Statutory offers of settlement in Florida practice: uses, problems, and solutions.

JurisdictionUnited States
AuthorCrockett, Jeffrey B.
Date01 March 2006

It has been 15 years since the Florida Legislature passed F.S. [section] 768.79, (1) the offer of settlement (and judgment) (2) statute, and nearly 10 years since the Florida Supreme Court amended Rule 1.442 to harmonize the Rules of Civil Procedure to match the legislature's handiwork. (3) The Florida statutory settlement offer procedure is a powerful weapon for either a plaintiff or a defendant to bring litigation to a speedy settlement in the right circumstances. The "stick" or "hammer" leading to this result is the threat that if the party receiving the offer rejects it and does not do at least 75 percent as well as offered, that party will have to pay the offeror's attorneys' fees and costs from the date of the offer. Florida's statutory offer procedure thus creates coercive pressure toward settlements based on the fear of the statute's consequences for the "unreasonable" (in hindsight) rejection of statutory settlement offers. (4)

Classic Situations for Use of the Offer of Settlement Procedure

* Creating Fee-shifting for Prevailing Defendants: Nominal and Similar Offers--In virtually every case in which a defendant is sued, the defendant should consider making a statutory settlement offer to the plaintiff for the purpose of generating a potential claim for fees if the defendant prevails. Essentially the same considerations apply to an offer of settlement which is nominal or simply less than the plaintiff will accept: for instance, less than readily provable out of pocket losses.

Such strategic offers offend many judges (and plaintiffs), and have resulted in some language and holdings to the effect that such offers were not in "good faith" under the statute. (5) The policy and language of F.S. [section] 768.79, however, apply with full force when a defendant has prevailed entirely after a plaintiff has walked away from a settlement offer in his favor. Florida law provides that even nominal offers made solely to trigger a potential recovery of attorneys' fees are valid for that purpose so long as the defendant would have complied with the offer if accepted and there was a "reasonable foundation" for it. (6) The "reasonable foundation" for any offer made by a defendant who in fact prevailed is not difficult to demonstrate; as the 11th Circuit held in one case, "to accept in the same case in which a party did prevail the notion that there was no reasonable basis for that party prevailing would require self-contradiction on a scale that we are unwilling to consider." (7) The take home message is that a defendant has much to gain, and nothing to lose, by making a statutory offer for the purpose of creating a right to recovery of fees should a defendant be so fortunate as to prevail ultimately in the litigation.

The operation of F.S. [section] 769.79 in this type of case may lead to harsh results. A defendant, for example, may recover crushing attorneys' fees under the statute even if the defendant's success resulted from the death of an essential witness, an intervening change in the law, or the jury's resolution of close and difficult factual disputes. An entitlement to a fee award can occur even if the offer rejected by the plaintiff was insultingly low or would not have provided significant compensation. The legislature has made the relevant public policy determination, concluding that the efficacy of the offer of judgment statute in shortening litigation and encouraging settlements outweighs the harm from unfair or unpalatable results in particular situations. The nonprevailing plaintiff in such a case has no defense to entitlement for attorneys' fees, although the plaintiff can argue that the fees awarded should be reduced in amount based on the statutory factors. (8)

* Off-setting Damages with Attorneys" Fees: The Over-reaching Plaintiff--If a plaintiff insists on more damages than he or she is likely to recover, a statutory offer of settlement from the defendant will often be advisable. Imagine a case in which a plaintiff has a strong case for receiving $10,000, but is stretching to claim an additional $90,000. The defendant in such a case should make a settlement offer for just more than 4/3 times the likely judgment, let's say $13,500. (9) If the plaintiff accepts the offer, the case is over. If the plaintiff does not, and the predicted result occurs, the plaintiff will have received only 74 percent of the offer, and thus, although $10,000 was won, from this figure will be set off the defendant's attorneys' fees and costs not only at trial, but dating from the date of the offer. It is possible (and in this example, likely) that the result will be a net payment to the defendant, when the offer of judgment statute is considered--a possibility expressly contemplated by statute. (10)

Note that the defendant, to obtain this benefit, must make an offer in an amount of 33 percent more than the defendant believes he or she is likely to have to pay after trial. This is much harder to do as the amount at stake increases. If the defendant believes that a likely judgment would be $100,000, for instance, he or she would have to offer more than $133,333 to trigger an entitlement to fees--and would only recover fees if the plaintiff were so foolish to reject the generous offer. If millions are at stake, the defendant would have to offer at a minimum, hundreds of thousands, more than the likely exposure to trigger offer of judgment remedies.

* Obtaining Attorneys' Fees from Defendants Where Not Otherwise Provided: The Stubborn Defendant--While most believe that the offer of judgment statute in its general operation favors defendants, the same procedure can be used by plaintiffs to their advantage in appropriate cases. Assume that a defendant is stubbornly unwilling to offer the full $100,000 which the plaintiff is sure he or she will win. If the plaintiff wants to collect his or her own reasonable attorneys' fees and expects to win $100,000, the plaintiff should demand just less than 4/5 of the expected judgment, that is, just less than 4/5 times $100,000, or $79,000. (11) If the demand is rejected, however, and the expected judgment arrives, the plaintiff will recover not only the $100,000 judgment but also reasonable attorneys' fees from the date of the offer of judgment. Note that to get this benefit, the plaintiff had to give the defendant the opportunity to settle the case for less than 80 percent of the predicted damages. Interestingly, the math is such that while a defendant must offer 33 percent (one-third) more than the expected judgment to obtain sanctions, a plaintiff need "only" give a 20 percent (one-fifth) discount from the expected judgment to obtain the corresponding benefit.

* The Half-a-Loaf Offer--It is always difficult for a risk averse party to walk away from a reasonable settlement offer. The possibility of offer-of-judgment sanctions for a less-than-hoped for result makes the risk of rejecting a "half-a-loaf" offer in the hope of a complete win even greater. This is exactly as the legislature intended. When the ultimate result is hard to predict (as it often is), a statutory offer within the realm of reason will strongly encourage settlement. The fact that an offer has been made pursuant to statute adds the additional risk that if things do not go well, the party would have to pay not only his or her own fees and costs, but also the other side's.

Four Topics of Florida Offer of Judgment Jurisprudence

* Are Offers of Judgment "Exclusive" of Costs and Fees Allowed? In some cases, a party might want the flexibility to make an enforceable statutory offer which does not include a precise figure for court-ordered costs and attorneys' fees, but leaves these items for court computation. If, for example, the prevailing plaintiff would be entitled to attorneys' fees under a statute or contract, the defendant might be willing to make an acceptable offer on the merits, but might have no knowledge of the amount of the plaintiff's attorneys' fees, or might disagree as to their amount. As the First District said, "[a] defendant would require prophetic powers to estimate the amount of fees to be awarded for his adversary's services." (12) If an offer which was "exclusive" of costs and fees (i.e., which would allow these items to be computed and "added on" to the offer by the court) were made and not accepted, and the defendant were later to move for sanctions under F.S. [section] 768.79, the court could simply disregard the issue of pre-offer fees and costs, which would otherwise need to be computed under the case law in determining whether the actual result was 25 percent better for the offeree. (13)

Florida law is not clear, however, as to whether such an "exclusive" offer is allowable (14) under F.S. [section] 768.79. The Second and Third DCAs have held that at least some "exclusive" offers (which expressly left awards of interest, costs, and/or attorneys' fees for the court) were invalid as either "conditional" (15) or lacking in "definiteness." (16) Cases in the Fourth and Fifth DCAs, by contrast, have upheld the award of fees under F.S. [section] 768.79 based upon offers of judgment which were expressly "exclusive" of costs or attorneys' fees. (17) Uncertainty remains on the basic issue of whether an offeror may include or exclude costs and, especially, fees in an offer while preserving the right to seek sanctions under F.S. [section] 768.79. The Supreme Court majority approached this issue, but did not resolve it, in White v. Steak and Ale, 816 So. 2d 1040 (Fla. 2002), (18) which involved an "inclusive" (lump sum) offer.

The proponents of "exclusive" offers have the better of the arguments for a number of reasons. The patent legislative intent is to encourage expeditious settlements on any reasonable terms. Florida Rule of Civil Procedure 1.442(c)(2)(F), in requiring that an offer "shall state whether the proposal includes attorneys' fees and whether attorneys' fees are part of the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT