Warr v. Williamson
195 S.W.3d 903
Ark.
2004
Check Treatment

*1 v. Kathleen C. WILLIAMSON Gaye WARR D. Kennedy and Richard 03-1474 of Arkansas Court

Supreme 21, 2004 delivered October Opinion *2 Firm, Law B. Brad Hendricks by: Phyllis Edding, appel- lant. and Christina Rose Watts, Donovan & Tilley, by: Tilley Jim

Conrad, for appellees. *3 an order of the N. Warr Gaye appeals Hannah, Jim Justice. Kathleen Williamson Court Circuit awarding Pope County that Williamson’s under Ark. P. 68 Warr costs R. Civ. alleges offer under 68 was not a bona dollar offer of Rule one judgment fide reverse an award of costs under Rule 68. We and so could not trigger was not a bona and hold that the offer of one dollar the circuit court Rule an award of costs under or faith offer as to required trigger good offer is hold that because the law on what sort of required 68. We also was not settled at the time Williamson to costs under Rule 68 trigger under Ark. P. 11 made the offer of sanctions R. Civ. judgment, circuit court’s denial of not and we affirm the were (2003) proper, sanctions.

Facts 26, 2000, was a in a car on Interstate On Warr July passenger that from behind. Warr filed a against 40 was struck complaint 11, 2001, on based in and Richard D. Williamson Kennedy April a car that that Williamson was driving She alleged negligence. and that “one or both” of the cars struck a car driven by Kennedy, in which she was of an Offer of struck the vehicle riding. By way offered to have dated Williamson August Judgment $1.00” her in the “total sum of entered judgment against Warr, The offer was never settlement of lawsuit. accepted by 3, trial, the case to trial on 2003. At jury and went June zero at fault and returned a verdict Williamson finding percent states, at fault. The “IT IS 100 Kennedy percent CONSIDERED, AD- ORDERED AND THEREFORE that the of N. Kathleen Warr against Gaye Complaint JUDGED is with After C. Williamson dismissed entry hereby prejudice.” a motion costs under Rule Williamson for brought judgment, motion for that the 68. Warr to the costs by arguing responded held that offer must be “Arkansas courts have a bona clearly Rule Warr further that the offer of made for 68 to apply.” argued was a and an to circumvent and one dollar offer” “bogus “attempt . . . .” that abuse the Warr also costs purposes argued were and not The motion for costs was discretionary mandatory. in an order October entered 2003. granted Warr a for sanctions Ark. R. P. motion under Civ. brought that the motion for costs under 68 was “not well arguing in the faith law or a the law.” grounded argument change for denied motion sanctions was in an order entered October In her Notice she Warr states that Appeal, appealing from order and the costs order sanctions. granting denying

At issue is P. Ark. R. Civ. 68 and a one whether dollar offer of will serve to costs under trigger right R. Civ. 68. Rule 68 provides pertinent part: At time any morethan i days trialbegins, party defending before against claim may upon serve adverse toallow party an tobetaken against money him or property specified effect hisoffer,withcoststhenaccrued.If within 10 after the serviceof days the offer the adverse serves written that the notice offer is *4 accepted, either then file the and party may offer notice of accep- tance with of service together proof judgment thereof and shallbe entered. An offer not shall accepted be deemed withdrawn and evidence thereof is not admissible in a to deter- except proceeding mine costs. the exclusive interest the date If of from of offer finallyobtained the isnot by more the the offer, than offeree favorable offeree must thecosts pay incurred making after of offer. Rule not added). 68 does define (Emphasis what constitutes an offer under Rule it that must be beyond “money property.” one dollar is albeit not Certainly much. The money, purpose 68 is defendant the means to provide to consider compel plaintiff anew the merit of claim his or her at the offer time the is made and Abraham, whether continued is v. 341 appropriate. Jones 66, Ark. 15 S.W.3d 310 (2000). settlement encourages early

238 to settle from who is

of claims and willing expenses protects party Bershears, accrue. Bell v. 351 which will and costs subsequently 260, if Rule 68 32 seealso (2002); Obviously, 92 S.W.3d Jones, supra. be extended it must that an offer is to serve its stated require purpose, the likelihood of to reassess which is sufficient to plaintiff compel See, the merits of the claim. Jones, success on e.g., supra. Livestock Co. v. In & Piney Darragh Poultry Equipment Inc., Sales, 743 804 this (1988),1 294 Ark. S.W.2d Creek stated, has discretion but “Under Rule 68 a trial no court judge the authorized costs incurred after must order the offeree to pay offer, if the exclusive of of a bona judgment, making interest, than the offer.” in is not more favorable Similarly, 492, Administration, Finance and 330 Ark. Hankins Deptartment of 497, 954 S.W.2d 259 this court cited (1997), Darragh, supra, the trial “We that Ark. R. Civ. stating, recognize requires after the to order an offeree to the authorized costs judge pay offer, interest, is of a bona if the exclusive of making judgment, Thus, not more favorable than the offer.” while both opinions offer,” neither discussed this court used the term opinion “bonafide that term was used or what sort of offer is why exactly required However, an under while not award costs trigger In on discussion Jones, precisely point, supra, helpful. Jones this court cited and stated: Darragh of Rule 68 is to a means which a defendant provide by purpose can to reassesshis claimand realistically thereby, compel plaintiff to settle. See & Livestock plaintiff DarraghPoultry perhaps, persuade Inc., Sales, Co. v. Creek 294 Ark. 743 S.W.2d Equipment Piney on The chancellor denied motion costsbased cross-appellants’ their October made a judgment. 1997 offer of Cross-appellants 1 Darragh In & Livestock Co. v. Creek Sales,Inc., Piney Poultry Equipment (1988), court considered whether a defendant who obtains a this though a defense verdict at trial collect costs under Ark. R. Civ. P. even the Rule may that costs are awarded when the offeree’s “is not more favorable than the provides reasoning offer” that the offeror this court declined to follow the in Delta case, made. that (1981), August, Inc.v. 450 U.S. 346 where the United States Court held that Airlines, Supreme making a victorious defendant is not entitled to recover costs incurred after the under Fed. R. Civ. P. 68. Neither has asked this court to reconsider our Delta, *5 Darragh, decision in settlement "one-third thenetvalue theestate offerof ofone-fourthof Abraham,” Frances whichwasno thantheminimumamountthat greater wereto inheritunder FrancesAbraham’slastwill ex- cross-appellees ecutedin 1987. The three were to inherit one-fourthof appellants Frances Abraham’sestate under the 1987 will. Rule 68 is not wherea makesan settlementthatis no applicable greater defendant offerof than minimumamountthatthe canrecover.Thetrialcourtwas plaintiff correctin itsruling. 341 Ark. at 81-2 this court

Jones, added). (emphasis Jones, supra, Abraham, affirmed the court of decision in 67 Ark. appeals Jones 304, 318, 999 S.W.2d 698 wherein the court of App. (1999), appeals stated, to “Offers made citing Darragh,supra, ofjudgment pursuant to Rule are effective if are bona offers.” only they “[T]he translation, settled of bona with its literal meaning synonymous faith,’ and is so familiar that the ‘good could not be average person State, Asher, misled.” 4000 Inc. v. 716 S.W.2d 190 Rule 68 offers a defendant the to make a opportunity good faith offer to settle the case ofjudgment encourage plaintiff and to and costs after acquire protection against expenses accruing the offer is made. To obtain the and benefit of Rule protection offer, words, defendant must make a faith or in other an offer sufficient to to reassess his or her case. It compel plaintiff is difficult to circumstances under which an offer of imagine any one dollar would consider compel plaintiff seriously settling case. For Warr far in excess of one dollar in example, paid filing fees the lawsuit. It is just that the offer of one bring apparent dollar was made in an to entitle Williamson to costs under attempt Rule 68 on technical should the return a grounds defense jury verdict.

It should be noted that Rule 68 to offers made applies “with costs then accrued.” even to a Clearly, though parties lawsuit will value case the Rule certainly any given differently, that an offer an award of costs under Rule contemplates triggering 68 would at the least take costs into account. This court stated has that Rule 68 has real and as an noted how the meaning, example Rule is to be effect as shown the fact it allows the given trial no discretion in fees where a judge meets the granting of the rule. An offer of one dollar requirements Darragh, supra. would not Warr to reassessthe likelihood of success simply compel and consider whether the offer would be best. The accepting

240 was not made in faith under Rule 68. The circuit court reversed on the award of fees under Rule 68 because Williamson failed make a valid offer of under Rule ÍÍ Sanctions

This court discussed Ark. P. 11 R. Civ. recently sanctions: 11 primary sanctions is to deter future purpose abuse, and the award of fees is but attorney’s one of several Brown,

methods this See Crockett & achieving goal. P.A. v. Wilson,321 Ark. 901 S.W.2d 826 (1995). When a trial court occurred, that a determines violation of Rule 11 has the Rule makes sanctions Id. The mandatory. has the burden to moving party Gunn, violation of Rule 11. Brattonv. prove 300 Ark. 777 S.W.2d 219 (1989). The of sanctions imposition to Rule pursuant 11 is a serious matter to be handled with and the circumspection, trial court’s decision is due substantial deference. Williamsv. Mar tin, 335 Ark. (1998); Brown, 980 S.W.2d 248 Crockett& Ins., Pomtree v. State Farm Mut. Auto. Warr that the circuit court abused its discretion in argues her motion for Rule 11 sanctions because the

denying offer of one dollar was in violation of the “clearly and intent of Rule 68.” purpose Warr further that the motion for costs was argues an “abuse of filing the rules of civil and the procedure judicial system.” Pomtree,

This court further stated in supra: The essentialissue is whether the who attorney signed pleading or other document fulfilled his or her duty reasonable inquiry law, into the relevant and the indicia of reasonable into the inquiry law include the of the plausibility legal theory espoused and the pleading of the issues raised. complexity Id. The moving establishes violation ofRule when it is clear that patently claim had no chance nonmoving party’s of success. Pomtree, 353 Ark. at 667.

We cannot that the motion say was made for an or that a reasonable improper purpose into the issue of inquiry what offer is an award of costs required under Rule 68 at trigger the time the offer was made would have shown that it was made, no there was offer was time the Rule 68 At the implausible. of offer what sort triggers on discussing of this court decision point affirm the circuit therefore 68. We of costs under Rule an award sanctions, on a basis motion for although denial of the court’s will affirm circuit court. We than that relied different upon it result even reached the though when it has right the lower court Arkansas, v. River HRR Inc. City reason. was based on wrong *7 Inc., Contractors, Imber,

Glaze and JJ., concurring. I concur Imber,

Annabelle Clinton Justice, concurring. that Williamson’s one-dollar offer with the faith, was not a bona under Ark. R. Civ. 68 (2004) judgment caselaw. offer as our Notwithstanding my agreement required by fide to out that the one-dollar with the I feel majority, compelled point for our court’s would not be an issue if it were not offer ofjudgment in Livestock Co. of Rule 68 & DarraghPoultry Equipment interpretation Inc., 427, 743 Sales, As the S.W.2d 804 (1988). Creek Piney notes, neither has asked us to reconsider our majority correctly party However, decision in I with United States Su agree Darragh. Lines, Inc. v. 450 U.S. 346 (1981), Court Delta Air preme August, that a should not be entitled to recover costs defendant prevailing incurred under Rule 68. of the Arkansas Rules of Civil Procedure states in

part: a claim serve the adverse may party defending against upon [A] an offer to allow to be taken him for the judgment against offer, or to the effect in his with costs

money property specified then accrued . . . . obtained the judgment. .finally by [I]f offeree offer, is not more favorable than the the offeree must the costs pay rule, incurred after the of the offer. .. For this making purposes the term is defined asreasonable exclud- “costs” expenses, attorney’s fees. ing

Ark. R. P. 68 In added). Civ. (2004)(emphasis refusing apply defendant, Delta Air Lines frivolous 68 to prevailing prevented offers, here. In settlement such as the one-dollar offer Darragh, Lines, however, this court declined to follow Delta Air but instead can stillrecover costsunder 68. ruled that defendant prevailing result, As a abandoned an issue on we prevent very opportunity , rather, our extended Rule 68

appeal; holding Darragh beyond obtained the offeree to judgments obtained by encompassjudgments In offeror. so this court instituted a by bona offer holding, fide Such a now forces our court to become requirement. requirement is, not, involved in what or is a bona offer when determining fide defendant costs under Rule awarding prevailing DarraghPoultry Co., case, & Livestock difficult In this it is not Equipment offer, determine that a one-dollar offer is not bona but what fide $200,000 amount of makes an offer bona For is a money example, fide? offer a bona offer in a case where always millions of dollars are at fide stake? the federal By of Rule this court following interpretation would eliminate the need to determine whether there has been a bona offer because a defendant cannot benefit from the rule. prevailing addition, a literal of Rule 68 eliminates interpretation any bona when a is obtained requirement by offeree; is, that when there is a favor plaintiff. Lines, As noted in Delta Air if the a realistic offer plaintiff rejects defendant, made then under Rule defendant will receive costs should the and receive a plaintiff gamble less than or to the amount offered. Delta equal Air Lines v. August, *8 at rule, U.S. 355-356. Under the of the an plain language off eror will receive costs when there only is a realistic offer made to a who plaintiff prevails:

But the of the plain language Rule makesit to read a unnecessary reasonableness into the Rule. A requirement literalinterpretation offers, avoidsthe totally problemofsham becausesuchan offerwill serveno and a defendant purpose, willbe make encouragedto only realisticsettlementoffers. Furthermore, Id. as out the Court inter- pointed by Supreme “[if] relief, that the

preted secure at least require some the rule plaintiff would insure that token offers will not be made because nothing would Note, be them.” Id. gained by (Fn. Rule 68: A 15)(citing “New” Tool 1978 Duke L. Litigation, (1978)). for J. Moreover, this court’s of Rule 68 in interpretation Darragh circumvents the intent and of Ark. R. Civ. 54. As application the the recognized by of Rule 68 is to a majority, purpose provide defendant the means to a to reassess the merits of compel plaintiff the case at the time the offer is made and determine whether Abraham, continued is appropriate. Jones 15 S.W.3d 310 (2000). Under Rule a trial court has no the the, . . obtained by costs if “judgment. in awarding discretion P. 68. Ark. R. Civ. than the offer.” more favorable offeree is not discretion in contrast, awarding the trial court 54(d) gives Our interpreting to the precedent costs party.1 prevailing to manda- has made an offer defendant who enables a prevailing result, trial costs, and, the we have lessened as recover torily costs to a to award party authority prevailing court’s discretionary Lines, noted in Delta Air the Court under Rule As 54(d). Supreme best in Rule 54(d) discretion established the rule of general offers of Rule 68 “only limiting application by protected obtained the defendant and by made only judgments by Lines, 450 U.S. at 352. The Delta Air Inc. v. scope August, plaintiff.” in Delta: is set forth Court of Rule 68 succinctly by Supreme 54(d) alter the Rule presumption Rule 68 could conceivably after three different kinds ofjudgments favor of the prevailing defendant; a(2) favor of the (1) judg- are entered: but for an amount less than ment in favor of plaintiff offer; for the (3) defendant’s settlement a judgment plaintiff an amount than the settlement offer. question pre- greater three situations is described by sented this case is which of these by the offeree . . . not more the words obtained “judgment finally by words do not encom- favorable than the offer.” those Obviously in favor of the offeree that is the third situation—a judgment pass encom- than the offer. Those words as do just clearly more favorable second, in favor for there can be no doubt that ajudgment pass But as of the has been “obtained the offeree.” inasmuch by plaintiff — . the offeree” rather than by the words . obtained “judgment. — would not be read normally words like “any judgment” the other to describe a in favor of lawyer party, plain — of Rule 68 confines its effect to the second of case type language obtained a for an amount one which has plaintiff less favorable than the defendant’s settlement offer. Lines,

Delta Air Inc. v. 450 U.S. at 351. August, *9 Glaze, J., joins. 54(d)(1) (2004) prevailing be to the shall allowed R. Civ.P. that“[c]osts provides the award if the court so unless a statute or rule makes directs, mandatory.”