amount of the offer with the principal amount of the judgment, without inclusion of costs. Where a defendant made an offer in a set amount which precluded a separate award of costs, the court must compare the amount of the offer together with the offeree’s pre-offer taxable costs with the principal amount of the judgment.

                         . . . .

The Nevada Supreme Court has held that when determining the amount of attorney’s fees that should be awarded pursuant to NRCP 68:
The trial court must carefully evaluate the following four factors: (1) whether the plaintiff’s claim was brought in good faith; (2) whether the defendant’s offer of judgment was reasonable and in good faith in both its timing and amount; (3) whether the plaintiff’s decision to reject the offer and proceed to trial was grossly unreasonable or in bad faith; and (4) whether the fees sought by the offeror are reasonable and justified in amount.  See Beattie v. Thomas, 99 Nev. 579, 588-89, 668 P.2d 268 (1983).
Based upon this Nevada case, whether attorney’s fees are actually awarded, is determined by the trial judge. The judge will determine if the amount and facts surrounding the Offer of Judgment  were reasonable.

It is also important to note that based upon the law, in personal injury contingency cases, the amount of attorney’s fees recovered from the other party, is deducted from any contingent fee. This leaves more money for the injury party, since their attorney’s fees are being paid, in part, by the other side.

Next time, we will discuss how a jury does not get to see certain evidence in Las Vegas accident cases.