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Preparing Enforceable Proposals for Settlement in Florida

May 3, 2016
Matthew Sanchez

The requirements for an enforceable proposal for settlement under Section 768.79, Florida Statutes, continuously shift and evolve as Courts grapple with new factual scenarios and revisions to relevant laws and rules. Issues regarding proposals that involve multiple parties are particularly complex, and Florida’s courts have issued several rulings over the past year addressing matters that must be considered when preparing such proposals.

Florida generally follows the “American Rule,” which requires each party in a lawsuit to pay its own attorneys’ fees unless a specific contract or law provides otherwise. Section 768.79 provides one potential basis for the recovery of attorneys’ fees in cases that otherwise would fall under the American Rule.

In brief, Section 768.79 allows a party to send a proposal for settlement that offers to resolve the litigation for a specified amount of money. The offering party may recover attorneys’ fees if (1) the other party rejects the offer and (2) the damages ultimately awarded in the lawsuit meet certain calculations set forth by the statute. For example, if a defendant sends a proposal that offers to pay the plaintiff a certain sum to resolve the lawsuit, and the plaintiff declines, the plaintiff must recover at least 75% of that sum in the lawsuit to avoid paying attorneys’ fees to the defendant.

These calculations become more complicated when multiple parties are involved. Generally, an offer that seeks to resolve claims involving multiple parties will be considered a “joint offer,” and therefore must specify the portions of the settlement amount that relate to each party. For example, a plaintiff’s proposal to two defendants might offer to settle for $100,000, with $75,000 paid by one defendant and $25,000 paid by the other, if the plaintiff expects to recover substantially more from one of the two defendants. An offer that simply asks the defendants to pay $100,000, with no differentiation between the two defendants, would be unenforceable.

In addition to separately apportioning the settlement amount, it has been long established that a plaintiff sending a proposal to multiple defendants, or a defendant sending a proposal to multiple plaintiffs, must give each offeree the opportunity to accept the proposal regardless of whether the other offerees accept.1 To use the previous example, the defendant asked to pay $25,000 and the defendant asked to pay $75,000 must be allowed to accept or decline their portion of the proposal separately, which could result in the plaintiff resolving the case against one defendant (for either $25,000 or $75,000, rather than the total amount of $100,000) and continuing to litigate against the other.

However, Florida’s courts have now determined that multiple plaintiffs can make an “all or nothing” offer that requires a defendant to settle with all plaintiffs, rather than accepting or declining individual offers from each plaintiff.2 The proposal still must specify which portion of the settlement amount would be paid to each plaintiff, although the defendant cannot choose to settle with less than all of the plaintiffs. According to Hoang Dinh Duong, this type of offer would only permit the plaintiffs to recover attorneys’ fees if all of the plaintiffs ultimately prevail under the “75%” calculation set forth in Section 768.79, because the defendant does not have the ability to consider each plaintiff’s offer separately.

A slightly different scenario arises where a party sends a demand to another party that seeks to resolve not only those two parties’ claims, but also claims of other parties. For example, a plaintiff may send an offer to a defendant in which that plaintiff’s claims, as well as claims of a co-plaintiff, will be released if the proposal is accepted. The Florida Supreme Court recently determined that such a proposal constitutes a “joint proposal” – even though it may technically have been sent by one party acting alone — and therefore will be valid only if it specifies the portions of the settlement amount that relate to the offering plaintiff and the other plaintiff whose claims would allegedly be released.3

Rules relating to multiple-party proposals have also been modified to reflect revisions to Rule 1.442 of the Florida Rules of Civil Procedure, which regulates procedural aspects of the proposal for settlement process. An amendment to Rule 1.442 provides that a plaintiff need not apportion a proposal between multiple defendants in certain circumstances in which one defendant is only alleged to be vicariously liable for the actions of another defendant – for example, an employer may be liable for actions committed by an employee, or a contractor may be liable for actions of a subcontractor. Courts have now confirmed that older cases wholly forbidding non-apportioned proposals no longer apply to situations that fall within the amendment to Rule 1.442.4

Each of the aforementioned cases modified the functional requirements that must be met in preparing proposals for settlement, either by resolving conflicts between other courts or addressing new rules. As these cases show, parties seeking to recover attorneys’ fees under Section 768.79 must carefully review recent developments in the law to ensure that their proposals for settlement meet the current requirements.

[1] See Attorneys’ Title Ins. Fund, Inc. v. Gorka, 989 So. 2d 1210, 1214 (Fla. 2d. DCA 2008).

[2] Hoang Dinh Duong v. Ziadie, 153 So. 3d 354, 359 (Fla. 4th DCA 2014).

[3] Audiffred v. Arnold, 161 So. 3d 1274, 1280 (Fla. 2015).

[4] Miley v. Nash, 171 So. 3d 145, 150 (Fla. 2d DCA 2015).