By: Tom Walton, Associate, Sutton | Booker | P.C.

The Colorado Court of Appeals provided new guidance on statutory offers of settlement pursuant to C.R.S. § 13-17-202. In Mitchell v. Chengbo Xu, the Colorado Court of Appeals held a plaintiff’s final judgment will always include their actual costs incurred prior to the statutory offer of settlement as well as pre-offer interest. 2021 COA 39.

Mitchell began as a simple personal injury action. During the course of litigation, the defendant extended a statutory offer of settlement in the amount of $5,000, with no mention of the plaintiff’s costs, just over four months before trial. At trial, the plaintiff was awarded $2,700 in economic damages and ultimately determined to be the prevailing party. As the statutory offer made no mention of the plaintiff’s costs, the trial court declined to include the plaintiff’s actual costs into its calculation of plaintiff’s final judgment, resulting in a final judgment of $3,186 based solely on the verdict and pre-offer interest.

The Court of Appeals disagreed with this process, reasoning that any statutory offer of settlement which purports to resolve all claims necessarily includes a plaintiff’s claim for costs accrued up to that point. This outcome drew heavily on the legislature’s use of the term “final judgment” rather than “damages” in C.R.S. § 13-17-202 and the plaintiff’s explicit request for costs in the complaint. Based on this reasoning, the Court of Appeals reversed the trial court’s award of post-offer costs to the defendant, finding that the plaintiff’s $2,983 in costs accrued prior to the statutory offer of settlement should have been included in the calculation of the plaintiff’s final judgment. Thus, the plaintiff’s final judgment was recalculated as $6,169, exceeding the statutory offer and entitling plaintiff to recover actual costs incurred post-offer.

The Mitchell decision highlights additional considerations that must go into making statutory offers, particularly where litigation has gone on for an extended period of time prior to the offer or the offer is calculated with little margin for error with respect to the anticipated verdict. When possible, statutory offers of settlement should be made early, before significant costs can reasonable be incurred. Additionally, defense counsel should take steps early in litigation to obtain discovery regarding the plaintiff’s actual costs by educating the court and plaintiff’s counsel about the Mitchell holding, requesting the plaintiff’s actual costs be included in C.R.C.P. 26 disclosures, and, if necessary, serving written discovery requesting the information.