Court Awards Attorneys' Fees Based on Unaccepted CPLR 3220 Offer to Liquidate Damages

On March 9, 2016, Justice Demarest of the Kings County Commercial Division issued a decision in Saul v. Cahan, 2016 NY Slip Op. 50295(U), awarding attorneys' fees based on an unaccepted CPLR 3220 offer to liquidate damages.

In Saul, the defendant's counsel served an offer to liquidated damages on the plaintiff's counsel. Plaintiff did not accept the offer. Subsequently, the court granted the defendant's motion to dismiss. The defendant then moved for an award of attorneys' fees under CPLR 3220. The court granted the motion, explaining:

CPLR §3220, 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).

. . . Although the plain language of the statute appears to contemplate at least the commencement of a trial before a party could recover attorney's fees pursuant to CPLR 3220, the Third Department granted attorney's fees pursuant to CPLR 3220 where a defendant obtained summary judgment dismissing a case after the joinder of issue. Accordingly, the doctrine of stare decisis requires this court to follow the precedent of the Third Department Appellate Division until the Court of Appeals or the Second Department Appellate Division pronounces a contrary rule. . . . .

(Internal quotations and citations omitted).