MIAMI BUSINESS LITIGATION: STRATEGIC USE OF OFFERS JUDGMENT

Florida law permits parties in litigation to issue offers of judgment and demands for judgment/proposals for settlement to their adversaries in litigation. If the opposing party accepts the offer, this will typically conclude litigation between the parties. If the opposing party refuses, and the offering party prevails by more than 25%, then the offering party will be entitled to a judgment in its favor for the attorneys’ fees it has incurred since the date that the offer was made. Florida businesses that seek to take advantage of this rule must consider the nuances of the rule to make best use of it. Peter Mavrick is a Miami business litigation attorney who represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringment litigation, and other legal disputes in federal and state courts and arbitration.

Florida Statute 768.79 and Rule 1.442 of the Florida Rules of Civil Procedure set forth the applicable rules regarding offers of judgment/proposals for settlement. The award of attorneys’ fees is mandatory when the offer of judgment complies with both § 768.79, Florida Statutes, and Florida Rules of Civil Procedure Rule 1.442. See Anderson v. Hilton Hotels Corp., 202 So. 3d 846 (Fla. 2016) (“The mandatory language of section 768.79 reinforces the notion that a proper offer automatically creates that entitlement, unless the offer is made in bad faith […] [t]hus, an offer that complies with section 768.79 and Rule 1.442 creates a ‘mandatory right’ to collect attorneys’ fees”).

Section 768.79(1) Florida Statutes, provides:

In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney’s fees against the award.

A plaintiff also has the right to issue a demand for judgment to defendants, though a plaintiff will be entitled to attorneys’ fees only if the judgment is at least 25 percent more than the demand for judgment. “Proposals for settlement are governed by the rules for interpretation of contracts.” Arnold v. Audiffred, 98 So. 3d 746 (Fla. 1st DCA 2012).

An offer of judgment is a powerful tool by which litigants can conclude litigation earlier than it otherwise would have. A party who receives an offer of judgment has a strong incentive to conclude litigation by accepting the offer when the offer is close to the estimated value of how much would ultimately awarded, or else risk having to pay the opposing party’s attorneys’ fees.

As the attorneys’ fees in prolonged litigation can be expensive, the precise way that the judgment is calculated is very important to litigants who are subject to the offer of judgment statute. Section 768.79(6) explains how the judgment is to be calculated when comparing the judgment with the original offer of judgment, to determine whether attorneys’ fees are owed. It states that for defendants “the term ‘judgment obtained’ means the amount of the net judgment entered, plus any postoffer collateral source payments received or due as of the date of the judgment, plus any postoffer settlement amounts by which the verdict was reduced.” For plaintiffs, it defines “judgment obtained” to mean “the amount of the net judgment entered, plus any postoffer settlement amounts by which the verdict was reduced.” Id.

The Florida Supreme Court explained that the term “judgment obtained” “does not limit the net judgment entered to the verdict.” White v. Steak & Ale of Florida, Inc., 816 So. 2d 546 (Fla. 2002). White found that the taxable costs which were incurred by a plaintiff in a premises liability action which were incurred prior receipt of an offer of judgment needed to be considered in calculating whether the judgment ultimately entered was 25% less than the offer of judgment issued by the defendant.

In determining both the amount of the offer and whether to accept the offer, the party necessarily must evaluate not only the amount of the potential jury verdict, but also any taxable costs, attorneys’ fees, and prejudgment interest to which the party would be entitled if the trial court entered the judgment at the time of the offer or demand. Id.

The recent Florida First District Court of Appeal case Wilcox v. Neville, 283 So. 3d 878 (Fla. 1st DCA 2019), further describes how to calculate the “judgment obtained.” In Wilcox, the plaintiff was injured in a car accident and sued both the driver of the vehicle and the owner of the vehicle. The plaintiff sent different offers of judgment to both the driver and the owner. The driver accepted the offer at $60,400, but the owner refused the offer of $89,600. The case went to trial, resulting in a verdict against the owner for $126,592. The trial court reduced the judgment by the $60,400 contribution made by the driver, and PIP benefits of $7,326.60, to an award of $58,865.73. The trial court determined that the judgment was not more than 25% greater than the offer of judgment for $89,000, and found that attorneys’ fees should not be awarded based upon the judgment entered.

The Wilcox plaintiff asserted that Florida Statute § 768.79(6) requires that the judgment be calculated by adding in any post-offer settlement amounts. The trial court disagreed, asserting that simultaneously sent offers of judgment deprive a recipient of the offer of judgment choice. This is because the statute requires a thirty-day consideration period and the recipient of one of two offers of judgment would not receive the full thirty days if the decision depended upon whether another recipient of an offer of judgment accepted the offer during that thirty-day period. The appellate court in Wilcox disagreed, holding that “we interpret ‘postoffer settlement’ to mean settlement reached any time after the service of the offer.” Id. White and Wilcox make it clear that when courts evaluate whether the judgment ultimately entered is 25% greater than a plaintiff’s offer of judgment, or, 25% less than a defendant’s offer of judgment, the proper method of analysis is to compare the ultimate judgment entered against the parties’ circumstance at the moment that the offer of judgment was issued. Had the parties’ recognized this principle in White or Wilcox, they may more effectively mitigated their own risk. For example, the defendant in White could have issued a subsequent, but more substantial offer of judgment which considered the issue of taxable costs, to ensure that at least some of the nearly $100,000 in attorneys’ fees which were expended could be recovered. In Wilcox, the defendant could have issued his own offer of judgment upon recognition that the ultimate award would factor in his co-defendant’s settlement.

With careful application of Florida’s offer of judgment statute, Florida businesses can conclude litigation early or otherwise shift legal expense from prolonged and unnecessary litigation to the opposing party.

Peter Mavrick is a Miami business litigation lawyer who has successfully prosecuted and defended breach of contract and other business lawsuits. This article does not serve as a substitute for legal advice tailored to a particular situation.