Drafting and analyzing joint proposals for settlement.

• Author: Luyster, Julia
• Position: Florida

For now, the Barnes Dilemma (1) remains a part of the drafting challenges for Florida attorneys drafting joint proposals for settlement. Drafting a valid and enforceable joint proposal for settlement in Florida requires strict adherence to F.S. [section] 768.79, and Fla. R. Civ. P. 1.442. (2) Evaluating an offer can be equally challenging and as such frustrates the intended purpose of the rule; timely and cost effective resolution of litigation.

The practicalities of applying Rule 1.442 were addressed by Chief Justice Pariente's special concurrence and Justice Lewis's concurrence in Lamb v. Matetzschk, 909 So.2d 1037 (Fla. 2005), a decision eagerly awaited and disappointingly absent any direction to Florida attorney's on application of the rule of civil procedure other than to suggest Florida attorneys are creative enough to eventually draft a proposal for settlement that will comply with the present rule. (3) It is possible that compliance could result in abandonment of the joint proposal for settlement as a viable tool for settlement purposes and a reliance upon proposals by one defendant conditioning acceptance of the proposal on a release including all defendants, (4) or other such nonmonetary conditions discussed later in this article. But even the use of single proposals has created unjust results and has failed to facilitate settlement. (5) Although the Lamb opinion disapproves the Second District's opinion in Barnes, it does so purely because of what it characterizes as a technical application of the language of Rule 1.442. (6) Such a construction of the rule defeats the object for which is was established, and frustrates, rather than furthers, the justice the procedural rule was designed to accomplish. (7)

The statutory language requires only that a proposal be in writing, name the offeror and offeree, and state the amount of the offer. (8) It does not require apportionment or differentiation, if the two terms can be defined as expressing different requirements. The language of the rule, however, requires that a joint proposal state the amount and terms attributable to each party. Construction of this language to require proposals to state "an" amount attributable to each party renders compliance in drafting untenable and actually discourages settlement. (9) Allstate Indemnity Co. v. Hingson, 808 So.2d 197 (Fla. 2002), holds that a proposal made by one defendant to multiple plaintiffs must be apportioned. (10) Willis Shaw Express, Inc. v. Hilyer Sod, Inc., 849 So.2d 276 (Fla. 2003), addressed a joint proposal for settlement made by multiple plaintiffs and required that a joint proposal for settlement made by multiple plaintiffs be apportioned. Lamb holds that all joint proposals must differentiate the amount and terms offered by or to each party to the proposal. (11)

Although one purpose of compliance with the rule is to reduce or eliminate judicial intervention in the resolution of litigation, strict compliance appears no longer plausible without judicial intervention, especially in light of Lamb's suggestion that creative drafting might bring one into compliance. (12) Unfortunately, though, the result of Lamb might be that until the rule is amended it will remain fatally defective where it conflicts with the very essence of vicarious liability; that there can be no monetary apportionment. The offending clause is found in Fla. R. Civ. P. 1.442(c)(3).

Fla. R. Civ. P. 1.442 states:

3. Form and Content of Proposal for Settlement.

(1) A proposal shall be in writing and shall identify the applicable Florida law under which it is being made.

(2) A proposal shall:

(A) name the party or parties making the proposal and the party or parties to whom the proposal is being made;

(B) identify the claim or claims the proposal is attempting to resolve;

(C) state with particularity any relevant conditions;

(D) state the total amount of the proposal and state with particularity all nonmonetary terms of the proposal;

(E) state with particularity the amount proposed to settle a claim for punitive damages, if any;

(F) state whether the proposal includes attorneys' fees and whether attorneys' fees are part of the legal claim; and

(G) include a certificate of service in the form required by rule 1.080(f). (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.

Since the offer of judgment statute and the related rule are being strictly construed because they are in derogation of the common law, any proposal that is ambiguous is not valid or enforceable. (13) Any joint proposal that does not apportion the amount offered by each offeror to each offeree is ambiguous and unenforceable. (14)

Differentiation: Lamb v. Matetzschk

The Florida Supreme Court reviewed Matetzschk v. Lamb, 849 So.2d 1141 (Fla. 5th DCA 2003) which certified conflict with Barnes v. Kellogg Co., 846 So.2d 568 (Fla. 2d DCA 2003). It disapproved Barnes and held that the plain language of Rule 1.442 mandates that offers of settlement be differentiated between the parties, even if a party's liability is purely vicarious. (15)

Lamb sued William and Margie Matetzschk after an automobile accident. Margie was sued as co-owner of the vehicle and had no direct liability. Her alleged liability was joint and several. Lamb made two undifferentiated offers, then settled with Mrs. Matetzschk and then served a final proposal for settlement for $6,000.00 upon Mr. Matetzschk. Lamb was awarded over $73,000.00 by a jury and pursued attorneys' fees pursuant to the proposal for settlement. The Fifth District held that the time period for calculating the attorneys' fees began after the third offer since the first two were undifferentiated in violation of the rule.

The Florida Supreme Court extended Willis Shaw to the facts of Lamb stating that the same "logic" nonetheless applies even though Willis Shaw involved an undifferentiated offer from multiple plaintiffs to a single defendant. The opinion notes that Lamb asserted that it is impossible to apportion an offer of settlement when one of the offerees is only vicariously liable, but the court summarily dismissed this by stating that creative drafting could breathe vitality into the differentiation requirement. (16)

The Supreme Court's opinion interprets Barnes as being in conflict with the Fifth District's opinion in Lamb because Barnes found the rule did not prohibit a joint offer of settlement when the offer was attributed jointly and severally to the defendants and the plaintiff was "prevented from accepting the proposal from one defendant or the other." It found the holding in conflict with the Fifth District's opinion in Lamb which held that a joint offer must differentiate the amount attributable to each party, "even where one party is only liable vicariously."

Justice Pariente recognized that the Barnes scenario is different from the Lamb scenario and that there are different considerations in drafting or evaluating a joint offer to two defendants, as opposed to a joint offer by two defendants to a single plaintiff as in Barnes. The rule, originally amended to accommodate the Fabre v. Marin, 623 So.2d 1182 (Fla. 1993), interpretation of statutory requirement of apportionment of liability for noneconomic damages has moved far beyond that accommodation and has resulted in a proliferation of litigation. (17)

Vicarious Liability

There is no logic to requiring a division of damages in a proposal for settlement if there is no rational method for dividing those damages between two defendants whose liability for paying those damages is coextensive. Vicarious liability does not avail itself to apportionment and, therefore, a rule requiring that settling parties are required to apportion an offer made to or by vicariously liable defendants, to accommodate some potential future setoff, has apparently become unworkable. William Underwood and Michael Morrison of Baylor University, as cited in Grobman v. Posey, 863 So.2d 1230 (Fla. 4th DCA 2003), explain this simply.

Apportionment of responsibility is simply ill-suited for cases where a party's liability for negligence is solely vicarious. As one commentator has explained: The liability of a master for the acts of a servant ... within the scope of employment ... stands upon grounds that do not support apportionment. Under the doctrine of respondeat superior, the master becomes responsible for the same act for which the servant is liable, and for the same consequences. Ordinarily there is a sound basis for indemnity, but not for any apportionment of damages between the two. (18)

But dividing a joint offer, assigning some percentage of the offer to each offeree, even when one of the offerees is a vicariously liable party, is logical, if one examines the language of a proposal, in conjunction with F.S. [section] 768.81(3). (19) If a party is vicariously liable that party has engaged in no wrongful conduct and there can be no "fault" within the meaning of [section] 768.81(3), (20) for purposes of putting the vicariously liable party on the verdict form for purpose of apportionment of damages by a jury. (But see American Home Assurance Company v. National Railroad Passenger Corp., 908 So.2d 459 (Fla. 2005), a case which did not involve a settlement but concluded that [section] 768.81 applies to vicariously liable parties.) The basis for imposing liability is that party's relationship to the active tortfeasor. (21) It is often justified because it ensures a financially responsible party will cover the damages. (22) One basis for proposing to release, or evaluating a proposal to release, a vicariously liable defendant...