Goulet v. USAA Insurance Agency

STATE OF MAINE SUPERIOR COURT
Penobscot, ss Docket No. CV-18-0136

Stephanie Goulet,
Plaintiff,
v. ORDER

USAA Insurance Agency,
Defendant.

Before the Court are plaintiff Stephanie Goulet's motion for interests and costs and motion for
attorney's fees. Defendant USAA opposes both motions.

Plaintiffs motions were filed on March 16, 2020. Defendant's reply was filed on April 22, 2020; this
reply was timely under the extended deadlines established by the Maine Supreme Court's "Pandemic
Management Order," PMO-SJC-2 issued on March 30, 2020 and revised on May 20, 2020. Section
(C) of the management order provides that "49 calendar days are added to the final date of any
unexpired deadline established by court order or court rules." "Pandemic Management Order," PMO­
SJC-2(C)(March 30, 2020) (revised May 20, 2020).

Background

Plaintiff commenced this action on October 17, 2018 based on allegations that she was injured in an
automobile accident and that her automobile insurer, USAA, is liable to her for payments under her
insurance policy. Plaintiff brought further allegations that USAA failed to properly investigate her
insurance claim and improperly denied her payments under her policy and therefore is liable to her
under 24-A M.R.S. § 2436-A and for violations of Maine's Unfair Trade Practices Act.

The parties proceeded through discovery and in early 2020 the Court was in the process of scheduling
a trial date that was agreeable for both parties.

On January 28, 2020, Defendant served upon the Plaintiff an Offer of Judgment. The Offer of
Judgment states, in essence: "In accord with the provisions of Rule 68 of the Maine Rules of
Civil Procedure, the Defendant hereby makes an Offer of Judgment in the amount of Two
Thousand Dollars ..., inclusive of all amounts to which the Plaintiff may be entitled, fees,
interests, and costs incurred to date." (Def.'s Reply, Ex. A.)

On Februaty 5, 2020, the Court received a document entitled "Notice Regarding Offer of
Judgment" from Plaintiff's attorney which stated that Plaintiff "accepts Defendant's Officer
[sic] of Judgment of $2,000.00 with costs then accrued in accordance with [Rule 68] ." (Pl.'s
"Notice Regarding Offer ofJudgment".) The defendant's offer was not submitted together with the
Notice as required by Rule 68. See lvl.R. Civ. P. 68.

Thereafter, on February 21, 2020, the Court received a "Stipulation to Judgment" signed by both of
the parties. The "Stipulation" stated that the parties "hereby stipulate to Judgment in favor of
the Plaintiff, against the Defendant, in the amount of $2,000 on all counts of the Complaint."
Relying on this stipulation, the Court issued a Judgment on March 3, 2020, which mirrored the
Stipulation of Judgment stating that: "Judgment is entered in favor of the Plaintiff and against
the Defendant in the amount of $2,000 on all connts of the complaint."

Two weeks later, Plaintiff filed motions seeking an additional $1,425.64 in interest and costs and
$25,707.00 in attorney's fees. USAA opposed these motions on the grounds that Plaintiff had
accepted the Defendant's Offer of Judgment when she filed her f'ebruary 5, 2020 notice with the
Court and that according to the terms of Defendant's offer, the judgment was for a lump sum of
$2,000 inclusive of attorney's fees, interest, costs, and any other amount Plaintiff may be entitled on
her claims.

Despite informing the Court that she had "accepted" the Offer of Judgment, Plaintiff contends that
she refused Defendant's January 28 offer and that the parties instead agreed to a judgment of $2,000
not inclusive of attorney's fees which is represented in the notice of acceptance she filed with the
Court. She further contends that the "Stipulation to .Judgment" that was filed with the Court on
February 21, 2020 is a superseding agreement and that the Court's judgment mirroring that stipulation
is now controlling on this issue. She contends that according to the terms of the stipulation she is not
precluded from seeking an award of attorney's fees, interest, and additional costs. (Pl.'s Reply ilil 16­
17.)

Defendant denies ever agreeing to a judgment against it on terms other than on the terms of the
January 28 offer.

Analysis

To begin, the Court must first look to the text of l\'1.R. Civ. P. 68, which states in pertinent part:

1\t any time more than 10 days before the trial begins or within such shorter time as
the court may approve, a party defending against a claim may serve upon tl1e adverse
party an offer to allow judgment to be taken against tl1e defending party for the money
or property or to the effect specified in the offer, with costs then accrued. If within 10
days after the service of the offer or within such shorter time as the court may order
the adverse party serves written notice that the offer is accepted, either party may then
file the offer and notice of acceptance together with proof of service thereof and
thereupon the clerk shall enter judgment. I\n offer not accepted shall be deemed
withdrawn and evidence iliereof is not admissible except in a proceeding to determine
costs. If the judgment finally obtained by the offeree is not more favorable tlrnn the
offer, the offeree must pay tl1e costs incurred after the making of the offer. The fact
that an offer is made but not accepted does not preclude a subsequent offer. When
the liability of one party to another has been determined by verdict or order or
judgment, but the amount or extent of the liability remains to be determined by further
proceedings, the party adjudged liable may make an offer of judgment ...

M.R. Civ. P. 68. The Rule is analogous to and derives from Federal Rule of Civil Procedure 68. F11!/er
v. Stale, 490 A.2d 1200, 1202 (Me. 1985); Fed. R. Civ. P. 68. Therefore, the Court will look to federal
casclaw regarding application of federal Rule 68 as well as state law to adjudicate the parties' dispute.
See r,t!!eJ; 490 A.2d at 1202 (l'viaine Rule 68 derives from the federal rule); see genmdly Towme11d v. S.K.R
Dist1ibs., CV-02-0126, 2002 Me. Super. LEXIS 248, at *5 (Dec. 26, 2002) (relying on federal caselaw
on federal Rule 68 to resolve a dispute occurring under M.R. Civ. P. 68).

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The purpose of Rule 68 is to encourage settlement of civil disputes and avoid protracted litigation.
Fu/lei; 490 A.2d at 1202; Mmrk /J, CheS11y, 473 U.S. 1, 5 (1985). It accomplishes this objective by two
means. Util. Automation 2000, Inc. v. Chocf(//JJhatd,ee Elei: Coop., I11c., 298 F.3d 1238, 1240 (11th Cir. 2002).
first, the Rule allows a defendant to make a firm, non-negotiable offer of judgment to the plaintiff.
lei. "Unlike traditional settlement negotiations, in which a plaintiff may seek clarification or make a
counteroffer, a plaintiff faced with a Rule 68 offer may only accept or refuse." Id. If the plaintiff
accepts) "the court automatically enters judgment in his favor; if he refuses, the case proceeds." Id/ see
M.R. Civ. P. 68 (if the offer is accepted and one-party files the offer, notice of acceptance, and proof
of service with the court "thereupon the clerk shall enter judgment"). Second, the Rule encourages
plaintiffs to accept reasonable offers through a cost-shifting provision. Util. A11!0111ation, 298 f.3d at
1240. The Rule's cost shifting provision creates a significant disincentive for plaintiffs to reject an
offer of judgment in favor of pursuing adjudication through trial by imposing a risk of being charged
with "costs incurred after the making of the offer if the judgment finally obtained by the offeree is not
more favorable than the offer." Fajel v. DiPaola, 399 F.3d 403,413 (1st Cir. 2005). "Thereby, the Rule
prompts both parties to a suit to evaluate the risks and costs of litigation, and to balance them against
the likelihood of success upon trial on the merits." Uti!. A11tomation, 298 F.3d at 1240; M,11vk, 473 U.S.
at 5.

It is well established that Rule 68 allows defendants to make lump sum offers of judgment inclusive
of attorney's fees. Townsend I!. S.K.R. Di.rt1ibs., CV-02-0126, 2002 Me. Super. LEXIS 248, at *5 (Dec.
26, 2002) (concluding that under Maine Rule 68 a defendant is "entitled to formulate and tender an
offer that expressly encompassed attorney's fees"); &decki v. Amoco Oil Co., 858 F.2d 397, 401 (8th
Cir. 1988) (Rule 68 allows defendants to make lump sum offers that are inclusive of attorney's fees);
see alsoM,11vk 473 U.S. at 6-7. A Rule 68 offer docs not need to expressly state 'inclusive of attorney's
fees' for the offer to be inclusive of attorney's fees. See Town.rend, 2002 Me. Super. at *7 (suggesting
that if defendant's Rule 68 offer had impliedly excluded plaintiff from seeking attorney's fees plaintiff
would not have been entitled to seek attorney's fees after accepting the offer); &1decki, 858 F.2d at 401
("Rule 68 does not require a laundry list of the clements of relief included within an offer or specific
mention of attorney fees, and it runs counter to the purpose of Rule 68 to assume that forms of relief
not mentioned arc not intended to be included within the sum offered").

To determine whether the parties have formed a Rule 68 agreement, courts apply ordinary contract
law principles. See e.g. Gamyalde-Rijo.r I!. M11nicipality ofCamlina, 799 F.3d 45, 47 (1st Cir. 2015); Mallo,y
11. Ej1id,, 922 F.2d 1273, 1282 (6th Cir. 1991); &decki., 858 F.2d at 400 ("to decide whether there has
been a valid offer and acceptance for the purposes of Rule 68, courts apply the principles of contract
law");}ohnso/1 v. Univ. College o/the Univ. o/Alabama, 706 F.2d 1205, 1209 (11th Cir.), mt. denied, 464 U.S.
994 (1983) (for a Rule 68 agreement to have been formed, there must be a "meeting of the minds"
under elementary principles of contract law). Under Maine law, "a contract exists when the parties
mutually assent to be bound by all its material terms, the assent is either expressly or impliedly
manifested in the contract, and the contract is sufficiently definite" to enable a court to determine its
meaning and foe legal liability to the parties. McOa1" //. Rocha, 2014 ME 4, iJ 16, 86 A3d 22; l'eppmll
'fr. Co. v. 1vlo11ntai11 /-Teir Fin. Co1p. 1998 ME 46, ~ 13, 708 A.2d 651. In regard to the mutual assent
element, it is elementary that: "an offeree cannot accept a different offer from that made by the
offeror. There must be a meeting of the minds." }ohn.ron v. Univ. Coll. o/Univ. o/A!a" 706 f.2d 1205,
1209 (11th Cir. 1983). If the parties enter into a contract under an actual and honest misunderstanding
then no contract is formed. Clark 11. Stetson, 115 Mc. 72, 76 (1916); see 1 Corbin on Contracts § 4.13
(2019) (if there has been no "meeting of the minds, the court will not hold a party bound by a contract

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varying from the party's own understanding unless the context shows that this party's words and
conduct gave the party reason to know that the other party would be and was in fact misled").

In determining whether parties have manifested assent to be bound by the material terms of the
contract, contract law docs not rely on the subjective intentions of the parties, instead it looks to the
objective manifestations of intent that the parties have conveyed to one another. Restaten1cnt
(Second) of Contracts§ 18-23; RLidecki, 858 F.2d at 402-403 ("materially different intent of the parties
as nrnnifested in their actions shows there was no n1utual assent, and hence no binding agree111ent',);
Kirkla!ld v. S11111ise Oppo111111ilies, 200 r.R.D. 159, 161 (D. Mc. 2001) ("contract formation has never been
a matter of telepathy... [c)ontract law ... looks to the manifestations of intent that the parties convey
to one another"). Some courts that have addressed the specific issue of whether there has been the
necessary manifestation of mutual assent to form a Rule 68 agreement (i.e. offer and acceptance), have
followed the rule that the plaintiffs purported acceptance of the defendant's offer must "mirror" the
offer. Radecki., 858 F.2d at 403 (holding that parties did not form Rule 68 agreement where the
plaintiffs purported acceptance did not "sufficiently reflect" the defendant's offer and "therefore does
not amount to an acceptance"). Lastly, the Court 111ust note that under the con11non law of contracts
an offer is not altered unless and until the offeree receives the new offer~'the offeror is the master
of their offer.' Kirkla11d, 200 F.R.D. at 161 (referencing Restatement (Second) of Contracts§ 42).

When Plaintiff filed her Notice of Acceptance with the Court on February 5, 2020, the only offer from
the defendant for which Plaintiff had a power of acceptance was tl1e January 28 offer. It is an
elementary principle of contract law that an offeree cannot accept a different offer from that made by
the offeror and that an offer is not altered unless and until the offeree receives a new offer. The
plaintiffs Notice of Acceptance did not operate to accept a new or amended offer from the defendant.

As this dispute demonstrates, the inclusion or exclusion of fees, interests, and other su1ns such as
attorney's fees were material terms to any settle111ent that were of utinost importance to the parties.

The Court has thought long and hard about whether Plaintiff's letter to the Court stating Plaintiff
"accepts Defendant's Officer [sic] of Judgment of $2,000.00 with costs then accrued in accordance
with [Rule 68]," requires that Plaintiff be deemed to have accepted the Rule 68 Offer of Judgment as
extended by tl1c Defendant. Ultimately, however, the Court finds that Plaintiff did not accept
Defendant's January 28 offer as the plaintiff did not manifest assent to the terms of that offer, despite
Plaintiff's letter to the Court stating Plaintiff "accepts Defendant's Officer [sic] of Judgment of
$2,000.00 with costs then accrued in accordance with [Rule 68]."

The Court next finds that tl1e parties did not form a different agreement for a judgment of $2,000 not
inclusive of attorney fees, interest, or costs because the Defendant did not n1anifest assent to those
terms. Ms. Hurley's email correspondence with Willey Law Offices on January 31, 2020 and her
Affidavit make clear that Defendant never agreed to anything-- other than paying Plaintiff$2,000 and
no more, as stated in the Offer of Judgment. (Def. "Surreply," Ex. C.) (Hurley Aff. iJ 10.) Defendant
never amended its January 28 offer, made a subsequent offer, or manifested assent to any agreement
on terms other than its .Januaiy 28 offer.

Plaintiff points to Defendant's signing of the subsequent "Stipulation to .Judgment" and the filing of
the Stipulation with the court as showing that Defendant accepted an agreement for $2,000 not
inclusive of attorney fees, interest, or additional costs. It is clear that Defendant understandably
believed that Plaintiff had accepted the Offer of .Judgment when Plaintiffs counsel wrote: "accepts
Defendant's Officer [sic] ofJudgment of$2,000.00 with costs then accrued in accordance with

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[Rule 68]" and that the stipulation merely memorialized this agreement. In signing the "Stipulation
to Judgment" and filing it with the Court, Defendant intended simply to prompt the Court to enter
the Rule 68 judgment on the docket, not to accept some new agreement on the terms argued by the
plaintiff. See (Hurley Aff. ~~ 6-12.). 1

In Defendant's Surreply, it implicitly requested that the Court vacate the Judgment if the Court found
that the Offer of Judgment was not accepted as written'. In her argument to the Court, Defendant's
counsel explicitly moved that the Court vacate the Judgment if it found that the Offer of Judgment
was not accepted as writtcn 3•

Under the circumstances of this case, there was no settlement agreement. Plaintiff did not accept the
Offer ofJudgment as extended and Defendant did not agree to any other settlement terms. There was
no meeting of the minds. Pursuant to M.R. Civ. P. 60, the Court vacates the Judgment4 •

Lastly, to the extent Plaintiff received $2,000 from the Defendant, Plaintiff is hereby ordered
to return $2,000 to the Defendant within 10 days of tl1is Order.

Entry:
1. The Court's Judgment signed on March 3, 2020 and entered on the docket on March
5, 2020 is vacated.
2. Plaintiffs Motion for Attorney's Pees and Costs is denied.
3. Plaintiffs Motion for Interest and Bill of Costs is denied.
4. To the extent Plaintiff received $2,000 from the Defendant, Plaintiff is ordered to
return $2,000 to the Defendant within 10 days of this Order.
5. This matter is returned to the trial list.

l .
Date ' 1\nn M. Murray,Justtce
Maine Superior Court

1 Plaintiffs argument that the Stipulation to Judgment "superseded" the Defendant's offer is without merit as
the parties never formed a valid Rule 68 agreement. If the parties had formed a valid Rule 68 agreement, the
Court's judgment following the stipulation would not have superseded or replaced the terms of the Defendant's
January 28 offer; rather the Court's judgment would have necessarily incorporated the terms of the January 28
offer. Fajel, 399 F.3d at 413-414 (a Rule 68 agreement is generally self-executing and the court's entty of
judgment necessarily incorporates the terms of the defendant's underlying offer).

2The relevant section of the Surreply states: "To the extent that the defendant's Rule 68 Offer of Judgment
were [sic} not a binding and self-executing judgment, then lhe exhibits placed before this Court unequivocally
establish that there was not meeting of the minds of this essential tertn of the parties' settlement, rendering the
Stipulation to Judgment voidable." (Def.'s "Surreply," 5.)

3 At oral argument) defense counsel argued: "If the coutt believes that the plaintiff didn't have the intent to
accept that offer of judgment [meaning Def.'s Jan. 28 offer] then I would ask that the judgment be vacated and
we set the case for trial."

4 Neither the doctrine of "law of the case" or "res judicata" are applicable in this circumstance.

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