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By Debra P. Klauber.

The Florida Supreme Court, on its own motion, recently amended Florida Rule of Civil Procedure 1.442, which governs the procedural aspects of proposals for settlement. The court explained that the changes were made in an effort to “align” the rule of procedure with the substantive portion of the Florida Statute (section 768.79) dealing with such settlement proposals. Because the statute does not specifically refer to any “nonmonetary” terms, the court specifically removed the language in the rule that allowed any nonmonetary conditions.

What Does This Mean in Practice?

Basically, a proposal for settlement will now simply set forth the amount that is being offered (or demanded) to settle the case, with an express reference to any portion that should be applied to attorneys’ fees or punitive damages. However, a proposal can no longer require the execution of a release, a confidentiality agreement, or any other nonmonetary term. If the proposal is accepted, the case will just be dismissed, with prejudice.

The statute and rule allowing for proposals for settlement were designed with an admirable goal in mind: to facilitate settlement and the prompt resolution of litigation, which generally confers a benefit on all of the parties involved. In essence, a party who offers to settle a lawsuit for a reasonable amount of money is permitted to recover attorneys’ fees incurred after that settlement offer is made if the opposing party unreasonably refuses to accept it. Whether the offer was reasonable (and the refusal unreasonable) is ultimately determined by the amount of the final judgment in the case.

Lingering Litigation Issues

Unfortunately, the complexities of the rule and the statute have generated significant collateral litigation, which defeats the original purpose of the proposals themselves – early resolution. Litigation over proposals for settlement has burdened our trial and appellate courts and delayed the resolution of litigation for parties and their counsel. The courts have addressed, time and again, the procedural requirements, such as the informal service of a proposal for settlement via e-mail versus a formal “service” e-mail. The courts are continually faced with arguments about whether or not a proposal (or the attached releases and other nonmonetary terms) are ambiguous. And the courts have been bombarded with cases involving convoluted questions about joint proposals, which are served by, or upon, multiple parties. Throughout the last decade or so, the pendulum in Florida’s appellate courts has been swinging back and forth between decisions utilizing a rigorous construction of the rule and statute and decisions applying a more common sense approach to the enforceability of these proposals.  

Key Takeaways

This current amendment to the rule should eliminate some confusion, and hopefully some of this collateral litigation, so a proposal can easily be evaluated from a financial perspective. If the amount of the offer “beats” the ultimate judgment by 25%, it ought to entitle the offeror to fees. However, there is still work to be done, particularly in the context of joint proposals which seemingly require the amount of the proposal to be apportioned between those parties regardless of the nature of the relationship between them. Another change that ought to be considered is an effort to align the lingo. In fact, the Florida Legislature ought to make the next smart move by amending the statute to call these proposals for settlement what they are, as opposed to the outdated offers of judgment. These are baby steps, but hopefully we are headed in the right direction. If you have any questions about how this amendment may impact your legal matter(s) and would like to discuss your options, please contact Debbie Klauber, or any of our Haliczer Pettis & Schwamm legal team.