Florida Litigation Update: Third DCA Clarifies When Joint Proposals for Settlement Are Ambiguous and Addresses the Interplay Between Joint Proposals and Indemnification Agreements.
Florida litigators are well aware of the power of a properly used proposal for settlement and the potentially devastating consequences of rejecting such a proposal. Such proposals are powerful tools designed to facilitate settlement by potentially exposing parties who reject good faith offers to settle to attorneys’ fee awards. See § 768.79(1), Fla. Stat.;[i] Attorneys’ Title Ins. Fund, Inc. v. Gorka, 989 So.2d 1210, 1213 (Fla. 2d DCA 2008) (“The purpose of section 768.79 is to encourage the settlement of lawsuits.”); Lieff v. Sandoval, 726 So.2d 335, 336 (Fla. 3d DCA 1999) (“The creation of the right to attorney’s fees is the reason, or among the reasons, why any litigant makes an offer under section 768.79. It is the carrot held out by the statute to encourage early settlements.”). Proposals for settlement are often the subject of appellate decisions in Florida.
In SDG Dadeland Associates, Inc. v. Arias, No. 3D22-2237 (Fla. 3d DCA Jan. 17, 2024), the Third District was tasked with addressing whether a joint proposal for settlement which expressly provides that one co-defendant does not contribute any portion of the settlement proceeds is unenforceable as an illusory contract lacking consideration. The case is a great read on the interplay between proposals for settlement, indemnification, and the concept of illusory contracts.
A. Proposals for settlement primer.
Proposals for settlement are governed by section 768.79, Florida Statutes, and Florida Rule of Civil Procedure 1.442. Both the statute and the rule contain detailed requirements for what a valid offer must contain. To be effective, a proposal shall: (A) name the party or parties making the proposal and the party or parties to whom the proposal is being made; (B) state that the proposal resolves all damages that would otherwise be awarded in a final judgment in the action in which the proposal is served, subject to subdivision (F); (C) exclude nonmonetary terms, with the exceptions of a voluntary dismissal of all claims with prejudice and any other nonmonetary terms permitted by statute; (D) state the total amount of the proposal; (E) state with particularity the amount proposed to settle a claim for punitive damages, if any; (F) state whether the proposal includes attorneys’ fees and whether attorneys’ fee are part of the legal claim; and (G) include a certificate of service in the form required by Florida Rule of General Practice and Judicial Administration 2.516. § 768.79, Fla. Stat.; Fla. R. Civ. P. 1.442(c)(2).
Joint proposals—which are proposals made together by multiple defendants or plaintiffs to one or more opposing parties—are allowed under the rule. A joint proposal shall state the amount and terms attributable to each party. Fla. R. Civ. P. 1.442(c)(3).
In determining whether a proposal for settlement is valid and enforceable, courts look to whether the proposal is sufficiently clear and definite in meeting with the requirements of section 768.79 and rule 1.442. See Anderson v. Hilton Hotels Corp., 202 So. 3d 846, 853 (Fla. 2016). However, not every potential ambiguity or defect is fatal. The Florida Supreme Court has been clear that courts are to evaluate proposals for settlement without “nitpicking” in search of an ambiguity. Id. Thus, only ambiguities that “could reasonably affect the offeree’s decision” to accept will render a proposal invalid. Id. (quoting State Farm Mut. Auto. Ins. Co. v. Nichols, 932 So. 2d 1067, 1079 (Fla. 2006)).
Once proposals for settlement are accepted, courts view the proposals as settlement contracts and both the statute and the rule provide for enforcement by the courts. See § 768.79(4), Fla. Stat. (2020) (“Upon the filing of both the offer and acceptance, the court has full jurisdiction to enforce the settlement agreement.”); Fla. R. Civ. P. 1.442(i) (“Evidence of a proposal or acceptance thereof is admissible only in proceedings to enforce an accepted proposal or to determine the imposition of sanctions.”); see also Suarez v. Trucking FL Corp. v. Souders, 350 So.3d 38, 41 (Fla. 2022). This concept of proposals for settlement as enforceable contracts is critical to understanding Plaintiff’s arguments on appeal and the Third District’s rationale in finding the proposal unambiguous and enforceable.
B. The Dadeland
- Background, lower court proceedings, and Plaintiff’s arguments as to why the joint proposal was ambiguous.
This case stems from a slip and fall at Dadeland Mall. Plaintiff sued the owner of the mall (Dadeland) and the entity hired to provide maintenance (Nationwide). The service contract between Nationwide and Dadeland contained an indemnification clause whereby Nationwide agreed to defend, indemnify, and hold Dadeland harmless from all claims brought by third parties against Dadeland in any way relating to or resulting from Nationwide’s performance under the service contract.
In January 2020, Dadeland and Nationwide served a joint proposal for settlement in which they sought to resolve all claims asserted by Plaintiff for a total amount of $5,000 conditioned on Plaintiff voluntary dismissing the lawsuit with prejudice as to all defendants. The joint proposal stated that the $5,000 settlement would be paid fully by Nationwide and that Dadeland would provide “a contribution of Zero dollars.” This proposal was rejected by Plaintiff. After a jury trial resulted in a verdict for Defendants, they moved for attorneys’ fees under section 768.79 based on Plaintiff’s rejection of their proposal for settlement.
Initially, the trial court granted Defendant’s motion for fees. However, the lower court later reversed itself after Plaintiff filed a motion for reconsideration and found the offer to be ambiguous. The lower court found the proposal to be ambiguous because of the proposal’s failure to (1) “provide a timeframe for payment” of the settlement amount once the proposal was accepted by Plaintiff; and (2) “state that a judgment would be entered in the amounts offered.” On appeal, the Plaintiff/Appellee also argued the proposal was ambiguous because if Plaintiff accepted the proposal where Dadeland paid nothing toward the $5,000, the offer was (3) unclear whether Plaintiff’s acceptance extinguished Plaintiff’s negligence claim against Dadeland; and (4) an illusory offer that was unenforceable for lack of consideration. In reversing the lower court, the Third District rejected all four of these grounds.
- A joint proposal is not illusory or ambiguous merely because it requires one co-defendant to fully pay all settlement proceeds.
Perhaps the most interesting and unique argument raised by Plaintiff was that, because the joint proposal attributed payment of the $5,000 settlement fully to Nationwide, the proposal was illusory as to Dadeland for lack of consideration. As explained above, accepted proposals are considered enforceable contracts. Thus, Plaintiff’s argument, at its essence, was that a contract requires adequate consideration to be enforceable and where, as here, Dadeland paid nothing towards the settlement, there was not adequate consideration for the bargained-for-exchange critical to creating a valid contract.
In rejecting this argument, the Court noted that the offer strictly complied with rule 1.442’s requirements for joint proposals. More specifically, the offer complied with rule 1.442(c)(2)(D)’s requirement of providing the total settlement offered and 1.442(c)(3)’s requirement by allocating the settlement amount between joint offerors—with Nationwide paying $5,000 and Dadeland paying $0.
The Court declined to adopt Plaintiff’s position that rule 1.442(c)(3)’s attribution requirements should be interpreted as requiring each co-defendant in a joint proposal contribute to the judgment. In rejecting this argument, the Court reasoned that Plaintiff’s interpretation would “effectively render joint proposals for settlement unavailable to parties to indemnity agreements”—such as Nationwide and Dadeland. The Court noted that indemnified parties should not have to choose to waive their entitlement to indemnification in order to avail themselves of the rights afforded under section 768.79.
The Court further explained that had Plaintiff argued Dadeland was vicariously liable for Nationwide’s negligence, rule 1.442(c)(3)’s attribution requirement would not have applied because acceptance of a joint proposal in that instance would have been without prejudice to rights of contribution or indemnity. See Fla. R. Civ. P. 1.442(c)(4). The Court refused to interpret the rule in a way that would declare a joint proposal by a vicariously liable co-defendant who contributes nothing towards the settlement offer valid, while an identical joint proposal made by an indemnified co-defendant automatically invalid.
This is not to say that the Court encourages $0 proposals for settlement. Instead, the Court’s “holding is that an otherwise valid joint proposal for settlement is not rendered invalid simply because one of the joint offerors is indemnified by the other joint offeror and, by virtue of the indemnity agreement, is not contributing to the joint settlement offer amount.”
- The Plaintiff’s other bases were rejected.
As explained above, three other grounds were asserted for why the proposal for settlement should be considered ambiguous. The Third District rejected each argument.
i. The failure to provide a timeframe for payment does not render a joint proposal for settlement ambiguous.
As to the failure of the proposal to provide a timeframe for payment, the Court explained that neither section 768.79 nor rule 1.442 expressly require a proposal contain a timeframe for payment. The Court also noted that Plaintiff/Appellee provided no case law holding that the lack of such a timeframe rendered a proposal ambiguous. The Court rejected Plaintiff’s argument that a lack of timeframe could result in a situation where a plaintiff accepts settlement but does not receive the proceeds for two reasons. First, practically, a proposal conditioned on Plaintiff dismissing the lawsuit in exchange for payment would only function in a way that Plaintiff dismissed the lawsuit when and if the proceeds were paid. Second, both section 768.79 and rule 1.442 contemplate enforcement proceedings when a settlement proposal is accepted and a party breaches an obligation thereunder. See § 768.79(4), Fla. Stat. (2020); Fla. R. Civ. P. 1.442(i).
ii. The failure to provide that a judgment would be entered in the amounts offered in the proposal does not render a joint proposal for settlement ambiguous.
As to failing to state that a judgment would be entered in the amounts offered, the lower court based its ruling on Harris v. Tiner, 336 So.3d 1238 (Fla. 2d DCA 2022), reasoning that, because Harris referenced a proposal’s failure to demand that the defendant consent to a judgment in the settlement amount, the proposal’s failure to do so in this case renders it ambiguous. The Court rejected this reading of Harris explaining, “[w]e do not read Harris as requiring a proposal from a defendant offeror to consent to a judgment. Rather, we read the Harris court’s reference to Tiner’s proposal not demanding the co-defendants ‘consent to judgment’ as merely illustrating the amorphous nature of [the] proposal. Because [that] proposal failed to prescribe, with any specificity, the parties’ obligations, the proposal was invalid for it could not have been accepted without judicial interpretation.” The Court explained that the proposal here contained no such infirmities.
iii. The proposal adequately explained that acceptance extinguished all claims.
As to whether the proposal was ambiguous as to whether Plaintiff’s acceptance extinguished its negligence claim against Dadeland, the Court explained paragraph 4 of the joint proposal plainly and unambiguously conditioned Arias’s acceptance of the proposal on her “dismissing with prejudice, the entirety of” the case “as to all Defendants.” Therefore, it was unambiguous that if Plaintiff had accepted the joint proposal, she was then required to dismiss her claims against both Dadeland and Nationwide with prejudice.
Proposals for settlement are a hotly contested area of litigation and often the subject of appellate scrutiny. This case is illustrative of how the courts must struggle with balancing basic principles of contract law with the dictates and policy behind the proposal for settlement/offer of judgment statute. The case provides needed clarity on the issue how co-defendants who are subject to indemnification can effectively offer valid joint proposals for settlement.
Regardless of which side you are on, FIDJ’s seasoned trial and appellate litigators can help you. For more information on how we can assist in your trial or appellate needs, contact us at 305-350-5690 or firstname.lastname@example.org.
[i] Section 768.79(1) states in pertinent part: “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 …, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him … 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 … If a plaintiff files a demand for judgment which is not accepted by the defendant … and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand.”