Civil settlement rule amendments concern some procedure committee members
Supreme Court proposed amendments to Florida Rule of Civil Procedure 1.442 on settlement offers, including offers to multiple parties, are confusing and might cause more harm than good, according to members of the Civil Procedure Rules Committee.
Committee members on October 14 reviewed, but took no final action, on comments to the amendments that the court issued for public feedback on September 9. Comments are due by November 1.
Committee members made their observations after reviewing a memo from committee member Kathryn Ender, who headed a subcommittee that reviewed the proposed amendments and is preparing a formal response.
The amendments dealt with offers of settlement and included a new rule section on making settlement offers to more than one party.
According to Ender’s memo, subcommittee members had reservations:
• On proposed new 1.442(c)(5), which establishes a procedure for making a settlement offer to two or more parties in a multi-party case. Subcommittee members said such a rule is needed, but they also said the proposed language could abrogate the Gorka decision and subsequent cases by forcing a party who wants to settle to remain in a case if another party rejects the offer. The proposed rule provides that, unless all parties receiving the offer agree to the proposed settlement, then the settlement offer is rejected. However, if attorney’s fees and costs are awarded after trial, they will be paid only by the parties that rejected the offer.
• On the proposed amendment to 1.442(c)(2)(C), excluding non-monetary terms from settlement offers, the subcommittee said that would bar releases from being in the offers, which would make many meaningless.
• On the proposed amendment to 1.442(c)(2)(B) that offers must include attorney fees, costs, and prejudgment interest, committee members said that was based on a recent Supreme Court decision on calculating the amount of judgment when determining attorney fees. But the rule is based on a statute on making settlement offers and the amendment in effect amends a state law, subcommittee members said. They also said the statute requires that the offer resolve “all damages,” which in many cases do not include fees and costs. The existing rule only requires that offers say whether they include attorney fees and costs.
• On the proposed amendment to Rule 1.442(a)that says the rule shall be interpreted according to its plain language; and any ambiguities will be settled not strictly but according to Fla. Rul. Civ. P. 1.010. The subcommittee said that language might be better in the rule comment.
Members of the full committee had several questions and comments about the proposal.
The prohibition against nonmonetary issues in a settlement proposal concerned committee member Judson Cohen.
“If I offer $100,000…and the other side says fine, and then I propose a release and they say no, what happens to the offer?” he asked. “What happens if the other side proposes $100,000 to me, I say yes, and then the release they provide says you’ve got to release five other parties? Or you’ve got to indemnify me and pay for something, or hold all the money in escrow for 17 years while we talk about it?
“It’s an invalid offer if you include the release. I don’t understand that.”
Those uncertainties would only lead to more litigation, Cohen said, adding when he proposes a settlement now, he includes the release and the dismissal with prejudice for the other party to see.
He also said the subsection (b) language on attorney fees, costs, and prejudgment interest would prove problematic in cases with multiple plaintiffs or defendants.
In complex cases with multiple defendants, “A lot of times right before trial, you have four or five defendants, you’re going to let one or two out with a small proposal for settlement,” Cohen said. “You can’t do this under this rule anymore…. When you resolve for $10,000 to let one defendant out so you can streamline your case, you are now waiving your costs up to that point. I don’t think that’s what the Supreme Court intended to do.”
Committee Chair Jason Stearns said he didn’t think the language in subsection (b) would be interpreted that way, but Cohen said he saw it as the plain language of the proposed amendment.
Committee member Cosme Caballero said he found the amendments to subsection (a) on how to construe the rule to be confusing.
After Stearns said he found the language clear, Caballero said that the wording could cause such disparate readings was a problem.
“In and of itself, its ambiguous,” he said.
On joint proposals, “Say you have two clients,” Caballero said. “They send a joint proposal to both parties, one of them accepts, the other does not. Whether you’re a plaintiff or a defendant, I think it creates an ethical problem, obviously creating a potential conflict between clients.”
He also said on nonmonetary settlements, most of the offers he receives include a confidentiality provision in the release, which would apparently be prohibited under the proposed amendments.
Committee member Maegan Luka said the rule amendments require that an offer include attorney fees, but she said that might not be an issue for people doing first party work.
“It does not allow you to elect not to include attorney fees,” she said, adding she sees some of the changes as substantive, not procedural.
Stearns said he saw the language as a clarification, adding, “Sometimes you can’t tell from a pleading if somebody is really alleging fees or not…. I thought it was more of a cleanup issue.”
Committee member Julie Fine questioned the inclusion of Rule 1.010 in the revisions to subsection (a). She argued Rule 1.010 already applies to all civil procedure rules and by specifically including it in Rule 1.442 might lead some to argue it’s less important for other procedural rules.
“To me, accentuating a rule within a rule is a really bad idea,” Fine said. “I think it’s just going to create issues.”
Committee member Jon Polenberg said he saw the interpretation changes in subsection (a) as telling judges when reviewing settlement proposals not to use strict common law standards but instead standards in the rule that favor resolving and disposing the cases.
“It’s rewriting this rule so the courts will construe in a way to try to make PFSs [proposals for settlement] work,” he said. “I could argue both sides of this…. I see it’s a clear indication by the court, ‘We’re not playing games.’”
“That’s how I read it,” Stearns said.
Stearns noted the expedited schedule for the committee to comment and said he intended to circulate the subcommittee’s final recommended comment to the full committee via email for review and approval before the November 1 comment deadline.
Comments are due by November 1 in In re: Amendments to Florida Rule of Civil Procedure 1.442, Case No. SC21-277.
