4th Cir Says Offer of Judgment "As Full and Complete Satisfaction" Does Not Include Attorney's Fees and Costs

The U.S. Court of Appeals for the Fourth Circuit recently held that a party who accepts an offer of judgment pursuant to Fed. R. Civ. P. 68(a) "as full and complete satisfaction" of the claims asserted may then still be awarded additional attorney's fees and court costs.


A copy of the opinion is available at:

http://pacer.ca4.uscourts.gov/opinion.pdf/101203.P.pdf

The plaintiff initiated a suit against various public employees and organizations (collectively, the "defendants") in connection with her husband's suicide. The defendants extended an offer of judgment pursuant to Rule 68(a) ("the offer of judgment") in the amount of $30,000.

The offer of judgment provided that it was extended "as full and complete satisfaction of [the plaintiff's] claim against.[the d]efendants." The offer did not mention attorney's fees or court costs.

The plaintiff accepted the offer of judgment. After accepting the offer, the plaintiff asked the lower court for the agreed-upon sum of $30,000, in addition to $120,702.55 to cover attorney's fees and costs. Over defendants' objection, the lower court awarded the plaintiff $66,463.80 in fees and costs. The defendants appealed.

As you may recall, Rule 68(a) provides that "a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued." In addition, courts are "obliged by the terms of the rule" to award an additional amount for attorneys' fees and costs, "if the offer does not state that costs are included and an amount for costs is not specified." Marek v. Chesy, 473 U.S. 1, 7 (1985).

The defendants advanced several arguments against the lower's court decision, arguing: (1) that because the offer was made in "full and complete" satisfaction of the plaintiff's claim, and the plaintiff asked for attorney's fees and costs as part of that claim, the offer did in fact refer to those fees and costs; (2) that Rule 68 was intended to encourage settlement, and that the lower court's interpretation frustrates that goal; and (3) principles of equity.

The Fourth Circuit did not find any of these arguments convincing.

The Court rejected the defendants' first argument because the cases relied upon by the defendants involved plaintiffs who sought awards of attorney's fees as the principal relief sought. As attorney's fees were not the principal relief sought in this matter, the Court found the cases relied upon to be distinguishable from the matter at hand. The Court rejected the defendants' second argument on the grounds that the defendants could easily have drafted their offer to specify that it included attorney's fees and costs. Finally, the Court rejected the defendants' third argument on the grounds that it was "wholly foreclosed" by the Supreme Court's decision in Marek v. Chesny, among other reasons.

Therefore, the Court affirmed the lower court's decision to award attorney's fees and costs to Plaintiff.