Lead Opinion
We must decide whether a plaintiff waives a statutory entitlement to seek attorney fees under the Truth in Lending Act (TILA), 15
Steven and Marianne Nusom appeal the district court’s order denying their request for attorney fees. The court held that the Nusoms waived any claim they might have had by accepting a Rule 68 offer of judgment for $15,000 plus costs since attorney fees are not recoverable as costs under TILA and ORICO. We disagree, because a Rule 68 offer for judgment in a specific sum together with costs, which is silent as to attorney fees, is ambiguous when the underlying statute does not make attorney fees a part of “costs.” As a waiver or limitation on attorney fees must be clear and unambiguous, we must reverse.
I
The Nusoms filed suit on August 25, 1995 in Oregon Circuit Court against The CIT Group/Sales Financing, Inc., the lender on their purchase of a mobile home and parcel of land, and others for problems arising out of the purchase.
Soon after CIT removed the action, it made an offer of judgment under Rule 68,
Pursuant to Fed R Civ P 68, the CIT Group/Sales Financing, Inc., (CIT) hereby offers to allow Judgment to be taken against CIT and in favor of Plaintiffs in the amount of $ 15,000.00, together with costs accrued to the date of this offer, as provided in Fed R Civ P 68.
On January 18, 1996, the Nusoms filed a proposed “Order For Final Judgment Under Fed.R.Civ.P. 54(b) Against the CIT Group/ Sales Financing, Inc.” The proposed order stated:
This is to certify that ... the undersigned hereby determines that there is no just reason for delay and expressly directs the entry of a final judgment in the amount of $ 15,000, together with costs and reasonable attorney fees accrued through the date of December 17, 1995, against ... CIT. (Emphasis added)
CIT objected to the proposed form of order because it directed entry of final judgment for costs and attorney fees, whereas its offer of judgment (accepted by the Nusoms) offered to settle for costs without reference to attorney fees. After considering the Nusoms’ response, the district court entered a Rule 54(b) order for final judgment that did not mention attorney fees:
This is to certify that ... the undersigned hereby determines that there is no just reason for delay and expressly directs the entry of a final judgment in the amount of $ 15,000, together with costs accrued through the date of December 17, 1995 against ... CIT.
The same day, the district court directed the Nusoms to file a motion for attorney fees pursuant to Local Rule 265. After they did, the district court denied the motion for fees on the ground that the Nusoms waived any claim they might have had when they accepted the offer of judgment limiting their recovery to the costs accrued. The Nusoms timely appealed.
The Nusoms argue that attorney fees are mandatory in a successful action to enforce both TILA and ORICO, and that the court should have awarded fees because entry of final judgment against CIT is a “successful action” under TILA. They submit that they did not waive attorney fees by accepting CIT’s Rule 68 offer, as the offer was silent on the subject. The district court got it wrong, the Nusoms suggest, by confusing the attorney fee provision in TILA (which does not define costs to include attorney fees) with statutes such as the Civil Rights Act, 42 U.S.C. § 1988 (which does), in the context of a Rule 68 offer to settle for a dollar amount with “costs.” Since TILA mandates the recovery of attorney fees in addition to costs, they conclude, CIT’s Rule 68 offer does not prevent that recovery.
CIT counters that because Rule 68 adopts the definition of costs in the underlying statute, and in the ease of TILA the term “costs” unambiguously excludes attorney fees, its offer in the language of Rule 68 likewise unambiguously excludes attorney fees. It contends that the court has no authority to modify its offer by adding attorney fees without its consent. In any event, CIT argues, none of the substantive issues in the case was litigated, so the Nusoms haven’t proved any wrongdoing and cannot be “successful” for purposes of their TILA claims or “prevailing parties” for purposes of ORICO. Finally, CIT urges, allowing the Nusoms attorney fees on top of the offer would frustrate the purposes of Rule 68; as CIT sees it, if the Nusoms had rejected the offer, their final recovery, including pre-offer attorney fees, would be compared to the $15,000 figure to determine whether or not to invoke Rule 68’s cost-shifting provisions.
We need not completely reinvent the wheel to resolve this appeal, for the Supreme Court has told us that Rule 68 incorporates the definition of costs under the relevant substantive statute. Marek v. Chesny,
We also have held that the “usual rules of contract construction” apply to a Rule 68 offer of judgment. Guerrero v. Cummings,
However, we have not previously considered whether a judgment for a sum plus costs, entered upon acceptance of a Rule 68 offer of judgment in an action where the underlying statute does not define costs to include attorney fees, excludes attorney fees as a matter of law. We conclude that, in this case, the judgment does not foreclose the Nusoms from seeking attorney fees because it does not clearly and unambiguously waive or limit them.
This decision is not without difficulty. We recognize that in general, defendants making a Rule 68 offer contemplate a lump-sum judgment that represents their total liability. Otherwise, as the Supreme Court pointed out in Marek, “they would understandably be reluctant to .make settlement offers.” Marek,
We are not persuaded by CIT’s argument that its offer of $ 15,000 plus costs necessarily excludes attorney fees because TILA treats attorney fees separately from costs. To us, this distinguishes the settlement that CIT’s offer was meant to stimulate, and the standard for comparison if the offer were rejected, from Marek. Cf. Haworth v. Nevada,
We do not think this is an unreasonable burden, for it is within a defendant’s power to make an offer to allow judgment to be taken against it “to the effect specified in the offer.” Fed.R.Civ.P. 68. The offer, once made, is non-negotiable; it is either accepted, in which case it is automatically entered by the clerk of court, or rejected, in which case it stands as the marker by which the plaintiffs results are ultimately measured. As such, defendants bear the brunt of uncertainty but easily may avoid it by making explicit that their offers do or do not permit plaintiffs to recover attorney fees.
Although we understand how the district court could have concluded otherwise, we cannot say that the judgment as offered, accepted, and entered clearly and unambiguously waived or limited attorney fees as it was silent on the subject and the underlying statute provides for an award of attorney fees separate from costs in successful actions. We must, therefore, reverse.
In doing so, however, we emphasize that the denial of the Nusoms’ motion for attorney fees on the ground of waiver is the only issue before us. We have no occasion to consider, and we make no comment one way or the other on, whether there was a meeting of the minds, or on what the intentions of the parties may have been in light of the pleading and negotiating history, or on the effect (if any) of the parties’ understanding of the law on the offer and acceptance or judgment. Neither party here requested an evidentiary hearing. Cf. Erdman,
Accordingly, we reverse and remand for the district court to consider the Nusoms’ fee request on the merits, and for such other proceedings as may be appropriate.
REVERSED and REMANDED.
Notes
. The Nusoms accepted a Rule 68 offer of judgment (for $ 25,000 plus costs and attorney’s fees) by Central Homes (the dealer); they reached a settlement with Fleetwood Homes of Oregon, Inc. (the mobile home manufacturer); and their claims against Dave Eby (the appraiser) were severed and remanded.
. Rule 68 provides that ”[a]t any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued." Fed.R.Civ.P. 68.
. TILA provides:
(a) [A]ny creditor who fails to comply with any requirement imposed under this part with respect to any person is liable to such person ...
(3) in the case of any successful action to enforce the foregoing liability or in any action in which a person is determined to have a right of rescission under section 1635 of this title, the costs of the action, together with a reasonable attorney’s fee as determined by the court.
15 U.S.C. § 1640(a) (emphasis added).
. Or.Rev.Stat. 166.725(14) provides:
The court may award reasonable attorney fees to the prevailing party in a civil action under this section.
. The Nusoms argue that they should be awarded attorney fees after (as well as before) CIT served its Rule 68 offer, which is an issue that we also leave to the district court on remand.
Concurrence Opinion
concurring:
The plaintiffs in this case have appealed only the district court’s denial of their post-judgment motion for attorneys’ fees. Thus, the only question before us is whether the plaintiffs waived the right to seek fees by accepting the defendants’ offer of judgment pursuant to Rule 68. I agree with the majority that we cannot answer this question in the affirmative because, in this circuit, any waiver or limitation of attorneys’ fees under Rule 68 must be clear and unambiguous. See Guerrero v. Cummings,
The defendants have not appealed from the judgment entered by the district court pursuant to Rule 68. On remand, I assume the defendants could move for relief from judgment on the ground that there was no meeting of the minds to support the Rule 68 agreement. See Radecki v. Amoco Oil Co.,
Concurrence Opinion
concurring:
I fully concur in Judge Rymer’s opinion for the court. I note only that I do not agree with Judge Goodwin’s concurrence and believe that all that remains for the district court to do is to determine the amount of attorney’s fees to be awarded plaintiffs. I very much doubt that the defendants can now have a second shot at avoiding those fees. I would think that the district court would be required to deny any motion they might seek to make.