Like a number of other states (including California), Colorado encourages parties to settle lawsuits. Such encouragement is by virtue of a statute that says, essentially, that a party will be regarded as a loser even if he is the winner, if he failed to accept a more advantageous offer of settlement. As the loser, that party will be required to pay everyone's litigation costs (but not attorney fees).
13-17-202 - Award of actual costs when offer of settlement was made.
(1) (a) Notwithstanding any other statute to the contrary, in any civil action of any nature commenced or appealed in any court of record in this state:
(I) If the plaintiff serves an offer of settlement at any time more than ten days before the commencement of the trial that is rejected by the defendant and the plaintiff recovers a final judgment in excess of the amount offered, then the plaintiff shall be awarded actual costs accruing after the offer of settlement to be paid by the defendant;
(II) If the defendant serves an offer of settlement at any time more than ten days before the commencement of the trial that is rejected by the plaintiff and the plaintiff does not recover a final judgment in excess of the amount offered, then the defendant shall be awarded actual costs accruing after the offer of settlement to be paid by the plaintiff;
(III) If an offer of settlement is not accepted within ten days after service of the offer, the offer shall be deemed rejected, and the party who made the offer is not precluded from making a subsequent offer. Evidence thereof is not admissible except in a proceeding to determine costs.
(IV) If an offer of settlement is accepted within ten days after service of the offer, either party may file the offer, written notice of acceptance, and proof of service with the court, and the clerk shall enter judgment upon the accepted offer of settlement;
(V) An offer of settlement under this section shall remain open for at least ten days from the date of service unless withdrawn by service of withdrawal of the offer of settlement;
(VI) An offer of settlement served at any time ten days or less before the commencement of the trial shall not be subject to this section, and evidence thereof is not admissible for any purpose.
(b) For purposes of this section, "actual costs" shall not include attorney fees.
(2) When comparing the amount of any offer of settlement to the amount of a final judgment actually awarded, any amount of the final judgment representing interest subsequent to the date of the offer in settlement shall not be considered.
(3) When the liability of one party to another has been determined by verdict or order or judgment, but the amount or extent of the liability remains to be determined by further proceedings, the party adjudged liable may make an offer of settlement, which shall have the same effect as an offer made before trial (except with respect to costs already incurred) if it is served pursuant to subsection (1) of this section.