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NO.

81-96

I N THE SUPREME COURT O THE STATE O F M N A A F OTN

1981

T M WESTON, O P l a i n t i f f and Respondent,
-VS-

ROY KUNTZ,

D e f e n d a n t and A p p e l l a n t .

Appeal from:

D i s t r i c t Court o f t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County o f M i s s o u l a , The H o n o r a b l e J o h n S. Henson, J u d g e p r e s i d i n g .

Counsel o f Record: For A p p e l l a n t ; G a r l h q t o n , Lohn & Robinson, M i s s o u l a , Montana

F o r Respondent : S m i t h , Connor & Van V a l k e n b u r g , M i s s o u l a , Yontana

S u b m i t t e d on B r i e f s : Decided:

July 24,

1981

OcT 1 9 1981

Filed:

DCT

19 1981'

Mr. J u s t i c e J o h n C . Court. This Chevrolet 1978, in appeal and

H a r r i s o n d e l i v e r e d t h e O p i n i o n of arises from damages to

the

respondent's 16, had

van

its contents during a
place of business.

f i r e January Respondent

appellant's

taken h i s vehicle t o a p p e l l a n t ' s auto repair service outside S t . I g n a t i u s , Montana, f o r r e p a i r on J a n u a r y 1 5 , 1 9 7 8 . After discovery, the claim was f i l e d , both p a r t i e s conducted

and r e s p o n d e n t

f i l e d a m o t i o n f o r summary judg-

ment on A p r i l 3 , 1 9 7 9 .

The D i s t r i c t C o u r t h e a r d a r g u m e n t on

t h e m o t i o n and on J u l y 2 , 1 9 7 9 , e n t e r e d summary judgment f o r the respondent reserving judgment as to the amount of

damages. Following d e t e r m i n a t i o n of the summary judgment, Kuntz appealed the

liability.

T h i s C o u r t found t h e a t t e m p t e d

a p p e a l was p r e m a t u r e b e c a u s e damages had n o t been d e t e r m i n e d and t h e a p p e a l was d i s m i s s e d w i t h o u t p r e j u d i c e . Kuntz ( 1 9 8 0 ) , On August Mont. 13, 1980, Weston v . 855. of

,

610 P.2d 1 7 2 , 37 S t . R e p . served an offer

appellant

judgment on t h e r e s p o n d e n t p u r s u a n t t o R u l e 6 8 , M.R.Civ.P., f o r t h e amount o f $ 2 , 2 0 0 . The o f f e r s p e c i f i e d it was n o t t o that

b e c o n s t r u e d a s a n a d m i s s i o n t h a t Kuntz was l i a b l e o r

Weston had s u f f e r e d damages a s a r e s u l t o f a n y n e g l i g e n c e o r l i a b i l i t y by Kuntz. On S e p t e m b e r 1 7 , 1 9 8 0 , t h e p a r t i e s s t i p u l a t e d t o a n e x t e n s i o n of t h e o f f e r through October 15, 1980. I n a l e t t e r d a t e d O c t o b e r 2 8 , 1 9 8 0 , Kuntz i n d i c a t e d a w i l l i n g n e s s t o compromise on t h e c l a i m i n a t o t a l amount o f $2,272.16. The l e t t e r n o t e d t h e amount was e s s e n t i a l l y t h e 1 9 8 0 , and s t a t e d i f Kuntz would

same a s a s e t t l e m e n t o f f e r o f J u n e 2 4 , the f i g u r e was still unacceptable

t o Weston,

r e q u e s t t h e c o u r t t o s e t t h e m a t t e r f o r h e a r i n g on damages. On t h a t d a y a l s o Kuntz f i l e d a m o t i o n t o e s t a b l i s h a h e a r i n g date. On O c t o b e r 2 9 , 1 9 8 0 , r e s p o n d e n t s e r v e d a p p e l l a n t w i t h a n a c c e p t a n c e of o f f e r o f judgment f o r $ 2 , 2 7 2 . 1 6 . On O c t o b e r 3 0 , 1 9 8 0 , Kuntz f i l e d a n o t i c e o f e x p i r a t i o n and w i t h d r a w a l o f o f f e r o f judgment s t a t i n g t h e o f f e r 15, 1980, had n o t

w h i c n had b e e n e x t e n d e d t h r o u g h O c t o b e r b e e n a c c e p t e d i n i t s amount o f $ 2 , 2 0 0 . Weston 1980. judgment, Kuntz had moved a for e n t r y of on

judgment the motion

on November for entry

3, of

Following

hearing

t h e D i s t r i c t C o u r t found t h a t on October 28, 1980, served an amended or new offer on Weston who

a c c e p t e d t h a t o f f e r on O c t o b e r 29, 1 9 8 0 .

K u n t z ' s motion f o r

r e c o n s i d e r a t i o n was d e n i e d , and t h i s a p p e a l f o l l o w e d . S e v e r a l i s s u e s a r e b e f o r e t h i s C o u r t on a p p e a l :
1.

Did

the

District

Court

err

in

its

entry

of

judgment i n t h e amount o f $ 2 , 2 7 2 . 1 6 ? 2. Does t h e o f f e r o f judgment e n t e r e d by t h e D i s l i a b i l i t y moot, thereby

t r i c t Court render

t h e q u e s t i o n of

p r e c l u d i n g a p p e a l o f t h e summary j u d g m e n t ?
3.

Did t h e D i s t r i c t C o u r t e r r i n g r a n t i n g p l a i n t i f f -

r e s p o n d e n t ' s m o t i o n f o r summary j u d g m e n t ? A p p e l l a n t a p p e a l s i n p a r t from t h e D i s t r i c t C o u r t ' s f i n d i n g of a n amended o r new o f f e r o f judgment i n t h e amount o f $2,272.16. of the This Court w i l l o v e r t u r n t h e f i n d i n g s of f a c t Court only And, if they are not supported by

District

s u b s t a n t i a l evidence.

t h e e v i d e n c e w i l l be v i e w e d i n Toeckes 611, 37

t h e l i g h t most f a v o r a b l e t o t h e p r e v a i l i n g p a r t y . v. Baker (1980), Mont.

,

611 P . 2 d

609,

St.Rep. 948, 950. The original offer of judgment for $2,200 was filed August 13, 1980, and by stipulation of the parties the offer was extended through October 15, 1980.
By

affidavit, 15,

respondent's counsel stated that on or about October 1980, he talked with appellant's counsel.

They discussed

the fact that appellant's counsel had heard from her client, that her client had come up some, that she was uncertain as to how the total figure compared with the August 13, 1980 offer, but that a letter from appellant's counsel regarding the matter was being forwarded to respondent's counsel. The

affidavit further stated that at no tine during the telephone conversation did either counsel mention or discuss

that the offer contained in the forthcoming letter was to be made, not as an offer of judgment as had already been made and extended, but only as a stipulation of damages. During the conversation also, according to the

affidavit, respondent's counsel again advised counsel of his opinion that an offer of

appellant's if

judgment,

accepted, would render an appeal moot. Appellant's reply memorandum to the motion to enter judgment states there was an oral agreement between the

parties to keep the offer open beyond October

15, 1980,

until respondent received appellant's final position as to damages. Counsel for both parties argued the motion before the District Court. Appellant claims that an offer of judgment, as a

compromise agreement, is contractual and requires a "meeting of the minds" to be binding. Appellant then argues since

t h e r e was no

"meeting

of

t h e minds"

between

the

parties,

t h e r e c o u l d be no o f f e r o f judgment a s a n t i c i p a t e d by R u l e 6 8 , M.R.Civ.P. But t n e q u e s t i o n of whether t h e minds" offer of t h e r e was a " m e e t i n g o f The both

is n o t a s c l e a r - c u t
judgment had been

as appellant purports. several times,

extended

v e r b a l l y and by s t i p u l a t i o n . had been left open beyond

Appellant admitted the o f f e r October 1 5 by agreement until

respondent

received

appellant's

final

position.

R e s p o n d e n t ' s c o u n s e l s t a t e d t h e r e had b e e n no m e n t i o n i n h i s t e l e p h o n e c o n v e r s a t i o n w i t h a p p e l l a n t ' s c o u n s e l t h a t t h e new f i g u r e was meant t o be o f f e r e d i n a n y f o r m o t h e r t h a n o f f e r o f judgment w i t h which t h e p a r t i e s had b e e n d e a l i n g f o r two weeks. C e r t a i n l y t h e r e i s c o n f l i c t i n g e v i d e n c e which m i g h t indicate there was no "meeting of the minds," but such

e v i d e n c e was weighed by t h e D i s t r i c t C o u r t , which d e t e r m i n e d otherwise. W e find the District Court's d e t e r m i n a t i o n is

s u p p o r t e d by s u b s t a n t i a l e v i d e n c e and t h e r e f o r e a f f i r m i t s f i n d i n g o f a new o r amended o f f e r o f judgment f o r $ 2 , 2 7 2 . 1 6 . The q u e s t i o n t h e n becomes w h e t h e r of judgment precludes appeal of the t h e e n t r y of o f f e r judgment by

summary

making t h e q u e s t i o n o f l i a b i l i t y moot. The o f f e r of to Rule 68, judgment was made and e n t e r e d p u r s u a n t This question has not been con-

M.R.Civ.P.

s i d e r e d i n Montana s o we m u s t l o o k t o t h e f e d e r a l r u l e w h i c h

i s n e a r l y i d e n t i c a l t o t h a t i n Montana.
The c a s e b e f o r e u s d o e s n o t a p p e a r t o be o n e w h i c h was contemplated by the rule or has been considered in

connection with it.

R u l e 6 8 , M.R.Civ.P.,

provides:

" O f f e r o f judgment. A t any t i m e more t h a n 1 0 days before the t r i a l begins, a party d e f e n d i n g a g a i n s t a c l a i m may s e r v e upon t h e a d v e r s e p a r t y a n o f f e r t o a l l o w judgment t o b e t a k e n a g a i n s t him f o r t h e money o r property or t o the e f f e c t specified i n h i s o f f e r , with c o s t s then accrued. I f w i t h i n 10 days a f t e r t h e s e r v i c e of t h e o f f e r t h e adverse party serves written notice t h a t the o f f e r i s a c c e p t e d , e i t h e r p a r t y may t h e n f i l e t h e o f f e r and n o t i c e o f a c c e p t a n c e t o g e t h e r w i t h p r o o f o f s e r v i c e t h e r e o f and t h e r e u p o n judgment s h a l l be e n t e r e d . An o f f e r n o t a c c e p t e d s h a l l be deemed w i t h d r a w n and e v i d e n c e t h e r e o f is n o t a d m i s s i b l e e x c e p t i n a proceeding t o determine c o s t s . I f t h e judgment f i n a l l y o b t a i n e d by t h e o f f e r e e i s n o t more f a v o r a b l e t h a n t h e o f f e r , t h e o f f e r e e must p a y t h e c o s t s i n c u r r e d a f t e r t h e making o f the offer. The f a c t t h a t a n o f f e r i s made b u t n o t accepted does n o t preclude a subseq u e n t o f f e r . When t h e l i a b i l i t y o f o n e p a r t y t o a n o t h e r h a s b e e n d e t e r m i n e d by v e r d i c t o r o r d e r o r j u d g m e n t , b u t t h e amount o r e x t e n t o f t h e l i a b i l i t y r e m a i n s t o be d e t e r m i n e d by f u r t h e r proceedings, t h e p a r t y adjudged l i a b l e may make a n o f f e r o f j u d g m e n t , which s h a l l h a v e t h e same e f f e c t a s a n o f f e r made b e f o r e t r i a l i f it is served w i t h i n a reas o n a b l e t i m e n o t l e s s t h a n 10 d a y s p r i o r t o t h e commencement o f h e a r i n g s t o d e t e r m i n e t h e amount o r e x t e n t o f l i a b i l i t y . " The b a s i c p u r p o s e o f R u l e 68 i s t o e n c o u r a g e s e t t l e ment and avoid protracted litigation. 225; F.R.D. S t a f f e n d v. 218; 7 Greenwood

v.

S t e v e n s o n ( 1 9 8 0 ) , 88 F.R.D. Airlines, Inc. (1969), 47

Lake C e n t r a l Federal

Moore's

P r a c t i c e 1168.02. burden placing of

The r u l e a l s o a t t e m p t s t o a l l e v i a t e t h e accrued who costs to the defendant by

subsequently

them o n a p l a i n t i f f and

refuses

t o accept

a good

faith offer

s u b s e q u e n t l y r e c e i v e s a judgment Greenwood, 88 F.R.D.

which a t 228.

is

not greater than the o f f e r .

Here i t i s t h e p a r t y who made t h e o f f e r o f j u d g m e n t who seeks f u r t h e r litigation. Throughout the negotiations

and o f f e r s r e g a r d i n g damages,

appellant maintained h i s s o l e

p u r p o s e was t o p u t t h e c a s e i n t o p r o p e r p o s t u r e f o r a p p e a l . The b u l k o f t h e l e g a l work r e q u i r e d o f t h e p a r t i e s t o a p p e a l

had, because of the previous appeal, been done before the offer. The additional costs of trial if the matter were to

be remanded, however, would be significant. It is apparent from the record that throughout these proceedings both parties were aware of appellant's intent to pursue appeal and respondent's position that acceptance of an offer would make the appeal improper. offer of judgment was made and accepted. Although this fact situation was not contemplated by the comments accompanying Rule 68 or considered by the cases construing it, the underlying philosophy of Rule 68 remains. It would be inconsistent to allow a procedure designed to facilitate settlement and avoid litigation costs to be used to challenge liability and, thereby, extend litigation. The Ninth Circuit considered a similar concept, although American based on different facts, in Cruz v. Pacific 746. Nevertheless, an

Insurance Corp.

(9th Cir.

1964), 3 3 7

F.2d

There, an offer of judgment was made and accepted which specified a matter of a 12% penalty was to be decided by the court. The appellee later argued the court could not award

the 12% damages without first having a trial on the issue of liability. The court held that such a trial was foreclosed "There could never be a valid

by the offer and acceptance.

offer in compromise and a valid acceptance if there had to be a subsequent determination of liability F.2d at 7 5 0 . Rule 68 specifies that an offer of judgment made

. . ."

Cruz, 3 3 7

after a finding of liability but before determination of damages shall have the same effect as an offer made before trial. That effect, if the offer is accepted, is to render

the issue of liability moot. We therefore find the appeal of the summary judgment before us inappropriate. Affirmed.

We concur:

3 49

Chief Justice

, w d



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