Nusom v. Comh Woodburn, Inc.

122 F.3d 830, 1997 WL 525527
Court of Appeals for the Ninth Circuit·Decided August 26, 1997·No. No. 96-35632·Published·Cited by 49 cases

Opinions

RYMER, Circuit Judge.

We must decide whether a plaintiff waives a statutory entitlement to seek attorney fees under the Truth in Lending Act (TILA), 15 [832]*832U.S.C. § 1640, and Oregon’s civil racketeering statute, Or.Rev.Stat. § 166.725(14) (ORI-CO) — both of which make attorney fees an item to be awarded separate from costs — by accepting an offer of judgment under Federal Rule of Civil Procedure 68 for “$15,000, together with costs accrued to the date of this offer.”

Steven and Marianne Nusom appeal the district court’s order denying their request for attorney fees. The court held that the Nusoms waived any claim they might have had by accepting a Rule 68 offer of judgment for $15,000 plus costs since attorney fees are not recoverable as costs under TILA and ORICO. We disagree, because a Rule 68 offer for judgment in a specific sum together with costs, which is silent as to attorney fees, is ambiguous when the underlying statute does not make attorney fees a part of “costs.” As a waiver or limitation on attorney fees must be clear and unambiguous, we must reverse.

I

The Nusoms filed suit on August 25, 1995 in Oregon Circuit Court against The CIT Group/Sales Financing, Inc., the lender on their purchase of a mobile home and parcel of land, and others for problems arising out of the purchase.1 The complaint alleges that CIT failed to make disclosures required by TILA and that it engaged in illegal practices under ORICO in connection with a loan that it made. The Nusoms sought $ 45,000 in actual damages, treble damages under ORI-CO, and $ 300,000 in punitive damages on each of three claims against CIT.

Soon after CIT removed the action, it made an offer of judgment under Rule 68,2 which the Nusoms accepted December 27, 1995. The offer of judgment states:

Pursuant to Fed R Civ P 68, the CIT Group/Sales Financing, Inc., (CIT) hereby offers to allow Judgment to be taken against CIT and in favor of Plaintiffs in the amount of $ 15,000.00, together with costs accrued to the date of this offer, as provided in Fed R Civ P 68.

On January 18, 1996, the Nusoms filed a proposed “Order For Final Judgment Under Fed.R.Civ.P. 54(b) Against the CIT Group/ Sales Financing, Inc.” The proposed order stated:

This is to certify that ... the undersigned hereby determines that there is no just reason for delay and expressly directs the entry of a final judgment in the amount of $ 15,000, together with costs and reasonable attorney fees accrued through the date of December 17, 1995, against ... CIT. (Emphasis added)

CIT objected to the proposed form of order because it directed entry of final judgment for costs and attorney fees, whereas its offer of judgment (accepted by the Nusoms) offered to settle for costs without reference to attorney fees. After considering the Nusoms’ response, the district court entered a Rule 54(b) order for final judgment that did not mention attorney fees:

This is to certify that ... the undersigned hereby determines that there is no just reason for delay and expressly directs the entry of a final judgment in the amount of $ 15,000, together with costs accrued through the date of December 17, 1995 against ... CIT.

The same day, the district court directed the Nusoms to file a motion for attorney fees pursuant to Local Rule 265. After they did, the district court denied the motion for fees on the ground that the Nusoms waived any claim they might have had when they accepted the offer of judgment limiting their recovery to the costs accrued. The Nusoms timely appealed.

[833]*833II

The Nusoms argue that attorney fees are mandatory in a successful action to enforce both TILA and ORICO, and that the court should have awarded fees because entry of final judgment against CIT is a “successful action” under TILA. They submit that they did not waive attorney fees by accepting CIT’s Rule 68 offer, as the offer was silent on the subject. The district court got it wrong, the Nusoms suggest, by confusing the attorney fee provision in TILA (which does not define costs to include attorney fees) with statutes such as the Civil Rights Act, 42 U.S.C. § 1988 (which does), in the context of a Rule 68 offer to settle for a dollar amount with “costs.” Since TILA mandates the recovery of attorney fees in addition to costs, they conclude, CIT’s Rule 68 offer does not prevent that recovery.

CIT counters that because Rule 68 adopts the definition of costs in the underlying statute, and in the ease of TILA the term “costs” unambiguously excludes attorney fees, its offer in the language of Rule 68 likewise unambiguously excludes attorney fees. It contends that the court has no authority to modify its offer by adding attorney fees without its consent. In any event, CIT argues, none of the substantive issues in the case was litigated, so the Nusoms haven’t proved any wrongdoing and cannot be “successful” for purposes of their TILA claims or “prevailing parties” for purposes of ORICO. Finally, CIT urges, allowing the Nusoms attorney fees on top of the offer would frustrate the purposes of Rule 68; as CIT sees it, if the Nusoms had rejected the offer, their final recovery, including pre-offer attorney fees, would be compared to the $15,000 figure to determine whether or not to invoke Rule 68’s cost-shifting provisions.

We need not completely reinvent the wheel to resolve this appeal, for the Supreme Court has told us that Rule 68 incorporates the definition of costs under the relevant substantive statute. Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). Thus, in Marek, which was a civil rights action for which attorney fees may be awarded pursuant to 42 U.S.C. § 1988 “as part of costs,” an offer to settle for a sum “including costs now accrued and attorney’s fees” had the effect of precluding the plaintiff from recovering attorney fees incurred after rejecting the offer that turned out to be more favorable than what he got at trial.

We also have held that the “usual rules of contract construction” apply to a Rule 68 offer of judgment. Guerrero v. Cummings, 70 F.3d 1111, 1113 (9th Cir.1995), cert. denied,—U.S.-, 116 S.Ct. 2549, 135 L.Ed.2d 1068 (1996). Therefore, ambiguities are construed against the offer- or. Erdman v. Cochise County, 926 F.2d 877, 880-81 (9th Cir.1991). But “Rule 68 offers differ from contracts with respect to attorney fees,” id. at 880; as to them, any waiver or limitation must be clear and unambiguous. Guerrero, 70 F.3d at 1113; Erdman, 926 F.2d at 880.

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Nusom v. Comh Woodburn, Inc., 122 F.3d 830, 1997 WL 525527 (9th Cir. 1997).

122 F.3d 830 (Nusom v. Comh Woodburn, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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