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Arizona Court of Appeals Confirms No “Good Faith”? Requirement for Offers of Judgment

by | Aug 14, 2017 | Insurance

Stafford v. Burns, —P.3d—,2017 WL 164310 (Ariz.App. January 17, 2017)

This is a medical malpractice and wrongful death case arising from emergency medical care rendered after a methadone overdose, the Arizona Court of Appeals “decline [d] to impose a requirement that Offers of Judgment be deemed reasonable before sanctions are imposed under Rule 68(g).”

In Arizona, a Rule 68 Offer of Judgment requires mandatory shifting of post-offer expert fees and double taxable costs if an Insurer, or any defendant, subsequently beats an Offer of Judgment at trial. Rule 68 states, “If the offeree rejects an offer and does not later obtain a more favorable judgment…the offeree must pay, as a sanction, reasonable expert witness fees and double the taxable costs…incurred by the offeror after making the offer…” ARCP 68(g).

In Stafford, the Court of Appeals rejected a “good faith” requirement in Offers of Judgment for two primary reasons.

First, “Arizona courts have uniformly held, consistent with the rule’s plain language, that sanctions imposed by Rule 68(g) are both mandatory and punitive.”

Second, adding a “good faith” requirement would undermine rather than serve the purpose of Offers of Judgment—“to promote settlement and avoid protracted unnecessary litigation.” The Court of Appeals reasoned that a “reasonableness requirement would only increase the cost of litigation by inviting the expenditure of time to resolve an offer’s validity [i.e. reasonableness and/or good faith], driving the parties’ settlement positions further apart.” (emphasis in original).

What are the primary takeaways for insurers in Arizona bad faith cases?

Arizona continues to enforce Offers of Judgment that encourage settlement and Stafford makes it more likely that Arizona will enforce a “Conditioned Offer of Judgment,” i.e. an Offer of Judgment conditioned on no entry of judgment, execution of a Settlement Agreement, and filing a Stipulation to Dismiss. See “How Insurers Can Shift the Risks of Attorney Fees, Expert Fees, and Costs in Arizona Bad Faith Cases.”

Nathan Meyer

Nathan Meyer

Nate is a partner at Jaburg Wilk in Phoenix, Arizona. His practice focuses on insurance coverage, bad faith litigation, commercial litigation, general liability litigation and professional liability litigation. He represents insurance companies, contractors, policy holders, global corporations, insurance adjusters, business owners, insurance agents and professionals. If you have questions about insurance law contact Nate at 602-248-1032 or ndm@jaburgwilk.com