The Role Of Proposals For Settlement In Florida Cases Involving Commercial Auto Policies and Vicarious Liability

By:  William P. Dilley, Esq.

Florida Statutes Section 768.79(1) allows attorneys’ fees and costs to be awarded against a defendant when a plaintiff files a demand for judgment or “proposal for settlement” which is not accepted by the defendant and the plaintiff recovers a judgment in an amount at least 25% greater than the offer. Florida statute does not explicitly discuss the complexities that arise in multiparty lawsuits. However, it uses the terms “a plaintiff,” “the plaintiff,” “a defendant,” and “the defendant” in a manner that would allow a plaintiff to make an offer to a specific defendant. Section 768.79(2) describes the content of an offer and requires that the offer “[n]ame the party making it and the party to whom it is being made.”  Further, nothing in the statute or corresponding Rule of Civil Procedure 1.442 requires that a proposal settle all claims between all parties, or even all claims between the party to the proposal.

Consider the following fact pattern:

[P]laintiff files suit against trucking company and insured driver for injuries sustained when insured driver caused an auto accident in the course and scope of her employment.  Plaintiff files a two-count complaint, one count against insured driver for negligence, and one count against trucking company for vicarious liability for insured driver’s negligence.  Plaintiff serves a proposal for settlement to insured driver in the amount of $200,000, in exchange for a dismissal with prejudice against insured driver, only.  Insured driver rejects the proposal, and Plaintiff obtains a net judgment in the amount of $875,000 at trial against both defendants. 

The above fact pattern is derived from a Florida case, McGregor v. Molnar.  In McGregor, the trial judge denied Plaintiff’s motion for attorneys’ fees and costs finding that the proposal for settlement was not made in good faith.  The reasons the trial court gave for this finding were that the offer was not intended to conclude the litigation because all claims against the trucking company remained, and further stated that if Plaintiff’s offer was accepted, it would merely provide funds for Plaintiff to proceed with the litigation against trucking company.

On appeal, the trial court’s order was reversed.  The Second District Court of Appeals cited an earlier decision, Hess v. Walton, involving a medical malpractice case against a physician and a vicariously liable entity.  In that decision, the Court suggested that, absent allegations of bad faith, there may be valid, strategic reasons for an offeror to submit differentiated offers to separate parties:

“It forces one defendant to settle.  The plaintiff obtains money that can be used to further prosecute the lawsuit or which can be safeguarded from the risk of a future judgment if the defendants obtain the right to a judgment for their fees.  The plaintiff can eliminate the defendant for whom the jury may have sympathy, or the defendant who may be on the brink of bankruptcy.  If more than one lawyer is involved, the plaintiff can remove the defendant with the best lawyer.”  Hess at 1051.

Insurers and counsel defending cases like the above fact pattern should be wary. Proposals for settlement to one of multiple defendants insured by a single carrier should be carefully considered as the above scenario presents the possibility for a Plaintiff to recover an extensive award for attorneys’ fees, even after achieving a less than ideal result on the underlying claim.  To attempt and combat this strategy, defense counsel should strongly consider serving a “best dollar” counter proposal.  Such a counter proposal should be served no later than 45 days prior to the first day of the trial docket on which the case is set for trial pursuant to Rule 1.442.