A formal offer can make the plaintiff pay your costs.

A plaintiff who turns down a formal offer and fails to beat it at trial can be made to pay for the refusal. New York gives a defending party three devices: a tender under CPLR 3219, a conditional offer to liquidate damages under CPLR 3220, and an offer to compromise under CPLR 3221. Each closes ten days before trial.

Pay now or defend: what does a formal offer actually change?

A formal offer under CPLR 3219, 3220 or 3221 changes the economics of a New York lawsuit by moving post-offer cost onto a claimant who turns down a reasonable number and then fails to beat it at trial. The claimant keeps the right to litigate. The claimant loses the right to litigate for free.

The question is not doctrinal. It is arithmetic. Defending is open-ended: the meter runs on your side and costs the claimant nothing extra. These three rules break that asymmetry.

I read the fee clause in the contract sued on before I decide which of the three offers to serve.

• CPLR 3221 is the general device. Any action except a matrimonial action.
• CPLR 3220 is the contract device with real financial teeth.
• CPLR 3219 is the contract device that requires you to put the money down.

How does a CPLR 3221 offer to compromise work?

CPLR 3221 allows a party against whom a claim is asserted, and against whom a separate judgment may be taken, except in a matrimonial action, to serve a written offer to allow judgment to be taken for a sum or property specified, with costs then accrued. Service must come no later than ten days before trial.

The claimant then has ten days to accept in writing, and the mechanics on acceptance are clerical. If the claimant serves written notice of acceptance within ten days, either party may file the summons, complaint and offer with proof of acceptance, and the clerk enters judgment accordingly. No motion. No hearing. The case ends on the terms you wrote.

The mechanics on refusal are the point. If the offer is not accepted and the claimant fails to obtain a more favorable judgment, the claimant recovers no costs from the time of the offer and pays costs from that time. The comparison is to the judgment the claimant actually obtains, so an offer pitched too low buys nothing. The shift is not self-executing either: you assert it and have costs taxed. And an offer of judgment under CPLR 3221 is not made known to the jury.

Law: CPLR 3221.

What does “costs” mean under CPLR 3221, and how big is that bite?

Costs under CPLR 3221 means taxable costs and disbursements, not your legal bills. CPLR article 83 governs disbursements, and CPLR 8301 lists what a party awarded costs may tax: witness and referee fees, deposition transcript expense subject to a statutory cap, certified copies, sheriff’s fees, docketing charges and similar items.

Statutory costs and taxable disbursements are real but modest. They are not a reimbursement of what you pay your lawyer. Any article implying that CPLR 3221 makes a losing plaintiff fund your defense is wrong. Serve one anyway. It creates a dated record of a specific sum and forces the claimant’s lawyer to put the downside in writing.

Law: CPLR 8301.

A CPLR 3221 offer moves a modest sum of money and a large amount of pressure. The pressure is the product.

How does a CPLR 3220 offer to liquidate damages conditionally work?

CPLR 3220 applies where a cause of action based upon contract, express or implied, is asserted. No later than ten days before trial, the defending party may serve a written offer to allow judgment to be taken for a specified sum, with costs then accrued, if that party fails in its defense.

That condition is the whole design. You are not conceding liability. You are telling the claimant: if you win, damages are this number. If the claimant accepts in writing within ten days and damages are later awarded at trial, they are assessed in the sum specified in the offer. You have capped exposure without admitting a thing.

Refusal is where the rule bites. If the offer is not accepted and the claimant fails to obtain a more favorable judgment, the claimant pays the expenses necessarily incurred by the offering party for trying the issue of damages from the time of the offer, ascertained by the judge or referee before whom the case is tried. An offer under CPLR 3220 is also not made known to the jury.

Law: CPLR 3220.

Does CPLR 3220 shift attorneys’ fees?

In the First Department, expenses under CPLR 3220 can include attorneys’ fees attributable to trying the issue of damages. In Abreu v Barkin & Assoc. Realty, Inc., that court modified a judgment to direct a hearing on the amount of legal fees, if any, owed to an individual defendant whose offer to liquidate was not accepted.

Two points separate out. First, the exposure is real, but nothing was fixed on appeal. The claimant withdrew her claims against the individual defendant by stipulation on the record during a nonjury trial. Having failed to obtain a more favorable judgment, she faced liability for costs and fees, and the amount, if any, went back for a hearing.

Second, the First Department stated that CPLR 3220 does not require payment of the offered amount into court, while noting older trial-level authority to the contrary. That is the practical difference between CPLR 3220 and the CPLR 3219 tender: CPLR 3220 costs you nothing in cash flow. The same court has since affirmed an award to a defendant of expenses, including reasonable attorneys’ fees, associated with trying the issue of damages, running from the date of the CPLR 3220 offer.

Cases: Abreu v Barkin & Assoc. Realty, Inc., 115 AD3d 624 (1st Dept 2014); Free People of PA LLC v Delshah 60 Ninth, LLC, 169 AD3d 622 (1st Dept 2019).

Note two limits in the statutory words. The fees must relate to trying the issue of damages, not the case at large. And they run from the time of the offer. An application for everything billed after the offer invites a court to cut it down.

Does the case have to reach trial before CPLR 3220 fees are available?

The departments disagree. CPLR 3220 shifts the expenses of trying the issue of damages, ascertained by the judge or referee before whom the case is tried. In Saul v Cahan, the Second Department read that language to tie the shift to a trial and reversed a fee judgment for a defendant who had won dismissal on motion.

That court reasoned from the American Rule. Statutory fee shifting requires explicit authority, and policy disfavors fee awards to prevailing parties. Abreu, in the First Department, allowed a fee hearing where a nonjury trial had begun and the claims against the individual defendant were withdrawn on the record during it. Saul did not discuss Abreu. Treat the question as open, and expect a claimant to press the Saul reading whenever the case ends before a damages trial.

Case: Saul v Cahan, 153 AD3d 951 (2d Dept 2017).

A CPLR 3220 offer is leverage that matures as the case enters trial. It will not reliably recover the cost of a winning summary judgment motion.

How does a CPLR 3219 tender work?

CPLR 3219 applies to a cause of action based upon contract, express or implied, asserted against a party from whom a separate judgment may be taken. No later than ten days before trial, and without court order, that party may deposit with the clerk an amount deemed sufficient to satisfy the claim and serve a written tender of payment.

A copy of the written tender is filed with the clerk when the money is deposited. Within ten days after the deposit, the claimant may withdraw the money by filing a duly acknowledged statement that the withdrawal is in satisfaction of the claim. The clerk then enters judgment dismissing the pleading that set forth the claim, without costs. Where there is no withdrawal within that ten-day period, the deposit is repaid to the depositor on request.

If the tender is not accepted and the claimant fails to obtain a more favorable judgment, the claimant recovers neither interest nor costs from the time of the offer, and pays costs for defending against the claim from that time. A tender is not made known to the jury either.

Law: CPLR 3219.

CPLR 3219 cuts off interest from the time of the tender, which the other two rules do not, and only if the claimant ends up with no more favorable judgment. Where prejudgment interest has grown into a serious number, stopping that clock can be worth more than any cost award. The price is cash sitting with the clerk.

CPLR 3219 vs 3220 vs 3221: which one should you serve on a contract case?

On a contract case, CPLR 3220 carries more weight than CPLR 3221, because CPLR 3220 shifts the expenses of trying the issue of damages, which the First Department reads to include attorneys’ fees, while CPLR 3221 shifts only taxable costs. CPLR 3219 is the choice when stopping prejudgment interest matters more than conserving cash.

CPLR 3221 makes refusal annoying. CPLR 3220 makes refusal expensive, at least where the case reaches a damages trial. On a contract claim headed for trial, serve the one that makes refusal expensive.

What happens if you miss the ten-days-before-trial deadline?

All three devices close ten days before trial. CPLR 3219, CPLR 3220 and CPLR 3221 each permit service at any time not later than ten days before trial. None contains its own good-cause exception, so a late offer carries no statutory cost consequence unless a court grants relief under the general extension power in CPLR 2004.

Law: CPLR 2004.

A defendant litigates for two years, gets realistic on the eve of trial, and finds the leverage expired. The offer can still be made. It is then an ordinary settlement offer, and any cost shift depends on discretionary relief you cannot plan around. Treat the trial date as the controlling date in the file.

What should you do this week?

The first step on any cost-shifting offer is valuation, not drafting, because every one of these rules turns on whether the claimant beats your number. An offer pitched below the realistic verdict range only tells the claimant you are thinking about settlement. An offer pitched at or slightly above it is the one that bites.

Work in this order.

• Find the trial date. Calendar the date ten days before it and treat that as a hard deadline.
• Classify every cause of action. Contract claims open CPLR 3219 and CPLR 3220. Non-contract claims leave you with CPLR 3221 only.
• Read the fee provision in the contract sued on. A prevailing-party clause may already shift fees by agreement, which changes what CPLR 3220 adds.
• Build a damages number, not a feeling. Model the claimant’s best realistic outcome and the interest accrued by trial.
• Decide whether interest is the real exposure. If accrued prejudgment interest is the larger half of the claim, a CPLR 3219 deposit may be the cheapest money you spend.
• Draft to the statute. Name the rule, state a sum certain, include costs then accrued, and for CPLR 3220 include the condition that the offer applies if you fail in your defense. A payment for a discontinuance and a general release is not, on its face, an offer to allow judgment on a contract claim.
• Serve it in writing and keep proof. The date of service is the date the cost shift starts running.

I set the trial date at the top of the file, count back ten days, and work the valuation against that date rather than against the discovery schedule.

Let the offer force the decision. If the claimant takes it, the case ends on your terms. If the claimant refuses and does worse, the refusal has a price, and under CPLR 3220 that price can include the fees of trying damages. Either way, you are no longer the only party paying for delay.