The Supreme Court Of Florida To Florida's District Courts Of Appeal – Stop "Nitpicking" Proposals For Settlement!

Financial Institutions Law Alert

The Supreme Court of Florida (the “Court”) recently revisited the issue of proposals for settlement under Florida Statute § 768.79 and Florida Rule of Civil Procedure 1.442, which lay out the statutory and procedural requirements to entitle a party to attorneys’ fees in certain circumstances. Allen v. Nunez, No. SC16-1164 (Fla. 2018). The statute allows the offeror to shift attorneys’ fees to the offeree if the offeree rejects the proposal for settlement and certain thresholds are met when a judgment is obtained. That is, if the offeror is the plaintiff, the judgment has to be at least 25% more than the proposed settlement amount and, if the offeror is the defendant, the judgment has to be at least 25% less. Of course, the offeror also must comply with the particular requirements of both Fla. Stat. § 768.79 and Fla. R. Civ. P. 1.442. Ultimately, the avowed purpose of this fee shifting mechanism is to reduce litigation. However, it has been the subject of significant litigation due to the perceived ambiguity of proposals by both offerees and lower courts. The Court’s recent decision in Allen reinforces the consensus that proposals for settlement must only be reasonably unambiguous when read as a whole. Id. In reversing Florida’s Fifth District Court of Appeal and finding the proposals for settlement at issue to be unambiguous, the Court stated, “[t]he ‘nitpicking’ of these offers by the district court below to find otherwise unnecessarily injected ambiguity into these proceedings and created more judicial labor, not less.” Id. at 22.

Allen originated from a case concerning a motor vehicle accident. The Defendants were a father and son—the Defendant-father owned the vehicle being operated by the Defendant-son, who struck the Plaintiff’s unoccupied vehicle. The Plaintiff served separate proposals for settlement on each Defendant under Fla. R. Civ. P. 1.442 and cited Fla. Stat. § 768.79 as the basis for the proposal. Additionally, each proposal identified: (a) the Plaintiff, by name; (b) the Defendant, by name; (c) that the proposal is for the purpose of settling any and all claims by Plaintiff against Defendant; (d) the settlement amount to be paid by Defendant to Plaintiff ($20,000); and (e) that the proposal “is inclusive of all damages claimed by Plaintiff, W. RILEY ALLEN, including all claims for interest, costs, and expenses and any claims for attorney’s fees.” Id. at 3. After Plaintiff secured a judgment entitling him to attorney’s fees pursuant to Fla. Stat. § 768.79 and Fla. R. Civ. P. 1.442, Defendants moved to strike the proposal and argued that paragraph 5 of the proposals (identified as (e) above) “were ambiguous as to whether acceptance and payment of one of the $20,000 proposals for settlement would have resolved the case against both [Defendants] or only against the individual [Defendant] accepting the proposal.” Id. The trial court granted Plaintiff’s motion to enforce the proposals, finding them to be sufficiently clear and unambiguous, and the Fifth District reversed, holding that paragraph 5 of the proposals caused them to be ambiguous and unenforceable.

The Court in Allen cited to its earlier decision, in which it recognized that proposals for settlement “must be sufficiently clear and free from ambiguities to allow the offeree the opportunity to fully consider the proposal.” Id. at 9 (citing State Farm Mut. Auto. Ins. Co. v. Nichols, 932 So. 2d 1067, 1079 (Fla. 2006)). However, this holding does not require the “elimination of every ambiguity—only reasonable ambiguities.” Id.

In reviewing the proposals at hand, the Court found that a reading of them in their entirety eliminated any ambiguity associated with an individual paragraph. Specifically, because each proposal identified the individual plaintiff and individual defendant, and that it was intended to settle all claims of that plaintiff against that defendant, a later paragraph including more general language did not render the entire proposal ambiguous. The Court determined that “the only reasonable interpretation is that the Petitioner, W. Riley Allen, offered to settle his claims with only the Respondent specified in each respective proposal.” Id. at 21.

While the Court in Allen generally warns lower courts against injecting ambiguity into proposals that, when read as a whole, are unambiguous, this case is specific to a single offeror sending proposals for settlement to multiple offerees. Since proposals for settlement could include any number of variables specific to each individual case, the parties and causes of action that would be resolved by the settlement should be identified at every opportunity within the proposal to reduce the chance that an offeree, or court, may perceive an ambiguity to exist. Litigants, both plaintiffs and defendants, must avoid any ambiguity that could serve to render unenforceable a proposal under the offer of judgment statute (Fla. Stat. § 768.79), thus shifting the burden of paying attorneys’ fees back to the prevailing party.