664 S.E.2d 109
JUSTICE STARCHER concurs and reserves the right to file a concurring opinion.
JUSTICE BENJAMIN dissents and reserves the right to file a dissenting opinion.
2. Costs included under West Virginia Rule of Civil Procedure 68(a) include attorney's fees when any statute applicable to the case defines costs as including attorney's fees. However, costs under Rule 68(a) do not include attorney's fees if the statute creating the right to attorney's fees defines attorney's fees as being in addition to, or separate and distinct from, costs. Syllabus Point 4, Shafer v. Kings Tire Service, Inc., 215 W.Va. 169, 597 S.E.2d 302 (2004).
3. Because the Human Rights Act defines costs as including attorneys
fees, the costs included in a Rule 68 offer of judgment includes attorney's fees. Syllabus
Point 5, Shafer v. Kings Tire Service, Inc., 215 W.Va. 169, 597 S.E.2d 302 (2004).
The appellants and plaintiffs below, Robin L. Croft, Jill A. Armitage, and Brandy G. McCoy, appeal the December 14, 2006, order of the Circuit Court of Ohio County insofar as the order denied the appellants' motion for attorney fees and costs. The appellants brought sexual harassment-related claims under the State Human Rights Act against the appellees and defendants below, TBR, Inc., d/b/a TJ's Sports Garden and Restaurant, Tashe Jovanni Radevski, and Shane Kulpa, and ultimately accepted offers of judgment made, pursuant to Rule 68 of the West Virginia Rules of Civil Procedure, by the defendants and intervenor Erie Insurance Property and Casualty Company. After accepting the offers of judgment, the appellants moved for attorney fees and costs. The circuit court denied the motions on the basis that the offers of judgment were inclusive of fees and costs. After careful consideration of the issue raised and the arguments of the parties, we reverse the ruling of the circuit court and remand for proceedings consistent with this opinion.
Pursuant to the provisions of Rule 68 of the West
Virginia Rules of Civil Procedure (2006), the defendants, TBR,
Inc., d/b/a TJ's Sports Garden and Restaurant, and Tashe
Jovanni Radevski, and Shane Kulpa, hereby allow judgment to
be taken against them by the plaintiff, [Plaintiff's Name], for full
satisfaction and dismissal of all claims which have been and/or
could have been asserted by plaintiff and any other person or
entity in this civil action, including any subrogation claims/liens
had by any person or entity for payments made to or on behalf
of plaintiff, in the total amount of Thirteen Thousand Dollars
and No Cents ($13,000.00), to be paid on defendants' behalf by
Erie Insurance Property and Casualty Company.
This offer of judgment is made for the purposes specified in Rule 68 and is not to be construed either as an admission that the defendants are liable in this action, or that plaintiff has sustained any damages. According to Rule 68(c), if this offer is not accepted within ten days after the service of the offer, it shall be deemed withdrawn. Should plaintiff not accept defendants' offer herein within the expiration of the ten day period, and should the judgment finally obtained by plaintiff against defendants not exceed Thirteen Thousand Dollars and No Cents ($13,000.00), defendants will, pursuant to Rule 68(c), seek an Order from the Court requiring plaintiff to pay all costs incurred in the defense of this case subsequent to the date of this offer.
The appellants accepted the offers of judgment. (See footnote 6) Subsequently, the appellants filed a motion with the circuit court for attorney fees and costs. After a hearing on the matter, the circuit court denied the motion on the basis that the language in the offers of judgment specifically referring to [a]ll claims that have been or could be asserted, is broad enough to include attorney's fees and costs. (See footnote 7) Appellants now appeal the circuit court's ruling.
[b]y its terms, an offer of judgment must include not only an offer of judgment on the claim
raised by the plaintiff, but such an offer must also include 'costs then accrued.' Id. (citation
omitted). We then noted that [t]he Human Rights Act's cost-shifting section defines 'costs'
as 'including reasonable attorney fees[.]' Shafer, 215 W.Va. at 174, 597 S.E.2d at 306.
Finally, we looked to the seminal United States Supreme Court case interpreting Federal
Rule of Civil Procedure 68, Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1
(1985), in which the Supreme Court held that the cost provision of Rule 68 extended to an
award of attorney fees under 42 U.S.C. § 1988 which is the general fee shifting provision for
federal civil rights litigation. Accordingly, this Court held that,
Costs included under West Virginia Rule of Civil Procedure 68(a) include attorney's fees when any statute applicable to the case defines costs as including attorney's fees. However, costs under Rule 68(a) do not include attorney's fees if the statute creating the right to attorney's fees defines attorney's fees as being in addition to, or separate and distinct from, costs.
Syllabus Point 4, Shafer. We further held that, [b]ecause the Human Rights Act defines costs as including attorneys fees, the costs included in a Rule 68 offer of judgment includes attorney's fees. Syllabus Point 5, Shafer. This Court reversed the circuit court's ruling and remanded for the court to make the requisite findings of fact and conclusions of law on the issue of reasonable attorney fees.
Of particular significance to the instant case is our decision in Shafer that although the offer of judgment in that case expressly indicated that the offer of $125,000 include[d] costs then accrued, the sum of $125,000 was not inclusive of attorney fees because the offer of judgment did not explicitly state that it was inclusive of attorney fees. It was the position of Kings Tire that the $125,000 offer of judgment was based upon the average back pay of Mr. Shafer and the then-accrued attorney fees so that no additional fees should be awarded. This Court rejected Kings' argument, and explained our reasoning in footnote 8:
Although it is not an implausible reading of Rule 68 to say that
the explicit inclusion of costs includes attorney's fees where
costs themselves include fees, this is not the position the federal
courts have taken. Rather, as we identified in Meadows [v. Wal-
Mart Stores, Inc., 207 W.Va. 203, 530 S.E.2d 676 (1999)],
courts apply contract principles to offers of judgment, 207
W.Va. at 220, 530 S.E.2d at 693, and in so doing courts tend to
interpret Rule 68 offers against the defendants who drafted
them[.] 12 [Charles Alan Wright, et al.,], Federal Practice &
Procedure . . . § 3005.1 at 112 [2d ed. 1997] (footnote omitted).
Consequently, unless the offer explicitly includes attorney's
fees, the courts construe the offer to be silent as to attorney's
fees if fees are not explicitly included, thereby necessitating an
attorney's fee award beyond the sum included in the offer.
We implied as much in Jordan [v. National Grange Mutual Insurance Co.], 183 W.Va.  at 13 n. 3, 393 S.E.2d  at 651 n. 4 [(1990)], where we noted in the context of an offer of judgment that [t]he recovery of reasonable attorney's fees must be explicitly waived by the parties to bar the court from awarding such fees in those types of cases where reasonable attorney's fees are otherwise recoverable. See also Rohrer v. Slatile Roofing & Sheet Metal Co., 655 F.Supp. 736, 737 (S.D.Ind. 1987) (While a plaintiff can, in a settlement agreement, waive his statutory right to seek an award of costs and attorney fees, waiver ordinarily will be found only when it is expressly provided in the terms of the settlement or in the offer of judgment. (citations omitted)). Based on a similar reasoning, one leading federal treatise has explained, [a]s a consequence, even defendants who honestly believe that they have capped their total liability may find that they are required to pay plaintiff's attorneys fees in addition to the sum in the Rule 68 offer because their offers did not explicitly provide otherwise. 12 Federal Practice & Procedure, supra, § 3005, at 112-13 (footnote omitted). Thus, we agree that [t]he better practice for defendants therefore would be to address the question in . . . explicit fashion in their offers of judgment. Id. at 112 (citing the language from the offer of judgment in Marek which provided that the offer was 'for a sum, including costs now accrued and attorney's fees, of $100,000.').
Shafer, 215 W.Va. at 176 n. 8, 597 S.E.2d at 309 n. 8. Therefore, Shafer stands for the principle of law that unless a defendant's offer of judgment under Rule 68(a) explicitly provides that the amount of the offer is inclusive of costs and attorney fees, the circuit court should determine costs and fees in addition to the amount stated in the offer of judgment.
When we apply this principle to the instant facts, we find that the offers of judgment of $13,000.00 to each of the three appellants do not explicitly state that the sum offered is inclusive of costs and attorney fees. The term explicit is defined as fully and clearly expressed or demonstrated; leaving nothing merely implied; unequivocal. Random House Webster's Unabridged Dictionary 681 (2d ed. 1998). Here, the appellees' offers of judgment do not clearly demonstrate and are not unequivocal that the offers are inclusive of attorney fees and costs. Therefore, we conclude that the circuit court erred in ruling that the offers are inclusive of fees and costs.
The appellees assert several arguments in support of their position that the offers of judgment are inclusive of attorney fees and costs. First, the appellees argue that the fact that the language in the offers of judgment which refers to all claims which have been and/or could have been asserted, the total amount, and the judgment finally obtained, coupled with the fact that the appellants' complaints specifically request attorney fees as part of the relief sought make it clear that such relief is included in the offers of judgment. The appellees also point for support to what they refer to as liability-limiting language in the offers of judgment such as for full satisfaction and dismissal of all claims which have been and/or could have been asserted by plaintiff and any other person or entity in this civil action. We reject this argument. While the language cited by the appellees arguably implies that costs and fees are included in the offers, it does not state it explicitly. In other words, the language in the offers of judgment does not unequivocally express that costs and fees are included in the sum of $13,000.00. Thus, under our rule, costs and attorney fees are not included in the appellees' offers of judgment.
The appellees also aver that the entire circumstances below indicate that costs and attorney fees are included in the offers. According to the appellees, the offers followed global settlement demands by the appellants as well as mediation. In both instances, say the appellees, the proposed terms clearly indicated that the appellants would agree to release all claims against the appellees as well as any claims against Erie. This fact is clear, say the appellees, from the letters that accompanied the offers of judgment. These letters stated that,
Enclosed please find three Offers of Judgment issued to each of
your clients. These offers are being made as a continuation of
the global settlement negotiations instituted by yourself some
time ago, and more recently, continued during the mediation of
this matter held on July 19, 2006. Accordingly, the same
stipulations placed on the offers extended by Erie Insurance
Property and Casualty Insurance Company at the mediation also
apply to the Offers of Judgment enclosed herein. Namely, that
the $13,000.00 offer will be applied to the underlying claims
against Mr. Radevski and TJ's Sports Garden, with the
understanding that the plaintiffs will voluntarily dismiss their
third party bad faith claims against Erie, with prejudice.
This Court finds no merit to the appellees' argument. The appellees do not claim, and this Court can find nothing in the record, to indicate that the parties discussed specifically the issue of whether attorney fees and costs would be included in lump sum offers of judgment or that the appellants explicitly waived their statutory right to seek an award of costs and attorney fees.
In addition, the appellees cite several cases in their brief which hold that a Rule 68 offer of judgment does not require invocation of the specific words attorney fees to unambiguously include such fees in the sum offered. See e.g., Nordby v. Anchor Hocking Packaging Co., 199 F.3d 390 (7th Cir. 1999); Pelkowski v. Highland Managed Care Group, Inc., 2002 WL 1836509 (7th Cir. Aug. 9, 2002 order); Broadcast Music, Inc. v. Dano's Restaurant Systems, Inc., 902 F.Supp. 224 (M.D.Fla. 1995); Blumel v. Mylander, 165 F.R.D. 113 (M.D. Fla. 1996). We are not persuaded by these cases. As noted by the appellants, these cases were in existence when this Court decided Shafer, yet this Court did not adopt the reasoning in these cases. We did, however, cite with approval Rohrer v. Slatile Roofing & Sheet Metal Co., 655 F.Supp. 736, 737 (S.D.Ind. 1987), and that case's statement that [w]hile a plaintiff can, in a settlement agreement, waive his statutory right to seek an award of costs and attorney fees, waiver ordinarily will be found only when it is expressly provided in the terms of the settlement or in the offer of judgment.
The appellees further posit that the language in footnote 8 of Shafer is merely dictum and does not control the instant case. It is true that language in a footnote generally should be considered obiter dicta which, by definition, is language 'unnecessary to the decision in the case and therefore not precedential.' State ex rel. Medical Assurance v. Recht, 213 W.Va. 457, 471, 583 S.E.2d 80, 94 (2003), quoting Black's Law Dictionary 1100 (7th ed. 1999). However, the language in footnote 8 of Shafer was necessary to address Kings Tire's assertion that the $125,000 offer of judgment was based upon the average back pay of Mr. Shafer and then-accrued attorney fees. If this Court had agreed with Kings Tire on this issue, it would not have been necessary to remand for the circuit court to determine reasonable attorney fees in addition to the $125,000 offer of judgment. Moreover, the language in footnote 8 is not an off-the-cuff statement but rather a reasoned analysis that is supported by citation to legal authority. Finally, footnote 8 is consistent with this Court's previous assertions that a plaintiff's waiver of reasonable attorney fees must be explicit. Thus, we reject the appellees' argument on this matter. (See footnote 10)