What Is Left of the Joint Proposal for Settlement?
The proposal for settlement or offer of judgment has been available to litigants in Florida in one form or another since 1986.1 I t is designed to permit a litigant to “up the ante” by making an offer to an opponent which, if not accepted, would allow the offeror to recover its attorneys’ fees if the final result is not at least 25 percent better than an offer made.2 T o be entitled to recover fees after making a proposal for settlement, a plaintiff must recover at least 25 percent more than the amount of the proposal for settlement.3 I n the case of an offer made by a defendant, the final judgment must be at least 25 percent less than the amount offered.4 T he proposal for settlement was intended to free up Florida courts by encouraging litigants to settle their disputes before trial.5 H owever, it has not had the desired effect. Instead, the proposal for settlement has spawned a substantial amount of additional litigation.6
One of the most litigated issues concerning proposals for settlement involves joint proposals for settlement.7 A joint proposal for settlement is a single proposal made to or from multiple parties.8 T his article explores the history of the joint proposal for settlement and analyzes whether it has any continuing viability based on recent developments in the law and recent changes to Fla. R. Civ. P. 1.442. The conclusion is that except in the case of proposals made after January 1, 2011, to or from defendants alleged to be only vicariously, constructively, derivatively, or technically liable, litigants would be wise to avoid using the joint proposal for settlement because it is fraught with pitfalls and has been rendered obsolete by the case law.
History of the Joint Proposal for Settlement
Although Fla. R. Civ. P. 1.442(c)(3) now expressly addresses joint proposals for settlement, the Florida Supreme Court limited the use of joint proposals for settlement even before Rule 1.442(c)(3) became effective. In Allstate Indemnity Co. v. Hingson, 808 So. 2d 197 (Fla. 2002), the Supreme Court considered two separate cases in which a single defendant served a joint proposal for settlement on multiple plaintiffs — the injured plaintiff and the spouse with a loss of consortium claim. In each case, the joint proposal offered to settle the claims of both plaintiffs with a single lump sum amount and failed to specify how much each plaintiff was to receive. Notwithstanding that Rule 1.442(c)(3) did not apply to either of the cases because it had not yet become effective, the Supreme Court held that §768.79 required that a proposal made to multiple parties specify the amount to which each would be entitled. The court held that undifferentiated joint offers were defective because “each party who receive[s] an offer of settlement is entitled. .. to evaluate the offer as it pertains to him or her.”9
The Hingson case is an excellent example of the Florida Supreme Court’s approach to cases dealing with joint proposals for settlement. The court has never allowed the specific facts of individual cases being decided to enter into the post-judgment analysis, but has instead held that undifferentiated joint proposals are per se invalid. The Hingson case involved two separate lawsuits. In the first case, the defendant, K-Mart, served a proposal for settlement offering an injured wife and her husband a total undifferentiated amount of $20,001 to settle both of their claims. The couple rejected the offer and later obtained a judgment in the amounts of $8,601 and $3,750, respectively. As the court pointed out, because the proposal failed to specify what portion of the lump sum offer applied to each distinct claim, there was no logical way to determine post-judgment whether the amount recovered by each was in fact 25 percent lower than the offer made.10
In the companion case, however, after the defendant offered the husband and wife an undifferentiated sum of $30,000, the jury returned a defense verdict. As the dissent pointed out, the final judgment was clearly 25 percent lower than the amount of the proposal, no matter how the amount could have been allocated between the two plaintiffs.11 T he majority held, however, that the failure to apportion the amount offered to each plaintiff in the proposal for settlement rendered it defective per se.12
This strict approach to joint proposals for settlement has been followed ever since. It makes no difference if the practical effect of the outcome of the case would require that the lump sum proposal for settlement be enforced. As long as the amount offered is not allocated between the multiple plaintiffs or defendants, the proposal is defective and will not be enforced, regardless of the outcome of the case. As a result, when a joint proposal for settlement does not allocate the amount offered between multiple offerees, it is not the offeree who bears the risk of its unreasonable rejection, but the offeror.
Application of Rule 1.442(c)(3)
In 1996, the Florida Supreme Court amended Rule 1.442 to include section (c)(3).13 S ection (c)(3) provides: “(3) A proposal may be made by or to any party or parties and by or to any combination of parties properly identified in the proposal. A joint proposal shall state the amount and terms attributable to each party.”
Notwithstanding the addition of Rule 1.442(c)(3), a number of Florida district courts continued to uphold joint lump sum proposals for settlement on the grounds that the particular circumstances of the cases made the failure to strictly comply with the rule a “harmless technical violation.”14 T hese cases usually involved a lump sum proposal by multiple offerees to a single offeror. These courts logically found that it made no difference to the sole party receiving the offer, be it the plaintiff or defendant, what amount of the lump sum offer was contributed by each offeror.15 A ccordingly, the failure of the offerors to allocate the amount each would be contributing to the offer was deemed to be a “harmless technical violation” and did not render the proposal for settlement invalid.16
Multiple Offerors to a Single Offeree
In 2003, the Florida Supreme Court first addressed the new joint proposal language of Rule 1.442 when it accepted review of Hilyer Sod, Inc. v. Willis Shaw Express, Inc., 817 So. 2d 1050 (Fla. 1st DCA 2002), based on certified conflict with the decisions in Flight Express, Inc. v. Robinson, 736 So. 2d 796 (Fla. 3d DCA 1999), and Spruce Creek Development Co. v. Drew, 746 So. 2d 1109 (Fla. 5th DCA 1999). Like Flight Express, Inc., and Spruce Creek Development Co., Willis Shaw Express, Inc., involved an undifferentiated proposal for settlement made by two offerors to a single offeree.17 I n Willis Shaw Express, Inc., two plaintiffs joined their personal property damages claims in a single suit.18 T he plaintiffs served a joint lump sum proposal for settlement on the defendant offering to settle both of their claims for the total sum of $95,001.19 T he defendant did not accept the proposal for settlement. After the plaintiffs recovered a judgment in a total amount more than 25 percent larger than the joint proposal amount, the trial court awarded them their attorneys’ fees based on their joint proposal for settlement.20
Without addressing the logic of the Flight Express, Inc., and Spruce Creek Development Co. decisions, that a single offeree has no reason to care how much each offeror is contributing to the lump sum settlement, the Supreme Court disapproved the decisions and held that the plain language of Rule 1.442(c)(3) requires that joint proposals must “state the amount and terms attributable to each party.”21 I n what now seems to have become standard language in every case considering a proposal for settlement, the Supreme Court stated that because the proposal for settlement statute and rule are in derogation of the common law rule that each party pay its own fees, they must be strictly construed.22
Notwithstanding the Florida Supreme Court’s strict application of Rule 1.442(c)(3), even after Willis Shaw Express, Inc., a number of cases still upheld joint proposals for settlement that were not allocated. For example, Barnes v. Kellogg Co., 846 So. 2d 568 (Fla. 2d DCA 2003), dealt with the issue of a joint undifferentiated proposal made by a plaintiff in a strict liability case to two defendants, the product manufacturer and the retailer of the product alleged to be defective.23 C omparing the retailer’s liability to vicarious liability in that the retailer had committed no active tort, the Second District Court of Appeal held that the undifferentiated proposal was enforceable because the defendants were jointly and severally liable for all damages and as with vicarious liability “there [was] no rational method to apportion fault between the strictly liable retailer, who has committed no negligent act, and the manufacturer who produced a product with a hidden defect.”24 T he court went on to point out that allowing unallocated joint proposals for settlement in cases in which the alleged liability of an offeree is merely vicarious would have the desired effect of facilitating settlement while disallowing it would have the opposite effect.25 A s the court explained:
If the retailer and the manufacturer were each required to file proposals in the full amount of the expected damages, then the plaintiff could accept a full recovery from the first offer while continuing litigation against the second. A fifty percent offer from either defendant would have no impact on the plaintiff’s decision to try the case when both defendants are jointly and severally liable for the entire judgment. Any settlement by the retailer would merely shift the lawsuit so that the retailer was the plaintiff seeking indemnity from the manufacturer. Thus, a joint offer by a retailer and a manufacturer, when the retailer has committed no alleged independent negligent act, does not restrict the plaintiff’s ability to evaluate or negotiate the claim and it facilitates overall settlement of the dispute.26
Although Barnes was not appealed, the Florida Supreme Court soon considered the issue in Lamb v. Matetzschk, 906 So. 2d 1037 (Fla. 2005), where it disapproved Barnes. Interestingly, the Supreme Court’s addition of Rule 1.442(c)(4), which became effective on January 1, 2011, does precisely what the Barnes court advised.
Single Offeror to Multiple Offerees
In 2005, the issue of joint proposals for settlement in a case involving vicarious liability came before the Florida Supreme Court. Lamb involved a personal injury claim against a husband and wife.27 A lthough the wife was not directly involved in causing the plaintiff’s injuries, the plaintiff sued her as a co-owner of the vehicle the husband was driving at the time of the incident.28 T he plaintiff made a number of undifferentiated proposals for settlement to the defendants, which he sought to enforce after he prevailed and recovered 25 percent more than the amount he had offered.29 T he trial court awarded the plaintiff his attorneys’ fees based on the joint undifferentiated proposal for settlement.30
On appeal, the Florida Supreme Court followed the strict approach it established in Willis Shaw Express, Inc., and held that any undifferentiated joint proposal for settlement is unenforceable.31 T he Supreme Court considered and rejected the argument that allocation should not be required between an active tortfeasor and one only vicariously liable because it is impossible to meaningfully allocate the amount attributable to each when their liability is co-extensive.32 R ejecting the argument, the Supreme Court stated that it had faith that the “lawyers of this State can and will draft an offer that will satisfy the requirements of the rule….”33
Lamb settled the issue of undifferentiated joint proposals with a bright line rule that they are per se not enforceable.
Recent Developments
Before 2008, the focus of cases addressing joint proposals for settlement was on the requirement that the amounts offered by each offeree be disclosed. Up until that time, it does not appear that any appellate court considered the issue of whether a joint proposal for settlement could be partially accepted; in other words, whether an offeree of a joint proposal for settlement could settle the case where others included in the joint proposal rejected it. In 2008, the First District Court of Appeal was faced with the issue in Clements v. Rose, 982 So. 2d 731 (Fla. 1st DCA 2008), when the proposal for settlement included a specific condition precluding acceptance by only one of the two offerees.
Clements was a dog bite case. The plaintiff served a joint proposal for settlement on the dog owners, a husband and wife, offering to settle for a total payment of $75,000, allocated so that each would pay $37,500.34 T he proposal included a novel condition. Although it properly allocated the amount offered to the two offerees, it provided that the proposal for settlement could only be accepted by both defendants together.35 T he defendants did not accept the proposal and when the plaintiff sought to recover his attorneys’ fees after obtaining a suitably large judgment, the defendants argued that the proposal for settlement was defective because it was ambiguous as to whether each could independently accept it.36 T he First District Court of Appeal held that the proposal was not ambiguous and clearly provided that it was conditioned upon both the husband and the wife accepting it together.37 T he court held that the condition did not render the proposal defective and held that plaintiff was entitled to recover his attorneys’ fees based upon it. The court explained:
The settlement proposal is conditional upon both Appellees — who are, after all, husband and wife — accepting it and paying their respective portions. The offer is not ambiguous. Although it is conditional, the offer is as definite as it is within Appellant’s power to make, because the condition depends not on Appellant’s election, but on each Appellee’s election. Rule 1.442 is designed to facilitate settlements, not to render settlement of a case impossible where there are multiple defendants.38
Shortly after the First District Court of Appeal decided Clements, the Second District Court of Appeal was faced with the same issue in Attorneys’ Title Insurance Fund, Inc. v. Gorka, 989 So. 2d 1210 (Fla. 2d DCA 2008), and came to the opposite conclusion. In Gorka, a husband and wife sued their title insurer after it refused to defend them in a dispute regarding their property.39 T he insurer served a proposal for settlement that offered each spouse $12,500, but included the condition that the proposal could only be accepted if both spouses accepted; neither could accept the proposal without the other.40 T he husband and wife rejected the proposal for settlement.41 A fter the insurer prevailed at trial, it moved to recover its attorneys’ fees.42 T he trial court denied the motion. Citing Lamb, the Second District Court of Appeal affirmed, finding that the proposal for settlement was invalid because it did not permit each offeree to independently evaluate and accept the proposal.43 T he court certified conflict with Clements.44
In 2010, the Florida Supreme Court accepted jurisdiction and again considered the joint proposal for settlement in Attorneys’ Title Insurance Fund, Inc. v. Gorka, 36 So. 3d 646 (Fla. 2010). This time, however, the issue was not whether Rule 1.442 required allocation so that each offeree could separately evaluate the proposal, but whether it required that each offeree be able to independently accept the proposal for settlement.45
The per curium opinion of the Supreme Court, in which four members joined, held that the Gorka proposal for settlement was defective based on Lamb because it did not allow each offeree to independently evaluate and accept the proposal.46 A lthough Lamb had held that each offeree must be able to independently evaluate a proposal for settlement, no court had previously held that each must be able to independently accept the proposal.47
Justice Polston’s dissent, with which two other justices concurred, found that the joint proposal conditioned upon joint acceptance was anticipated by the plain language of Rule 1.442 and serves to advance the policy of promoting settlement.48 A s the dissent also pointed out, a party seeking to accept a joint proposal for settlement conditioned on acceptance by all offerees need only file a notice of acceptance based on Rule 1.442(f)(1) to avoid the sanction of attorneys’ fees.49
Alternative to the Joint Proposal for Settlement in the Case of Multiple Defendants
Interestingly, under the present state of the law, there remains a means by which multiple defendants can accomplish what the offerors in Clements and Gorka were trying to accomplish, namely to make a proposal for settlement which will either resolve the entire case or set up the offeror’s entitlement to recover attorneys’ fees at its conclusion. This is accomplished not by using Rule 1.442(c)(3) dealing with joint proposals but rather Rule 1.442(2)(d), which allows a proposal for settlement to include nonmonetary conditions. Courts have upheld proposals for settlement made by only one defendant that also include the condition that both defendants be released.
In Alioto-Alexander v. Toll Bros., Inc., 12 So. 3d 915 (Fla. 4th DCA 2009), for example, the plaintiff sued an employee and included his employer based on allegations of vicarious liability.50 T he employer alone served a proposal for settlement offering $5,000.51 T he proposal did not apportion the $5,000 between employer and employee.52 I nstead, the proposal for settlement included a condition that required the plaintiff to dismiss the entire case not only against the employer but also against the employee.53 T he plaintiff rejected the proposal for settlement.54 W hen the employer prevailed and sought its attorneys’ fees, the plaintiff claimed the proposal was defective because it was a joint proposal which failed to apportion the amount offered between the two defendants.55 T he Fourth District Court of Appeal rejected the argument, pointing out that the proposal was not joint because it was made only by the employer, and the requested dismissal of the co-defendant was a permissible condition of settlement.56 T he employer was entitled to recover it attorneys’ fees based on the rejected proposal for settlement.
Under similar circumstances, in Eastern Atlantic Realty & Inv. Inc. v. GSOMR LLC, 14 So. 3d 1215 (Fla. 3d DCA 2009), the Third District Court of Appeal held likewise when a single co-plaintiff/counter-defendant made an undifferentiated proposal for settlement that offered to settle the claims of the co-plaintiff and was conditioned upon the dismissal of all claims which were or could have been asserted against both co-plaintiffs. Relying strictly on the language of Rule 1.442(c)(3), the court held that apportionment is only required if the proposal is made jointly by several parties.57 B ecause the proposal was made by only one party, no apportionment was necessary.58
Recent Changes to Rule 1.442
On September 8, 2010, the Florida Supreme Court amended Rule 1.442 by adding §(c)(4), which provides:
(4) Notwithstanding subdivision (c)(3) [the section dealing with joint proposals for settlement], when a party is alleged to be solely vicariously, constructively, derivatively, or technically liable, whether by operation of law or by contract, a joint proposal made by or served on such a party need not state the apportionment or contribution as to that party. Acceptance by any party shall be without prejudice to rights of contribution or indemnity.
Rule 1.442(c)(4) became effective on January 1, 2011.59 R ule 1.442(c)(4) has the effect of abrogating Lamb by allowing parties only vicariously or technically liable to make or receive proposals for settlement without allocation of the total amount offered.60
Is There Any Reason to Use a Joint Proposal for Settlement After Gorka ?
There can be little doubt that the joint proposal for settlement has resulted in a large amount of litigation in Florida courts and has not had the desired effect of reducing the courts’ workloads. In addition, the case law makes it clear that many joint proposals for settlement made since 1996 have been found to be defective.
It is only because of the addition of §(c)(4) to Rule 1.442, effective January 1, 2011, that joint proposals for settlement have any continuing utility at all. Joint proposals in cases involving parties only vicariously or technically liable no longer require the impossible task of allocating settlement amounts between parties actively liable and those only passively liable. It is only in these cases that the joint proposal for settlement remains a useful litigation tool.
What has become obvious after the Gorka decision is that in all cases not involving vicariously or technical liability, there is no longer any valid reason for making a joint proposal for settlement. After Hingson, Willis Shaw Express, Inc., Lamb, and Gorka, a joint proposal must not only allocate the amount offered to or from each offeror or offeree, but must also allow each offeree to independently accept or reject the proposal. This is absolutely no different than simply serving a separate proposal for settlement for each offeror or offeree. Because joint proposals for settlement allow more opportunity for error and add additional reasons for being found defective, anyone seeking to make a proposal for settlement from or to multiple parties should not use a joint proposal but instead simply make separate proposals for settlement with each only addressing one offeror and one offeree.
Conclusion
In conclusion, the case law interpreting Rule 1.442(c)(3) has rendered the joint proposal for settlement obsolete. Consequently, except in cases involving parties who are merely vicariously or technically liable, litigants would be well advised to stay away from using them.
1 I n 1986, the Florida Legislature enacted
Fla. Stat. §768.79, “Offer of Judgment and Demand for Judgment.” Approximately one year later, it enacted a companion law,
Fla. Stat. §45.061, “Offers of Settlement.” In 1990,
Fla. Stat. §768.79 was amended to incorporate elements of
Fla. Stat. §45.061 and
Fla. Stat. §45.061 was effectively repealed in that it was amended to apply only to causes of action accruing prior to October 1, 1990.
Fla. Stat. §768.79, together with
Fla. R. Civ. P. 1.442, now govern proposals for settlement in Florida. For an excellent history of the early confusion surrounding
Fla. Stat. §§45.061, 768.79 and
Fla. R. Civ. P. 1.442, see David L. Kian, The 1996 Amendments to Florida Rule of Civil Procedure 1.442 — Reconciling a Decade of Confusion, 71
Fla. B.J.
32 (July/August 1997).
2 See Allstate Property & Cas. Ins., Co. v. Lewis, 14 So. 3d 1230, 1235 (Fla. 4th D.C.A. 2009) (“The purpose of Section 768.79 is to lead ‘litigants to settle by penalizing those who decline offers that satisfy the statutory requirements.’”) (quoting BDO Seidman, LLP v. British Car Auctions, Inc., 802 So. 2d 366, 371-72 (Fla. 4th D.C.A. 2001)).
3 F la. Stat. §768.79(1).
4 Id.
5 See Attorneys’ Title Insurance Fund, Inc. v. Gorka, 36 So. 3d 646, 650 (Fla. 2010).
6 Id. (“The expected result of the attorneys’ fee sanction was to reduce litigation costs and conserve judicial resources by encouraging the settlement of legal actions. The effect, however, has been in sharp contrast to the intended outcome because the statute and rule have seemingly increased litigation as parties dispute the respective validity and enforceability of these offers.”) (Citations omitted.)
7 Lamb v. Matetzschk, 906 So. 2d 1037, 1038 (Fla. 2005) (Pariente, C.J., concurring) (“It was the Court’s hope that the 1997 amendments to rule 1.442 would ‘enable parties to focus with greater specificity in their negotiations and thereby facilitate more settlements and less litigation.’ However, as this case and others since [ MGR Equip. Corp. v. Wilson Ice Enters., 731 So. 2d 1262 (Fla. 1999)] demonstrate, subdivision (c)(3) of rule 1.442 has instead caused a proliferation of litigation rather than ‘obviate the need for further intervention of the judicial process.’”) (Citations omitted.)
8 F la. R. Civ. P. 1.442(c)(3).
9 Allstate Indemnity Co. v. Hingson, 808 So. 2d 197, 199 (Fla. 2002) (quoting C & S Chemicals, Inc. v. McDougald, 754 So. 2d 795, 797-98 (Fla. 2d D.C.A. 2000)).
10 Id. at 199, n.3.
11 Allstate, 808 So. 2d at 200 (Harding, J. dissenting).
12 Id. at 199.
13 F la. R. Civ. P.
1.442(c)(3) became effective on January 1, 1997.
14 See, e.g., Flight Express, Inc. v. Robinson, 736 So. 2d 796 (Fla. 3d D.C.A. 1999); Spruce Creek Dev. Co. v. Drew, 746 So. 2d 1109 (Fla. 5th D.C.A. 1999).
15 Flight Express, Inc., 736 So. 2d at 797; Spruce Creek Dev. Co., 746 So. 2d at 1116.
16 Id.
17 Willis Shaw Express, Inc. v. Hilyer Sod, Inc., 849 So. 2d 276, 277-78 (Fla. 2003).
18 Id. at 277.
19 Id.
20 Id.
21 Id. at 278.
22 Id. at 278.
23 Barnes v. Kellogg Co., 846 So. 2d 568, 570 (Fla. 2d D.C.A. 2003).
24 Id. at 571.
25 Id. at 572.
26 Id.
27 Lamb v. Matetzschk, 906 So. 2d 1037, 1038 (Fla. 2005).
28 Id.
29 Id.
30 Id. at 1039.
31 Id. at 1042.
32 Id. at 1041.
33 Id. Courts continued to criticize the decision to require joint proposals for settlement involving parties who are only vicariously liable to allocate the amount offered. See, e.g., Andrews v. McPartland, 29 So. 3d 342, 342 (Fla. 5th D.C.A. 2010) (Cohen, J., concurring). The Supreme Court’s addition of §(c)(4) to
Fla. R. Civ. P. 1.442, which became effective on January 1, 2011, resolved the issue.
34 Clements v. Rose, 982 So. 2d 731, 732 (Fla. 1st D.C.A. 2008).
35 Id.
36 Id.
37 Id.
38 Id.
39 Attorneys’ Title Ins. Fund, Inc. v. Gorka, 989 So. 2d 1210, 1212 (Fla. 2d D.C.A. 2008).
40 Id.
41 Id.
42 Id. at 1211.
43 Id. at 1213-14.
44 Id. at 1214.
45 Attorneys’ Title Ins. Fund, Inc., v. Gorka, 36 So. 3d 646, 647 (Fla. 2010).
46 Id. at 650-51.
47 I nterestingly, prior to the offerors’ inclusion of the “joint acceptance” condition in the proposals for settlement in Clements and Gorka, there do not appear to be any cases in Florida considering the acceptance of an allocated joint proposal made to multiple offerees by only one of the offerees. Could it be that prior to Clements and Gorka, it was always assumed that joint proposals made to multiple offerees could only be jointly accepted and it was not until the condition was expressly added to the proposals in Clements and Gorka that creative offerees who unreasonably failed to accept the proposal used the condition as a means to invalidate it?
48 Id. at 652-54 (Polston, J., dissenting).
49 Id. at 652.
50 Alioto-Alexander v. Toll Bros., Inc., 12 So. 3d 915, 916 (Fla. 4th D.C.A. 2009).
51 Id.
52 Id.
53 Id.
54 Id.
55 Id.
56 Id. at 916-17.
57 Eastern Atlantic Realty, 14 So. 3d at 1222.
58 Id.
59 In re Amendments to The Florida Rules Of Civil Procedure, 35 Fla. L. Weekly S494a (Fla. Sept. 8, 2010).
60 See Andrews v. McPartland, 29 So. 3d 342, 343 (Fla. 5th D.C.A. 2010) (Cohen, J., concurring) (“To require differentiated settlements when vicarious liability is undisputed is unworkable, and could potentially wreak havoc with jury instructions and verdict forms, resulting in additional litigation as lawyers struggle to give meaning to rule 1.442. In those circumstances, absent a reason for assessing individual responsibility, for all practical purposes, the defendants are one, and should be treated as such under the rule.”).
Raymond L. Robin is special counsel with Duane Morris LLP. He is a 1986 graduate of the University of Miami School of Law and practices in the area of commercial litigation. He submits this article in memory of his mentors, the late Judge Joseph Nesbitt of the Florida Third District Court of Appeal and the late Sam Daniels.
