Tri-State Electric, Inc. v. Western Surety Company et al

Filing 58

MEMORANDUM DECISION AND ORDER IT IS HEREBY ORDERED that Defendants' Motion to Strike Plaintiff Tri-State Electric, Inc.s Acceptance of Offer of Judgment (Docket No. 29 ) is GRANTED. Tri-State's attempted acceptance of Defendants' Offer of Judgment amounts to a rejection of the same. Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO

TRI-STATE ELECTRIC, INC., an Idaho
corporation, and UNITED STATES OF AMERICA
for the use and benefit of APEX ENTERPRISES,
INC., an Idaho corporation,
Plaintiffs,

Case No.: 1:14-cv-00245-EJL-REB
MEMORANDUM DECISION AND
ORDER RE: MOTION TO STRIKE
TRI-STATE ELECTRIC, INC.’S
ACCEPTANCE OF OFFER OF
JUDGMENT

vs.
(Docket No. 29)
WESTERN SURETY COMPANY, a South Dakota
corporation, and SYGNOS, INC., a California
corporation,
Defendants,
__________________________________________
SYGNOS, INC., an Arizona corporation,
Counterclaimaint,
vs.
APEX ENTERPRISES, INC., an Idaho corporation,
Counterdefendant,

Now pending before the Court is Defendant Western Surety Company’s (“Western”) and
Defendant/Counterclaimant Syngos, Inc.’s (“Syngos”) Motion to Strike Plaintiff Tri-State
Electric, Inc.’s (“Tri-State”) Acceptance of Offer of Judgment (Docket No. 29). Having
carefully reviewed the record and otherwise being fully advised, the undersigned enters the
following Memorandum Decision and Order:

MEMORANDUM DECISION AND ORDER - 1

DISCUSSION
This consolidated case arises out of a construction project at the Boise VA Medical
Center. Though its many moving parts are important to the substantive intricacies of the parties’
respective claims and defenses, the instant Motion focuses upon the scope of Defendants’ Offer
of Judgment and, relatedly, the effect of Tri-State’s “acceptance” of the same.
On September 1, 2015, Defendants’ counsel delivered the at-issue Offer of Judgment to
Plaintiffs’ counsel (Plaintiffs are represented by the same law firm). The Offer of Judgment
reads:
COME NOW Defendant Western Surety Company (“Western”) and
Defendant/Counterclaimant Sygnos, Inc. (“Sygnos”), referred to collectively
hereinafter as “Defendants,” by and through their counsel of record David T. Krueck
and Thomas J. Lloyd III of the firm GREENER BURKE SHOEMAKER OBERRECHT P.A.,
and pursuant to Rule 68 of the Federal Rules of Civil Procedure, hereby offer to
allow judgment to be taken against them in the amount of ONE HUNDRED
EIGHTY THOUSAND DOLLARS AND 00/100s ($180,000.00), inclusive of any
and all attorney fees and costs allowed by contract or law incurred to date, and
inclusive of all claims and counterclaims in this case.
This Offer of Judgment is made for the purposes specified in Rule 68 of the Federal
Rules of Civil Procedure and is not to be construed either as an admission that said
Defendants are liable in this action or that the Plaintiffs have suffered any damage.
Offer of J., p. 2, attached as Ex. A to Tri-State’s Accept. of Offer of J. (Docket No. 28)
(capitalization in original). Within the 14 day time-period for acceptance pursuant to FRCP
68(a), Plaintiff Tri-State served written notice of its acceptance of the Offer of Judgment, stating:
COMES NOW, Tri-State Electric, Inc., for itself and for no other party to this
lawsuit, and by and through its counsel of record, Geoffrey J. McConnell, of
McConnell Wagner Sykes & Stacey, PLLC and, in accordance with Rule 68 of the
Federal Rules of Civil Procedure, Tri-State Electric, Inc. Hereby accepts that Offer
of Judgment of Defendant Western Surety Company and Defendant/Counterclaimant
Sygnos, Inc. (collectively “Defendants”) and served by said Defendants on or about
September 1, 2015, in the amount of ONE HUNDRED EIGHTY THOUSAND
DOLLARS AND 00/100s ($180,000.00) which judgment, when entered, shall be
MEMORANDUM DECISION AND ORDER - 2

deemed to include all claims and counterclaims recoverable, including any attorney
fees allowed by contract or the law, and costs incurred to date. A true and correct
copy of the Offer of Judgment is attached hereto as Exhibit A.
Tri-State’s Accept. of Offer of J. (Docket No. 28) (capitalization, bolding, and underlining in
original). The next day, Defendants filed their Motion to Strike, arguing:
The basis for this Motion is that the Offer of Judgment was not accepted according
to the plaint and unambiguous terms of the Offer, which premised the Offer of
Judgment as being “inclusive of all claims and counterclaims in this case” . . ., as the
purported “Acceptance” of the Offer was filed by counsel for both Plaintiffs on
behalf of a sing Plaintiff, Tri-State Electric, Inc. Because the Offer of Judgment was
not accepted according to its terms, the Acceptance filed by Tri-State Electric, Inc.
Is ineffective as a matter of law and should be stricken (or, in the alternative, merely
deemed an ineffective acceptance).
Mot. to Strike, p. 2 (Docket No. 29) (italics in Motion, not Offer of Judgment).
Thus, as evidenced by the volley of filings on this point, the issue before the Court is
whether Defendants’ Offer of Judgment was conditioned upon the acceptance of each Plaintiff to
this action – not just Tri-State. The undersigned concludes that this is indeed the case and that,
based upon its terms, the Offer of Judgment could not be accepted in piecemeal fashion. The
Court’s reasoning is based upon the well settled rule that FRCP 68 offers of judgment are
enforceable according to their terms, and that their terms are to be determined according to the
“usual rules of contract construction.” Nusom v. Comh Woodburn, Inc., 122 F.3d 830, 833 (9th
Cir. 1997); see also Lang v. Gates, 36 F.3d 73, 75 (9th Cir. 1994) (“In determining whether an
offer is proper under Rule 68, courts will apply traditional principles of contract construction.”);
Fed. R. Civ. P. 68(a) (“At least 14 days before the date set for trial, a party defending against a
claim may serve on an opposing party an offer to allow judgment on specified terms, with the
costs then accrued.”) (emphasis added). Therefore, “[t]he offeror is the master of his offer; just
as the making of any offer at all can be avoided by appropriate language or other conduct, so the
MEMORANDUM DECISION AND ORDER - 3

power of acceptance can be narrowly limited.” RESTATEMENT (SECOND) OF CONTRACTS § 29
(1981). As such “[a]n offer not accepted by its terms is rejected.” Lang, 36 F.3d at 75. Any
ambiguities, however, are construed against the drafter. See Erdman v. Coshise Cnty., Ariz., 926
F.2d 877, 880 (9th Cir. 1991).
Unapportioned offers are not per se invalid. See Doe v. Keala, 361 F. Supp. 2d 1171,
1179 (D. Haw. 2005). However, “[i]n general, contract terms are to be given their ordinary
meaning, . . . and when the terms of a contract are clear, the intent of the parties must be
ascertained from the contract itself.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d
1542, 1549 (9th Cir. 1989) (citations omitted). Here, the plain language of Defendants’ Offer of
Judgment provides a proposal to pay $180,000.00 to Plaintiffs Tri-State and Apex, in return for a
judgment in this cause of action. This is so because the Offer of Judgment specifically makes
reference to “all claims and counterclaims in this case” as well as the fact that it should not be
construed “as an admission that . . . Plaintiffs have suffered any damage.” Offer of J., p. 2
attached as Ex. A to Tri-State’s Accept. of Offer of J. (Docket No. 28) (emphasis added). By its
terms, Defendants’ Offer of Judgment is conditioned upon the full and final resolution of the
litigation in its entirely. Nothing within Defendants’ Offer of Judgment could be interpreted as
contemplating anything short of Plaintiffs’ joint acceptance. Defendants could have been more
precise with their wording, but any lack of absolute clarity in this respect is not an ambiguity
permitting Tri-State to opportunistically “accept” the full amount of the $180,000 Offer of
Judgment for only itself, while on the other hand leaving Apex’s claims against Defendants
intact heading toward trial. Such an interpretation would frustrate the understood terms and
objective of Defendants’ Offer of Judgment.

MEMORANDUM DECISION AND ORDER - 4

Accordingly, Tri-State’s purported acceptance of an offer of $180,000.00 on its behalf
only is not valid and, to this extent, Defendants’ Motion to Strike is granted. The Court declines
to further analyze the propriety of Defendants’ unapportioned Offer of Judgment (and, likewise,
its potential negative impacts upon Defendants), as the issue of whether “any judgment finally. .
. obtain[ed] is not more favorable than the unaccepted offer” is not presently before it (nor can it
be given the ongoing status of the action). Fed. R. Civ. P. 68(d).
ORDER
Based on the foregoing IT IS HEREBY ORDERED that Defendants’ Motion to Strike
Plaintiff Tri-State Electric, Inc.’s Acceptance of Offer of Judgment (Docket No. 29) is
GRANTED. Tri-State’s attempted acceptance of Defendants’ Offer of Judgment amounts to a
rejection of the same.
DATED: June 27, 2016

Honorable Ronald E. Bush
Chief U. S. Magistrate Judge

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