The 1996 amendments to Florida Rule of Civil Procedure 1.442; reconciling a decade of confusion.

• Author: Kian, David L.

In an effort "to reconcile, where possible," the often confusing and contradictory set of statutes, rules, and cases that govern offers of judgment in Florida, the Florida Supreme Court recently amended Florida Rule of Civil Procedure 1.442.[1] The amendment culminates a decade of activity regarding the issue. Since 1986, the Florida Legislature has enacted and amended F.S. [sections]768.79 and has enacted, amended, and partially repealed F.S. [sections]45.061;[2] the Florida Supreme Court has withdrawn, added, repealed, added again, and amended Rule 1.422;[3] and a host of authors have published articles chronicling the resulting state of confusion,[4] a result one judge found was "characterized aptly" as "one of the most oblique areas of rule and law that I think I have ever seen."[5]

However, the confusion may be coming to an end. In a series of key cases, the Florida Supreme Court has clarified two issues at the heart of the offer of judgment controversy: 1) the nature of and constitutional basis for fee awards following rejected offers of judgments; and 2) the discretion of the trial court in implementing such awards. The resolution of these issues is now reflected in amended Rule 1.442.

A "Serious Question": Substantive or Procedural?

The initial and most recurring issue addressed by the court's decisions is the nature of an entitlement to fees pursuant to a rejected offer of judgment. Because of its implications for the separation of legislative and judicial power, the constitutionality of the offer of judgment statutes and rules turns on this issue.

Under the traditional "American rule," each party to litigation must pay its own attorneys' fees .6 However, exceptions to this rule have been carved by courts and by legislatures. Judicial exceptions to the American rule involve the assessment of attorneys' fees as sanctions for procedural misconduct and legislative exceptions incorporate attorneys' fees into the remedies provided for violations of certain substantive rights. When attorneys' fees are assessed as a judicial sanction, a court exercises its authority to enforce judicial procedures that preserve the integrity of the judicial process.[7] That exercise of authority is necessarily subject to the discretion of the enforcing judicial officer. By contrast, when entitlement to fees is a remedy provided by substantive law, the legislature has implemented its sovereign discretion to create a right to fees under the occurrence of certain circumstances.[8] The interest vindicated by the assessment of such fees is not the proper administration of judicial procedures, but rather the public policy goals that motivated the legislature's creation of the entitlement. Where judicially adopted rules of procedure and legislatively enacted statutes both appear to create an entitlement to attorneys' fees under similar circumstances (such as occurred with Rule 1.422 and F.S. [subsections]45.061 and 768.79), "a serious question" arises as to whether the court-made rule "impinges upon the legislative prerogative to enact substantive law."[9]

The Florida Supreme Court first identified this "serious question" in the context of offers of judgment in The Florida Bar re: Amendment to Rules of Civil Procedure, Rule 1.442 (Offer of Judgment), 550 So. 2d 442 (Fla. 1989). Concerned with the "possible conflict" between Rule 1.442 and [subsections] 768.79 and 45.061, the court requested the Civil Procedure Rules Committee of The Florida Bar to examine the issue. In response, the rules committee proposed an amendment to the rule that would have provided for a sanction based on a percentage of an unaccepted offer of judgment. The rules committee also urged the court to declare [subsections] 768.79 and 45.061 unconstitutional.[10] This request reflected a concern that the statutes did not create a substantive right to fees, but rather a judicial sanctioning mechanism that infringed upon the Supreme Court's exclusive constitutional authority to govern the rules of procedure in Florida courts.[11]

The court rejected the rules committee's proposed rule, expressing concern that the form of the proposed sanction encroached upon legislative substantive law: "[T]his Court has authority to create rules imposing sanctions and requiring payment of costs and attorneys fees when a party violates the rules, [but] it is not so clear that a sanction is 'procedural' when it imposes a 'fine' based on a percentage of an unaccepted offer, especially when a party may have done nothing more serious than guessing...