When litigating in Louisiana, both in State and Federal court there are some interesting tools that can be deployed by both sides of the dispute in order to encourage settlement. The Louisiana version of this codification is more robust than the Federal one, but both are appropriate for discussion in this post. Federal Rule of Civil Procedure 68 will be talked about in more detail in future posts. For now we will focus on the Louisiana offer of judgment.
Louisiana Civil Code of Procedure Article 790Even the title of this code article seems a bit confusing, which must be a precursor to the actual article itself. The Louisiana Civil Code Article 790 is entitled "Motion for judgment on offer of judgment." I had to sit down and read through this article a few times and read some case law on it to fully get the gist of what the Louisiana Legislature was trying to do when they passed a vote on the language of this article. Surely, the Legislature wanted to create a rule similar to the Federal Rule of Civil Procedure 68. But in true Louisiana fashion, we had to take things a step further. The most interesting and controversial section is located in subsection C. La CCP 790(c) is creatively written text, it reads:
"C. If the final judgment obtained by the plaintiff-offeree is at least twenty-five percent less than the amount of the offer of judgment made by the defendant-offeror or if the final judgment obtained against the defendant-offeree is at least twenty-five percent greater than the amount of the offer of judgment made by the plaintiff-offeror, the offeree must pay the offeror's costs, exclusive of attorney fees, incurred after the offer was made, as fixed by the court."
Layman's Reading of Louisiana Offer of Judgment ArticleIn an effort to clear c0nfusion here, I have broken down the language above into the following formula like sentence: (1) If the Plaintiff makes an offer to settle to the Defendant, and the final judgment equals more than 25% more than that offer, the Plaintiff is entitled to its costs to be paid by the Defendant for not accepting. (2) If the Defendant makes an offer to settle and the final judgment equals 25% less than that offer, the Defendant is entitled to its costs to be paid by the Plaintiff for not accepting. There are a few caveats here. The offer must be made more than 20 days before trial. If a party is awarded costs based on La CCP 970, then its only costs from after the offer is made. Costs are specifically exclusive of attorney fees according to the article. If the offer is accepted, then the judgement is considered final, but neither party can appeal it due to the fact they both agreed to the offer. In essence, both sides to the litigation can use this article to its favor.
Case Law on Offer of JudgmentThe Louisiana Fifth Circuit described the nature of La CCP 970 and what type of costs are included in the Hacienda Construction v. Newman decision from 2010. The court opined:
"These costs refer to costs of litigation, including court costs. Further, the court may include litigation expenses necessary to bring the case to trial after the offer was rejected, which may include the offeror's evidence, experts, and deposition fees... The function of Article 970 is to compensate the rejected offeror who was forced to incur greater trial litigation costs than he would have if the offeree had accepted his settlement offer. The article is punitive in nature and therefore must be strictly construed." Hacienda Constr., Inc. v. Newman, 44 So. 3d 333, 337 (La.App. 5 Cir. 2010). [Internal citations omitted]To add even another twist, if the Defendant prevails in the suit, La CCP 970 does not apply. There is no need if the Defendant wins the suit. If the Defendant wins and is awarded a judgment then the awarding court has discretion to award costs and fees under La CCP 120. See the Broussard v. Martin Operating P'ship, 103 So. 3d 713, 741 (La.App. 3 Cir. 2012), case for further explanation. The court there looked at FRCP 68 case law and did not stray from previous jurisprudence.