WA Legal Roundup: Division III
The issue in this case is whether a trial court can deduct costs from verdict amount in a trial de novo to determine whether a party bettered their position after mandatory arbitration. Niccum sued Enquist for damages as a result of an automobile accident. In mandatory arbitration Niccum was awarded $24,496. Enquist requested a trial de novo. Nicumm made an offer of compromise in the amount of $22,000 intended to replace the arbitrator’s award. Enquist rejected the offer. Niccum then made a second offer of compromise in the amount of $17,350 including costs and statutory attorney fees, which Enquist also rejected.
MAR 7.3 and RCW 7.06.050(1) provide that if a party does not better its position from the offer of compromise (or arbitration award), that party will pay the opposing party’s costs and reasonable attorney fees incurred at the trial.
The trial de novo resulted in a verdict awarding Niccum $16,650. Now, even under the new math, that number would appear less than the $17,350 that Niccum offered to compromise the case. However, the trial court then deducted costs in the amount of $1,061.28 from the offer of compromise coming up with an amount of $16,288.72. According to the trial court, this amount compared to $16,650 (the verdict amount), meant that Enquist did not better his position.
Division III looked to previous case law dealing with comparing arbitration awards to trial de novo verdicts and found that trial courts must compare comparables. What?! This means you compare the damages found in the arbitration to damages found in the trial de novo. Since Niccum’s offer of compromise included costs and attorney fees, the trial court was correct in deducting the costs from the offer and then comparing it to the verdict amount. Wow! A verdict of $361.28 more cost Mr. Enquist over $15,000 in attorney fees. Make sure you counsel your client well in considering offers of compromise.