When an offeree rejects an offer of judgment made pursuant to Minn. R. Civ. P. 68, which is ultimately more favorable to the offeree than the net judgment, the offeror is entitled to recover costs and disbursements incurred from the beginning of the lawsuit.
The opinion of the court was delivered by: Blatz, Chief Justice.
Took no part, Anderson, G. Barry, J.
Considered and decided by the court en banc without oral argument.
Appellants D. Scott and Dawn Vandenheuvel challenge the district court's decision allowing respondent Virgil A. Wagner to recover, under Minn. R. Civ. P. 68 ("Rule 68"), his total costs and disbursements incurred from the beginning of the lawsuit. Appellants contend that when the net verdict is less favorable to the offeree than the pretrial offer of judgment, Rule 68 allows the offeror to recover only those costs and disbursements incurred after the offer of judgment was made. A divided panel of the court of appeals affirmed the district court's award of respondent's total costs and disbursements incurred from the beginning of the lawsuit. Vandenheuvel v. Wagner, 673 N.W.2d 524, 525 (Minn. App. 2004). We affirm.
The facts of this case are undisputed. On May 11, 2000, appellant Dawn Vandenheuvel and respondent Virgil A. Wagner were involved in a two vehicle automobile accident. As a result of the accident, Dawn Vandenheuvel sustained injuries to her back and left shoulder and incurred medical bills in excess of $40,000. Appellants Dawn Vandenheuvel and her husband D. Scott Vandenheuvel brought suit against Wagner for personal injuries and loss of consortium.
On May 16, 2002, one month prior to trial, respondent made a written offer of judgment for $25,000 pursuant to Rule 68. Appellants rejected the offer. After a two-day trial, the jury awarded appellant Dawn Vandenheuvel $30,000 in past medical expenses, $1000 for past pain and suffering, and $90 for past loss of earnings. The jury also awarded appellant D. Scott Vandenheuvel $1000 for his loss of consortium claim. Appellants' no-fault carrier paid $20,000 in medical benefits and $90 in past lost earnings. Because neither party requested the jury to make specific findings of fact as to how much of the $30,000 in medical bills were attributable to those paid by the no-fault carrier, the full $20,000 in medical benefits paid by the insurance carrier as well as the $90 for past lost earnings were deducted from the award. Thus, appellants' net judgment was $12,000. The district court concluded that, because the net judgment did not exceed respondent's $25,000 offer of judgment, respondent was entitled, pursuant to Rule 68, to recover all his costs and disbursements, which amounted to $8,022.71.
We review a lower court's legal determinations regarding Rule 68 offers of judgment de novo. Stoebe v. Merastar Ins. Co., 554 N.W.2d 733, 735 (Minn. 1996). While very few of our cases address the principles of rule construction, we said in House v. Hansonthat: "the words of a court rule, like those of a statute, must be taken and construed in the sense in which they were understood and intended at the time the rule was promulgated."*fn1 245 Minn. 466, 473, 72 N.W.2d 874, 878 (1955).
The issue in this case involves the calculation of costs and disbursements under Rule 68 and arises out of amendments made to the rule in 1985. The language of Rule 68 at issue here presently states:
At any time prior to 10 days before the trial begins, any party may serve upon an adverse party an offer to allow judgment to be entered to the effect specified in the offer or to pay or accept a specified sum of money, with costs and disbursements then accrued, either as to the claim of the offering party against the adverse party or as to the claim of the adverse party against the offering party. * * * If the judgment finally entered is not more favorable to the offeree than the offer, the offeree must pay the offeror's costs and disbursements.
Minn. R. Civ. P. 68 (emphasis added).
Before the 1985 amendments, Rule 68 provided, in ...