|January 6, 2014|
Previously published on January 3, 2013
The Florida Supreme Court in November 2013 made a notable change to Florida's Proposal for Settlement rule. Namely, the Court generally gutted the ability of a party to serve a partial Proposal for Settlement. This notable change in Florida civil procedure becomes effective on January 1, 2014.
In terms of background, Florida litigants may, as a result of a Proposal for Settlement, obtain a post-trial sanction of attorney's fees against the other party. The sanction is available if such party unreasonably failed to settle before trial (i.e., did not accept a pre-trial Proposal for Settlement that the proposing party later “beat” by 25 percent or more at trial). The controlling statute and rule for such Proposals for Settlement are Section 768.79, Florida Statutes and Rule 1.442, Florida Rules of Civil Procedure. This statute and rule, prior to the change at hand, permitted a party to serve a Proposal for Settlement that would only resolve part of the lawsuit if accepted. For example, a product liability party could serve a Proposal for Settlement that sought to resolve all negligence counts against a given counter-party, but which did not resolve any strict liability counts against such counter-party. Effective January 1, 2014, such a partial Proposal for Settlement (e.g., one as to the negligence counts, but not as to the strict liability counts against a party) would be invalid. Such party would need to serve a Proposal for Settlement that would resolve all negligence and strict liability causes of action. Such a Proposal would also need to resolve any other counts against the party on whom the Proposal was being served.
The history behind the proposal for settlement change is straightforward. The Florida Bar's Standing Committee on the Florida Rules of Civil Procedure determined that Rule 1.442 should be consistent with the statute, §768.79, which states that Proposals “shall be construed as including all damages which may be awarded in a final judgment.” The final judgment language of course suggests that all counts of a complaint should be taken into account. The new Rule 1.442 requires that a party serving a Proposal for Settlement take into account all counts of a complaint.
The one exception to the new prohibition of partial Proposals for Settlement is that a party may still exclude attorney's fees claims from Proposals. For instance, in a malicious prosecution claim (a claim that by definition usually involves attorney's fees), a defendant serving a Proposal could exclude attorney's fees from the Proposal. By doing so, the defendant would obtain the immediate benefit and leverage provided by the Proposal for Settlement rule without having to estimate, or specifically determine, the amount of attorney's fees the plaintiff has incurred.
In summary, the new partial Proposal for Settlement rule will invalidate partial Proposals for Settlement served after January 1, 2014—unless the Proposal is only partial insofar as it expressly excludes attorney's fees. While partial proposals may have been a creative tool in the past for multi-count complaints, a Florida litigant's use of the same partial Proposals in the future may run afoul of the Supreme Court's modified Rule 1.442.