Awards of Costs and Fees when an Offer of Settlement is Made
For civil lawsuits and civil litigation in Colorado and Denver courts, Colorado statutes provide for an award of costs and fees under certain circumstances where a settlement offer has been made by one side and rejected by the other.
In particular, C.R.S. § 13-17-202 provides that costs and fees incurred after a settlement offer has been made and rejected shall be awarded where:
- The plaintiff serves an offer of settlement in writing to the defendant, the defendant rejects the offer or does not accept it within a 14 day time period, and the plaintiff prevails at trial in excess of the offered amount. Under those circumstances the plaintiff shall be awarded costs and fees he or she incurred after the settlement offer was made. But see R.S. § 13-16-104 & C.R.C.P. 54(d) (directing that a plaintiff prevailing in a lawsuit be awarded costs and fees incurred in litigating the action).
- The defendant serves an offer of settlement in writing to the plaintiff, the plaintiff rejects the offer or does not accept it within a 14 day time period, and the plaintiff does not recover a final judgment at trial in excess of the offered amount. Under those circumstances the defendant shall be awarded costs and fees he or she incurred after the settlement offer was made. Further, where the plaintiff prevailed, the plaintiff shall only be awarded costs and fees that accrued prior to the settlement offer.
Importantly, however, costs and fees as defined under the statute do not include attorneys’ fees; but, they do include almost all other costs incurred ancillary to litigation – e.g., “filing fees, subpoena fees, reasonable expert witness fees, copying costs, court reporter fees, reasonable investigative expenses and fees, reasonable travel expenses, exhibit or visual aid preparation or presentation expenses, legal research expenses, and all other similar fees and expenses.” C.R.S. § 13-17-202(1)(b). See C.R.S. § 13-16-122 (items includable as costs).
Further, in comparing offers of settlement made under the statute to a final judgment rendered in an action, interest shall not be included subsequent to the offer date. C.R.S. § 13-17-202(2). In other words, only interest on the judgment prior to the settlement offer date shall be included in determining whether a plaintiff or defendant is entitled to costs under the statute.
“The intent of [C.R.S. § 13-17-202] is to encourage settlements by imposing costs upon a rejecting party in the event the final result is less favorable to that party than the offer. Bennett, 992 P.2d at 672. This provision modifies [C.R.S. § 13-16-104]. . . , and C.R.C.P. 54(d) to prohibit a prevailing party from recovering costs when that party rejected a settlement offer that exceeded the ultimate award. Id. at 672-73.” Hall v. Frankel, 190 P.3d 852 (Colo.App. 2008).
Overall, the statute provides that if a party makes a settlement offer and that offer is rejected by the other side, and the party that made the offer receives a more favorable judgment at trial, then the rejecting party is responsible for paying the costs incurred by the offering party after the offer was made.
© 2016 J.D. Porter, LLC; Jordan Porter. Denver, Colorado.