Boyle v. Ford Motor Company , 235 Ariz. 529 ( 2014 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION TWO
THOMAS GRAHAM BOYLE, JR. AND LISA BOYLE,
Appellants,
v.
FORD MOTOR COMPANY,
Appellee.
No. 2 CA-CV 2014-0029
Filed August 29, 2014
Appeal from the Superior Court in Pima County
Nos. C20120675 and C20123751 (Consolidated)
The Honorable Ted B. Borek, Judge
AFFIRMED
COUNSEL
Joseph C. Dolan, Phoenix
Counsel for Appellant
Bowman and Brooke LLP, Phoenix
By Iman Rita Soliman
and
Thompson Coe Cousins & Irons, L.L.P., Dallas, Texas
By John S. Gersch
Counsel for Appellee
BOYLE v. FORD MOTOR CO.
Opinion of the Court
OPINION
Judge Espinosa authored the opinion of the Court, in which
Presiding Judge Miller and Chief Judge Eckerstrom concurred.
E S P I N O S A, Judge:
¶1 Appellants Thomas and Lisa Boyle challenge the trial
court’s imposition of sanctions under Rule 68, Ariz. R. Civ. P., and
the court’s denial of their motion for new trial concerning those
sanctions. Because the Boyles failed to timely object to the validity
of appellee Ford Motor Company’s offer of judgment, as more fully
set forth below, we affirm.
Factual and Procedural Background
¶2 In June 2010, Thomas Boyle’s Ford F-150 truck caught
fire while parked in the driveway of the residence the Boyles were
renting. The fire spread to the house, the carport, and another
vehicle. In January 2012, Liberty Mutual Insurance Company, which
had insured the residence, filed a subrogation lawsuit against Ford
and the Boyles seeking to recover amounts paid by it for the
damages caused by the fire. In June 2013, the Boyles filed a cross-
claim against Ford asserting strict product liability and negligence.
Ford denied liability.
¶3 In September 2013, Ford served on the Boyles a
document titled: “Defendant Ford Motor Company’s Offer of
Judgment.” That document stated:
Pursuant to Rule 68 of the Arizona Rules of
Civil Procedure, Defendant Ford Motor
Company (“Ford”) hereby makes an offer
of judgment against Ford, and in favor of
plaintiffs Thomas and Lisa Boyle upon all
claims made in the above-entitled action,
for collective and total payment in the
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BOYLE v. FORD MOTOR CO.
Opinion of the Court
amount of $22,500.00 . . . inclusive of all
damages, taxable costs, interest, and
attorney fees incurred to date. Acceptance
of this offer, in its entirety, by plaintiffs
Thomas and Lisa Boyle will represent a
settlement of all claims and an agreement
to stipulate to the dismissal of all claims
against Ford with prejudice. Plaintiffs
Thomas and Lisa Boyle may accept this
Offer of Judgment by providing written
notice of acceptance in accordance with
Arizona Rules of Civil Procedure,
Rule 68(c).
Contemporaneously, Ford filed a “Notice of Service of Defendant
Ford Motor Company’s Offer of Judgment.”
¶4 The Boyles did not accept the offer or object to it. The
parties had several settlement discussions before trial, but no
agreement was reached. In their October 4 joint pretrial statement,
the parties represented to the court that both “ha[d] outstanding
offers of judgment.”
¶5 Following a five-day trial in October, the jury decided
in favor of Ford, which thereafter applied for its costs and for
sanctions pursuant to Rule 68(g). The Boyles filed an “opposition”
to the application arguing “Ford is not entitled to Rule 68 sanctions
because Ford did not serve an offer of judgment that complies with
Rule 68,” Ariz. R. Civ. P. The trial court reviewed Ford’s application
and the Boyles’ opposition and determined Ford was entitled to its
costs and Rule 68(g) sanctions totaling $59,305.17 and ordered that
judgment be entered.
¶6 In December, the Boyles moved for a new trial asking
the court to vacate the portion of the judgment granting the
Rule 68(g) sanctions against them. While the motion was pending,
the Boyles filed a notice of appeal challenging those sanctions. After
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BOYLE v. FORD MOTOR CO.
Opinion of the Court
the court denied the motion for new trial,1 the Boyles filed an
amended notice of appeal, adding to their appeal the court’s denial
of their motion. We have jurisdiction over the appeal pursuant to
A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1)(2).
Standard of Review
¶7 The meaning and effect of a court rule is a question of
law that we review de novo. Pima Cnty. v. Pima Cnty. Law
Enforcement Merit Sys. Council, 211 Ariz. 224, 227, ¶ 13, 119 P.3d 1027,
1030 (2005) (citations omitted). In interpreting court rules, we base
our analysis on the language of the rule. State ex rel. Romney v.
Superior Ct. (Stewart), 168 Ariz. 167, 169, 812 P.2d 985, 987 (1991).
Only if the rule is ambiguous will we look to other rules of
construction. Levy v. Alfaro, 215 Ariz. 443, 444, ¶ 6, 160 P.3d 1201,
1202 (App. 2007).
Rule 68 Sanctions
¶8 Rule 68(a) provides, “At any time more than 30 days
before the trial begins, any party may serve upon any other party an
offer to allow judgment to be entered in the action.” An offer that is
not accepted is deemed rejected. Ariz. R. Civ. P. 68(d). Rule 68(d)
states that if the offeree has any objections to the “validity of the
offer, the offeree must serve upon the offeror, within ten days after
service of the offer, written notice of any such objections.” Ariz. R.
Civ. P. 68(d). Unless the offeree does so, “the offeree waives the
right to do so in any proceeding to determine sanctions under this
rule.” Id.
¶9 The Boyles argued below, as they do here, that the trial
court erred in awarding Rule 68 sanctions because “[t]he document
which Ford served on [them] did not comply with Rule 68.” The
Boyles assert Ford’s offer “nowhere expressed an offer to allow
1The trial court concluded it had jurisdiction to rule on the
motion for new trial pursuant to Craig v. Craig, 227 Ariz. 105, ¶ 13,
253 P.3d 624, 626 (2001) (notice of appeal filed while party’s time-
extending motion pending before the trial court, “is ‘ineffective’ and
a nullity”).
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BOYLE v. FORD MOTOR CO.
Opinion of the Court
judgment to be entered in the action.” Rather, it offered payment
“in exchange for an ‘agreement to stipulate to the dismissal of all
claims against Ford with prejudice.’”
¶10 The trial court rejected the Boyles’ claim, finding their
position “an unnecessarily technical and inaccurate interpretation of
the offer.” It also found the Boyles’ argument “a nullity” because
they had “failed to file and serve timely written objections [to the
offer] . . . as required by Rule 68(d).” We agree with the trial court’s
ruling that the Boyles’ objections to the offer of judgment were
waived pursuant to Rule 68(d).
Waiver
¶11 In 2007, our supreme court amended Rule 68 to include,
inter alia, a waiver provision. That provision, cited above, provides
that if the offeree has any objections to the “validity of the offer,” the
offeree must inform the offeror or waive the right to later object. See
Ariz. R. Civ. P. 68(d). It was drafted and promoted by the State Bar
of Arizona to address the problem of “offerees at times wait[ing]
until the conclusion of the case to attack the validity of the offer on
grounds, for example, that the offeror improperly served or wrongly
stated the intended terms of the offer.” Petition to Amend Rule 68 of
the Arizona Rules of Civil Procedure, Supreme Court No. R 06-0010
(hereinafter “Petition”). The State Bar noted that “in many cases
[prior to the Rule’s amendment], the offeror could have corrected
the claimed defect following notice from the offeree.” Id.
¶12 The Boyles argue that the “defect in Ford’s offer was
fundamental and cannot be waived.” They point to several cases in
which the Rule 68 offeror was denied the benefit of its offer of
judgment when it made an offer that was not sufficiently specific as
to each offeree. See Greenwald v. Ford Motor Co., 196 Ariz. 123,
¶¶ 5-6, 10, 993 P.2d 1087, 1088-90 (App. 1999) (party cannot benefit
from Rule 68 when it failed to comply with the rule by offering an
impermissible, unapportioned lump-sum offer); Duke v. Cochise
Cnty., 189 Ariz. 35, 41, 938 P.2d 84, 90 (App. 1996) (same); Clouse v.
State Dep’t of Pub. Safety, 194 Ariz. 473, ¶¶ 28-30, 984 P.2d 559, 565
(App. 1998) (same), vacated by Clouse v. State Dep’t of Pub. Safety, 198
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Ariz. 473, ¶ 29, 11 P.3d 1012, 1020 (2000).2 In Greenwald, the offeror
noted that the offeree never objected to the form of offer, but the
court held “the burden is not on the offeree to determine whether
the offer meets the requirements of Rule 68 but rather on the
offeror.” Greenwald, 196 Ariz. 123, ¶ 12, 993 P.2d at 1090. Greenwald,
Duke, and Clouse, however, all predate the 2007 amendment to
Rule 68 that addressed unapportioned offers, see Rule 68(f), and
added the waiver provision that shifts the burden to the offeree to
determine whether the offer meets the requirements of Rule 68, see
Rule 68(d).
¶13 The Boyles argue, without citation to authority, that the
Rule 68(d) waiver provision “must relate only to defects or
objections as to matters which do not impact upon whether the
document satisfies the sine qua non of an offer of judgment; i.e. the
offer to allow judgment to be entered.” They suggest “[s]uch
examples may include where an offer to allow judgment is made but
where it misstates whether attorney fees have been claimed in the
2In these cases, the offer of judgment did not set forth a
specific amount permitting the offeree to properly assess its chances
of doing better at trial, see, e.g., Duke, 189 Ariz. 35, 41, 938 P.2d 84, 90,
thus defeating the purpose of Rule 68, see Levy, 215 Ariz. 443, 445,
160 P.3d 1201, 1203 (“Rule 68 is intended to encourage settlement
and avoid protracted litigation.”). The Boyles rely heavily on a case
decided by the Intermediate Court of Appeals of Hawaii, Crown
Props., Inc. v. Fin. Sec. Life Ins. Co., 712 P.2d 504, 510 (1985) (cited by
Greenwald), for the proposition that a defective offer is a “nullity”
that may not be cured, even if the offeree accepts the offer. But in
Crown Properties, the court noted that the offer of judgment would
not dispose of all claims and that “[w]e would not know what
specific obligations the [offer] covers.” Id. Because the offer was
“imprecise,” even though accepted by the offeree, it did not result in
a binding agreement. Id. Here, Ford’s offer of judgment did not
involve an indeterminate amount or fail to dispose of all claims.
Had the offer been accepted by the Boyles, the trial court would
have been able to enter judgment as required by Rule 68(c).
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Opinion of the Court
case; or where the offer of judgment offers equitable relief in a case
that ple[d] only legal relief.” The rule, however, states that waiver
applies if the “offeree has any objection(s) to the validity of the offer.”
Ariz. R. Civ. P. 68 (emphasis added). It is thus apparent that the
“validity” of the offer would not be in question when only
superficial errors were at issue. Indeed, in proposing the rule
change, the State Bar stated the waiver provision might be employed
where “the offeror improperly served or wrongly stated the
intended terms of the offer.” Petition p. 7.
¶14 In this case, Ford served the Boyles with a document
clearly marked “offer of judgment” and filed a notice of offer of
judgment in the trial court. The offer properly cited Rule 68, and
was specific as to the sum offered. The one deficiency noted by the
Boyles is that the offer included “an agreement to stipulate to the
dismissal of all claims” rather than to a judgment.3 The Boyles,
however, never objected before trial, and in the parties’ pretrial
statement, they acknowledged having received an offer of judgment
from Ford. The Boyles objected only following the verdict and after
Ford submitted a form of judgment requesting the Rule 68 sanctions.
¶15 The Boyles never claimed they did not know the
document served on them by Ford was a Rule 68 offer of judgment
or that the offer was not sufficient in its terms or form. As knowing
recipients of such an offer, pursuant to Rule 68(d) the Boyles bore
the burden of informing Ford of any objection to its offer. They
failed to do so, and thus waived their objection in accordance with
that rule.
Attorney Fees and Costs
¶16 Ford requests attorney fees on appeal “under Arizona
Rule of Civil Appellate Procedure 21.” However, as pointed out by
3We do not suggest the Boyles lacked sufficient grounds to file
an objection to Ford’s offer, which proposed “dismissal of all
claims” rather than judgment in accordance with the language of
Rule 68(a) (“any party may serve upon any other party an offer to
allow judgment to be entered in the action”).
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BOYLE v. FORD MOTOR CO.
Opinion of the Court
the Boyles, Ford has not cited to any statute, rule, decisional law,
contract, or other provision authorizing an award of attorneys’ fees.”
Ariz. R. Civ. App. P. 21(a)(2) (rule “does not create any substantive
right to attorneys’ fees”). We therefore decline Ford’s request. See
Country Mut. Ins. Co. v. Fonk, 198 Ariz. 167, ¶ 25, 7 P.3d 973, 978
(App. 2000). As the prevailing party on appeal, however, Ford is
entitled to an award of costs provided it complies with Rule 21, Ariz.
R. Civ. App. P. Id.
Disposition
¶17 For the foregoing reasons, the trial court’s imposition of
sanctions under Rule 68 and its denial of the Boyles’ motion for new
trial are affirmed.
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