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Can It Be Done? Evaluating Judicial Authority to Expand the PFS Acceptance Period

Appellate Practice

When it comes to negotiating the resolution of a case, timing is important. But the moment a valid proposal for settlement (PFS)1 is served, timing is everything. A defendant who does not timely accept a plaintiff’s PFS may be ordered to pay the plaintiff’s attorneys’ fees and costs if the net judgment obtained is at least 25 percent greater than the plaintiff’s offer.2 Conversely, a plaintiff who does not timely accept a defendant’s PFS may be ordered to pay the defendant’s attorneys’ fees and costs if the net judgment obtained by the plaintiff is at least 25 percent less than defendant’s offer, or if there is a finding of no liability. Although Florida law is clear that parties may agree to an enlarged acceptance period,3 thereby delaying the point at which fees and costs may be taxed, it is uncertain whether a court may enlarge the period over the offeror’s objection.

F.S. §768.79 and Fla. R. Civ. P. 1.442 govern the procedural and substantive aspects of proposals for settlement. Both the statute and rule allow 30 daysfor an offeree to accept a PFS once it is duly served, but recent appellate decisions have differed on whether the acceptance window may be enlarged by court order on an offeree’s motion. At least one district court of appeal has opined in dicta that more time may be granted over the objection of the offering party, pursuant to Rule 1.090. Meanwhile, at least one circuit court, sitting in an appellate capacity, has opined in dicta that the period is fixed by statute. This article first addresses those contrary positions, and then suggests that the issue may be resolved by a separation of powers analysis: If the 30-day acceptance period is classified as procedural, then courts likely have authority to grant an enlargement over the offeror’s objection, but if the acceptance period is substantive, then courts are likely bound to strictly construe and apply the 30-day statutory period, barring any enlargement under the rules of procedure.

30 Days. . . and Beyond
Generally, a trial court’s authority to enlarge the period of time for a party to act is derived from Fla. Rul. Civ. P. 1.090. This rule provides in pertinent part that when a rule or order of court specifies a period of time for a party to act, “the court can at any time in its discretion. . . order the period enlarged[.]”4 Certain periods of time that cannot be enlarged under Rule 1.090 are expressly enumerated, and they do not include the provisions of Rule 1.442 or §768.79.5

While Rule 1.090 puts no limitation on enlargements of time to accept a PFS, the plain language of both Rule 1.442 and §768.79 grants no more and no less than 30 days for a party to accept a proposal. Both authorities are also silent as to whether more time may be given to accept a PFS. In fact, §768.79(1) provides that when a party submits an offer that is not accepted within 30 days, the party “shall be entitled to recover reasonable costs and attorney’s fees” from the offeree.6 Further, both the rule and statute must be strictly construed, as the award of fees and costs is a sanction that is in derogation of common law.7 Ostensibly, then, the procedural rules do not expressly bar a court from enlarging the time to accept a PFS past 30 days, but, at the same time, §768.79 nowhere indicates that the time can be extended. As a result of that ambiguity, authorities are now split, or at least in doubt, as to how the timing aspects of the statute and the applicable procedural rules are to be interpreted.

Most recently, PFS acceptance periods were addressed in Ochoa v. Koppel, 197 So. 3d 77 (Fla. 2d DCA 2016), when the Second District Court of Appeal reviewed the trial court’s ruling that a party timely accepted a valid proposal after the 30-day period had expired. The plaintiff argued that her PFS was enforceable against the defendant, who had moved under Rule 1.090 for an enlargement of time a day before the 30-day window ended, but had accepted the proposal before the trial court could rule on the motion.8 The central issue on appeal, therefore, became not whether the time to accept a PFS could be enlarged, but whether moving for an extension would automatically toll the 30-day acceptance window.

The Second District evaluated Rules 1.090 and 1.442, and concluded that they contained “no provision tolling time while a motion for enlargement is pending.”9 The Second District also opined in dicta that had the motion gone before the trial court, Rule 1.090 conferred broad discretion on the judge to grant more time to accept the PFS upon a showing that the moving party had a “bona fide interest” in settling the case.10 Still, despite that reasoning, the Second District suggested in an intriguing footnote that it was unclear whether Rule 1.090 could confer authority to a trial court to enlarge a statutory period of time imposed by the legislature in §768.79(1).11 The court described this “potentially implicated” issue as “whether, in light of the fact that the [30]-day period after which a [PFS] is deemed rejected is also statutory under [§]768.79, that deadline is extendable under [R]ule 1.090 at all.”12 Without deciding that issue, the Second District certified conflict with Goldy v. Corbett Cranes Services, Inc., 692 So. 2d 225 (Fla. 5th DCA 1997),13 in which the Fifth District Court of Appeal held that PFS time periods are susceptible to tolling pursuant to Rule 1.090, and strongly indicated that the procedural rules give judges authority to grant additional time to accept a PFS.

In Goldy, the plaintiff sought to enforce a PFS that had not been accepted within 30 days.14 On the final day of the acceptance period, the defendant moved for an enlargement of time in which to accept under Rule 1.090.15 However, before the trial court could rule on the motion, and after the acceptance period ended, the plaintiff withdrew the PFS.16 After the case went to verdict, the plaintiff claimed entitlement to fees and costs.17 The trial court ruled in the defendant’s favor, finding that the motion for more time automatically tolled the acceptance window, meaning that the PFS was withdrawn by the plaintiff before the defendant’s acceptance period had expired, rendering the PFS unenforceable against the defendant.18 The trial court suggested that the motion triggered the tolling provisions of Rule 1.090 in part because it could have been ruled upon if the plaintiff had not already withdrawn it.19

On review, the Fifth District affirmed. It agreed with the trial court’s reasoning that the 30-day acceptance period was tolled by operation of Rule 1.090, and that the period could have ultimately been enlarged.20 The court explained that a “plaintiff with a sincere desire to settle, pursuant to an offer of judgment, is not prejudiced when a court grants an extension of time for acceptance after a good reason is shown by the offeree. The plaintiff always has the power to withdraw the offer at any time before acceptance if the plaintiff’s position changes.”21 As in Ochoa, the Fifth District in Goldy did not reach the question of whether a trial court may enlarge the PFS acceptance window over the objection of the offering party. Thus, the Fifth District’s professed agreement with the lower court regarding judicial authority to enlarge the acceptance period does not definitively resolve the question at hand.22

30 Days. . . and No More
In contrast, at least one circuit court has expressed doubt that a trial court ever has authority to enlarge the acceptance period. Sitting in its appellate capacity, the court in State Farm Mut. Auto Ins. Co. v. South Florida Med. Health Center, 24 Fla. L. Weekly Supp. 21 (Fla. 11th Cir. Ct. 2016), considered whether an acceptance of a PFS after the 30-day period was binding on the parties. The trial judge had ruled that the plaintiff timely accepted a proposal for settlement on the 40th day after the PFS was conveyed.23 The trial judge determined that since the defendant never withdrew the PFS, and the plaintiff’s motion to enlarge was still pending, the offer remained open at the time of acceptance, and the PFS was not enforceable as a basis for awarding attorneys’ fees and costs.24 The trial judge’s order ratified the acceptance and precluded the defendant’s recovery of fees and costs, and the defendant appealed.25

The 11th Judicial Circuit appellate panel reversed, holding that the motion to enlarge did not toll the acceptance period. The court emphasized that §768.79 and Rule 1.442 must be strictly construed to permit only 30 days to accept a proposal for settlement.26 In support of that point, the 11th Circuit cited Diamond Aircraft Indus., Inc. v. Horowitch, 107 So. 3d 362, 376 (Fla. 2013), in which the Florida Supreme Court held that “[b]oth [§]768.79 and [R]ule 1.442 are in derogation of the common law rule that each party is responsible for its own attorney’s fees which requires that we strictly construe both the statute and the rule.”27 Based on that rationale, the 11th Circuit appellate panel explained: “We are skeptical, but need not decide, whether absent agreement from the other party one may obtain an enlargement of time by court order under the rule or especially under the statute, in light of the Florida Supreme Court’s requirement of strict compliance.”28

This remark faintly echoed the suggestion in Ochoa that Rule 1.090 may not be used to enlarge a time period prescribed by §768.79. In both cases, this unelaborated concern probably stemmed in part from the Florida Supreme Court’s formal adoption of §768.79 into Rule 1.442. The effect of adopting the statute into that procedural rule is that “[§]768.79. . . provides the substantive law concerning proposals for settlement while Rule 1.442. . . provides its procedural mechanism.”29 This distinction is significant because the separation of powers provision in the Florida Constitution gives sole power to the Florida Supreme Court to craft procedure, while only the legislature may grant substantive rights — these powers are mutually exclusive and cannot be delegated.30

As suggested in South Florida Med. Health Center, a party who serves a PFS may have a statutory (and substantive) right to enforce the PFS if it is not accepted within 30 days of service.31 Based on that strict construction of §768.79, there is no mechanism by which the statutory period may be enlarged. Assuming that the acceptance period in §768.79 is indeed fixed as a substantive legal right, courts would have no power to alter it.32

Substantive or Procedural?
Determining whether the acceptance period in §768.79 is substantive or procedural is tricky because the statute seems to fall into both categories. The Florida Supreme Court has explained that a “rule of procedure prescribes the method or order by which a party enforces substantive rights or obtains redress for their invasion. Substantive law creates those rights. Practice and procedure are the machinery of the judicial process as opposed to the product thereof.”33 When a statute contains both procedural and substantive aspects, the statute may be held unconstitutional if it encroaches on the practice and procedure of the court system. However, “where a statute contains some procedural aspects, but those provisions are so intimately intertwined with the substantive rights created by the statute, the statute will not impermissibly intrude on the practice and procedure of the courts in a constitutional sense[.]”34

The Florida Supreme Court has found §768.79 to be “constitutional despite [its] procedural aspects because [it] contained substantive provisions authorizing an award of attorney’s fees.”35 The Supreme Court has also adopted §768.79 into Rule 1.442, and by doing so, only the “procedural portions of the statute were superseded by Rule of Civil Procedure 1.442.”36 Again, no court has squarely ruled on whether the statute’s provision regarding entitlement to fees and costs within 30 days is so intimately intertwined with a substantive right to tax fees and costs that the statutory acceptance period is absolutely fixed.37

The main arguments for the 30-day period being purely procedural, and, thus, subject to enlargement over objection, are fairly straightforward. The time to accept a PFS is prescribed not just by statute, but also by Rule 1.442. The courts’ broad discretion to extend time periods, as set forth in Rule 1.090, would necessarily encompass the deadlines in Rule 1.442 for accepting a PFS.38 To the extent that §768.79 contains a strict acceptance deadline, that time period would be procedural, and the courts’ broad discretion to act pursuant to Rule 1.090 would override the statute to allow an enlargement of an offeree’s time to accept.

The primary arguments for the time period being substantive are more nuanced. Statutory time periods, especially provisions that delay the entitlement to a right, are not procedural per se and, in fact, are commonly substantive in nature.39 It could, therefore, be asserted that the expiration of the acceptance period in §768.79 does not create the method or order by which the right is enforced, but, rather, the expiration of the period is a condition precedent that creates the right itself. Accordingly, any rule-based infringement of that statutory right by the judiciary could be viewed as a substantive change that would encroach on the legislature’s exclusive authority.40

In sum, the timing provisions for proposals for settlement in both the rule and statute, and whether they can be extended, may benefit from clarification. Although a number of district courts of appeal have indicated that motions to enlarge time under Rules 1.090 and 1.442 may be granted, the issue remains unresolved. As discussed above, Florida’s courts have not clearly or directly answered whether a trial court has authority to enlarge the time to accept a PFS over the offeror’s objection. Moreover, the Florida Supreme Court has not yet spoken definitively on whether the time to accept a PFS can be extended at all. Ultimately, since §768.79 does not seem to contemplate an acceptance period exceeding 30 days, the answer may hinge on whether the statutory acceptance period is substantive or procedural. Until all such questions regarding whether the time to accept a PFS may be altered or extended by court order over objection, practitioners should be aware of each possibility and advise their clients accordingly.

1 Fla. Stat. §768.79 uses the term, “offer of judgment,” whereas Fla. R. Civ. P. 1.442 uses the term “proposal for settlement.” The terms are essentially interchangeable, but for the sake of uniformity, this article only uses the latter phrase.

2 This article does not address other requirements that must be satisfied before PFS sanctions may apply, such as good faith to settle by the offeror and proper service.

3 To clarify, a party cannot be compelled to keep an offer open, but the acceptance period must expire before the offeror becomes entitled to fees and costs. See Baratta v. Bradford Electric, Inc., 9 So. 3d 694 (Fla. 4th DCA 2009).

4 Fla. R. Civ. P. 1.090(b).

5 Rule 1.090(b) does not enlarge times to file motions “for new trial, for rehearing, or to alter or amend a judgment; making a motion for relief from a judgment under [R]ule 1.540(b); taking an appeal or filing a petition for certiorari; or making a motion for a directed verdict.” Fla. R. Civ. P. 1.090(b). The absence of a specific limitation, thus, suggests that a PFS may be enlarged pursuant to Rule 1.090.

6 See Fla. Stat.§768.79(1) (emphasis added). Further, Rule 1.010 states that the procedure in “all special statutory proceedings shall be as prescribed by the statutes governing the proceeding unless these rules specifically provide to the contrary.” Thus, “[t]o the extent that statutes dealing specifically with a particular civil action or proceeding do not set out a specific rule for a particular phase of practice or procedure, such phase would appear to be governed by these rules.” Fla. R. Civ. P. 1.010 (1967 Comments).

7 See Diamond Aircraft Indus., Inc. v. Horowitch, 107 So. 3d 362, 376 (Fla. 2013) (both Rule 1.442 and §768.79 must be strictly construed).

8 Ochoa, 197 So. 3d at 79.

9 Id.; see also Three Lions Const. Inc. v. Namm Grp., Inc., 183 So. 3d 1119, 1119-20 (Fla. 3d DCA 2015) (reversing PFS enforcement because offeree’s motion for extension could not toll acceptance period and no hearing was held on motion prior to period’s expiration).

10 Ochoa, 197 So. 3d at 83.

11 Id. at 79, n.1.The Second District seemed to be hinting to the mutually exclusive authority of courts over procedure and the legislature over substantive rights. See generally Massey v. David, 979 So. 2d 931, 936-39 (Fla. 2008).

12 Ochoa, 197 So. 3d at 79, n. 1 (citing BNP v. Wynne, 944 So. 2d 1004, 1005-06 (Fla. 4th DCA 2005)) (Rule 1.090, “by not expressly mentioning statutes, is applicable to procedural deadlines under a special statutory proceeding.”). There is no definition for a “special statutory proceeding.” In re Commitment of Cartwright, 870 So. 2d 152, 162 (Fla. 2d DCA 2004). But Rule 1.010 provides that the “form, content, procedure, and time for pleading in all special statutory proceedings shall be as prescribed by the statutes governing the proceeding unless these rules specifically provide to the contrary.”

13 Ochoa, 197 So. 3d at 84.The Florida Supreme Court has accepted jurisdiction to review Ochoa based on express and direct conflict with Goldy as to whether the acceptance period may be tolled. Review is pending in Florida Supreme Court case number, SC16-1474.

14 Goldy, 692 So. 2d at 226.

15 Id.

16 Id.

17 Id.

18 Id. at 228.

19 Id.

20 Id.

21 Id.

22 In Schmidt v. Fortner, 629 So. 2d 1036, 1038 (Fla. 4th DCA 1993), the Fourth District commented that the difference between the offer amount and judgment alone determine entitlement to an award under §768.79. The court also asserted that since “the time for responding to an offer of judgment under [§]768.79 is now governed by [R]ule 1.442, there is no reason why [R]ule 1.090(b) should not authorize enlargement of the prescribed time to respond to offer or demand of judgment.” Id. at 1038, n.3. However, no motion for an enlargement of time was ever sought in Fortner, so that decision is not dispositive on the precise issue of whether the time to accept can be extended over objection.

23 State Farm Mut. Auto Ins. Co. v. South Florida Med. Health Center, 24 Fla. L. Weekly Supp. 21 (Fla. 11th Cir. Ct. 2016).

24 Id.

25 Id.

26 Id.

27 Id. (emphasis in original); see also Grip Dev., Inc. v. Coldwell Banker Res., 788 So. 2d 262, 266 (Fla. 4th DCA 2000) (holding that rules and statute governing proposals for settlement must be strictly construed such that period for serving a PFS may not be enlarged under Rule 1.090).

28 Id. at n.5 (“Although Goldy…[and like cases] suggest that an offeree could seek an enlargement of the period within which to respond to an Offer of Judgment made pursuant to [an earlier version of Rule 1.442], it is questionable whether this reasoning survives Diamond Aircraft, et al.”). The 11th Circuit appellate panel also disagreed with a number of county and circuit court rulings, which involved enlarged acceptance periods, because when reviewing those “terse orders …there is no way to determine whether those extensions were agreed[.]” Id.

29 Saenz v. Campos, 967 So. 2d 1114 (Fla. 4th DCA 2007) (emphasis added); see generally Massey, 979 So. 2d at 938-39.

30 See Fla. Const. art. II, §3.

31 This issue is related to but distinct from whether other time periods in Rule 1.442 and §768.79 may be enlarged. For example, the Fourth District held in Grip Development that the 90-day period in which to serve a PFS under Rule 1.442 must be strictly construed and cannot be enlarged. Grip Dev., 788 So. 2d at 266. Since §768.79 does not contain service provisions of its own, the separation of powers is not implicated.

32 Courts in other jurisdictions have construed their statutes to preclude enlargements of time in which to accept a PFS. See, e.g., Ennis v. Henderson, 627 S.E.2d 324, 325-26 (N.C. Ct. App. 2006) (“[T]he trial court did not have discretion. . . to extend the time allotted for plaintiff to accept defendants’ offer of judgment[.]”); Twin City Const. of Fargo, N. Dakota v. Cantor, 524 P. 2d 967, 969 (Ariz. Ct. App. 1974) (same).

33 Massey, 979 So. 2d at 935 (citing Estate of Cort v. Broward County Sherriff, 807 So. 2d 736, 738 (Fla. 4th DCA 2002)) (holding that §57.071(2) intruded on the courts’ exclusive rulemaking authority, with respect to the recovery of tax and cost, by imposing additional procedural requirements).

34 Id.; see also Timmons v. Combs, 608 So. 2d 1, 2-3 (Fla. 1992) (“[T]he circumstances under which a party is entitled to costs and attorney’s fees is substantive.”).

35 Knealing v. Puleo, 675 So. 2d 593, 596 (Fla. 1996) (emphasis added).

36 TGI Friday’s, Inc. v. Dvorak, 663 So. 2d 606, 611 (Fla. 1995).

37 The Florida Supreme Court appears to have stated that the PFS acceptance period is procedural, but only in the context of conforming an earlier version of Rule 1.442 to §768.79. See The Florida Bar Re Amendment to Rule 1.442, 550 So. 2d at 443.

38 Id.; see also Knealing, 675 So. 2d at 596 (holding that a statute tolling the acceptance period during mediation is procedural); CSR Partnership v. State, Dept. of Transp., 741 So. 2d 623 (Fla. 2d DCA 1999) (holding that period to serve a PFS is procedural such that a rule would control over an inconsistent statute).

39 Florida courts have held that delaying entitlement to a statutory right is a substantive change of law. See, e.g., Stolzer v. Magic Tilt Trailer, Inc., 878 So. 2d 437, 438 (Fla. 1st DCA 2004) (amendment to the attorneys’ fee statute is substantive by allowing employer/carrier more time to provide benefits before being responsible for payment of attorneys’ fees); Walker v. Cash Register Auto Insurance of Leon County, Inc., 946 So. 2d 66 (Fla. 1st DCA 2006) (statute deemed substantive by delaying entitlement to tax attorneys’ fees).

40 See Adhin v. First Horizon Home Loans, 44 So. 3d 1245, 1252 (Fla. 5th DCA 2010) (holding that time limit for intervening to assert an unrecorded lien after recording of a notice of lis pendens was a matter of substantive law and not merely procedural); Menendez v. Progressive Exp. Ins. Co., Inc., 35 So. 3d 873, 879-80 (Fla. 2010) (pre-suit notice conditions which permitted delayed payment from an insurer were substantive law and not just procedural).

Brian Lee Ellison is an attorney with Kubicki Draper in the firm’s appellate division. He received his B.A. from the New College of Florida and his J.D. from the University of Florida Levin College of Law.

This column is submitted on behalf of the Appellate Practice Section, Kristin A. Norse, chair, and Brandon Christian and Thomas Seider, editors.

Appellate Practice