Losing at trial hurts. Getting hit with the bill for your adversary’s attorney’s fees makes it hurt ever-so-much more. That’s why fee-shifting under Florida Statutes Section 768.79 — available to parties that make a proposal for settlement under Rule 1.442 — can be such a powerful tool. It’s probably also why lawyers who refuse an offer for settlement – and get burned – fight so hard to avoid the consequences.
Many courts, including the Florida Supreme Court, aren’t too keen on this kind of fee-shifting either. Although common in many foreign legal systems, fee-shifting is an exception to the so-called “American Rule” that each party generally bears its own fees. That – and the fact that Rule 1.442 and Section 768.79 can be used to play “gotcha” – explains the judicial resistance.
Thus, Rule 1.442 in its current form contains very precise requirements for what must be included in a settlement proposal. Under longstanding precedent, specificity is required as to each of the required elements, and any ambiguity can nullify fee-shifting.
Proposals to settle the claims or liabilities of multiple parties, known as “joint proposals”, have proven particularly troublesome. Subsections (c)(3) and (c)(4) of Rule 1.442 specify how the Rule applies to such proposals:
3) A proposal may be made by or to any party or parties and by or to any combination of parties properly identified in the proposal. A joint proposal shall state the amount and terms attributable to each party.
(4) Notwithstanding subdivision (c)(3), when a party is alleged to be solely vicariously, constructively, derivatively, or technically liable, whether by operation of law or by contract, a joint proposal made by or served on such a party need not state the apportionment or contribution as to that party. Acceptance by any party shall be without prejudice to rights of contribution or indemnity.
Do Florida Supreme Court Decisions Make Joint Proposals Impossible?
The Florida Supreme Court has addressed these subsections in a series of cases since the current form of the Rule was adopted in 1996. It has concluded that a settlement offer made by or to multiple parties must always specify the amount attributable to each party, so that each party can individually decide whether to accept or reject the offer.
In a 2005 case, Lamb v. Matetzschk, 906 So. 2d 1037, the Court held that even in vicarious liability cases (to which subsection (c)(4) applies), a plaintiff’s offer to multiple defendants must still specify the amount attributable to each defendant. Then last year, in Attorneys’ Title Insurance Fund, Inc. v. Gorka, 36 So. 3d 646 (Fla. 2010), the Court held that a joint proposal from a defendant to multiple plaintiffs must allow each plaintiff to individually decide whether to settle. So a proposal can’t condition the settlement of one plaintiff’s claims on the other’s agreement to settle as well.
In the wake of these cases, the 1st DCA recently wondered aloud [in Schantz v. Sekine, 60 So. 3d 444 (Fla. 1st DCA 2011)] whether a joint proposal to multiple plaintiffs can ever satisfy Rule 1.442. Agreeing with Justice Polston’s suggestion in his Gorka dissent, the Court lamented that the decision’s practical effect was to excise joint proposals from Rule 1.442 entirely.
Can A Proposal Release Claims Against Multiple Parties Without Being a Joint Proposal?
But pending word from the Florida Supreme Court (which is likely within the next year), there’s at least one context in which claims against multiple parties can be released in a single settlement proposal. Relying on 2009 decisions of the 3rd and 4th DCAs, the Fifth District recently held in Andrews v. Frey, No. 5D10-2068 (released on July 29, 2011), that if one defendant is only alleged to be vicariously liable for the acts of a primary defendant, a settlement proposal by the primary defendant can provide for the release of the vicarious defendant as well.
Of course the 5th DCA didn’t characterize the proposal as a “joint proposal.” Indeed, the court framed the dispositive issue as whether in that particular context, the proposal made by a single defendant, but requiring the release of a second defendant, is a “joint proposal” under Rule 1.442. The 5th DCA found that it was not, so the offering party was entitled to collect attorney’s fees after the trial resulted in a verdict of less than the amount offered in the settlement proposal. But since it wasn’t a “joint proposal,” the vicariously liable party, who would also have been released under the proposal, was not entitled to attorney’s fees.
Will the Supreme Court Embrace Individual Proposals That Release Multiple Parties?
Despite the holding in Andrews, fee-shifting based on these multi-party release, individually offered, settlement proposals may not survive for very long. Andrews itself may end up in the Florida Supreme Court, as the 5th DCA certified the question of whether a proposal made by one party that requires a release of claims against multiple parties is in fact a “joint proposal” under Rule 1.442(c)(3).
And the same question is included among three certified to the Florida Supreme Court by the 11th Circuit in Auto-Owners Insurance Co. v. Southeast Floating Docks, Inc., 632 F.3d 1195 (11th Cir. 2011), which the Court has set for oral argument on October 4, 2011. With 3 certified questions at issue, it’s possible that the Court may not reach the question that the 5th DCA was concerned with. It’s also possible that the Court will reframe the certified questions.
And, of course, it’s possible that the Court will answer the question, but will be fine with imposing attorney’s fees on parties that refuse an individual proposal that requires a release of multiple parties. I wouldn’t count on it, though.