Washington Case Law Update: Including Costs in Settlement Offers May Cost You
From the Desk of Kyle D. Riley: Washington’s Mandatory Arbitration Rules require that a party that fails to improve its position after requesting a trial de novo following an arbitration award must pay the prevailing party’s attorney fees. If a party serves an offer of compromise before trial, the offer replaces the arbitration award as the number to beat at trial. But how does a court evaluate a vague or confusing settlement offer when determining whether a party’s position was improved? Read on to find out.
Claims Pointer: In this personal injury case arising out of a car accident, the Washington Supreme Court held that settlement offers will be interpreted as an ordinary person would understand them. This case is a reminder to all litigants to make clear and comprehensible settlement offers, particularly after a trial de novo has been requested following arbitration.
Nelson v. Erickson, No. 92489-9, Washington Supreme Court (August 18, 2016)
Jess Nelson (“Nelson”) sued Michael Erickson (“Erickson”) for personal injuries after a car accident. At mandatory arbitration, the arbitrator awarded Nelson $44,923, including $1,522 for attorney fees and costs. Erickson was dissatisfied and decided to go to trial. Nelson, hoping to avoid trial, presented an offer of compromise for “$26,000 plus taxable costs incurred at arbitration.” Erickson did not respond to the settlement offer.
At trial, the jury awarded Nelson $24,167. The judge added an additional $3,000 for future noneconomic damages on Nelson’s motion, bringing the total award to $27,167. Nelson then moved for attorney fees under Washington’s Mandatory Arbitration Rules on the grounds that Erickson failed to improve his position at trial. According to Nelson, the settlement offer was for $26,000, and because the trial award was for $27,167, Erickson’s position was not improved. The...