SYLLABUS
(This syllabus is not part of the opinion of the Court. It has
been prepared by the Office of the Clerk for the convenience of the
reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not
have been summarized).
The facts underlying this appeal are these. On September 10, 1997, John and
Elizabeth Wiese, husband and wife, were injured in an automobile accident (collectively plaintiffs).
They sued James Dedhia, the driver of the vehicle; the cars owner; and
the drivers insurer (collectively defendants). Plaintiffs sought to recover for their personal injuries
and for Elizabeths loss of services and consortium. Plaintiffs claims were submitted to
mandatory arbitration and the arbitrator awarded damages in the amount of $60,000 to
John and $17,500 to Elizabeth. Defendants rejected the arbitration award and demanded a
trial de novo.
Prior to trial, plaintiffs submitted a joint offer of settlement for $75,000. Defendants
rejected that offer. At trial, the parties stipulated to 5% negligence against John
and 95% negligence against Jamir Dedhia. Following a ten-day trial, the jury awarded
$83,814 to John, reduced by 5% to $79,243.30, and $20,336 to Elizabeth. Plaintiffs
thereafter moved for counsel fees, costs, and interest pursuant to Rule 4:58-2. The
trial court denied the motion.
Plaintiffs appealed the decision of the trial court and the Appellate Division reversed,
finding that the combined award of over $90,000 qualified as being in excess
of 120% of the $75,000 joint offer. In reaching its conclusion, the appellate
panel reasoned that the effectiveness of the offer of judgment rule would be
undermined if it were construed to require spousal plaintiffs with interrelated claims to
submit separate offers of judgment.
On remand, the trial judge awarded plaintiffs counsel fees, costs, and prejudgment interest
for the trial and for the appeal. Defendants appealed, challenging, among other things,
the amount of fees and costs awarded. The Appellate Division affirmed and neither
party appealed that decision. Plaintiffs later moved for counsel fees and costs incurred
on the second appeal. The Appellate Division denied plaintiffs motion by order.
The Supreme Court granted certification.
HELD: All costs as a result of the rejection of an offer of
settlement, including those incurred in Appellate Division and Supreme Court proceedings, fall within
the scope of Rule 4:58-2.
1. The plain language of Rule 4:58-2 clearly provides that when a pre-trial
offer is rejected and the money award exceeds 120% of the offer, the
offeror is entitled to all reasonable litigation expenses incurred following non-acceptance. The rule
further entitles the offeror to attorneys fees for such subsequent services as are
compelled by the non-acceptance. The offer of judgment rule is mandatory and does
not permit the judge discretion in determining whether or not to award attorneys
fees and costs of suit in an offer of judgment case. (Pp. 4-7)
2. Rule 2:11-4 provides that counsel fees may be allowed by the Appellate
Court, in its discretion. Nonetheless, Rule 2:11-4 does not trump the language of
Rule 4:58-2. The offer of judgment rule was intended as a procedural mechanism
to facilitate the settlement of cases. It was intended to penalize, through the
imposition of financial consequences, a party who rejects a settlement offer that turns
out to be more favorable than the ultimate judgment. Thus, it would thwart
Rule 4:58-2 to allow a party who has rejected a settlement to escape
mandatory payment for any portion of the costs incurred as a result of
that decision. Although the discretionary provision of Rule 2:11-4 ordinarily governs counsel fees
on appeal, it was not meant to take the place of Rule 4:58-2,
which serves a unique and specific purpose of imposing financial consequences on parties
who unwisely reject an offer of settlement and insist on a trial. (Pp.
7-9)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED for
calculation of fees and costs in accordance with this opinion.
JUSTICES LaVECCHIA, ZAZZALI, ALBIN, WALLACE, and RIVERA-SOTO join in JUSTICE LONGS opinion.
SUPREME COURT OF NEW JERSEY
A-
92 September Term 2005
JOHN WIESE and ELIZABETH WIESE,
Plaintiffs-Appellants,
v.
JAMIR D. DEDHIA, DAMYANTI D. DEDHIA and RUTGERS CASUALTY INSURANCE COMPANY,
Defendants.
Argued October 11, 2006 Decided December 13, 2006
On certification to the Superior Court, Appellate Division.
Rudolph C. Westmoreland argued the cause for appellants (Westmoreland Vesper & Quattrone, attorneys;
Thomas J. Vesper, on the brief).
JUSTICE LONG delivered the opinion of the Court.
The offer of judgment rule provides that, where, as here, a defendant does
not accept a plaintiffs pre-trial settlement offer and the ultimate verdict in the
plaintiffs favor exceeds 120% of the offer, counsel fees and other trial costs
are recoverable by the plaintiff.
See footnote 1
R. 4:58. In this appeal, we have been
asked to delimit the margins of that rule. In particular, we are faced
with the question of whether Rule 4:58 covers counsel fees and costs incurred
on appeal. We hold that it does, and that the consequences of non-acceptance
under Rule 4:58 are mandatory not only for trial costs but for those
incurred on appeal.
[R. 4:58-1 (2005).]
The rule further provided for the consequences of non-acceptance of the claimants offer:
If the offer of a claimant is not accepted and the claimant obtains
a verdict or determination at least as favorable as the rejected offer or,
if a money judgment, in an amount that is 120% of the offer
or more, excluding allowable prejudgment interest and counsel fees, the claimant shall be
allowed, in addition to costs of suit: (a) all reasonable litigation expenses incurred
following non-acceptance; (b) prejudgment interest of eight percent on the amount of any
money recovery from the date of the offer or the date of completion
of discovery, whichever is later, but only to the extent that such prejudgment
interest exceeds the interest prescribed by R. 4:42-11(b), which also shall be allowable;
and (c) a reasonable attorneys fee, which shall belong to the client, for
such subsequent services as are compelled by the non-acceptance, such fee to be
applied for within 20 days following entry of final judgment and in accordance
with R. 4:42-9(b).
[R. 4:58-2 (2005)(emphasis added).]
As noted, the question presented is whether the rule was intended to sweep
in costs and attorneys fees incurred on appeal.
When interpreting court rules, we ordinarily apply canons of statutory construction. E.g., First
Resolution Inv. Corp. v. Seker,
171 N.J. 502, 511 (2002); Douglas v. Harris,
35 N.J. 270, 278 (1961) (applying canons of construction in interpreting court rule).
Accordingly, as with a statute, the analysis must begin with the plain language
of the rule. DiProspero v. Penn,
183 N.J. 477, 492 (2005). The Court
must ascribe to the [words of the rule] their ordinary meaning and significance
. . . and read them in context with related provisions so as
to give sense to the [court rules] as a whole . . .
. Id. at 492 (citations omitted). If the language of the rule is
ambiguous such that it leads to more than one plausible interpretation, the Court
may turn to extrinsic evidence. Id. at 493.
Rule 4:58-2 clearly provides that when a pre-trial offer is rejected and the
monetary award exceeds 120% of the offer, the offeror is entitled to all
reasonable litigation expenses incurred following non-acceptance. R. 4:58-2(a) (emphasis added). The rule further
entitles the offeror to attorneys fees for such subsequent services as are compelled
by the non-acceptance. R. 4:58-2(c). The rule is cast in mandatory and not
exhortatory terms, and, thus, accords judges no discretion regarding whether or not to
award attorneys fees and costs of suit in an offer of judgment case.
R. 4:58-2 (promulgating that such recovery shall be allowed); see also, McMahon v.
N.J. Mfrs. Ins. Co.,
364 N.J. Super. 188, 194 (App. Div. 2003) (stating
that the consequences of non-acceptance of a plaintiffs offer under R. 4:58-2 are
mandatory) (emphasis added).
Although defendants have not advanced an ambiguity argument on this appeal and the
Appellate Division did not set forth any reasons for denying plaintiffs motion, we
surmise that the rationale underlying the denial was that Rule 2:11-4, stating that
appellate counsel fees may be allowed by the Appellate Court, in its discretion,
trumps Rule 4:58-2. R. 2:11-4 (emphasis added). We disagree.
Patterned after Fed. R. Civ. P. 68, the offer of judgment rule was
intended as a procedural mechanism to facilitate the settlement of cases. Inducement to
settlement has remained the fundamental purpose of the rule as it has evolved.
Pressler, supra, cmt. 1 on R. 4:58. We have described the rule as
being designed particularly as a mechanism to encourage, promote, and stimulate early out-of-court
settlement of . . . claims that in justice and reason ought to
be settled without trial. The rule was intended to penalize a party who
rejects a settlement offer that turns out to be more favorable than the
ultimate judgment. Gonzalez v. Safe & Sound Sec. Corp.,
185 N.J. 100, 125
(2005) (citations omitted); see also, Crudup v. Marrero,
57 N.J. 353, 361 (1971)
(explaining that the offer of judgment rule was designed particularly as a mechanism
to encourage, promote, and stimulate early out-of-court settlement of . . . claims
that in justice and reason ought to be settled without trial).
In essence, the rule imposes financial consequences on a party who rejects a
settlement offer that turns out to be more favorable than the ultimate judgment.
Schettino v. Roizman Dev.,
158 N.J. 476, 482 (1999). Given those purposes, it
would thwart the rule to allow a party who has rejected a settlement
to escape mandatory payment for any portion of the costs incurred as a
result of his decision.
That reading of the Rule 4:58-2 can be reconciled with Rule 2:11-4 because
the former is specific and the latter general. Kingsley v. Wes Outdoor Adver.
Co.,
55 N.J. 336, 339 (1970) (holding that when there is a conflict
between a general and a specific act, the latter shall prevail). Put another
way, although the discretionary provision of Rule 2:11-4 ordinarily governs counsel fees on
appeal, it was not meant to take the place of Rule 4:58-2, which
serves the unique and particular purpose of imposing financial consequences on parties who
unwisely reject an offer of settlement and insist on a trial. In sum,
all costs as a result of the rejection of an offer of judgment,
including those incurred in Appellate Division and Supreme Court proceedings, fall within the
scope of Rule 4:58-2.
SUPREME COURT OF NEW JERSEY
NO. A-92 SEPTEMBER TERM 2005
ON CERTIFICATION TO Appellate Division, Superior Court
JOHN WIESE and ELIZABETH
WIESE,
Plaintiffs-Appellants,
v.
JAMIR D. DEDHIA, DAMYANTI D.
DEDHIA and RUTGERS CASUALTY
INSURANCE COMPANY,
Defendants.
DECIDED December 13, 2006
Justice Long PRESIDING
OPINION BY Justice Long
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
CHECKLIST
Footnote: 1
Where a defendant is the offeror, the 20% margin of error operates as
follows: if the ultimate verdict is 80% of the offer or less, the
defendant will be entitled to counsel fees and other trial costs. Pressler, Current
N.J. Court Rules, comment 2 on R. 4:58 (2007).
Footnote: 2
During the litigation of this case, the offer of judgment rule was
amended twice. Those amendments do not pertain to the issue before the Court.