Typically, defendants ignore an offer of judgment filed by a plaintiff. The published Appellate Division decision in Feliciano v. Faldetta, 2014 N.J. Super. LEXIS (App. Div. 2014) should give defendants a reason to take these offers seriously. In Feliciano, a $15,000 offer of judgment, which was rejected, turned into a $109,185 judgment after attorneys fees, prejudgment interest, and costs were added to the jury award.
This case involved a bodily injury claim arising from an automobile accident. The plaintiff suffered a neck and back injury. The defendant tried to obtain a dismissal through summary judgment based upon the plaintiff’s failure to satisfy the verbal threshold.
After that motion was denied, the plaintiff filed an offer to take judgment in the amount of $15,000. The defendant rejected the offer. Under the New Jersey offer of judgment rule, R. 4:58-2, if an offer is rejected by a defendant and the verdict is at least 120% of the offer, then the defendant must pay all reasonable litigation expenses incurred thereafter, including attorneys fees, prejudgment interest, and expert fees. The case was tried and a $50,000 jury verdict was awarded.
Thereafter, the plaintiff submitted a request for attorneys fees in the amount of $62,780. Presumably, these fees were primarily trial costs. There was a 3 day trial and it was chaired by two attorneys. The trial court judge reduced that request to $42,230 plus $6,831 in costs. The trial court entered a total judgment of $109,185 against the defendant.
In this appeal, the defendant argued that this fee award was excessive and would be duplicative unless there was a one-third contingent fee reduction from this attorneys fee award. The Appellate Division disagreed and held that this fee award was to pay for the work performed after the offer of judgment was rejected. It was between the attorney and the plaintiff to work out fair compensation for services rendered prior to that period.
As a further problem, however, the policy limit was only $50,000. The defendant’s counsel argued that this award of attorneys fees would constitute a hardship to the defendant due to the policy limit. The Appellate Division refused to consider that argument because it had not been raised below with the trial court. Moreover, the court noted that the defendant may have a Rova Farms claim against his carrier for its failure to settle within his policy limit.
In a cross-appeal, the plaintiff argued that she should have been entitled to a fee enhancement, above the hourly rate which was approved by the trial court. The Appellate Division, however, agreed with the trial court judge that no fee enhancement was required in this case. It noted that the fee-shifting provisions of Rule 4:58 was to encourage settlement, rather than to provide an incentive for representation of plaintiffs in certain types of cases. That was the only good news in this case.
Thus, this case shows the risk of not accepting an offer of judgment. Not only was a judgment entered of more than 7 times the original judgment offered, but now the defendant’s carrier may be faced with paying almost twice its policy limit if the defendant succeeds under a Rova Farms claim.
