Recovering Attorneys’ Fees in Litigation: How to Avoid a Defective Proposal for Settlement
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Many parties engaged in litigation are primarily concerned with resolving their disputes through the most cost-efficient means. In the early stages of litigation, clients pose some version of the following question: “Who is going to pay my legal fees?” Under the common law, each party should bear their own legal expenses incurred. However, entitlement to fees can exist if provided by contract or statute. Because contractual and statutory entitlement to fees is in derogation to the common law, strict compliance with the contract or statute is required. This article addresses a party’s ability to recover statutory attorneys’ fees through strict compliance with the rules and statutes regarding a Proposal for Settlement.
A Proposal for Settlement, also known as an Offer of Judgment, is essentially a written offer served on the opposing party to settle a pending lawsuit. To encourage settlement of legal disputes, the Florida legislature adopted Section 768.79, Florida Statutes, which entitles an offering party to attorneys’ fees if certain conditions are met after the opposing party rejects the offer. To implement this statutory right to fees, and to address the procedural implementation of the statute, the Florida Supreme Court adopted Rule 1.442, Florida Rules of Civil Procedure. The Rule should be read in conjunction with the F.S. 768.79, and it supersedes the statute to the extent that the statute is inconsistent with the Rule. See Rule 1.442(a), Fla. R. Civ. P.
The use of the Proposal for Settlement is a useful tool to any litigant in the prosecution or defense of claims, which would not otherwise entitle the litigant to statutory or contractual fees. Specifically, the offer of judgment statute applies to any civil action for damages. Fla. Stat. 768.79(1). If a plaintiff files an offer which is not accepted by the defendant within 30 days, the plaintiff is entitled to attorneys’ fees if it recovers a judgment greater than 25% of the offered amount. Id. On the other hand, if the defendant files an offer which is not accepted by the plaintiff, the defendant is entitled to attorneys’ fees if the plaintiff does not recover a judgment at least 25% less than the offered amount. Id.
As stated before, courts require strict compliance with the rules for entitlement to fees, and every litigant should pay particular attention to each requirement necessary for a valid proposal. Rule 1.442(b) requires that a proposal to a defendant be served no earlier than 90 days after service of process, and a proposal to a plaintiff can be served no earlier than 90 days after service of process. To demonstrate the courts’ strict adherence to the rule, a proposal for settlement mailed to a party 87 days after service of process was considered invalid, although the proposal was received 92 days after process was served. See Grip Development, Inc. v. Coldwell Banker Residential Real Estate, Inc., 788 So. 2d 262 (Fla. 4th DCA 2000).
Under Rule 1.442(c)(2), the written offer must also:
(A) Name the party or parties making the proposal and the party or parties to whom the proposal is being made;
(B) Identify the claim or claims the proposal is attempting to resolve;
(C) State with particularity any relevant conditions;
(D) State the total amount of the proposal and state with particularity all nonmonetary terms 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’ fees are part of the legal claim; and
(G) Include a certificate of service in the form required by Rule 1.080(f).
The proposal should be served on the opposing party; however, the proposal should not be filed unless it is necessary to enforce the provisions of the Rule. Rule 1.442(e), Fla. R. Civ. P. Note that filing the proposal before entry of the judgment is not fatal to the entitlement to fees under the Rule, when the opposing party does not object. See Frosti v. Creel, 979 So. 2d 912 (Fla. 2008) (holding that any grievance with an unnecessarily filed proposal should be remedied by a motion to strike).
While strict compliance with the rule and statute is required, there are several pitfalls of which every litigant should be aware when drafted a proposal for settlement. For instance, the statute states that the offer of judgment statute applies to any civil action for damages. Fla. Stat. 768.79(1). The statute is inapplicable when both equitable relief and damages are sought. See Diamond Aircraft Industries, Inc., v. Horowaitch, 107 So. 3d 362 (Fla. 2013). A common mistake, which could render a proposal invalid, is a party’s attempt to resolve all claims in a suit that contains claims for damages and equitable relief. When addressing the “claim or claims the proposal is attempting to resolve”, under Rule 1.442(c)(2)(B), the offering party must take care to specifically state that the proposal is to resolve all claims for damages, when some of the claims asserted are equitable in nature.
Additionally, litigants should state any terms and conditions of the proposal with particularity under Rule 1.442(c)(2)(D). Parties often contemplate a general release of claims, upon settlement of any civil action, and such a release is considered a non-monetary term. A sole recitation of a “general release” will be inadequate and render the proposal ambiguous. A general release condition in a proposal for settlement must include the language of the proposed release, or a summary of the proposed release to eliminate any ambiguity about the scope of the release. See State Farm Mutual Automobile Insurance Co. v. Nichols, 932 So. 2d 1067 (Fla. 2006). A good practice includes attaching a copy of the general release to the proposal as an exhibit to eliminate any ambiguity.
Any party seeking to facilitate a settlement of claims in a cost-effective manner should consider a proposal for settlement—particularly when those claims do not otherwise provide a basis for entitlement to attorneys’ fees. Serving a proposal of settlement can be an effective tool to encourage opposing parties to consider the merits of the case in relationship to the offer. However, it is critical to strictly comply with the substantive and procedural requirements to ensure that the proposal for settlement is valid.