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Failure to understand ‘offer of judgment’ costly to defendant

An offer of judgment is different from a settlement, and a federal magistrate judge has awarded attorneys’ fees against a defendant who failed to appreciate the distinction.

Once an offer of judgment is accepted, a plaintiff is free to file notice of the agreement with the federal clerk’s office which “must” enter it, Magistrate Judge Dennis W. Dohnal ruled earlier this month. Any discussions that occurred after the acceptance of the offer was irrelevant, even if the judgment had not yet been filed.

The issue stemmed from a Fair Debt Collection Practice Act filed in Richmond against the Greenberg Law Firm PC based in Virginia Beach. The plaintiff alleged that the firm had violated the act in its effort to enforce a judgment on a credit card debt of about $5,000.

The firm made an offer of judgment under Fed.R.Civ.P. 68: waiver of the amount due on the credit card and payment of $1,500, including attorney’s fees.

After the plaintiff accepted the offer, the parties discussed a way of resolving the case by some other means. When that effort was unsuccessful, her attorney, John Cole Gayle of Richmond, filed the notice of acceptance of the offer of judgment on a Friday afternoon.

On the next Monday, the firm filed a motion objecting to the Rule 68 procedure and asking U.S. Magistrate Judge Dennis W. Dohnal in Richmond to dismiss the case for lack of subject matter jurisdiction. The acceptance of the offer of judgment had rendered the matter moot, the firm argued. The clerk’s office delayed entering the judgment until Dohnal decided the issue.

Extensive briefing and a hearing followed before Dohnal ruled that acceptance of the judgment by the clerk was a ministerial task that the office was obliged to perform.

That left the issue of the attorney’s fees the plaintiff incurred in upholding the entry of the judgment. As the prevailing party, she was entitled to an award of reasonable attorney’s fees to enforce it, Dohnal said.

Gayle claimed fees of $11,950, and the defendant agreed to pay $9,000 to resolve the matter, he said.

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