Summary
The Supreme Court of Arkansas addressed the interaction between Arkansas Rules of Civil Procedure 54(d) and 68 in awarding litigation costs after a rejected offer of judgment. The court held that Rule 68 required the plaintiff to pay post-offer costs but did not preclude the trial court from exercising discretion to award the prevailing plaintiff pre-offer costs under Rule 54(d). The court affirmed in part, reversed in part, and remanded for consideration of pre-offer costs.
Topics
Practice areas
Questions Presented
- Whether an award of post-offer costs to the defendant under Arkansas Rule of Civil Procedure 68 precludes an award of pre-offer costs to the prevailing plaintiff under Rule 54(d).
- Whether Rule 68 requires post-offer costs incurred by both parties to be shifted to the offeree when the judgment obtained is not more favorable than the offer.
- Whether pre-offer costs must be included when comparing the judgment obtained with the offer of judgment.
- Whether the appellate court could review the reasonableness of the costs awarded or the constitutionality of Rule 68 when the trial court made no specific rulings on those issues.
Holdings
- An award of post-offer costs to the defendant under Rule 68 does not preclude the trial court from exercising its discretion under Rule 54(d) to consider awarding pre-offer costs to the prevailing plaintiff.
- Rule 68 requires the offeree to pay all costs incurred after the offer, including post-offer costs incurred by both parties, and correspondingly bars the prevailing plaintiff from recovering post-offer costs under Rule 54(d).
- Pre-offer costs must be included in determining whether the judgment obtained was more favorable than the offer of judgment, but the comparison in this case still showed that Bell's judgment was less favorable than Bershears's offer.
- The appellate court could not review those issues because Bell failed to obtain rulings from the trial court.
Key quotations
“The question here is whether an award of post-offer costs to the defendant under Rule 68 necessarily precludes an award of pre-offer costs to the prevailing plaintiff under Rule 54(d).” (92 S.W.3d at 36)
“We hold that it does not.” (92 S.W.3d at 36)
“The bottom line is that while the trial judge correctly perceived that Rule 68 required him to award post-offer costs to Appellee and, simultaneously, to deny post-offer costs to Appellant, he incorrectly concluded that he lacked the discretionary authority to consider Appellant's motion for pre-offer costs under Rule 54(d).” (92 S.W.3d at 37)
Factual background
Bell sued Bershears for personal injuries sustained in an automobile collision. Before trial, Bershears offered to allow judgment for $13,589 plus costs accrued to that date; Bell rejected the offer. A jury awarded Bell $13,200, and the parties then sought costs. Bell claimed total costs of $1,161.20, including pre- and post-offer costs, while Bershears sought $1,088.05 in post-offer costs.
Procedural history
Bershears made a Rule 68 offer of judgment for $13,589 plus costs accrued to that date, which Bell rejected. Bell prevailed at trial but recovered less than the offer amount when the judgment was compared with the pre-offer costs included in the offer. The trial court awarded Bershears post-offer costs, denied Bell's request for costs, and did not specifically rule on Bell's challenges to the reasonableness of the costs or the constitutionality of Rule 68. The Supreme Court of Arkansas affirmed in part and reversed and remanded in part.
Remand instructions
Remand for the trial court to exercise its discretion under Rule 54(d) and consider whether Bell, as the prevailing party, should recover costs incurred before Bershears's offer of judgment.