Court of Appeals of Arizona, Second Division, Department A
APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY Cause No. C20072433 Honorable Gus Aragón, Judge
Hollingsworth Kelly By Louis Hollingsworth, Michael F. Kelly, and John F. Kelly, Attorneys for Plaintiff/Appellee
Renaud Cook Drury Mesaros, PA, Tamara N. Cook and Kevin R. Myer and Lewis and Roca LLP By Susan M. Freeman and William G. Voit, Attorneys for Defendant/Appellant
GARYE L. VÁSQUEZ, Presiding Judge
¶1 In this personal injury action, appellant BCI Coca-Cola Bottling Company of Los Angeles, Inc. (BCI) appeals from the judgment entered after a jury verdict in favor of appellee Marisol Metzler and following two prior appeals. In this appeal, BCI contends the trial court erred in determining that prejudgment interest imposed as a sanction under Rule 68(g), Ariz. R. Civ. P., was interest on an "obligation" calculated at ten percent per annum pursuant to A.R.S. § 44-1201(A) and not interest "on a judgment" calculated at one percent plus the prime rate pursuant to subsection (B). For the reasons stated below, we affirm the judgment as modified.
Factual and Procedural Background
¶2 In August 2009, a jury found BCI liable for Metzler's injuries sustained in a fall at a grocery store and awarded her $1.5 million in damages. On September 2, 2009, the trial court entered judgment in favor of Metzler in the amount of $1, 855, 398.86, which included prejudgment interest under Rule 68(g) as a sanction against BCI for rejecting a prior, more favorable offer of judgment. On December 8, 2009, the court granted BCI's motion for a new trial on liability but denied a new trial on damages. BCI appealed the court's denial of a new trial on damages, and Metzler cross-appealed the grant of a new trial on liability. This court issued a memorandum decision reversing the grant of a new trial on liability, affirming the denial of a new trial on damages, and remanding the matter for entry of final judgment. Metzler v. BCI Coca-Cola Bottling Co. (Metzler I), No. 2 CA-CV 2010-0023, ¶ 16 (memorandum decision filed Mar. 16, 2011).
¶3 In April 2011, BCI unconditionally tendered, and Metzler accepted, payment of $1, 906, 690.76. According to BCI, the amount included: the damages award; Rule 68(g) sanctions including prejudgment interest from the date of the offer of judgment through September 2, 2009; post-judgment interest from September 3, 2009, through December 8, 2009; and costs on appeal. After this court's mandate in Metzler I issued on May 11, 2011, BCI filed a motion for a judgment on the mandate. BCI argued prejudgment interest under Rule 68(g) terminated on September 2, the date the trial court originally entered the judgment on the verdict, because that was "clearly the operative judgment." In response, Metzler maintained that prejudgment interest continued to accrue from the date of the offer of judgment until entry of the judgment on the mandate.
¶4 On June 30, 2011, the trial court entered judgment, specifying that prejudgment interest terminated on September 2. Metzler appealed, and this court vacated the judgment. Metzler v. BCI Coca-Cola Bottling Co. (Metzler II), 230 Ariz. 26, ¶ 1, 279 P.3d 1188, 1189 (App. 2012). In doing so, we explained that the September 2 judgment had been vacated by the trial court in granting BCI's motion for a new trial, thereby leaving the parties "without a judgment for the comparative purposes of Rule 68(g)." Id ¶ 8. And, because the June 30 judgment was vacated pursuant to our decision on appeal, prejudgment interest continued to accrue. Id ¶ 10. Accordingly, we remanded to the trial court for entry of judgment after a redetermination of prejudgment interest. Id ¶ 11. Our mandate in Metzler II issued on August 6, 2012.
¶5 On remand, Metzler lodged a form of judgment with the trial court calculating prejudgment interest pursuant to Rule 68(g) at the rate of ten percent per annum, the same interest rate that had been used in the two prior judgments. BCI objected, asserting that under the recently amended version of § 44-1201, the interest rate should have been calculated at the rate of one percent per annum plus the prime rate or 4.25 percent. After finding the proper interest rate was ten percent, the court entered judgment on October 10, 2012. BCI now appeals from that judgment. We have jurisdiction pursuant to A.R.S. §§ 12-120.21 and 12-2101(A)(1).
¶6Rule 68(a) provides that at any time more than thirty days before trial, "any party may serve upon any other party an offer to allow judgment to be entered in the action." Subsection (g) of the rule states the following:
If the offeree rejects an offer and does not later obtain a more favorable judgment . . ., the offeree must pay, as a sanction, reasonable expert witness fees and double the taxable costs, as defined in A.R.S. § 12-332, incurred by the offeror after making the offer and prejudgment interest on unliquidated claims to accrue from the date of the offer.
An award of sanctions pursuant to Rule 68(g) is mandatory. Levy v. Alfaro, 215 Ariz. 443, ¶ 8, 160 P.3d 1201, 1203 (App. 2007). The purpose of the rule is to promote settlement and to avoid protracted litigation. Id. ¶ 12; Warner v. Sw. Desert Images, LLC, 218 Ariz. 121, ¶ 52, 180 P.3d 986, 1002 (App. 2008). Metzler offered to settle this case before trial for $150, 000, but BCI rejected that offer, and the jury later awarded her $1.5 million in damages. BCI does not dispute that Metzler is entitled to an award of sanctions pursuant to ...