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By: Wayne S. Melnick
Since they came into existence as part of the 2005 Tort Reform Act, Rule 68 Offers of Settlement have become an effective weapon in the defense attorney’s arsenal. Pursuant to O.C.G.A. § 9-11-68, these offers allow a party to tort litigation in Georgia to make an offer of settlement to the opposing side. If that Rule 68 Offer is rejected and if the rejecting party does not achieve a judgment in an amount equal to or greater than a certain percentage of that offer, then the rejecting party is responsible for all its oppositions attorney’s fees and expenses of litigation from the date of the rejection. In the case of an offer made from a defendant to a plaintiff, if the plaintiff rejects the offer, he must obtain a verdict that is equal to or greater than 75% of the offer.
By statute, Rule 68 offers must remain open for thirty days to be valid. The offer can be revoked prior to the thirty days, but if it is, then the party that made the offer cannot later seek to recover attorney’s fees and litigation expenses under that Code section. If the offer remains open for the full thirty days but is not accepted during that time, then the offer is deemed rejected by operation of statute.
A recent case highlights the importance of the defense understanding the status and timing of its offers relative to other action in the case. In Graham v. HHC St. Simons, Inc., 2013 WL 3358030 (Ga. Ct. App. Case No. A13A0454, decided July 5, 2013), the Georgia Court of Appeals was faced with a situation where competing Rule 68 Offers were made and summary judgment was granted. In Graham, while the defense’s summary judgment motion was pending, the defense made a Rule 68 Offer of $100,000.00. Plaintiff then made a counter-Rule 68 offer of $200,000.00, which, by operation of statute, automatically rejected the defense’s $100,000.00 Rule 68 Offer. The defense then rejected plaintiff’s counter-Rule 68 Offer and sent a fax to plaintiff that “reiterate[d its] previous offer of $100,000.00.” Twenty days after that fax was sent, the trial court granted summary judgment to the defense. The next day, the plaintiff faxed a purported acceptance of the $100,000.00 offer and later filed a motion to enforce settlement.
The Georgia Court of Appeals affirmed the trial court’s denial of the motion to enforce settlement. In doing so, the appellate court found the “reiterated” $100,000.00 offer was not a Rule 68 Offer but merely a common law settlement offer that was revoked upon the granting of summary judgment because the granting of summary judgment concluded the “reasonable time” the offer was required to remain open under common law.
Graham is important to all defendants, insurers and defense counsel because it highlights the importance of being aware of the status of the case with regard to any Rule 68 Offers of Settlement. Had Graham determined the offer in question was a Rule 68 Offer, then the offer would have been required to have remained open for thirty days unless explicitly revoked by the offering party. See O.C.G.A. § 9-11-68(c). If that were the case, then the granting of summary judgment would not have acted to revoke the offer and the defense would have been stuck paying the settlement that was timely accepted by the plaintiff.
It is incumbent upon the defense to ensure that if a Rule 68 Offer is outstanding when summary judgment is granted, that the Rule 68 Offer immediately be revoked in writing as required by Rule 68(c). If no revocation is quickly and timely made, then plaintiff still has the full thirty days to accept the offer even if summary judgment is granted against it.