Arizona Court of Appeals Division Two Holds That the Burden to Determine Whether a Rule 68 Offer of Judgment Is Valid Lies with the Offeree.

Thomas and Lisa Boyle brought a product liability suit against Ford Motor Company.  Before trial Ford served on the Boyles a document styled as an “Offer of Judgment” which cited Rule 68 of the Arizona Rules of Civil Procedure.  However, the document did not offer to allow judgment to be entered against Ford, as required by Rule 68(a).  Instead, the document offered to “settle all claims” and stipulate to dismissal with prejudice.  The Boyles rejected the offer by declining to respond, and did not serve objections to the offer within ten days as required by Rule 68(d).

Ford received a favorable jury verdict at trial and applied to the trial court for sanctions under Rule 68(g).  The Boyles opposed, arguing that Ford had never served an offer of judgment which complied with Rule 68.  The trial court ruled in favor of Ford and awarded costs and Rule 68 sanctions of nearly $60,000.  The Boyles timely appealed.

The Arizona Court of Appeals affirmed the decision.  The Court recounted the history of the 2007 amendment to Rule 68, which added a new provision which waives all objections to the validity of an offer of judgment if those objections are not served on the offering party within 10 days of receipt of the offer.  The Court noted that this waiver provision “shifts the burden to the offeree to determine whether the offer meets the requirements of Rule 68.”  Although the Court does not address whether the offer was a valid Rule 68 offer of judgment when made, it notes that the Boyles acknowledged in a pretrial statement that they had received a Rule 68 offer of judgment from Ford.  This placed the burden on the Boyles to object on the grounds that the offer was for settlement rather than entry of judgment.  The Court also denied Ford’s request for fees on appeal because Ford failed to cite any authority for the award.

Judge Espinosa authored the opinion; Presiding Judge Miller and Chief Judge Eckerstrom concurred.