A Proposal For Settlement Cannot Be Ambigous

The intent behind the Proposal for Settlement rule was to expedite the settlement of claims, and to reduce litigation. However, due to the wording of the rule, and decisions interpreting that wording, we often have litigation to determine the validity of  the actual proposal.  I know that sounds confusing so let me explain.

Proposal for Settlement Rule

Florida rule of civil procedure 1.442 and Florida Statute 768.79 jointly make up the Proposal for Settlement Rule.  In simple terms both the plaintiff and defendant have the right to serve a proposal for settlement on each other.  There are time requirements, and those are set forth in Rule 1.442.

The statute states in simple terms that if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, 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, and the court shall set off such costs and attorney’s fees against the award. Where such costs and attorney’s fees total more than the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the plaintiff’s award.

Conversely, if a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days 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. If rejected, neither an offer nor demand is admissible in subsequent litigation, except for pursuing the penalties of this section.

In simple terms, if the defendant files an offer of judgment for $10,000.00 and does not get a verdict of at least $7,500.00 (25% less than the offer) then the Plaintiff is obligated to pay attorney’s fees and costs to the defendant.   I will not get into the fairness of the rule or lack thereof at this time -that is a conversation for a different date.

If the Plaintiff files a demand for judgment for $10,000.00 and gets a verdict in excess of $12,500(25% more than the demand) then the Defendant is obligated to pay the Plaintiff attorneys fees and costs.

Of course, either party has the right to accept the Proposal for 30 days from the date of service, and in fact that is what the legislature intended when the rules were written

So, why is the rule so confusing? The confusion centers around what constitutes a valid proposal.

The recent case of GOVERNMENT EMPLOYEES INSURANCE COMPANY  v. RYAN, highlights the disconnect between the intent and application of the rule.

The facts of the Ryan case are as follows:
Ryan was involved in a car accident and sued GEICO based on the uninsured/underinsured motorist portion of her own insurance policy. In conjunction with her suit, Ryan served a Proposal for Settlement on GEICO which provided:

The Plaintiff, BERNADETTE RYAN, pursuant to Florida Rules [sic] of Civil Procedure 1.442, and Florida Statute 768.79, and in accordance with all provisions, make [sic] the following Proposal for Settlement to the Defendant, GEICO, in the total amount of One Hundred Thousand Dollars ($50,000.00) inclusive of all costs and fees and in full and final settlement of all pending claims. The total amount of this settlement shall not exceed $50,000.00.

The case proceeded to trial and the jury awarded Ryan $195,739.81. Ryan filed a motion to tax costs and a motion to tax attorney’s fees based on her Proposal for Settlement.

At the hearing on Ryan’s motions, GEICO argued that the money terms in the Proposal for Settlement were inconsistent,($100,000 written out and $50,000 noted) thereby creating a patent ambiguity.

Nonetheless, the trial court entered an order granting Ryan’s motions for attorney’s fees and to tax costs. In its order, the court noted that Ryan’s Proposal for Settlement was “sufficiently clear and definite and not susceptible to more than one reasonable interpretation.” The court entered final judgment for Ryan, and GEICO appealed.

The 4th DCA reversed the award holding that Ryan’s Proposal for Settlement contains a patent ambiguity—spelling out $100,000 in words but also referring to $50,000 in numerals.

Thus, the moral of this story is if you file a Proposal for Settlement, make sure it is clear and unambiguous.