Florida Proposals for Settlement: Failure to Strictly Comply to Statute Can Be Fatal

Author: David Lewis

Guest Editor: Alexander Nguyen

December 3, 2018 9:00am

Common Scenario

It happens in almost every negligence case.  A plaintiff sues a defendant (or multiple defendants) asserting a claim for damages.  At some point, one or both of the parties will serve a Proposal for Settlement, offering to settle the case at a specific monetary amount in exchange for a release and dismissal of all claims.  Oftentimes, these Proposals are rejected and a verdict is rendered in favor of one of the parties.  In such an event, the court will be asked to evaluate the offering party’s Proposal and ask for an order shifting attorney’s fees.  Is your Proposal for Settlement valid?

Proposals For Settlement In Florida

Under Florida law, a Proposal for Settlement is a procedure that allows a prevailing party to recover reasonable attorney’s fees and costs in “any civil action for damages.”  (Fla. Stat., § 768.79(1).)  The intent of the Florida legislature for the creation of this procedural mechanism was to encourage the early settlement of a civil case.  (See e.g. Kuhajda v. Borden Dairy Co. of Alabama, LLC, 202 So.3d 391 (Fla. 2016).)  Proposals for Settlement are more stick than carrot – the statute serves to penalize those parties who do not act reasonably and in good faith in initiating or settling lawsuits.  (Diamond Aircraft Industries, Inc. v. Horowitch, 107 So.3d 362, 372 (Fla. 2013).)

Proposals for Settlement are governed under both the Florida Rules of Civil Procedure and the Florida Statutes.  (Fla. R. Civ. P. 1.442; Fla Stat., § 768.79.)  Pursuant to the Florida Rules of Civil Procedure, a plaintiff may file a Proposal for Settlement no earlier than 90 days after the defendant is served with the complaint; similarly, a defendant may file its Proposal for Settlement 90 days after the suit is filed.  (Fla. R. Civ. P. 1.442(b).)  In no event may either party file a Proposal for Settlement later than 45 days to trial or the first day of the trial docket, whichever occurs earlier.  (Id.)

Proposals for Settlement are not available in every civil case, however.  Specifically, any Proposal for Settlement is deemed invalid if it seeks to resolve claims for equitable relief, even when coupled with claims for legal damages.  (Diamond, supra, 107 So.3d at 373.)

Form And Content Required In Proposals For Settlement

In order for a Proposal for Settlement to have the legal effect of shifting liability for attorneys’ fees to the opposing party, the Proposal must:

  1. Include the name of the party making the Proposal;
  2. Include the name of the party to whom the Proposal is being made;
  3. State with particularity the relevant conditions;
  4. Provide the total amount of the Proposal and all non-monetary terms;
  5. State the amount proposed by the party to settle any claim for punitive damages; and
  6. Specifically provide whether the Proposal is encompassing of attorneys’ fees or not.

(Fla. R. Civ. P. 1.442(c)(2)(A)-(G); Fla Stat., § 768.79(2)(a)-(d).)

The Amount Of The Offer To Settle Must Be Clear And Unambiguous

The amount of the Proposal for Settlement must be made in good faith, and should be specific and clear in its terms.  As to the “good faith” component, the courts look to Florida Statute section 768.79(7)(b) to provide a blueprint, which includes the following factors:

  1. The apparent merit or lack of merit to the claim;
  2. The number and nature of the offers to settle made by the parties;
  3. The closeness of questions of law and fact at issue in the case;
  4. Whether the offering party had unreasonably refused to furnish information necessary for the receiving party to evaluate the reasonableness of such offer;
  5. Whether the lawsuit was a novel case of far-reaching importance affecting nonparties; and
  6. The amount of delay, cost, and expense that the offering party reasonably would be expected to incur should the litigation be prolonged.

(Fla. Stat., § 768.79(7)(b)(1)-(6).)

In 2015, the Florida appellate court put this “good faith” framework to the test.  In Isais v. The HT Hackney Co., 159 So.3d 1002 (Fla. 3d DCA 2015), the court found that the three individual defendants’ Proposals for Settlement in the amount of $500.00 were deemed to have been made in good faith as the defendants possessed a reasonable basis to believe their exposure was minimal.  (159 So.3d at 1005-1006.)  In this case, plaintiff filed suit against three defendants, alleging they had not paid plaintiff’s invoices.  (Id. at 1004.)  During discovery, it was confirmed that, in fact, the three defendants had paid plaintiff’s invoices in full.  (Id.)  On the basis of plaintiff’s admission to this fact, the court held the defendants had an “objective reasonable basis” to file the monetarily minimal Proposals for Settlement of $500.00.  (Id. at 1005.)

Joint Proposals For Settlement Involving Multiple Parties

In two opinions recently authored by the Florida Supreme Court, it was made clear Proposals for Settlement involving multiple defendants must be apportioned and differentiated between the parties.

First, in Pratt v. Weiss, 161 So.3d 1268 (Fla. 2015), the Supreme Court reversed an appellate court opinion that upheld an award of attorney’s fees to the defendants.  The appellate court had held the defendants were, in reality, part of a single corporate entity, and therefore, these defendants were not required to apportion their Proposal for Settlement.  (Id. at 1271.)  In reversing the appellate court, the Supreme Court held because the complaint treated the defendants as separate, and included direct and vicarious liability claims, the defendants were to be considered as distinct entities requiring separate Proposals for Settlement.  (Id. at 1272.)

Next, the Florida Supreme Court considered the case of Audiffred v. Arnold, 161 So.3d 1274 (Fla. 2015), which involved two separate motor vehicle claims between Audiffred and Arnold.  Audiffred sought claims for personal injuries against Arnold, and Audiffred’s husband brought a loss of consortium claim against the same defendant.  (Id. at 1275.)  Audiffred served a Proposal for Settlement on Arnold, offering to dismiss both her and her husband’s claims in exchange for $17,500.00.  (Id. at 1276.)  Arnold rejected the Proposal for Settlement, and a jury awarded a verdict of $26,055.54 in favor of Audiffred, but no award was made in her husband’s favor.  (Id.)  When Audiffred moved for attorney’s fees based on her Proposal for Settlement, Arnold opposed, asserting the Proposal was defective because it failed to apportion the settlement amount to each plaintiff.  (Id.)  The court held although Audiffred alleged the intent of the Proposal for Settlement was for her husband not to receive a portion of the settlement amount for his claim, the literal language of the Proposal did not state this intent. Thus, the Proposal was invalid as it was ambiguous.  (Id. at 1279-1280.)  Had the Proposal apportioned the offered settlement, the result would have been different.  (Id.)

Takeaway

Recent cases involving Proposals for Settlement make clear the offering parties must take exceptional care when evaluating and preparing their Proposals.  As seen above, the consequences for failing to comply with the express requirements of Florida Rule of Civil Procedure 1.442 and Florida Statutes section 768.79 may result in an invalid Proposal for Settlement that is of no consequence in shifting the burdens of attorney’s fees and costs to the receiving party.

 

About the Author

David Lewis graduated from Western State University College of Law in 2012.  Mr. Lewis serves as a member of Tyson and Mendes’ Complex Trial Team.

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