Robbins: The curious device of statutory offers
There is strange beast of the law of which I suspect most folks have never heard. I would wager that many lawyers — litigators excepted — may know little of it as well. While it lacks a catchy name like Sasquatch and is less elusive than the Loch Ness monster, it is as shy and retreating as a binturong or clouded leopard.
It is the statutory offer. Or more formally, a statutory offer of settlement. And rather than in the jungles of Southeast Asia or the dewy arboreal soup of the Pacific Northwest, the statutory offer may be found at Colorado Revised Statute Section 13-17-202 and its natural habitat is in the courtroom.
What it provides is this:
As a case is leading up to trial, provided that it is made at least 14 days before the start of trial, either party can serve the other party with an offer of settlement. Big whoop, you may be thinking. Can’t a party offer settlement at any time? Well yeah, but this is different because …
Well, there are consequences.
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In the usual circumstance where an offer is made, it can simply be accepted or rejected or a counter-offer can be made. But, as noted above, a statutory offer of settlement is a horse of different color.
Let’s suppose you are embroiled in a lawsuit. Let’s further suppose that you have been gnashing your teeth and pulling out your hair in a so-far futile attempt to resolve the dang thing without both sides driving themselves directly into the poorhouse. So far, though, no go. You have floated out an offer, only to have the tide of rejection wash it back at your feet.
What’s a body to do?
A statutory offer, perhaps?
One party — say you are the defendant (that is, the person being sued) and it’s you — determines it is time to call the hand. You put your best and final offer on the table. If you wish to make a statutory offer, the way you do so is to reduce the offer to writing and make it clear to the other party that what they now have before them is a statutory offer of settlement.
Once made, the party upon whom it is served (the plaintiff) will have an opportunity to ruminate, cogitate, ponder, consider and consult with his or her attorney whether she or he should accept the offer. But careful there! Too much cogitating, pondering and consulting can have its risks as the offer may be withdrawn while the other party’s thinking cap is on, so long as it is withdrawn in the same manner in which the offer was originally made.
If the plaintiff accepts the offer, game over. The parties shake hands — or not — the settlement is paid, and the parties go on to greener pastures and greater glory. The court will enforce the settlement that was reached.
But what if the offer is rejected or simply not accepted?
That’s where the magic happens and — other than the possibility of leveraging a settlement, often after a protracted stalemate — what is really the whole purpose of making a statutory offer flowers.
If the offer is rejected (or simply not accepted and the offer therefore expires) and the case proceeds to trial, then the plaintiff has to beat the offer made by the defense. Read that last sentence again because it is really the whole point.
If the plaintiff does less well monetarily at trial than the amount in which the statutory offer was made, then … oops … the plaintiff will have to pay up!
An example here might help.
Let’s say your offer to get rid of this pesky litigation was $15,000. Let’s also say for purposes of our example that the plaintiff “beats” the offer and the jury awards him or her $16,000. As she or he has beaten the offer, there are no negative consequences to the plaintiff. But what if…?
What if, instead, the jury says, “uh-uh” and, instead awards the plaintiff $10,000. As the offer was not “beaten” by the plaintiff, owing to the statutory offer having been made, the plaintiff will now be responsible to you and will have to reimburse you all costs spent after his or her rejection of your offer. And this can be considerable, potentially exceeding the amount of the plaintiff’s award.
Litigation is expensive. As such, the end result of winning or losing a statutory offer can be substantial. It is possible that, in rejecting a statutory offer of settlement, a plaintiff might win the battle but end up losing the war.
Rohn K. Robbins is an attorney licensed before the bars of Colorado and California who practices Of Counsel in the Vail Valley with the Law Firm of Caplan & Earnest, LLC. His practice areas include: business and commercial transactions; real estate and development; family law, custody, and divorce; and civil litigation. Mr. Robbins may be reached at 970-926-4461 or firstname.lastname@example.org. His novels, “How to Raise a Shark (an apocryphal tale)” and “The Stone Minder’s Daughter,” are currently available at Amazon.com.