Hale v. Se. Colo. Power Ass'n

512 P.3d 1068

2022 COA 36

Marjorie Mundell HALE; Justin Mundell, as Co-Trustee of the Sandra Kay Mundell Administrative Trust UAD June 19, 2013, Created Under the Sandra Kay Mundell Revocable Trust Dated June 19, 2013; Clinton Mundell, as Co-Trustee of the Sandra Kay Mundell Administrative Trust UAD June 19, 2013, Created Under the Sandra Kay Mundell Revocable Trust Dated June 19, 2013; Justin Mundell, as Personal Representative of the Estate of Sandra Kay Mundell, Deceased; and Clinton Mundell, as Personal Representative of the Estate of Sandra Kay Mundell, Deceased, Plaintiffs-Appellees,

v.SOUTHEAST COLORADO POWER ASSOCIATION, Defendant-Appellant.

Court of Appeals No. 21CA1757

Colorado Court of Appeals, Division A.

Announced March 24, 2022

Rehearing Denied April 28, 2022

Law Offices of Michael W. Callahan LLC, Michael W. Callahan, Pueblo, Colorado; Porter Law Office, Larry Porter, Springfield, Colorado, for Plaintiffs-Appellees

Law Offices of Gregory Pelton LLC, Gregory V. Pelton, Colorado Springs, Colorado; Butler Snow LLP, David G. Mayhan, Sarah Smyth O'Brien, Denver, Colorado, for Defendant-Appellant

Opinion by JUDGE RICHMAN

¶ 1 To encourage settlement in civil cases, a Colorado statute provides that a plaintiff who makes a written offer of settlement more than fourteen days before trial that is rejected by the defendant is entitled to recover his actual costs incurred after making the offer, so long as he recovers a final judgment greater than the amount offered. § 13-17-202(1)(a)(I), C.R.S. 2021. It works the other way, too: a defendant is entitled to recover his post-offer actual costs when he makes a timely offer that is rejected by the plaintiff and the plaintiff does not recover a final judgment greater than the amount offered. § 13-17-202(1)(a)(II). We refer to such offers as "statutory offers."

¶ 2 In this C.A.R. 4.2 interlocutory appeal, we have been asked to decide whether a court has authority to recognize, and take action with respect to, an alleged mistake in a statutory offer after the offer has been accepted but before a judgment has been entered. As we will explain, the answer is "yes." Accordingly, we reverse the district court's order and remand the case for further proceedings.

I. Background

¶ 3 In 2018, the Badger Hole Fire burned tens of thousands of acres in southeastern Colorado, including property owned by the plaintiffs: a 7,800-acre ranch (the Ranch) and a separate, 200-acre parcel (the Hale Property). The plaintiffs are Marjorie Mundell Hale (Hale), the Sandra Kay Mundell Revocable Trust (the Trust), and the Estate of Sandra Kay Mundell (the Estate).¹ Hale and the Trust own equal undivided interests in the Ranch, while Hale alone owns the Hale Property. In 2020, they sued the defendant, Southeast Colorado Power Association (SECPA), alleging that its negligence caused the fire. (The Estate is a party because it claims that Sandra Kay Mundell paid for certain repairs to the Ranch.) In 2021, the parties proceeded to mediation.

¶ 4 When mediation proved unsuccessful, SECPA served the plaintiffs with the following offers, which it explained were being made "pursuant to C.R.S. 13-17-202":

1. To Plaintiffs JUSTIN MUNDELL AND CLINTON MUNDELL, AS CO-TRUSTEES OF THE SANDRA KAY MUNDELL ADMINISTRATIVE TRUST UAD JUNE 19, 2013, CREATED UNDER THE SANDRA KAY MUNDELL REVOCABLE TRUST DATED JUNE 19, 2013; and JUSTIN MUNDELL AND CLINTON MUNDELL, AS PERSONAL REPRESENTATIVES OF THE ESTATE OF SANDRA KAY MUNDELL, DECEASED[,] Defendant offers the total sum of $1,241,677.00 plus court costs incurred to date. Said Offer of Settlement shall remain open for 14 days after service and if not accepted within that time, shall be deemed withdrawn.

2. To Plaintiff MARJORIE MUNDELL HALE, Defendant offers the total sum of $15,000.00 plus court costs incurred to date. Said Offer of Settlement shall remain open for 14 days after service and[ ] if not accepted within that time, shall be deemed withdrawn.²

¶ 5 The Mundells accepted the first offer, and Hale rejected the second. SECPA then filed a motion to enforce settlement, arguing that, based on the history of negotiations, the offers it made to the plaintiffs were clearly apportioned according to the claims in the case, with the larger dollar figure accounting for all claims arising out of damage to the Ranch — Hale's included — and the smaller dollar figure accounting for all claims arising out of damage to the Hale Property, and the plaintiffs knew it, so the court should enforce the settlement agreement resulting from the first offer (that is, resolving all claims related to the Ranch) accordingly. The plaintiffs responded with a cross-motion to enforce settlement, arguing that the Mundells’ acceptance of the first offer and Hale's rejection of the second created a binding settlement agreement between SECPA and the Mundells but not between SECPA and Hale. In effect, therefore, the plaintiffs argued that all of Hale's claims — those related to the Ranch and those related to the Hale Property — remained unresolved. What is more, they asserted that the agreement is clear and unambiguous and must be enforced without reference to any extrinsic evidence.

¶ 6 In a written order, the district court denied SECPA's motion and granted the plaintiffs’ cross-motion, reasoning that Hale's name was "noticeably absent" from the first offer; that the Mundells accepted that offer; that granting SECPA the relief it sought would require the court to alter or modify the terms of the agreement; and that, according to Centric-Jones Co. v. Hufnagel , 848 P.2d 942 (Colo. 1993), the court lacked the power to do so.

¶ 7 SECPA then moved for reconsideration and, in the alternative, for certification of an interlocutory appeal, contending that it should not have to endure a costly trial on Hale's claims just to seek review of the court's order with respect to the Mundells. The court denied SECPA's motion for reconsideration but granted its motion for certification, concluding the following questions were appropriate for interlocutory review: (1) "Does [ Centric-Jones Co. ] permit [a] trial court to alter or modify a settlement offer made pursuant to C.R.S. § 13-17-202 based on [a] mistake in the drafting of the offer by the offeror?"; and (2) "Does [ Centric-Jones Co. ] permit enforcement of a purported settlement agreement pursuant to C.R.S. § 13-17-202 to be avoided on the grounds of mistake, excusable neglect, and/or lack of authority by the offering party's counsel?"

¶ 8 SECPA then filed a petition to appeal pursuant to C.A.R. 4.2. We granted the petition because we concluded that it satisfied the requirements for an interlocutory appeal. See C.A.R. 4.2(b) (listing the grounds for allowing an interlocutory appeal). We now address the merits of the appeal.

II. Analysis

¶ 9 To resolve the questions in this case, we begin by looking to Centric-Jones Co. and the language of section 13-17-202 as it existed when that case was decided. At the time, subsection (3) provided, in pertinent part, that

[a]t any time more than ten days before the trial begins, a party defending against a claim may serve upon the adverse party an offer of settlement to the effect specified in his offer, with costs then accrued. If within ten days after the service of the offer, the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance, together with proof of service thereof, and thereupon the clerk shall enter judgment.

§ 13-17-202(3), C.R.S. 1992.

¶ 10 The dispute in Centric-Jones Co. concerned the following sequence of events. First, the defendants made a statutory offer to the plaintiffs. Centric-Jones Co. , 848 P.2d at 944. Eight days later, the trial court entered summary judgment in favor of one of the defendants, and the defendants immediately attempted to withdraw their offer. Id. at 945. Knowing of the summary judgment (and, perhaps, of the defendants’ attempted withdrawal), the plaintiffs nonetheless accepted the defendants’ offer within the ten-day period specified in subsection (3) and moved for an order directing entry of judgment. Id. The trial court denied the plaintiffs’ motion. Id.

¶ 11 Reviewing the case, our supreme court explicitly addressed two issues: (1) whether an offeror can withdraw a statutory offer within ten days of making it; and (2) whether a statutory offer is automatically revoked if, within those ten days, the trial court enters summary judgment in favor of the offeror. Id.

¶ 12 Rejecting both propositions, the court explained that "contract principles do not control this situation. An offer of judgment pursuant to section 13-17-202(3) is not a simple private offer of settlement. Rather, it invokes a special statutory process spelled out in clear and unambiguous language which can and should be enforced without engrafting contract principles onto it." Id. at 946. As for a trial court's role in the process, the court continued:

The parties, not the court, are the players under the statute, and the operation of the statute takes place largely outside the aegis of the trial court. ... The court ... has no discretion to alter or modify the offer of judgment if accepted by the offeree, and the clerk must enter the judgment under the plain language of the statute.

Id. at 947.

¶ 13 Accordingly, the court held that "an offer under section 13-17-202(3) is both irrevocable and absolute for the ten-day statutory period" and remanded the case to the trial court with directions to enter judgment in favor of the plaintiffs. Id. at 948.

¶ 14 Two years later, in Domenico v. Southwest Properties Venture , 914 P.2d 390 (Colo. App. 1995), a division of this court addressed a different question regarding statutory offers: Can an erroneous offer that is accepted by the offeree be set aside under C.R.C.P. 60(b) ? In Domenico , defense counsel sent the plaintiff's counsel an offer to settle for $25,000; the plaintiff accepted the offer; and the court...