By: Jay Young and Guest Blogger Rock Rocheleu
A reader asked me about the use of Offers of Judgment in family court disputes. Since I rarely darken the halls of our family courts, I have enlisted the help of my friend and family law attorney Rock Rocheleau to assist with this blog post.
What is an Offer of Judgment?
An offer of judgment, sometimes called an OOJ, is a tool to help settle litigation providing a strong economic incentive for the receiving party to accept the offer. It allows a litigant to share an offer to settle the entire case on terms outlined in the offer. If the offer is accepted, the case is resolved by the offer either being paid or being reduced to judgment. If the offer is rejected and the offering party later obtains a better result than the offer, the party who rejected the offer may be required to pay the attorney fees and costs incurred by the party making the offer.
Those fees and costs are calculated from the date the offer was made. In other words, an offer effectively says, “either take this offer or when I get a better result at trial, you will have to pay my fees and costs incurred from today until the end of this dispute.” A wise party will analyze the strengths and weaknesses of its own case against the value of the offer before rejecting an offer that may subject them to penalties. Since many parties and their attorneys suffer from overconfidence bias, this is a good opportunity to take stock of the dispute.
The rule at the same time provides a strong economic incentive for the offering party to make an attractive offer. If the offer is outside the practical realm of possible outcomes at trial, the other side will not accept the offer, and the penalty of having to pay attorney fees and costs will not be triggered. An offer must be close enough to a possible result at trial to place the other side in fear of the penalty. Therefore, the rule serves to encourage both a reasonable offer and a reasonable acceptance.
Offers of Judgement for Family Law
Nevada Rules of Civil Procedure, Rule 68 and newly enacted Nevada Revised Statutes (“NRS”) 17.117 generally govern offers of judgment. Nevada’s legislature has also carved out special procedures for offers of judgment in specific areas of law. For example, an OOJ in a construction defect case is controlled by NRS 40.665. The statute allows, for example, a contractor may settle a claim by repurchasing the claimant’s residence. The statutory offer is considered an OOJ if it includes specific language required by the statute.
For family law cases, our Nevada Supreme Court found NRCP 68 inapplicable to divorce proceedings. “To hold NRCP 68 applicable to divorce matters would be incompatible with the pattern and policy of our law, for several reasons.” Leeming v. Leeming, 87 Nev. 530, 533, 490 P.2d 342, 344, 345 (1971). There are several social considerations supporting this holding. For one, there is an overarching public policy that the best interest of the child is paramount to all custody matters. If a parent becomes too concerned about the possibility of paying the other parent’s attorney fees, it may deter a parent’s good faith claim. The rule could have a chilling effect on determining what is in the interest of the child.
In response, our legislature created NRS 125.141 to specifically allow a different type of offer of judgment in a divorce case. The law allows an offer of judgement in a divorce matter to be made as long as terms regarding child custody, child support, and alimony are not included in the offer. This mechanism provides each parties the opportunity to settlement asset and debt issues. The receiving party has ten days to accept the offer. The NRS 125.141 offer of judgment carries the same potential penalty for rejecting an offer as is found in NRCP 68 and NRS 17.117. NRS 125.141(4)(c).
Additionally, the family court judge is given discretion when determining an award based on the rejection of an offer of judgment. The family court judge may consider, inter alia: 1) whether each party had an attorney; 2) whether the offer was made or rejected in good faith; and 3) whether the rejecting party increased the costs of litigation. NRS 125.141(5).
Awarding Attorney Fees
The effective purpose of an OOJ is to deter unreasonable litigation. In our American system of justice, attorney fees are not awarded to the prevailing party unless required by contract or statute. Moreover, judges have discretion when awarding fees to the prevailing party under contract or statute.
NRS 18.010 provides an award of attorney fees to a prevailing party, and NRS 7.085, provides for an award of attorney fees when a party takes an unreasonable legal position. Family law motions even have a rule for awarding attorney fees if a motion was filed without first attempting to resolve the issue with the other party. EDCR 5.501. Each allows for judge discretion when answering the questions of “who prevailed?” or “was the position unreasonable?” A NRS 125.141 OOJ is more binary and does not allow as much discretion. With a NRS 125.141 OOJ, the question is simple–“Were you awarded more assets than the offer provided?” If the answer is no, then you may owe attorney fees.
Under NRS 18.010 analysis, the court may decide both parties prevailed, and thus refuse to award attorney fees. The Supreme Court has stated that a party faced with the offer of judgment penalty provisions cannot recover any attorney fees based upon some other statute. Albios v. Horizon Communities, Inc., 122 Nev. 409, 418, 132 P.3d 1022, 1028 (2006).
An offer of judgement is a valuable tool used by skilled divorce attorneys. The next time you need leverage to settle the assets and debts portion of your case, think about sending an OOJ. If you need further assistance, please contact Rock.