• Navigating the Uncertain Waters of Florida Proposals for Settlement
  • November 25, 2015
  • Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - Jacksonville Office
  • Key Points:
    • Utmost care is needed when evaluating and preparing proposals for settlement.
    • Failure to strictly comply with Florida Statute § 768.79 and Florida Rule of Civil Procedure § 1.442 may result in either an offer to settle with no consequence or an invalid proposal for settlement.
    The jury has just returned a verdict in your favor. You find yourself tasked with evaluating a proposal for settlement you served months or even years ago. Now an important question arises: Is the proposal for settlement valid and enforceable? Given recent legal developments in Florida, the courts have taken great efforts to clear up any uncertainty to that answer.

    What Is a Proposal for Settlement?
    A proposal for settlement (PFS) is a vehicle under Florida law that can allow a party to recover reasonable attorneys’ fees “in any civil action for damages.” PFSs are governed under both Florida Statute § 768.79 and Florida Rule of Civil Procedure § 1.442. Defendants may file a PFS 90 days after suit is filed, and plaintiffs may file 90 days after the defendant is served. Both parties cannot serve a PFS later than 45 days from trial or the first day of the trial docket, whichever is earlier.

    A PFS is deemed invalid if it seeks to resolve claims for equitable relief along with legal damages. Diamond Aircraft Industries, Inc. v. Horowitch, 107 So.3d 362 (Fla. 2013). Examples of equitable relief are specific performance or an injunction.

    Content and Form
    A PFS may have the legal effect of triggering liability for an opponent’s attorney’s fees. To do so, the PFS must:
    1. Name the party or parties making the proposal and to whom the proposal is being made;
    2. Identify the claim(s) the proposal is attempting to resolve;
    3. State with particularity any relevant conditions;
    4. State the total amount of the proposal and all non-monetary terms of the proposal;
    5. State the amount proposed to settle a claim for punitive damages, if any; and
    6. State whether the proposal includes attorneys’ fees and whether fees are part of the legal claim.
    Is the Amount of the Offer Clear?
    The recent legal holdings send a clear message: Failure to strictly comply with the plain language of the Florida Statute and the Florida Rules of Civil Procedure will result in an invalid PFS. Further, any deficiencies will be strictly construed against the drafter. Hilton Hotels Corp. v. Anderson, 153 So.3d 412 (Fla. 5th DCA Dec. 19, 2014).

    The Fourth DCA recently held in Government Employees Insurance Co. v. Ryan, 165 So.3d 674 (Fla. 4th DCA Mar. 11, 2015), that a PFS was patently ambiguous and defective when the plaintiff filed a PFS to GEICO stating that the offer to settle “was in the total amount of one hundred thousand dollars ($50,000) inclusive of all fees.”

    The trial court held that, despite the conflicting amounts, both parties were aware that GEICO’s policy had a $50,000 policy limit. Consequently, the PFS was sufficiently clear and not susceptible to more than one reasonable interpretation. The Fourth DCA reversed the trial court’s ruling and found this inconsistency to be patently ambiguous and precluded an award for attorney’s fees. Practical Tip: a prudent attorney will have another individual review the PFS. This review should take place not only when they are received but, also, before they are served on a party.

    Was the Proposal for Settlement Made In Good Faith?
    The amount of the PFS must not only be clear and specific, but it must be made in good faith. In determining whether a PFS was made in good faith, the court will use the valuable blueprint provided in Florida Statute § 768.79(7)(a) in evaluating a “good faith basis.” The considerations enumerated in this statute include:
    1. The then apparent merit or lack of merit in the claim;
    2. The number and nature of offers made by the parties;
    3. The closeness of questions of fact and law at issue;
    4. Whether the person making the offer had unreasonably refused to furnish information necessary to evaluate the reasonableness of such offer;
    5. Whether the suit was in the nature of a test case presenting questions of far-reaching importance affecting nonparties; and
    6. The amount of the additional delay cost and expense that the person making the offer reasonably would be expected to incur if the litigation should be prolonged.
    Utilizing the above statutory criteria, the Third DCA recently held in Isais v. The HT Hackney Co.,159 So.3d 1002 (Fla. 3d DCA Mar. 25, 2015), that three defendants’ PFSs in the amount of $500 were made in good faith because the defendants had a reasonable basis to believe their exposure was nominal. In this case, Hackney filed suit against Isais, REW Dairy and Toni Gas, alleging that the defendants had not paid Hackney’s invoices. In 2006, discovery in the case confirmed that all of Hackney’s invoices issued to the defendants had, in fact, been paid. Based on Hackney’s harmful concession, the Third DCA held that the defendants had an “objective reasonable basis” to file the $500 PFSs. Practice Tip: At the time of serving, a nominal PFS memorialized the factors which support the modest offer.

    Joint Proposals for Settlement
    On April 16, 2015, the Florida Supreme Court authored two important opinions on the issue of joint PFSs. The Supreme Court made it clear that statutory proposals for settlement must be apportioned and differentiated between the parties.

    First, Audiffred v. Arnold, 161 So.3d 1274 (Fla. 2015) involved two separate claims arising from a motor vehicle accident between Audiffred and Arnold. Audiffred sought claims for her personal injuries and property damage, and her husband, Kimmons, asserted a loss of consortium claim. The plaintiff served a PFS upon the defendant, offering to dismiss both Audiffred’s and Kimmons’ claims in exchange for $17,500. The plaintiff’s PFS was rejected by Arnold. The jury entered a verdict in favor of Audiffred in the amount of $26,055.54; however, no award was made in Kimmons’ favor. The plaintiff moved for attorney’s fees, and Arnold asserted that the PFS was defective because it failed to apportion the settlement amount to each plaintiff. The trial court denied Arnold’s motion to strike. The First DCA reversed. The Florida Supreme Court granted review based on conflicting opinions from the Third, Fourth and Fifth Districts. The Supreme Court held that, although Audiffred alleged that the intent of the proposal was for Kimmons not to receive any portion of the settlement amount for his consortium claim, the actual language of the PFS did not convey this position. Consequently, based on the ambiguity of apportionment of the settlement amount against the pending claims, the proposal was ambiguous and “the offer lacked sufficient clarity to permit Arnold to reach an informed decision with regard to the settlement amount against the pending claims by Audiffred and Kimmons.”

    In the second important opinion, Pratt v. Weiss, 161 So.3d 1268 (Fla. 2015), the Supreme Court quashed a Fourth District opinion that upheld an award of attorney’s fees to the defendants, FMC Hospital LTD and FMC Medical, Inc. The Fourth DCA held that the defendants represented a single hospital entity, and, therefore, it was unnecessary to apportion their offer of settlement.

    The Supreme Court disagreed and held that the amended complaint not only treated FMC Hospital and FMC Medical as separate defendants, the complaint alleged both active and vicarious liability as to these distinct defendants.

    Notably, within both the Audiffred and Pratt opinions, the Supreme Court acknowledged the 2011 amendment to Rule 1.442, which creates an exception to the apportionment requirement where the party is alleged to be solely, vicariously, constructively, derivatively or technically liable. However, the court held this section inapplicable to these cases. Practice Tip: If a proposal for settlement will resolve claims against more than one party, the offer must be apportioned.

    The lesson to take away from the recent legal developments regarding PFSs is that the utmost care is needed when evaluating and preparing them. The consequences for failing to strictly comply with Florida Statute § 768.79 and Florida Rule of Civil Procedure § 1.442 may result in an offer to settle with no consequence or an invalid PFS. Perhaps the courts will continue to increase clarity on a definitive manner for preparing a PFS so that it can finally serve its proper purpose to efficiently and effectively dispose of cases that should never see the inside of a courtroom.