AN ACT Relating to judgments; amending RCW 4.56.110; adding a new section to chapter 2.08 RCW; adding a new section to chapter 3.30 RCW; adding a new section to chapter 4.56 RCW; creating a new section; and repealing RCW 4.84.250, 4.84.260, 4.84.270, 4.84.280, 4.84.290, and 4.84.300.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 2.08 RCW to read as follows:

(1) In any civil cause of action, if a defendant serves on a plaintiff a written offer of settlement that is rejected or that is not accepted by that plaintiff within thirty days and if that plaintiff subsequently obtains a judgment in an amount that is at least twenty-five percent less than the offer:

(a) That defendant shall be entitled to recover reasonable expenses and attorneys' fees incurred from the date of service of the offer which, if awarded, shall be a set-off against that plaintiff's judgment. If the expenses and attorneys' fees as awarded to that defendant total more than that plaintiff's judgment, then judgment for that defendant shall be entered against that plaintiff for the amount of those expenses and attorneys' fees awarded, less the amount of that plaintiff's judgment, if any; and

(b) The court may, upon a request by the defendant, order that prejudgment interest, awarded pursuant to section 3 of this act, shall not be allowed beyond the date of service of offer of settlement.

(2) In any civil cause of action, if a plaintiff serves on a defendant a written demand for settlement that is rejected or that is not accepted by that defendant within thirty days and if that plaintiff subsequently obtains a judgment in an amount that is at least twenty-five percent greater than the demand, that plaintiff shall be entitled to recover reasonable expenses and attorneys' fees incurred from the date of the service of the demand which, if awarded under this section, shall be added to that plaintiff's judgment against that defendant.

(3) For purposes of this section:

(a) "Judgment" includes awards rendered in proceedings pursuant to chapters 48.22 and 7.06 RCW, and Mandatory Arbitration Rule 1.1 et seq.

(b) "Plaintiff" includes a party making a claim.

(d) "Trial date" includes an arbitration hearing date.

(4) For purposes of calculating the twenty-five percent margin under this section, "judgment" shall be the sum of all damages found and interest awarded, less all set-offs allowed on affirmative defenses and counterclaims, except for the set-off contemplated in subsection (1) of this section, and all as calculated before any statutorily required limitation on damages, periodic payment adjustments, or cost award.

(5) In the event of a partial settlement involving some, but not all defendants, the sum paid in settlement by each defendant shall be deemed to be allocated between that defendant's total contribution to the plaintiff's ultimate damages found and interest awarded, and to the plaintiff's expenses and attorneys' fees incurred to date of that partial settlement.

(6) All amounts awarded for expenses and attorneys' fees under this section shall be payable in a lump sum and shall not be subject to periodic payment.

(7) Service of an offer or demand shall be made in the manner provided by Civil Rule 5.

(8) No offer or demand may be filed or made known in any way to the trier of fact until after a verdict has been announced or an oral or memoranda of judgment declared at which time the party relying upon such offer or demand may file the offer or demand, along with proof of service, with the judge or arbitrator.

(9) If rejected or not accepted, neither an offer nor demand is admissible in subsequent litigation, except for pursuing the award of expenses and attorneys' fees provided by this section or the reduction in the award of prejudgment interest.

(10) Any offer or demand for settlement made pursuant to this section shall not be made before ninety days after filing of the suit or demand for arbitration, nor later than sixty days before the scheduled trial date, and in any event, may not be accepted later than thirty days before the scheduled trial date.

(11) If a party is entitled to expenses and attorneys' fees pursuant to this section that party's attorney shall file and serve on all parties an affidavit setting forth with reasonable specificity the nature and amount of legal services rendered and expenses incurred since the date the offer or demand was served, in addition to a cost bill required by RCW 4.84.090.

(12) If a party is entitled to expenses and attorneys' fees pursuant to this section or requests a reduction of prejudgment interest, the judge or arbitrator shall, in his or her discretion, determine the reasonableness of an award of attorneys' fees and expenses pursuant to this section or a reduction in the award of prejudgment interest and may, in his or her discretion, and by specific written findings, disallow an award of attorneys' fees and expenses or a reduction in the award of prejudgment interest by considering, along with all other relevant criteria, the following factors:

(a) Whether the offer was made in good faith;

(b) The then-apparent merit or lack of merit in the claim that was subject to the offer at the time the offer was served;

(d) The closeness of questions of fact and law at issue;

(e) Whether the party making the offer had unreasonably refused to furnish information necessary to evaluate the reasonableness of the offer;

(f) Whether the cause of action was in the nature of a test case, presenting questions of far-reaching importance affecting nonparties;

(g) The amount of additional delay and expense that the party making the offer or demand reasonably would be expected to incur if the litigation should be prolonged;

(h) Additional relevant facts or information becoming known after the offer or demand is rejected or not accepted;

(i) Whether public policy, societal interests, and the ends of justice would best be served, or whether undue hardship would be imposed, by an award of attorneys' fees and expenses or a reduction in the award of prejudgment interest; and

(j) The reasonableness criteria for attorneys' fees outlined in the code of professional responsibility and such other criteria as are adopted by the supreme court.

(13) An award of expenses and attorneys' fees under this section shall not be construed as fixing the amount or reasonableness of the expenses and attorneys' fees between attorney and client.

(14) In no event may any judgment for attorneys' fees and expenses entered pursuant to this section for the rejection or failure to accept an offer become a lien against or in any manner enforceable against the primary residence of the party to whom the offer was directed or against any other property otherwise exempt by law.

(15) This section applies to offers of settlement and demands for settlement made after the effective date of this section.

NEW SECTION. Sec. 2. A new section is added to chapter 3.30 RCW to read as follows:

(b) The court may, upon a request by the defendant, order that prejudgment interest, awarded pursuant to section 3 of this act, shall not be allowed beyond the date of service of offer of settlement.

(3) For purposes of this section:

(a) "Judgment" includes awards rendered in proceedings pursuant to chapters 48.22 and 7.06 RCW, and Mandatory Arbitration Rule 1.1 et seq.

(b) "Plaintiff" includes a party making a claim.

(d) "Trial date" includes an arbitration hearing date.

(6) All amounts awarded for expenses and attorneys' fees under this section shall be payable in a lump sum and shall not be subject to periodic payment.

(7) Service of an offer or demand shall be made in the manner provided by Civil Rule 5.

(a) Whether the offer was made in good faith;

(b) The then-apparent merit or lack of merit in the claim that was subject to the offer at the time the offer was served;

(d) The closeness of questions of fact and law at issue;

(e) Whether the party making the offer had unreasonably refused to furnish information necessary to evaluate the reasonableness of the offer;

(f) Whether the cause of action was in the nature of a test case, presenting questions of far-reaching importance affecting nonparties;

(g) The amount of additional delay and expense that the party making the offer or demand reasonably would be expected to incur if the litigation should be prolonged;

(h) Additional relevant facts or information becoming known after the offer or demand is rejected or not accepted;

(j) The reasonableness criteria for attorneys' fees outlined in the code of professional responsibility and such other criteria as are adopted by the supreme court.

(13) An award of expenses and attorneys' fees under this section shall not be construed as fixing the amount or reasonableness of the expenses and attorneys' fees between attorney and client.

(15) This section applies to offers of settlement and demands for settlement made after the effective date of this section.

Sec. 3. Section 4, chapter 136, Laws of 1895 as last amended by section 1, chapter 147, Laws of 1983 and RCW 4.56.110 are each amended to read as follows:

Interest on judgments shall accrue as follows:

(1) Judgments founded on written contracts, providing for the payment of interest until paid at a specified rate, shall bear interest at the rate specified in the contracts: PROVIDED, That said interest rate is set forth in the judgment.

(2) Except as provided under subsection (1) of this section, judgments shall bear interest from the date of entry at the maximum rate permitted under RCW 19.52.020 on the date of entry thereof: PROVIDED, That in any case where a court is directed on review to enter judgment on a verdict or in any case where a judgment entered on a verdict is wholly or partly affirmed on review, interest on the judgment or on that portion of the judgment affirmed shall date back to and shall accrue from the date the verdict was rendered.

(3) In all other civil causes of action, except as provided by sections 1 and 2 of this 1987 act, the court shall add interest to any judgment entered at the rate allowed in subsection (4) of this section from the date the cause of action is filed to the date of entry of judgment calculated on the total judgment awardable before calculation of such interest.

(4) The rate of interest under subsection (3) of this section shall be the maximum rate permitted under RCW 19.52.020 on the date the cause of action is filed.

NEW SECTION. Sec. 4. A new section is added to chapter 4.56 RCW to read as follows:

An attorney shall not receive as compensation any portion of the interest awarded pursuant to RCW 4.56.110(3) or 4.56.115(2).

NEW SECTION. Sec. 5. Section 3 of this act applies to any judgment entered after the effective date of this section.

NEW SECTION. Sec. 6. The following acts or parts of acts are each repealed:

(1) Section 1, chapter 84, Laws of 1973, section 1, chapter 94, Laws of 1980, section 88, chapter 258, Laws of 1984 and RCW 4.84.250;

(2) Section 2, chapter 84, Laws of 1973 and RCW 4.84.260;

(3) Section 3, chapter 84, Laws of 1973, section 2, chapter 94, Laws of 1980 and RCW 4.84.270;

(4) Section 4, chapter 84, Laws of 1973, section 3, chapter 94, Laws of 1980, section 1, chapter 282, Laws of 1983 and RCW 4.84.280;

(5) Section 5, chapter 84, Laws of 1973 and RCW 4.84.290; and

(6) Section 6, chapter 84, Laws of 1973, section 4, chapter 94, Laws of 1980 and RCW 4.84.300.