Ronald J. Radecki and Radecki's Service, Inc., a Minnesota Corporation v. Amoco Oil Company, a Maryland Corporation
858 F.2d 397
8th Cir.
1988
Check Treatment

*1 397 accepted apparently posi- in- Court has requires appropriate Dakota South on re- present Supreme rejected, on value discount of the and struction tion Court has 765, Eback, law, 291 quest, v. N.W.2d logic Watkins as a matter state the Court’s (S.D.1980), given, as the instruction 767 that both income tax deduction and a appellant’s well as the exclusion rate on the discount based “safest” invest- bonds, corporate Triple A evidence together. ments need not tied be legislative judi- its and By meets this test. foregoing reasons, Because of the we silence, at Dakota this time cial South affirm lower court decision. computation of the dis- to leave the wishes of the trial rate to the discretion count The court in this instance did

court. following rea-

abuse that discretion

soning of Pfeifer. argues trial

Secondly, Theis that the jury by failing to instruct the

judge erred income from the estimated

to deduct tax Under South Dako stream of lost income. Ronald J. RADECKI Radecki’s liability is law, “income a matter ta tax Service, Inc., a Minnesota damages in that foreign to award corporation, Appellees, pertinent bearing issue on the is not a of income tax thereof. An amount v. prospec due on one’s which become COMPANY, Maryland a AMOCO OIL earnings, example, conjectu tive too corporation, Appellant. fixing damages.” ral to be considered 534, (S.D. No. 87-5253. Prouty, v. 321 N.W.2d Dehn 1982) (Chief dissenting in Justice Wollman Appeals, United States Court of part, stating regarding instruction Eighth Circuit. consequences tax should have been income clear, given). The law is there is 10, Submitted Feb. error. Sept. Decided posi- appellant suggests The that such a a tion is inconsistent with statement that:

Pfeifer under & R. Western [S]ince Norfolk Liepelt, v. 62 LEd2d

Co. (1980), SCt stream lost income should estimated in after- terms, the rate should also

tax discount

represent the after-tax rate of return to injured worker.

Pfeifer, (footnote omitted).

L.Ed.2d

Nevertheless, in and in the Dehn decision Mi- Armstrong more recent case of v. (S.D.1982),

nor, N.W.2d where Supreme South Dakota

unanimous Dehn, Supreme

followed the South Dakota fairly expected money from only the evidence to be and not the from reasonably sents real cost person charges hedge safe which a cost as a investments additional the lender Cadwell, ordinary prudence, particular fi- but without against inflation." Kleeman skill, (citations experience could make in (Minn.App.1987) nancial N.W.2d omitted). Ahrendsen, locality.” Iowa Von Iowa discount Tersch has found jury found N.W.2d to be used is the one "rate *2 F.Supp. 1393. See also 643 Reveal, Minn., Minneapolis,

Ernest for appellant. Minn.,

Wayne Hergott, Minneapolis, A. appellees. BOWMAN, Judge, Before Circuit FAIRCHILD,* Judge, Senior Circuit MAGILL, Judge. Circuit BOWMAN, Judge. Circuit (Amoco) Company appeals Amoco Oil from a District Court favor of appellees, Ronald J. Radecki and Radecki’s Service, (Radecki). Inc. Amoco contends that the District erred enter- both ing judgment pursuant for Radecki Amoco’s Fed.R.Civ.P. 68 offer of by awarding attorney agree fees. We and reverse.

I. brought present against Radecki suit April Invoking Amoco on Marketing Petroleum Practices Act (PMPA), seq., 15 U.S.C. 2801 et sought compel Amoco to renew the Ra- agreement decki franchise without includ- provision Amoco that would wanted converting have called for the “full-ser- or, “pumper,” vice” station to a alternative- compel ly, to Amoco to sell the station to Radecki. 1986, shortly

In the fall of the suit before trial, go was scheduled to * FAIRCHILD, Circuit, sitting by designation. The HONORABLE THOMAS E. enth Judge Senior United States Circuit' for the Sev- then, before, gott if not negotiations. Ra- understood settlement conducted Wayne Hergott represented by the offer wanted decki was Flaherty; Amo- Patrick and his co-counsel the table inclusive his by Dale Larson and represented co was ten-day fees. As the end of the McConnell, along Rita with co-counsel period accepting approached, *3 attorney Maurice in-house Glover. Amoco simultaneously “Accept- filed an Radecki confer- At of the last settlement the end Judgment” (purporting ance of to ence, close to parties were settlement. the offer) the November and a motion for $600,000plus offering non-cash Amoco was expert attorney and witness fees. case, Ra- the and settle considerations The District Court determined that $675,000 demanding plus the decki was properly “Amoco could not or withdraw parties The un- considerations. non-cash 18,” clarify its offer of November held that de- the offered and derstood that amounts purported acceptance the of- Radecki’s of poten- all of Amoco’s manded were cover effective, $525,- fer found was and that the liability including any for costs liability, tial attorney offered not 000 sum did subsume negotiations The ended attorney and fees. 25, 1987, February on the Dis- fees. reaching a settlement. without the judgment for trict Court ordered entered later, days A on few “in the of includ- amount of on a formal offer served Radecki Amoco and, pursuant ing costs now accrued” Rule 68 of the Fed. judgment pursuant to PMPA, 2805(d)(1)(C), the 15 U.S.C. § The offer stated: “PLEASE R.Civ.P.1 $229,887.29 awarded Radecki an additional that, pursuant to Rule TAKE NOTICE in attorney subsequent fees. Amoco’s mo- Procedure, Federal Rules of Civil denied, in an tions were and order dated defendant, Company, hereby of- Amoco Oil May the District Court confirmed taken to allow fers [to] February its 1987 order. Amoco $525,000.00, against in the of alia, appeal contending, brought this inter Ap- including accrued.” costs now Joint held that the District Court should not have pendix (App.) day, The next Amoco acceptance effective that Radecki’s judg- a second offer of served Radecki with attorney not awarded fees. and should have only in differed from the first ment that explicitly that the amount that it stated II. attorney of fees. offered was inclusive application of the con- This case involves telephone a conversation acceptance and to a principles tract of offer Hergott that McConnell informed Rule allows judgment. Rule 68 offer second offer was intended to clari- Amoco’s plaintiff a offer a to make an defendant tendering fy first and that Amoco was the whereby, upon acceptance, judgment will the offer of with the against speci- for a be taken the defendant understanding the amount in- that offered Fed. any liability Her- fied sum “with costs then accrued.” cluded by provides: is not more favorable tained offeree Rule 68 offer, pay offeree must the costs days than any time more than 10 before the At making defending against begins, party after of the offer. The a a claim incurred trial upon party may accepted offer to serve the adverse made but not fact that an offer is against be taken the de- allow preclude subsequent offer. When does not money fending party property or or to liability party has been one another specified costs effect with judgment, order verdict or determined days accrued. If within after then liability re- or extent but the amount party serves of the offer the adverse service proceed- to be further mains determined accepted, notice that the offer is either written party may ings, party adjudged liable make may then the offer notice of file judgment, shall the same which have offer together proof acceptance with of service if it is as an made before trial effect offer thereupon the clerk shall enter thereof time than not less served within a reasonable accepted judgment. An shall be days prior commencement of hear- to the deemed withdrawn and evidence thereof ings amount or extent to determine the except proceeding de- admissible in a liability. judgment finally costs. ob- If the termine attorney fees were in- argues primary issue here is R.Civ.P. 68. The cluded, A they were not. Amoco’s Rule 68 Radecki contends accepted whether Radecki not includ- finding fees were judgment. offer of position pur- that its supports ed Radecki’s been a To decide whether there has effective, and vice ported acceptance was acceptance purposes valid offer and p. 403. The offer itself versa. See infra apply principles of con Rule courts yet it no mention of makes See, University e.g., tract law. Johnson contemplate seems to Alabama, 706 F.2d College the Univ. fully resolve Amoco’s liabili- the offer will Cir.), denied, (11th cert. lump-sum ty; appears to be a 489, 78 L.Ed.2d 684 U.S. subsuming even within the amount (1983); 110 F.R.D. Wolff, Adams v. *4 (The any liability offered for “costs.”2 (D.Nev.1986); Bolger, 110 Bentley v. “in- offer states that the amount offered 108, (C.D.Ill.1986); Boor F.R.D. 113-14 stating “plus” cludes” costs rather than 31, York, 107 F.R.D. City stein v. New Marek, costs.) Chesny “and” See (S.D.N.Y.1985). contract Under basic 474, (7th Cir.1983), F.2d rev’d on other principles, for offer and law 1, 3012, 87 grounds, 473 U.S. 105 S.Ct. binding agreement there must to create a L.Ed.2d 1 Because the offer is si- objective manifestation of mutual be an respect attorney lent with we re- (some assent, i.e., referred to what is often the them- sort to factors outside words misleadingly) “meeting of the what selves to determine whether Amoco intend- minds,” Corbin, 1 A. on Con see Corbin ed the offered sum of to subsume (1963); princi this tracts at 478-79 § attorney fees.3 accept ple applies to Rule 68 offers and See, Johnson, e.g., ances. 706 F.2d at The District found that Amoco did Court 1209; Adams, 293; 110 F.R.D. at Boor attorney not intend to include fees in its 33-34; stein, 107 F.R.D. at Greenwood v. November 18 offer. The District Court (D.R.I. Stevenson, 88 F.R.D. 229-30 “An differs in states: fees ... 1980). judgment both nature and effect from a on merits. the court concludes that has mutual assent Whether there been judgment depends in this case in the offer of of November between the part disputed attorneys’ issue of what Amoco 1986 not intended to include on the $525,- dispute expert part offered. In is whether the witness’ fees as [sic] App. in its at 226 000 Amoco tendered November 18 Amoco offered.” (citation omitted). That, course, attorney offer was intended to include fees. is a non Chesny, specific 2. Marek v. 105 S.Ct. tion that the offer’s reference to costs (but (1985), fees) attorney Supreme con shows that Amoco in- 87 L.Ed.2d 1 Court attorney scope meaning exclude of “costs" in Rule 68. The tended to fees from sidered the costs, By mentioning attorney of the offer. Court said that fees would be included language simply purposes tracks the of Rule 68. See Rule where the as costs for 68; Meisenholder, Fed.R.Civ.P. 4 R. West’s Fed- underlying statute in the action defined “costs" (1982); § eral Forms 5391 at 635-37 see also attorney approach fees. This seems to include Marek, (“[I]f 473 U.S. at imply attorney part fees are not of Rule offer does not state that costs are included and underlying 68 costs if the statute does not define specified, Brennan, for costs is not the court amount part them as of costs. Justice dissent obliged by Marek, will be the terms majority’s [Rule 68] interpreted so hold include in its an additional amount Marek, ing and other courts have as well. See J., which in its discretion it determines to be suffi- (Brennan, 473 U.S. at 105 S.Ct. at 3023 (citation omitted)). Co., cient to cover the costs.” dissenting); ValleyBank & Shorter v. Trust (N.D.Ill.1988); F.Supp. Fisher (E.D.Mich.1986). Corp., Radecki’s assertion that the November 18 of- Stolaruk 110 F.R.D. 74 us, "clear,” underlying for Radecki at is belied In the case before statute fer was Brief attorney part by Hergott’s he does not define fees as of costs. admission that when received PMPA, 2805(d)(1). See 15 U.S.C. We there the offer he could not tell from its face whether attorney fore do not hold that Amoco’s offer of fees were included in the offer and attorney included fees its reference to the fact that his firm launched a research effort proposi- But neither can we to resolve the issue. "costs.” to include fees within the Court’s con- tended Perhaps the District sequitur. specified in its initial offer of No- amount that “McCon- on its is based belief clusion First, the settlement amounts vember of the status was unaware [set- nell during negotiations consistently discussed she drafted negotiations” when tlement] had been inclusive the District App. at 223.' But offer. surprised therefore was when found, McConnell cite, have we does not nor Hergott position told he her take support record that be- anything in the fees were not subsumed every contrary, McConnell had lief. To the in the the amount tendered parties’ positions since reason know Second, judgment. offer of the November settlement ne- personally attended the she appears to be a 19 offer clarification rather representative of Amoco. gotiations as a than a modification the November 18 affidavit, explains in her she knew As she right The “revised” offer followed offer. last offer and Radecki’s of Amoco’s last first, apparent on the heels of the with during settlement confer- demand final intervening event cause Amoco to and, the settlement ence consistent with change the of its offer. terms discussions, of- intended the November 18 provides no explanation why would lump-sum inclusive fer to be a modify want what *5 attorney fees. simply says offered on November but purpose pro with its of Consistent changed “for Amoco some reason ... its settlements, moting Rule 68 allows defend Amoco, mind.” Brief for Radecki at 24. lump-sum offers are to make that ants hand, persuasively the other explains attorney “If defendants inclusive of fees. follow-up that the reason for was the lump-sum of not to make allowed [were] clarify ambiguous to offer. need would, represent if accepted, that their fers Third, wording of 18 the November understandably they liability, total would suggests offer that Amoco intended to make offers.” reluctant to settlement proffer would, lump a sum amount that if 1, 6-7, 105 Chesny, v. 473 S.Ct. Marek U.S. represent liability. its accepted, total Not 3012, 3015-16, 87 L.Ed.2d 1 See “costs” left of even were discretion Air August, Delta Lines It very the District thus seems Court. n. 1163 n. unlikely that Amoco been would have will- J., (1981) (Rehnquist, dissent L.Ed.2d binding that ing to make a offer left it (“Were ing) attorney’s to hold that fees we exposed liability attorney fees in compro subject not to settlement were amount the District Court whatever (in way mise the same as issues fix, especially since Amoco was aware that remedies) liability, damages, and other as a attorney claimed to have fees of Radecki offer, part of a Rule 68 we would frustrate $300,000. Fourth, clear approximately is 68].”) (emphasis in purpose of [Rule under the relevant section of the that D., 475 original); see also Evans v. Jeff (15 2805(d)(1)(C))an PMPA U.S.C. 1531, 1540-41, 732-34, 106 U.S. S.Ct. attorney prevailing fees to a franchisee (1986) Marek). (citing L.Ed.2d 747 recovering damages is more than nominal Moreover, require Rule 68 does not a laun Hence, mandatory. there could not have list of the elements of relief included dry any that would be enti- been doubt Radecki specific mention of attor within offer part recovery attorney fees as of his tled ney purpose and it runs counter to the try would and it follows that Amoco assume forms relief of Rule that exposure significant por- its to such a limit in not mentioned are not intended to be liability by potential its includ- tion of total cluded within the sum offered. Rule 68 attorney in offered. ing fees the amount settlement, encourage designed complete Fifth, understood that Radecki was Amoco simply liability to resolve the issues of demanding punitive damages to- actual and remedies. $375,000 rest Ra- taling and that $675,000 (exclu- Here, demand whole decki’s settlement evidence a considerations) consisted strongly in- of non-cash supports view sive ” explain conviction’ that the find- attorney fees. Radecki fails to District Court’s judg- that Amoco did not intend to include why Amoco would make an offer $150,000 in exceeding by per- attorney what it fees the amount offered is ment damages clearly if erroneous. ceived as Radecki’s demand for Anderson Bessemer 564, 573, City, 470 the amount were not intended to include U.S. S.Ct. (1985) explanation, (quoting 84 L.Ed.2d 518 attorney fees. Amoco’s Unit- course, Co., Gypsum is that the amount offered was ed States v. United States 525, 542, attorney intended to include U.S. S.Ct. (1948)). firmly L.Ed. 746 We are convinced argues Radecki that because that Amoco intended include “substantially fees its November 18 and we below” the amount of the last settlement finding overturn the District Court’s to the “suggests this there was contrary. Brief intention to include fees.” corollary, As Because Amoco intended to include attor- for Radecki at 14. $525,- “gambling” ney fees in its 18 offer of contends that Amoco was its the District Court would award offer did consti- or, that, $525,000 result, of- tute a modification as a a revoca- fees combined with offer,4 fered, only of the earlier no more than Amoco tion but a clarifi- would be what negotiations. cation.5 we need not reach the issue had offered in the settlement the District Court addressed of whether a Radecki calculates that a fee award less party may judg- revoke its Rule 68 offer of gamble than would have made ment.6 pay figure by valuing off. He reaches this the non-cash considerations included Assuming arguendo that Rule 68 Amoco’s last settlement offer at *6 prohibits judg an revocation of offer of bringing thus the cash value of that offer ment, we believe courts should be hesi $670,000, $525,000. subtracting to and then tant to characterize as offeror revocations though Amoco counters that even the offer clarify incomplete communications that or judgment was lower than the settlement ambiguous desirability offers. The of hav offer, $150,000 it still exceeded what ing particularly such offers clarified is claiming Amoco understood Radecki to be great in the Rule context. the situa (Amoco) damages, in and that was unwill- typical, garden-variety tion of a offer to ing gamble to the District what contract, reject the offeree is free to concerning attorney do fees. Amo- running incurring offer without risk position rings reality, co’s whereas Ra- liability plaintiff as a result. But “a who decki’s assertion that Amoco and its attor- receives a Rule 68 offer is in a difficult neys modern-day are is Bat Mastersons position, because ‘a Rule 68 offer has a conjecture. unlikely sheer It most seems binding effect when refused as as well Amoco, knowing to us that that the attor- accepted’ when this results from the ney approximated fees claimed cost-shifting mechanism, Rule’s which be gambled

would have that a court would operative upon accept. comes failure to $145,000. only fees of Trust, Valley Shorter Bank & evidence, (N.D.Ill.1988) Carefully reviewing F.Supp. (quoting all 719-20 “ Boorstein, 34). Thus, firm espe- we are ‘left with the definite and 107 F.R.D. at cedure, 4. Under traditional rules governing proper- the forma- § could contracts, tion of a substantive alteration of an ly clarify or its offer of November withdraw 1986_” operates offer as a revocation of that offer. See App. at 225. Corbin, 163-64; p. supra § A. at United Co., Foundry Steelworkers America v. Bell court, 6.At least one federal in addition to the (9th Cir.1980). F.2d below, position that District Court has taken the may an offeror not revoke a Rule 68 offer. See glosses 5. The District Court over this distinction Fisher, (E.D.Mich.1986); 110 F.R.D. at 75 see when it states: offer of day period is irrev- ‘‘[A]n Miller, Wright also 12 C. & A. Federal Practice during acceptance. ocable the ten (1973). and Procedure at 59-60 Miller, Wright C. & A. Federal Practice and Pro- FAIRCHILD, considering a Rule Judge, Senior Circuit daily when needs a clear under concurring part, dissenting to have in part. offeree standing the terms of offer in order I concur in the judgment ap- reversal of decision an informed whether to make from, pealed agree but do not that the cost Boorstein, it. 107 F.R.D. at accept shifting mechanism of Rule 68 inappro- addition, Adams, at 293. In 110 F.R.D. See priate in this case. in preacceptance clarification of to allow appears contemplate Rule 68 an offer ambiguous Rule 68 offers complete sum, specified for a with costs the offeror’s and court’s interests serves point accrued to that be added well, will be certain since offeror more acceptance. in the court event of A de- potential liability his and the court will however, fending party may, recite interpret ambiguous upon not be called specifies costs are included in the sum he Marek, 7; U.S. Boor See at offers. and, so, where he his does offer is valid 34; Evans, stein, 107 see F.R.D. also exactly Rule 68 the specified under 732-34, 1540-41. U.S. at 106 S.Ct. at Chesny, sum. Marek v. purported now come to Radecki’s We S.Ct. 87 L.Ed.2d Al- earlier, acceptance. noted for Ra- As we though the wording of the Rule makes it binding decki and Amoco to have created necessary to recite that costs are included objec- agreement there must have been an if the offeror avoid an desires to addition of mutual As tive manifestation of assent. acceptance, in the nothing costs event of it, put acceptance court has must one impact the Rule has a similar on matter Bentley, F.R.D. at “mirror” offer. attorney’s of an fee.1 purported that Radecki’s 113. We hold sufficiently does not reflect therefore, me, It seems that an offer does not Amoco’s and therefore sum, specified including for a attempt- acceptance. to an While costs, if necessarily means accept simul- Amoco's accepted, resulting judgment will be tanteously filed a motion sum, specified for the without addition of Clearly, of- Radecki intended attorney’s fee or not whether the attor- fer for that was inclusive part ney’s fee is a of costs. *7 fees, had which is an view, my In AMOCO’sNovember 18 of- materially in- extended. The different not plainly fer was an offer of for parties the manifiested in their tent of a judgment and did not offer for assent, no actions shows there was mutual plus attorney’s that amount fee to be binding agreement. hence and agree I do fixed the court. Thus not parties a con We cannot hold required evidence that resort to extrinsic is they It tract never made. therefore will be AMOCO “to determine whether intended necessary approach $525,000 to offered sum of subsume addition, question In settlement anew. be Ante, p. fees.” of the of this cause unusual circumstances agree although Radecki filed a I do case, uncertainty of and the Radecki as circum- formal pur legal post-clarification effect his stances, simulta- including particularly his acceptance Amoco’s ported attorney’s filing application of an neous hold offers we “acceptance” legal effect gave his cost-shifting not made have mechanism rejection purpose for the of Rule of a operative. of Rule respect why no reason his all I see entry With

The District Court’s offer as made should failure to award of fees reversed and shifting consequences have the cost proceed- case is for further not remanded Rule, join I do in opinion. provided in the ings consistent with this explicit happened specify nothing reference to to indicate that the 1. The offer Marek attorney’s significant. was the amount included I find fees considered shifting the direction that the cost mecha- operate proceed- shall

nism future

ings in this case. view, my plain the offer was under plaintiffs’ professed

Rule 68 and under-

standing that the offer

plus attorney’s fee is not a sufficient exempting plaintiffs

reason for from the

operation of if it the Rule turns out that judgment plaintiffs obtained is not

more than the offer. favorable America,

UNITED STATES

Appellant, MEANS, King,

William Mathew a/k/a Redman, Abourezk, Noble Charles Rus persons

sell Means and all other occu

pying the location called “Yellow Thun Camp”

der at Victoria Lake in the Forest, Appellees.

Black Hills National MEANS, Gregory Zephier,

William A. F. Bulls,

Ron Two Russell Means for Yel Camp

low Thunder and the Lakota Na

tion, Appellees, MATHERS, Supervisor,

James Forest Service; Craig

United States Forest

Rupp, Regional Supervisor, Forest *8 Service;

United States Forest R. Max

Peterson, Chief, United States Forest

Service; Lyng, Secretary Richard

Agriculture, Appellants.

No. 87-5118.

United Appeals, States Court of

Eighth Circuit. Sept.

Submitted Sept.

Decided

Rehearing Rehearing En Banc Denied 13, 1988.

Dec.