On December 13, 2006 the New Jersey Supreme Court issued a unanimous decision that interpreted the fee shifting provisions of the Offer of Judgment Rule.  Wiese v. Diedha 2006 WL 3614842.  Its decision establishes in no uncertain terms that the party who fails to accept an offer of judgment will be liable to offering party for all reasonable attorneys fees and costs from the date of the offer through the conclusion of the case, inclusive of any appeal.  Id.

An Offer of Judgment is an offer to settle a case for a selected amount which is made prior to Trial.  Pressler, Current NJ Court Rules, R. 4:58-1 (Gann 2007).  According to the Rule, a party may at any time no later than twenty (20) days prior to the date of Trial serve upon the opposing party an offer to allow judgment in a specific amount or of a specific nature to be entered in their favor or taken against them.  Id.  A party has until the tenth day from to the actual Trial date to accept the offer.  Id.  An offer is not revoked by the other party making a counteroffer, nor can it be withdrawn by the offering party.  R. 4:58-1

Certain penalties exist for failing to accept an offer of judgment.  Pressler, Current NJ Court Rules, R. 4:58-2 (Gann 2007).  These are the very penalties that were the subject of the Wiese decision.  Indeed, according to Wiese, these penalties are mandatory and the trial courts lack the discretion to decide whether to impose them.

To trigger the penalty provisions of the Offer of Judgment rule a threshold condition must be met.  R.4:58-2.  In cases where the plaintiff makes the offer of judgment, the penalty provisions are triggered only if the money judgment awarded is at least 120% of the offer of judgment.  Id.  Conversely, in cases where the defendant makes the offer of judgment the penalties are triggered only if the money judgment awarded is 80% of the total offer of judgment or less.  Id.  Once the threshold is met, in addition to an award of pre-judgment interest at 8% (for prevailing plaintiffs only) the prevailing party is entitled to all reasonable attorney’s fees, costs of suit and reasonable litigation expenses.  R. 4:58-2.

The import of the Wiese decision involves the fee shifting provision of the Offer of Judgment rule.  Simply put, the Wiese decision establishes that the fee shift involves all post offer of judgment litigation costs and fees that flow from the non-acceptance of an offer of judgment. To that end, the Wiese Court specifically made the costs and fees incurred for any post offer of judgment appeal eligible under the fee shifting provisions of R. 4:58-2.  Equally important is the Supreme Court’s holding that the fee shift provision of R. 4:58-2, in cases where an offer of judgment has been made, trumps the discretion allotted to the Appellate Division under R. 2:11-4, to impose fees and costs of an appeal on the non-prevailing party.  Thus, depending upon the circumstances of the individual cases, the New Jersey Supreme Court in its decision in Wiese has turned the Offer of Judgment Rule into a powerful sword.

By: Eric Schlesinger