Proposals for settlement have become common-place in litigation as a strategic means to engage settlement, and as a feeshifting mechanism in the event settlement reaches impasse. Florida Rule of Civil Procedure 1.442 governs the content of proposals for settlement. Although a rule of procedure, the Florida Supreme Court has definitively held that it must be strictly construed due to its penal implications.1 However, what used to be strict construction based upon a reasonable interpretation of the statute has morphed into an imbalanced treatment of the rule’s provisions at the behest of strict construction.2 The result is inconsistent application of the rule’s provisions by the Florida courts; thereby invalidating otherwise unambiguous proposals for settlement, and leaving counsel and claims professionals to speculate as to what is sufficient to satisfy the rule’s requirements.
The Florida Supreme Court has recently accepted jurisdiction over this issue to determine whether a proposal for settlement can satisfy the requirements of Rule 1.442(c)(2)(F) when it does not directly “state whether the proposal includes attorneys’ fees and whether attorneys’ fees are part of the legal claim.”3 Until now, finding the legally-correct answer to this question has created a conflict in Florida in cases where attorneys’ fees are not explicitly part of the plaintiff’s legal claim. Specifically, the Third and Fourth District Courts of Appeal have upheld proposals that do not precisely adhere to the language of Rule 1.442(c)(2)(F), concluding that no ambiguity existed and that the terms were sufficient for the party to make an informed decision.4 Whereas, the First District has rejected this approach, concluding that “the test is strict compliance, not the absence of ambiguity.”5
Notably, the impact of this yet-to-be resolved conflict is that there are likely many pending proposals for settlement that would be unenforceable if the Florida Supreme Court adopts the First District Court of Appeal’s analysis. Given this present legal conflict, it is prudent for counsel and claims professionals to be mindful of the Florida courts’ ever-increasing scrutiny, and strictly adhere to the rule’s requirements.
The case recently certified to the Florida Supreme Court is that of Borden Dairy Company of Alabama, LLC and Major O. Greenrock v. Susanne L. Kuhajda.6 The particular issue certified is whether, in cases where a complaint does not make a claim for attorneys’ fees, a proposal for settlement can satisfy the requirements of Rule 1.442 when it does not explicitly “state whether the proposal includes attorneys’ fees” and “whether attorneys’ fees are part of the legal claim.”7
In Kuhajda, no legal claim for attorneys’ fees was made in the complaint.8 The proposals stated that they included “costs, interest, and all damages or monies recoverable under the complaint by law,” but did not include the specific fee language set forth in Rule 1.442(c)(2)(F).9 The defendants argued that the proposals were ambiguous because they did not include the specific fee language of Rule 1.442(c)(2)(F) and, therefore, did not strictly follow the rule’s requirements.10 The trial court disagreed and found that the failure to include the attorneys’ fee language did not create an ambiguity because the plaintiff never sought attorneys’ fees in the complaint.11 On appeal, the First District Court of Appeal reversed, concluding that “the supreme court has made the test strict compliance, not the absence of ambiguity.”12
This holding is directly contrary to that of the earlier Fourth District Court of Appeal decision in Bennett.13 In Bennett, the Fourth District Court of Appeal considered a substantially similar issue and upheld the validity of a proposal for settlement, calling the fee language “mere surplussage” when there is no claim for attorneys’ fees made in the complaint.14 As the Fourth District Court of Appeal explained, the purpose of Rule 1.442 is to “provide an efficient mechanism to convey an offer of settlement to the opposing party free from ambiguities so that the recipient can fully evaluate its terms and conditions.”15 Thus, although the provisions of Rule 1.442 are to be strictly construed, “this rule of construction should not eviscerate the legislature’s policy choice. When reviewing offers of judgment courts should use reason and common sense and interpret the offer as a whole to avoid unreasonable results.”16
In spite of the Florida District Courts’ inconsistent treatment of what constitutes “strict construction,” the Florida Supreme Court has determined that the most critical characteristics of a proposal are that it: (1) follow the technical requirements of Rule 1.442; and (2) not be ambiguous.17 Thus, the key is clarity. As the Fourth District Court of Appeal has commented, the parties should not “nit-pick” the validity of a proposal for settlement based upon allegations of ambiguity unless the asserted ambiguity could “reasonably affect the offeree’s decision on whether to accept the proposal for settlement.”18
Practically, just as it is inequitable to allow parties to be subject to attorneys’ fees when they cannot reasonably evaluate the terms and conditions of a proposal due to ambiguities, so too would it be inequitable for a party to benefit from the Florida courts’ reliance on strict construction to create ambiguities that do not otherwise exist. One example of a so-called ambiguity appears in the argument made in Kuhajda, where there was no legal right to fees, yet liability for fees was circumvented as a result of an ambiguity that was allegedly created by not formally referencing the fee provision of Rule 1.442(c)(2)(F). Similar concerns may result where no legal claim for fees is made, yet the proposal purports to “include” attorneys’ fees in an effort to satisfy the rule’s requirements. A further practical concern arises when parties argue that strict construction equates to “verbatim recitation” of the rule, because anything less could be deemed an “ambiguity.”19
The Florida Supreme Court’s consideration of this issue is necessary in order for Rule 1.442 to maintain its utility. While we await the outcome of the Florida Supreme Court’s decision on the certified question in Kuhajda, counsel and claims professionals should remain cognizant of this conflict in the law and ensure their proposals comply with the First District Court of Appeal’s more strict interpretation of Rule 1.442’s requirements. Additionally, a renewed evaluation of pending proposals for settlement may help ensure litigation goals are reached by confirming the proposals satisfy the rule’s requirements, and by allowing new proposals to be served in cases where they do not.
1 Willis Shaw Express, Inc. v. Hilyer Sod, Inc., 849 So.2d 276 (Fla. 2003).
2 Cf. State Farm Mut. Auto. Ins. Co. v. Nichols, 932 So.2d 1067, 1070 (Fla.2006) (requiring a proposal merely to be “sufficiently clear and definite to allow the offeree to make an informed decision without needing clarification”); Diamond Aircraft Indus., Inc. v. Horowitch, 107 So.3d 362, 377-78 (Fla. 2013) (holding that, under the facts of that case, the party’s failure to include a provision of rule 1.442 created an ambiguity by omission). Compare Bennett v. American Learning Systems of Boca Delray, Inc., 857 So.2d 986 (Fla. 4th DCA 2003) (hereinafter “Bennett”) (“The purpose of the rule is to provide an efficient mechanism to convey an offer of settlement to the opposing party free from ambiguities so that the recipient can fully evaluate its terms and conditions.”), and Three Lions Construction, Inc. v. The Namm Group, Inc., 2015 WL 4464494, at *1 (Fla. 3d DCA July 22, 2015) (hereinafter “Three Lions”) (holding that a proposal satisfied the requirements of Diamond Aircraft even though it did not track the language of Rule 1.442(c)(2)(F)), with Borden Dairy Company of Alabama, LLC and Major O. Greenrock v. Susanne L. Kuhajda, 171 So.3d 242, at 243 (Fla. 1st DCA 2015) (hereinafter “Kuhajda”) (concluding that the test is “strict compliance, not the absence of ambiguity”).
3 Suzanne L. Kuhajda v. Borden Dairy Co. of Alabama, LLC and Major O. Greenrock, 2015 WL 8204268, SC15-1682 (Fla. Nov. 30, 2015); see also Colvin v. Clements and Ashmore, P.A. d/b/a North Florida Women’s Care, 2015 WL 167010 (Fla. 1st DCA Jan. 15, 2016) (relying on Kuhajda to find a proposal unenforceable and certifying same conflict to Florida Supreme Court).
4 Bennett, 857 So.2d at 986; Three Lions, 2015 WL 4464494, at *1.
5 Bennett, 857 So.2d at 986 (holding that the proposal does not have to state whether it “includes attorneys’ fees and whether attorneys’ fees are part of the legal claim” in a case in which the plaintiff’s complaint did not contain a plea for attorneys’ fees), with Kuhajda, 171 So.3d at 243 (holding that the proposal does have to state whether it “includes attorneys’ fees and whether attorneys’ fees are part of the legal claim” in a case in which the plaintiff’s complaint does not contain a plea for attorneys’ fees, and certifying the issue as a conflict for determination by the Florida Supreme Court).
6 Kuhajda, 171 So.3d at 243.
7 Fla. R. Civ. P. 1.442(c)(2)(F).
8 Kuhajda, 171 So.3d at 242.
9 Id. at 242-43.
10 Id. at 243.
11 Id. at 243.
12 Id. (quoting R.J. Reynolds Tobacco v. Ward, 141 So.3d 236, 238 (Fla. 1st DCA 2014)).
13 Id. (certifying conflict with Bennett).
14 Bennett, 857 So.2d at 988.
15 Id.
16 Jacksonville Golfair, Inc. v. Grover, 988 So.2d 1225, 1227 (Fla. 1st DCA 2008).
17 Nichols, 932 So.2d at 1078.
18 Alamo Financing, L.P. v. Mazoff, 112 So.3d 626, 629 (Fla. 4th DCA 2013) (quoting Carey-All Transp., Inc. v. Newby, 989 So.2d 1201, 1206 (Fla. 2d DCA 2008)).
19 Cf. Miley v. Nash, 171 So.2d 145 (Fla. 2d DCA 2015) (holding that a proposal resolving “all claims” sufficiently identified the claims to be resolved without specifically identifying the consortium claim, and explaining that “[t]he wording of these conditions does not create any ambiguity as to what the effect of accepting the proposal will be.”), cert. denied 2015 WL 9306766 (Fla. Dec. 18, 2015); Three Lions, 2015 WL 4464494, at *1 (observing that a proposal for settlement satisfied the requirements of Diamond Aircraft where it simply stated that the “proposal includes any attorney fee claim [the offeree] may have against [the offeror]” and did not track the language of Rule 1.442(c)(2)(F)).
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