Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Filed December 30, 1997
Hennepin County District Court
File No. 9510490
Mark C. Vanderlist, 14569 Grand Avenue South, Burnsville, MN 55306 (for appellant)
Angela C. Shackleford, Steven L. Viltoft, Labore & Guilliani, Ltd., 10285 Yellow Circle Drive, P.O. Box 70, Hopkins, MN 55343 (for respondent)
Considered and decided by Randall, Presiding Judge, Norton, Judge, and Forsberg, Judge.
Appellant argues that the district court erred when it allowed respondent to tax costs and disbursements following a jury verdict where the net judgment, after collateral source
offsets and comparative negligence apportionment, was less than the offer of judgment served by appellant. We reverse.
On October 24, 1996, the jury returned its verdict, finding that Maloney was 60% negligent, that Borchert sustained permanent injury, and that she sustained damages in the amount of $11,651. The district court adopted the jury's verdict and ordered judgment against Maloney in the amount of $6,990.60, plus costs and disbursement.
Following a posttrial motion by Maloney the district court issued amended findings of fact, conclusions of law, and order for judgment, reducing the jury verdict by $4,147 to account for the no-fault medical benefits received by Borchert. The remaining $7,504 was reduced by 40 percent to reflect Maloney's 60% negligence. The court entered judgment for Borchert in the amount of $4,502.40, plus costs and disbursements. In addition, the court ruled that pursuant to Minn. R. Civ. P. 68, Maloney was entitled to judgment against Borchert for his costs and disbursements.
Maloney moved the district court for Amended Findings of Fact, Conclusions of Law, and Order for Judgment, requesting that pursuant to Minn. R. Civ. P. 68, only he could tax his costs and disbursements and that Borchert could not tax hers. The district court denied Maloney's motion, ruling that Borchert was allowed to tax her reasonable disbursements pursuant to Minn. Stat. § 549.04 (1996), because she was the prevailing party at trial. The court reasoned that, although Maloney could tax his reasonable costs and disbursements pursuant to Minn. R. Civ. P. 68, the rule did not prevent Borchert from recovering costs and disbursements under Minn. Stat. § 549.04. Ultimately, the district court entered judgment in the amount of $8,778.87 in favor of Borchert, and in the amount of $4,640.34 in favor of Maloney.
Pursuant to Minn. R. Civ. P. 68, any party may serve on an adverse party, an offer to allow judgment. "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. Rule 68 provides an incentive to make settlement offers by shifting the payment of costs and disbursements to the offeree in the event the outcome at trial is not as favorable as the offer. Koop v. Independent Sch. Dist. No. 624, 505 N.W.2d 93, 95 (Minn. App. 1993). An award of costs and disbursements under Rule 68 is not discretionary. Imperial Developers v. Seaboard Sur. Co., 518 N.W.2d 623, 628 (Minn. App. 1994), review denied (Minn. Aug. 24, 1994).
Maloney argues that Borchert is not allowed to tax her costs and disbursements because she refused his offer of judgment made pursuant to Minn. R. Civ. P. 68 and then received a net judgment in an amount less than the offer of judgment. We agree. Where a plaintiff rejects a Rule 68 offer of settlement by a defendant and receives a judgment less favorable than the offer, plaintiff is denied costs and disbursements. Mathieu v. Freeman, 472 N.W.2d 187, 188 (Minn. App. 1991), review denied (Minn. Aug. 29, 1991).
Here, prior to trial, Maloney properly served Borchert with an offer of judgment in the amount of $10,000. Borchert refused this offer, deciding instead to proceed to trial. Following trial, the jury returned a verdict finding that Borchert sustained damages in the amount of $11,651. After appropriate collateral source offsets and negligence apportionment, the court entered judgment in Borchert's favor in the amount of $4,502. This amount is significantly less than Maloney's Rule 68 offer.
Because Borchert rejected Maloney's Rule 68 offer and received a judgment less favorable than Maloney's offer, under Mathieu, she is precluded from recovering costs and disbursements.