Defendant Whose CPLR 3220 Offer Was Rejected is Entitled to Her Attorneys' Fees Related to Proving Damages From Time of Offer

On March 27, 2014, the First Department issued a decision in Abreu v. Barkin & Associates Realty, Inc., 2014 NY Slip Op. 02146, clarifying that an offer of judgment under CPLR 3220 entitles the offering party not just to costs but also to its attorneys' fees related to proving damages.

Article 32 of the CPLR is entitled Accelerated Judgment. Three of Article 32's sections relate to offers of judgment.

CPLR 3219, Tender, provides that:

At any time not later than ten days before trial, any party against whom a cause of action based upon contract, expressed or implied, is asserted, and against whom a separate judgment may be taken, may, without court order, deposit with the clerk of the court for safekeeping, an amount deemed by him to be sufficient to satisfy the claim asserted against him, and serve upon the claimant a written tender of payment to satisfy such claim . . . . Within ten days after such deposit the claimant may withdraw the amount deposited upon filing a duly acknowledged statement that the withdrawal is in satisfaction of the claim. . . . If the tender is not accepted and the claimant fails to obtain a more favorable judgment, he shall not recover interest or costs from the time of the offer, but shall pay costs for defending against the claim from that time.

(Emphasis added). CPLR 3220, Offer to Liquidate Damages Conditionally, provides:

At any time not later than ten days before trial, any party against whom a cause of action based upon contract, express or implied, is asserted may serve upon the claimant a written offer to allow judgment to be taken against him for a sum therein specified, with costs then accrued, if the party against whom the claim is asserted fails in his defense. If within ten days thereafter the claimant serves a written notice that he accepts the offer, and damages are awarded to him on the trial, they shall be assessed in the sum specified in the offer. If the offer is not so accepted and the claimant fails to obtain a more favorable judgment, he shall pay the expenses necessarily incurred by the party against whom the claim is asserted, for trying the issue of damages from the time of the offer. The expenses shall be ascertained by the judge or referee before whom the case is tried. An offer under this rule shall not be made known to the jury.

(Emphasis added). Finally, CPLR 3221, Offer to Compromise, provides:

Except in a matrimonial action, at any time not later than ten days before trial, any party against whom a claim is asserted, and against whom a separate judgment may be taken, may serve upon the claimant a written offer to allow judgment to be taken against him for a sum or property or to the effect therein specified, with costs then accrued. If within ten days thereafter the claimant serves a written notice that he accepts the offer, either party may file the summons, complaint and offer, with proof of acceptance, and thereupon the clerk shall enter judgment accordingly. If the offer is not accepted and the claimant fails to obtain a more favorable judgment, he shall not recover costs from the time of the offer, but shall pay costs from that time. An offer of judgment shall not be made known to the jury.

(Emphasis added). Three similar provisions, but with important differences. CPLR 3219 and 3220 only apply to contract claims, while CPLR 3221 applies in any action except a matrimonial action. Relevant here, CPLR 3220 makes the plaintiff who does not accept the offer to liquidate damages liable not just for costs, but for "expenses necessarily incurred by the party against whom the claim is asserted, for trying the issue of damages from the time of the offer."

In Abreu, where a defendant had made an offer of judgment that was not accepted and the plaintiff later dismissed her claims against the defendant, the First Department applied CPLR 3220, explaining:

Defendant made an offer to liquidate. Plaintiff then withdrew her claims against [the defendant], in a stipulation on the record at trial. Having failed to obtain a more favorable judgment than the offer, plaintiff became liable for costs and fees. This is true even though there was no payment of the offer amount into court. Such payment is not required by CPLR 3220.

(Internal citations omitted).

The First Department's decision is matter-of-fact, but unpacking it a bit, it means that the defendant who made a CPLR 3220 offer is now entitled to her attorneys' fees related to proving damages from the time of the offer, even though (or actually, because) the plaintiff dismissed her from the action.

NOTE: Schlam Stone & Dolan LLP was counsel for Defendants-Appellants in this action.