Offer of Judgment Cannot Be Revoked During 10-Day Window

The Tennessee Court of Appeals recently took up a civil procedure issue of first impression in the state. In McGinnis v. Cox, No. M2014-00102-COA-R3-CV (Tenn. Ct. App. Oct. 31, 2014), the issue presented was“[w]hether a Rule 68 offer of judgment may be revoked by the offeror within the ten-day time period for acceptance on the basis that the offeror ‘changed his mind.’” Following the weight of authority from federal and other state courts, the Court held that offers of judgment under Rule 68 are generally not revocable prior to the ten-day window expiring.

The McGinnis case arose from a car accident, and though no answer was ever filed, plaintiffs presented defendants with an offer of judgment for a specified amount or the policy limits of the applicable insurance policy. It was undisputed that the offer of judgment was made pursuant to Rule 68. There was some discrepancy between the date on the certificate of service and the date the offer was actually mailed, but defendants’ counsel received it on March 13, 2013. Counsel for both parties spoke two days later and agreed to forgo the deadline due to the postposed mailing. On that same day, however, plaintiff’s counsel faxed defendants’ counsel stating that the offer of judgment was revoked. The basis of this purported revocation was that the plaintiff had changed his mind. Subsequently, but on the same day and well within the ten-day time frame, defendants responded by fax that they accepted the offer of judgment in the amount of the policy limit. As there were no allegations of fraud or other good cause, the trial court found that the offer of judgment could not be revoked and thus granted a motion to enforce the judgment. The Court of Appeals affirmed.

In analyzing the issue, the Court determined that “the failure to include a provision allowing revocation [in Rule 68] is indicative of an intent not to allow revocation within the ten-day time period for acceptance.” The Court stated that adding a revocation provision would “deprive the offeree of the ten  days to consider the offer of judgment  the offeree was clearly intended to possess pursuant to Rule 68’s plain language.” The Court emphasized that the 10-day window was needed to give the offeree an appropriate amount of time to consider the offer, as rejecting such an offer subjects the offeree to certain risks. Allowing revocation would give the offeror the ability to force the offeree into a hasty decision.

Further, despite the fact that an accepted offer of judgment is interpreted under contract law, the Court found that contract law does not provide a basis for revoking a Rule 68 offer of judgment.  “While an accepted offer of judgment is enforced as any other contract, the offer itself is not a creature of contract; it is a mechanism created and governed by the Rules of Civil Procedure.” With this analysis, Tennessee fell in line with most state and federal courts in finding that Rule 68 offers of judgment are not revocable.

Because Tennessee’s Rule 68 allows either a plaintiff or defendant to make an offer of judgment, this is a vital case for all trial attorneys. An offer of judgment must be well thought out and carefully drafted, as once it is submitted to the opponent it cannot be revoked prior to the ten-day window expiring. Under the plain language of the rule as well as the guidance provided from other jurisdictions, this seems to be the correct result and the likely result that the Supreme Court would reach if it ever took up this issue. This holding, then, should govern practitioners’ behavior as they contemplate making offers of judgment in their cases.