Tennessee Rule 68 Offer of Judgment Cannot be Revoked Within Ten Day Period

The Tennessee Court of Appeals recently decided an issue of first impression in Tennessee involving an offer of judgment.  The case of Kaitlyn Alexis McGinnis v. Aubie L. Cox, No. M2014-00102-COA-R3-CV, 2014 WL 5512451 (Tenn. Ct. App. 2014), discussed a situation where a plaintiff provided a Rule 68 offer of judgment and then revoked it within the ten day time period found in Tennessee Rule of Civil Procedure 68.  After the attempted revocation of the offer, the defendants went ahead and accepted the offer within the ten day timeframe provided under Rule 68.  The plaintiffs refused to comply with the offer of judgment.  The defendants filed a motion to enforce the offer of judgment in the Trial Court.  The Trial Court had a hearing and granted the motion to enforce the offer of judgment.  This issue was appealed to the Tennessee Court of Appeals.

The Tennessee Court of Appeals noted that there are no Tennessee cases that have addressed this issue in the past.  In this case the Court framed the appeal as being the singular issue of “whether a Rule 68 offer of judgment may be revoked by the offeror within the ten-day time period for acceptance on the basis that the offeror changed his mind?”  McGinnis at 2.  The text of Rule 68 of the Tennessee Rules of Civil Procedure is as follows:

At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property, or to the effect specified in the offer, with costs then accrued. Likewise a party prosecuting a claim may serve upon the adverse party an offer to allow judgment to be taken against that adverse party for the money or property or to the effect specified in the offer with costs then accrued. If within 10 days after service of the offer the adverse party serves written notice that the offer is accepted, either party may file the offer and notice of acceptance, together with proof of service thereof, with the court and thereupon judgment shall be rendered accordingly. An offer not accepted shall be deemed withdrawn and evidence thereof is not admissible except in the proceeding to determine costs. If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree shall pay all costs accruing after the making of the offer. The fact that an offer is made but not accepted does not preclude a subsequent offer.

The court noted that nothing in the express language of Rule 68 discusses whether the offer can be revoked within the ten day window.  As a result, the Tennessee Court of Appeals found that the language was ambiguous and, therefore, the court may “consider matters beyond the statutory text, including public policy, historical facts relevant to the enactment of the statute, the background and purpose of the statute, and the entire statutory scheme.”  McGinnis at 3 (citing Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368 (Tenn. 2012)). 

The Tennessee Court of Appeals analyzed the purpose of the Rule and the federal case law on this issue in detail.  The federal courts have nearly unanimously found that during the ten day period referenced in the rule the offeror cannot revoke the offer of judgment.  However, some federal courts have acknowledged various exceptions to this rule for some extenuating circumstances (for example fraud or serious mistake). McGinnis at 6.  After reviewing the federal case law and discussing the purpose of the rule, the Tennessee Court of Appeals found as follows: 

Under these circumstances, we agree with the federal courts that Rule 68 offers of judgment are generally not revocable prior to the expiration of the time period for acceptance provided by the Rule, regardless of traditional contract principles. In this case, there are no allegations of fraud or any other good cause that would prevent the typical operation of Rule 68. Instead, the record shows that the Appellants simply changed their minds and wished to proceed to trial. Accordingly, we need not consider what, if any, circumstances would bar operation of the above rule. We note that the majority of state courts with rules similar to our own have also reached the conclusion that Rule 68 offers are not revocable within the time period for acceptance.

As a result, in this case of first impression there is now substantive support for the position in Tennessee that an offer of judgment cannot be revoked within the ten day period.  Obviously, the Tennessee Supreme Court could ultimately decide this issue in the future, however, due to the overwhelming support in the federal case law, it is likely the Tennessee Supreme Court would find the exact same way as this Tennessee Court of Appeals decision found.  This decision is well reasoned and provides good support for the theory behind the offer of judgment rule and the fact that a revocation should not be allowed in the ten day period.  As a result, if you make an offer of judgment in the future, make sure that the offer of judgment is accurate and that you are sure you are willing to keep the offer opened for ten days.  If you try to revoke the offer of judgment within the ten day period, you will likely be unsuccessful.