By: Manuel L. Dobrinsky
Florida Statute § 768.79 (offer of judgment and demand for judgment) and Florida Rule of Civil Procedure 1.442 (proposals for settlement) provide the mechanism for obtaining legal fees and costs when a party rejects a formal offer to settle a case. These can be used as a tool to pressure the other side to settle a case or risk incurring attorneys’ fees at a later date.
However, the timing of when to serve such a proposal is a strategic decision that requires certain considerations. For example, when you serve a proposal for settlement on your opponent, chances are that you will have one served on your client. Thus, you must weigh the risks of having your client served with such a proposal.
Also, since you must be able to beat your proposal for settlement by 25%, your proposal for settlement cannot be very high (in contrast to your valuation of your case) and therefore, if not accepted, you will not have much room to negotiate. Therefore, we often find that the best time to serve a proposal is right after mediation, when you have an idea as to what the defendant is willing to pay.
Finally, you must understand the law and the mechanisms for a proposal for settlement. Below is a survey of the law for your review:
Florida Statute § 768.79 provides in pertinent part:
If a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer. If the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, the court shall set off such costs and attorneys’ fees against the award. Where such costs and attorney’s fees total more than the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the plaintiff’s award (emphasis added).
If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorneys’ fees incurred from the date of the filing of the demand. If rejected, neither an offer nor demand is admissible in subsequent litigation, except for pursuing the penalties of this section (emphasis added).
Although the statute references the filing of a proposal/demand, Rule 1.442(d) states that the proposal shall be served and not filed unless necessary to enforce the provisions of this rule. The timing for filing the proposals is discussed below.
The following is an outline of the steps that must be followed to properly serve a proposal/demand. The case law, however, is varied as to how strictly compliance with the letter of the Rule will be enforced. See, e.g., Saenz v. Campos, 967 So. 2d 1114 (Fla. 4th DCA 2007) (a patent or latent ambiguity will render the proposal void).
Rule 1.442 sets forth the required form and content of a proposal for settlement, so that will not be repeated here. However, we will try and provide cases that interpret the rule.
When should they be served
- On a defendant no earlier than 90 days from service of process. See Fla. R. Civ. P. 1.442(b).
- On a plaintiff no earlier than 90 days after the action has been commenced. See Fla. R. Civ. P. 1.442(b).
- No later than 45 days before the date set for trial or the first day of the docket on which the case is set for trial, whichever is earlier. See Fla. R. Civ. P. 1.442(b)
Generally, the timing requirements are strictly construed
For example, there is a very narrow exception to the requirement that the proposal be served no later than 45 days before the date set for trial or the first day of the docket on which the case is set for trial, whichever is earlier. This narrow exception requires that it be clear to both parties that the case will not be reached during the upcoming calendar. See Ligouri v. David, 756 So. 2d 268 (Fla. 4th DCA 2000) and Progressive Casualty Insurance Co. v. Radiology and Imaging Center of South Florida Inc., 761 So. 2d 399 (Fla. 3rd DCA 2000).
In Largen v. Gonzalez, 797 So. 2d 635 (Fla. 5th DCA 2001), the Fifth District rejected a proposal that was served within 45 days, and reiterated that the exception to the 45 day requirement was very narrow.
There is a disagreement among the district courts of appeal as to whether the timing provisions in Rule 1.442 must be strictly construed. In Grip Development Inc. v. Coldwell Banker Residential Real, 788 So. 2d 262 (Fla. 4th DCA 2000), the Fourth District held that a plaintiff who had served a proposal for settlement three days prior to the expiration of the 90-day period was not entitled to attorneys’ fees because the proposal had been served prematurely. The court reasoned that section 768.79 and Rule 1.442 are punitive in nature and thus must be strictly construed. In Regions Bank v. Rhodes, 126 So. 3d 1259 (Fla 4th DCA 2013) the Fourth District reaffirmed its ruling in Grip Development and held that the 90-day period does not commence against a party until that party is named in the lawsuit. The Second District, in Bottcher v. Walsh, 843 So. 2d 183 (Fla. 2nd DCA 2002) agreed that the provisions of the rule had to be strictly construed. In that case, the defendant had prematurely filed her proposal for settlement.
In Kuvin v. Keller Ladders, Inc., 797 So. 2d 611 (Fla. 3rd DCA 2001) the Third District disagreed with Grip and held that any failure to follow the rule was “merely a harmless technical violation which did not affect the rights of the parties.” (Citations omitted).
And, In Mills v. Martinez, 909 So. 2d 340 (Fla. 5th DCA 2005) the Fifth District disagreed with Bottcher and held that prematurely filing a proposal for settlement was “immaterial and certainly not prejudicial.” Id. at *3. See, also, Shoppes of Liberty City v. Sotolongo, 2006 WL 1540881 (Fla. 3rd DCA 2006)
When is response to a proposal due
- A proposal shall be deemed rejected unless accepted by delivery of written notice within 30 days after service of proposal. When computing the time, please note that the provisions of Rule 1.090(e) do not apply. Rule 1.442(f)(1).
- Can request an enlargement of time from the court. See Florida Rule of Civil Procedure 1.090(b). However, the motion for enlargement of time should be set for hearing before the thirty days expires. See Donohoe v. Starmed Staffing, Inc., 743 So. 2d 623 (Fla. 2nd DCA 1999).
If you have a claim for punitive damages pending, then it is not sufficient to state that your proposed amount will resolve all claims, including those for punitive damages. You must state a specific amount: “Both the statute and the rule require the offeror to state with particularity the amount proposed to settle any claim for punitive damages, however, whenever such a claim exists.” R.J. Reynolds Tobacco v. Ward, 2014 WL 2852971 (Fla.App. 1st DCA 2014).
How do you address multiple parties
- Florida Rule of Civil Procedure 1.442(c)(3) provides “a joint proposal shall state the amount and terms attributable to each party.”
- Multiple defendants- See McFarland & Sons, Inc. v. Basel, 727 So. 2d 266 (Fla. 5th DCA 1999)(rule requires that specific amount be set forth as to each defendant); Ford Motor Company v. Meyers, 771 So. 2d 1202 (Fla. 4th DCA 2000);
- Multiple plaintiffs- Allstate Indemnity Company v. Hingson, 808 So. 2d 197 (Fla. 2002)(even under old rule offers to plaintiffs had to be separate); Goldstein v. Harris, 768 So. 2d 1146 (Fla. 4th DCA 2000)(separate offers must be made to each plaintiff)
- Rule 1.442, recently amended (2011), now provides that: “Notwithstanding subdivision (c)(3), when a party is alleged to be solely vicariously, constructively, derivatively, or technically liable, whether by operation of law or by contract, a joint proposal made by or served on such a party need not state the apportionment or contribution as to that party. Acceptance by any party shall be without prejudice to rights of contribution or indemnity.” See 1.442(c)(4).
- Offer from multiple plaintiffs must apportion the offer among the plaintiffs. Wills Shaw Express, Inc. v. Hilyer Sod, Inc., 849 So. 2d 276 (Fla. 2003). See Hall v. Lexington Insurance Company, 895 So. 2d 1161 (Fla 4th DCA 2005) which distinguished Hilyer Sod in a case where a joint proposal was made to two plaintiffs and the plaintiffs made a unified single insurance claim and submitted a unified verdict form for damages.
- Proposals made by one plaintiff on separate defendants, conditioned on dismissal of both defendants are not ambiguous. Health First, Inc. v. Cataldo, 92 So. 3d 859, 871 (Fla 5th DCA 2012).
Claims for equitable relief
The offer of judgment statute does not apply to an action which seeks both damages and equitable relief. See Diamond Aircraft Indus. Inc. v. Horowitch, 107 So. 3d 362, 374 (Fla 2013). Thus, the Second District recently held that offers that included language that the offer was to settle all damage claims and all claims for equitable relief were invalid. Patel v. Nandigam, M.D., 2014 WL 2596181 (Fla. 2nd DCA 2014). Similarly, the Third District has held that the offer of judgment statute does not apply to cases that involve a general offer seeking release of all claims in the case, both equitable and monetary. Bull Motors, LLC v. Borders, 132 So. 3d 1158 (Fla. 3rdDCA 2013).
When must be filed
- Rule 1.442(g) Any party seeking sanctions pursuant to applicable Florida law, based on the failure of the proposal’s recipient to accept a proposal, shall do so by serving a motion in accordance with rule 1.525
- Rule 1.525- party seeking a judgment taxing costs, attorneys’ fees or both shall serve a motion within 30 days after filing of the judgment, including a judgment of dismissal or the service of a notice for voluntary dismissal.
See Norris v. Treadwell, 2005 WL 1467348 (Fla. 1st DCA 2005)- motion filed after verdict but before judgment considered timely. The court held that the main purpose of the rule was to set an outside limit as to when the motion could be filed, i.e. 30 days after the entry of a judgment.
Extensions beyond 30 days
- may be enlarged pursuant to Fla. R. Civ. P. 1.090(b). See Gulliver Academy, Inc. v. Bodek, 694 So. 2d 675 (Fla. 1997).
- Reservation of jurisdiction to consider motion for fees and costs in final judgment is an enlargement of time under Rule 1.090(b). Remember that in a jury case, the extension must be granted within 30 days of the verdict.
- Pursuant to Bodek, motions for attorneys’ fees should be ruled upon at the time that the court rules on its other post-trial motions.
When Proposal Requires a Release
- A “general release” is a “relevant condition” that must be described with particularity. A summary of the proposed release can be sufficient if it eliminates any reasonable ambiguity. State Farm Mutual Automobile Insurance Company v. Nichols, 2006 WL 1491542.
- Rivera v. Publix Super Markets, Inc., 929 So. 2d 1184 (Fla. 4th DCA 2006)- making the release and other documents available at attorney=s office not enoughB must be stated in the proposal.
- However, if the language in the proposal is different than that in the releases, that does not render the proposal ambiguous. See, Mathis V. Cook, 2014 WL 2130255 (Fla. 5th DCA 2014).
Bad Faith Proposals
- Nominal offers-A reasonable basis for a nominal offer exists only where the undisputed record strongly indicates that the defendant had no exposure. Event Services America, Inc. v. Ragusa, 917 So. 2d 882 (Fla. 3rd DCA 2005); Eagleman v. Eagleman, 673 So. 2d 946 (Fla. 4thDCA 1996) ;
- “In determining whether $1,000 settlement offer made by homeowners insurer to its insured in insured’s lawsuit arising out of the denial of his claim for alleged hurricane damage was made in good faith … the correct standard was whether insurer had a reasonable basis to conclude that its exposure was nominal, rather than whether the undisputed record strongly indicated that the insurer had no exposure.” Citizen=s Property Insurance Corporation v. Perez, 2014 WL 2741467 (Fla.App. 4th DCA 2014).
- Obligation of good faith merely requires that offeror have a reasonable foundation on which to base the offer. Downs v. Coastal Systems International, Inc., 2008 WL 34795; Donohoe v. Starmed Staffing Inc., 743 So. 2d 623 (Fla. 2nd DCA 1999)
- No bad faith simply because plaintiff figured that demanded amount would not be accepted. Schmidt v. Fortner, 629 So. 2d 1036 (Fla. 4th DCA 1993).
Proposals to an Estate
A judgment for fees and costs pursuant to Florida Statute § 768.79 can be enforced against an estate, but not against the beneficiaries of the estate. In Thompson v. Hodson, 825 So. 2d 941 (Fla. 1st DCA 2002) the court held that a judgment for fees and costs could not be satisfied from monies recovered for the survivors in an earlier settlement, even though those funds were still held by the personal representative. Id. at 950. See, also, Johnson v. Schneegold, 419 So. 2d 684, 685 (Fla. 2nd DCA 1982)(in a wrongful death case there is no provision authorizing recovery of costs against survivors by a successful defendant); Walker v. Bozeman, 243 F.Supp.2d 1298 (N.D. Fla. 2003)(explaining and applying Thompson).
- A voluntary dismissal without prejudice will avoid an offer of judgment. Mx Invs., Inc. v. Crawford, 700 So. 2d 640 (Fla. 1997)(attorneys’ fees after voluntary dismissal only when voluntary dismissal is with prejudice); Aero Toy Store, Inc. v. Sherwin Williams Co., 725 So. 2d 1267 (Fla. 4th DCA 1999).
- Voluntary dismissal without prejudice even after statute of limitations has run is without prejudice. Tucker v. Ohren, 739 So. 2d 684 (Fla. 4th DCA 1999).
- However, even if you dismiss without prejudice, costs can still be assessed pursuant to Rule 1.420(d).
- The Florida Supreme Court has held that “judgment obtained” pursuant to section 768.79 “includes the net judgment for damages and any attorneys’ fees and taxable costs that could have been included in a final judgment if such final judgment was entered on the date of the offer.” White v. Steak And Ale of Florida, Inc., 816 So. 2d 546 (Fla. 2002).
- attorneys’ fees at time of offer only accrue if they can be awarded pursuant to contract or statute. Segui v. Margrill, 864 So. 2d 518 (Fla. 5th DCA 2004).