Clarification On Calculating “Judgment Obtained” Under Florida’s Proposal For Settlement/Offer Of Judgment Rules

Florida’s Proposal for Settlement and Offer of Judgment rules are delineated in Fla. Stat. § 786.79 and Fla. R. Civ. P. 1.442.  See Anderson v. Hilton Hotels Corp., 202 So. 3d 846, 852 (Fla. 2016); see also Wilcox v. Neville, No. 1D18-4057, 2019 Fla. App. LEXIS 16394, at *5 (Fla. 1st DCA 2019).  An offer that complies with these provisions creates a mandatory right to collect attorney’s fees, unless the offer is made in bad faith. Furthermore, if plaintiff serves an offer which is not accepted by defendant, and the judgment obtained by plaintiff is at least 25 percent more than the offer, plaintiff shall be awarded reasonable costs and attorney’s fees.  “Judgment obtained” means the amount of the net judgment entered, plus any postoffer settlement amounts by which the verdict was reduced.  A party’s entitlement to fees depends on the judgment obtained, not the jury’s verdict, and that entitlement is for postoffer attorney’s fees and costs. Most parties in Florida get confused as to the divergent interpretation of the phrase “postoffer settlement” and “postoffer” in Fla. Stat. § 768.79(6) because the Legislature did not define said terms.

 The plaintiff in Wilcox v. Neville, initially filed a complaint against two defendants: the driver and the owner of the defendants’ motor vehicle. On May 2, 2017, Plaintiff filed a notice of serving a Proposal for Settlement (“PFS”) as to each defendant for $89,600 to the driver and $60,400 to the owner.  So, in order for plaintiff to be entitled to attorney’s fees and costs, the judgment obtained by plaintiff as to her PFS directed toward defendant driver must exceed $112,000 (25 percent more than the $89,600 offer). On May 17, 2017, defendant owner timely filed a notice of acceptance of plaintiff’s PFS to resolve his claim for $60,400, and plaintiff dismissed her claim against him.  Defendant driver allowed his PFS to expire and the parties proceeded to trial.  The jury returned a verdict in plaintiff’s favor in the amount of $126,592.33, and the district court denied plaintiff’s motion for attorney’s fees and costs because the verdict was reduced to $58,865.73 due to agreed-to set-offs, such as PIP benefits received by plaintiff; the trial court ruled that the defendant owner’s timely acceptance of plaintiff’s PFS was not a postoffer settlement because if it were, said interpretation would eliminate the statutory requirement that every offer remain open for consideration for a full thirty days.  The parties disagreed about plaintiff’s entitlement to attorney’s fees based on the divergent interpretation of the phase “postoffer settlement” in Fla. Stat. § 768.79(6).  Precisely, the dispositive issue to be resolved was whether defendant owner’s acceptance of plaintiff’s proposal for settlement constituted a “postoffer settlement” that should have been added to the net judgment ($58,865.73).  The First District Court of Appeals answered in the affirmative, that said acceptance should be added to the net judgment.

 In Wilcox, the First District Court of Appeals ruled that the plain meaning of “postoffer” means, “to be after the offer; that is, after the act of presenting something for acceptance or displaying a willingness to enter into a contract on specified terms.”  No. 1D18-4057 at 7. Furthermore, the First District Court of Appeals defined “postoffer settlement” as a “settlement reached any time after the service of the offer.” The appellate court ruled that a co-defendant’s independent acceptance of an offer has no bearing on the defendant’s acceptance period, and therefore, Fla. Stat. § 768.79(6) requires the judgment obtained to include the amount of any settlement by a co-defendant after the date of service of the offer on the defendant by which the verdict was reduced.  For example, if there are two defendants, and defendant 1 is served with a proposal for settlement that is rejected through lapse of time (30 days), and subsequently defendant 2 settles, that amount of settlement will be included in the net judgment, or judgment obtained, for purposes of determining whether or not plaintiff would be entitled to attorney’s fees and costs pursuant to Fla. Stat. § 786.79 and Fla. R. Civ. P. 1.442.

“Prevailing Party Fees on Appeal”

Generally, the prevailing party is one who obtains a favorable judgment in the lawsuit.  In some instances, the prevailing party is entitled to the recovery of attorney’s fees and costs.  This is contrary to the American Rule, which mandates that each party is responsible for paying its own attorney’s fees and costs.  The issue concerning attorney’s fees and costs was recently addressed by the Florida Supreme Court in the case of Mari Ann Glass v. Nationstar Mortgage, LLC (No. SC17-1387). 

In Glass, the Florida Supreme Court reviewed the decision of the Fourth District in Nationstar Mortgage LLC v. Glass, 219 So. 3d 896 (Fla. 4th DCA 2017), as it directly conflicted with Bank of New York v. Williams, 979 So. 2d 347 (Fla 1st DCA 2008).  The issue presented to the Court was whether a voluntary dismissal provides a basis for being considered the prevailing party for the purposes of appellate attorney fees.  In sum, the Florida Supreme Court quashed the decision of the Fourth DCA in Glass and approved the decision in the 1st DCA in Williams. 

By arriving at its conclusion, the Court recited the pertinent facts of the underlying factual allegations. In Glass, Nationstar filed a Verified Complaint against Mari Ann Glass, pursuing an in rem action to foreclose the mortgage on Glass’s real property.  After several motions to dismiss the Complaint, Glass filed a motion to dismiss the Amended Complaint filed by Nationstar, asserting that the Amended Complaint failed to correct any of its previous defects. The trial court granted Glass’s motion to dismiss with prejudice. Then, Glass sought attorney’s fees pursuant to Fla. R. Civ. P. 1.525, the mortgage, and Fla. Stat. § 57.105(7). Of note, Fla. R. Civ. P. 1.525 requires any party seeking a judgment taxing attorneys' fees to serve a motion after filing of the judgment, or the service of a notice of voluntary dismissal. Likewise, § 57.105(7) provides that if a contract contains a provision allowing attorney’s fees to the other party when he or she is required to take any action to enforce the contract, the court may allow reasonable attorney’s fees to the other party when the party prevails in any action, whether plaintiff or defendant. 

Following the order granting Glass’s motion to dismiss with prejudice, Nationstar appealed to the Fourth District. It submitted its initial briefing, then, thereafter, filed a notice of voluntary dismissal.  Glass renewed her motion for appellate attorney’s fees based on § 57.105(7) and Nationstar’s dismissal. The Fourth District denied Glass’s motion for fees.  The Fourth District relied on the decision of the Third District, which held that because no contract existed between the bank and plaintiff of that case, she could not invoke the reciprocity provisions of § 57.105(7).  The Florida Supreme Court distinguished the two cases. The Court reasoned that while the law is clear that a party is precluded from claiming attorney’s fees under a contract that has been found to have never existed, when parties enter into a contract and litigation later ensues over that contract, attorney’s fees may be recovered under a prevailing-party attorney’s fee provision contained therein even though the contract is rescinded or held to be unenforceable. Applying said reasoning to the facts of Glass, the Florida Supreme Court found that Glass and the original lender had a reverse mortgage, which was later assigned its rights to Nationstar. The Court quashed the 4th DCA’s decision and approved Williams, holding that a voluntary dismissal provides the basis for being considered the prevailing party for purpose of appellate attorney fees. 

The Admission Hurdle: Evidence of Post-Accident Reconstruction

How can one overcome the inadmissible feature associated with offering post-accident repairs to escape liability at the summary judgment stage?  It is well-settled that evidence of subsequent remedial measures generally is not admissible to prove that the subject event was caused by negligence or culpable conduct, pursuant to N.J.R.E. 407.  However, the Rule permits that evidence of subsequent remedial conduct may be admitted to prove other issues, often times ownership, control, or the feasibility of precautionary measures.   

Recently, in the matter of in the matter of McAllister v. Scarborough Properties, et al., ATL-418-17, Defendants, Harbour Cove South Condominium Association, Inc., Harbour Cove Condominium Association, and Harbour Cove North Condominium Association, represented by Callahan and Fusco, LLC, moved for summary judgment in the Superior Court, Atlantic County, before the Honorable James P. Savio, J.S.C. In McAllister, the plaintiff tripped and fell over a manhole cover located in the middle of a road bordering an overflow parking lot purportedly owned by a co-defendant, while attempting to the cross the street over to the Doc’s Place Restaurant, another named co-defendant.  The approximate end of the street where the subject fall occurred encircled the Harbour Cove Condominiums.   

In Defendants’ motion for summary judgment, it was contended that the written discovery and deposition testimony failed to provide any evidence that the Harbour Cove Condominiums had any interest or maintenance responsibility over the subject area.  To the contrary, the record indicated that the parking lot’s ownership extended to the subject area, sharing responsibility with another co-defendant for a subsequent repair made where the subject accident occurred.  Furthermore, it was asserted that there was evidence gathered through supplemental interrogatories showing two co-defendants’ performance of subsequent repairs over the subject area, made a day and a half following the accident, with costs split between them.

Callahan and Fusco successfully argued that there was no evidence on record to attribute ownership or control to Harbour Cove Condominiums, nor was Harbour Cove Condominiums ever found responsible for the subject portion of the roadway, and the Court granted Defendants’ summary judgment motion on behalf of Harbour Cove Condominiums – essentially holding that there was no genuine issue of material fact to suggest Harbour Cove Condominiums possessed any responsibility or duty to the plaintiff with respect to the maintenance or repair of the subject area.  While evidence of feasibility of subsequent repairs can result in the preferred feasibility of a summary judgment win, that outcome is not always viable.  Nonetheless, the rule and its exceptions exist to offer a bridge between inadmissible and admissible evidence for various purposes that, when applied properly, can result in a successful defense.

Under the No-Fault Law, the Ability to Sue is the Exception, Not the Rule

The New Jersey Supreme Court issued a recent opinion regarding no-fault insurance coverage arising from automobile accidents. In Haines v. Taft, the Court considered whether the legislature intended to deviate from its highly regulated no-fault system of first-party self-insurance to cover medical expenses arising from automobile accidents when it amended the statute to allow an insured to elect smaller amounts of personal injury protection (“PIP”) under a standard policy?

In this case, each plaintiff was injured in a car accident and was insured under a standard policy with insurance that provided for $15,000 in PIP no-fault coverage instead of the default amount of $250,000. Neither plaintiff was able to sustain a claim for bodily injury (non-economic loss) due to the fact that each policy's limitation-on-lawsuit option. As a result, each plaintiff was suing for outstanding medical provider charges in excess of their elected $15,000 PIP coverage ($28,000 and $10,000, respectively).

Each plaintiff filed a personal injury claim, and each defendant moved to preclude that plaintiff from presenting evidence of medical expenses that exceeded their $15,000 PIP limits. The defendants relied on N.J.S.A. 39:6A-12 (Section 12), which addresses the inadmissibility of evidence of losses collectible under personal injury protection, and Roig v. Kelsey, 135 N.J. 500, 641 A.2d 248 (1994). In Roig, the Court held that the public policies underlying the no-fault system required that Section 12 be construed to prohibit injured parties from recovering medical deductibles and copayments from a tortfeasor.

The Trial Court ruled against the plaintiffs in each matter and prohibited both plaintiffs from admitting evidence of their medical expenses that exceeded their $15,000 PIP limits. The Appellate Division consolidated the cases on appeal, and, in a published opinion, reversed both Trial Court orders stating in pertinent part… “Unless the Legislature makes such an intent clearly known, the Court will not assume that such a change was intended by the Legislature through its amendments to the no-fault system in the Automobile Insurance Cost Reduction Act.” The Supreme Court granted defendants' petitions for certification and concluded that the Appellate Division judgment must be reversed to ensure that the legislative intent of AICRA was maintained. 

“Under the No-Fault Law, the ability to sue is the exception, not the rule. The Legislature has determined that the benefits of creating limited but automatic medical reimbursement for injured motor-vehicle-accident victims outweigh the ability of a minority of injured parties to recover larger amounts in tort.” Haines v. Taft, 237 N.J. 271 (2019). 

In Haines, The Supreme Court of New Jersey opined that it was legislature’s belief that it is good public policy to provide medical benefits on a first party basis without regard to fault to persons injured in automobile accidents. However, in order to keep premium costs down, the benefit must be offset by a reduction in the cost of other coverages. Most notably, a restriction on the right of persons, who have non-permanent or non-serious injuries, to sue for pain and suffering.

Drawing the Line on Horizontal Immunity

In a recent ruling, Florida’s Second District Court of Appeals reversed and remanded a Circuit Court decision regarding the application and scope of “horizontal immunity” in the context of workers’ compensation. Herida v. John Beach & Assoc., Inc. and Gross, 44 Fla. L. Weekly D1892a (Fla. 2d DCA 2019). Specifically, the Court delved into the extent into which the immunity should be statutorily applied in the instance of negligence regarding contractors and subcontractors working at the same construction site. It did this by examining the legislature’s intent, as depicted in the applicable statute, and by referring to prior rulings regarding the interpretation of that statute.

Pursuant to Florida Statute § 440.10, horizontal immunity is afforded when three factors are met: (1) the subcontractor secured workers’ compensation insurance for its employees or the general contractor has secured insurance on the subcontractor’s behalf; (2) all employees of the contractor and subcontractors are providing services on the same project or contract work; and (3) the subcontractor’s own gross negligence is not the major contributing cause of the injury. Thus, when the employee of one subcontractor, or an employee of the contractor, brings a claim against another subcontractor or its employee, and when all three of the above factors are met, horizontal immunity is afforded to defendants.

In the instant case, a residential developer which intended to develop its own land hired both a roadwork company and a surveying company. A roadwork employee brought a negligence cause of action against the surveying company and against its employee, alleging that the surveying employee negligently backed a truck into him while performing work. The lower court found that statutory horizontal immunity was afforded to the surveying company and its employee against the negligence claims of the roadwork employee. The Appellate Court reviewed whether horizontal immunity should have been afforded. The Court hinged its decision on analyzing what the legislature intended by the word “contractor,” as utilized in § 440.10(b), which outlines horizontal immunity. 

Florida statute § 440.10(b) states in part, “In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment [ . . .].”

Thus, the Appellate Court clarified that in order for a party to be afforded the statutory protection of horizontal immunity, the contractor must be performing work pursuant to a contract. In the instant case, the residential developer owned the land and hired the roadwork company and surveying company for its own benefit, and not pursuant to a contract. Although it’s very plausible that the residential developer may have been a general contractor, it is nonetheless not a contractor for purposes of § 440.10(b). For a party to be considered a contractor under § 440.10(b), the party’s “‘primary obligation in performing a job or providing a service must arise out of a contract.’” Id (quoting Sotomayor v. Huntington Broward Assocs. L.P., 697 So. 2d 1006, 1007 (Fla. 4th DCA 1997) quoting Gator Freightways, Inc. v. Roberts, 550 So. 2d 1117,1119 (Fla. 1989)).

In the instant case, the Appellate Court determined that because the residential developer was not a contractor for purposes of § 440.10(b) horizontal immunity should not be afforded to the surveying company and its employee. Therefore, the injured roadwork employee would not be barred from bringing a negligence cause of action against the surveying company and its employee. This ruling is defining in the realm of personal injury and negligence claims. With year-round construction in Florida, injuries occur often on work sites. Determining whether horizontal immunity is afforded to a party early on, can save tremendous time and resources and even lead to early resolution or denial of claims.

Stuck Between a “Substantial Need” and “Equivalent Materials” Investigation of a Claim and the Work-Product Privilege

In the recent unpublished matter of Caroline Paladino, et al. v. Auetto Enterprises, Inc., the New Jersey Appellate Division reviewed the standard for evaluating the work-product privilege in the context of an investigation conducted by an insurance carrier post-accident but pre-suit.  The Court noted that there is a “multi-party, fact-specific” test.  The Court stated “[t]he first inquiry is whether the materials were prepared or collected in anticipation of litigation or trial by another party or that party's representative.  If so, to obtain the materials, a party must satisfy a two-part standard.  The party seeking the materials must (1) show a substantial need for the discovery, and (2) demonstrate that he or she is unable, without undue hardship, to obtain the substantial equivalent of the materials.”

 In Paladino, plaintiff injured herself at a catering facility and the facility notified their general liability carrier of the accident.  The carrier instructed an investigator to photograph the accident scene and obtain statements from plaintiff and representatives of the defendant.  The investigator additionally created a sketch of the area and obtained recorded oral statements from three employees.

 Thereafter, plaintiff filed suit and in response to interrogatories, defendant disclosed the above-noted materials but declined to produce them.  Plaintiff filed a motion to compel the production of said materials with the exception of a hand-drawn diagram.  In an oral opinion, the trial court ordered the defendant to produce the photographs and recorded statements that were secured by the investigator. These materials were created before plaintiff’s complaint was filed and defense counsel had been assigned. The trial court reasoned that the insurer “may have” had interests apart from protecting its insured’s rights.

 The Appellate Division reversed the lower court’s decision holding that the record is insufficient to determine whether plaintiff showed a substantial need for the discovery and whether she was unable, without undue hardship, to obtain the substantial equivalent of the photographs or statements.  Specifically, the Court noted that in Paladino, there was a video of the accident and plaintiff’s attorney was allowed to secure photographs of the area in question.  The Appellate Division noted that on remand, the trial court will need to “make a determination whether there is any showing that there was a change to the staircase that plaintiff was not able to capture in the photographs that her counsel took [.]”

 The Appellate Division further noted that the trial court will also need to analyze the witness statements.  The Court noted that witness statements will always satisfy the first part of the standard or show “substantial need.”  The Court noted that if the witnesses recall the facts within their statements then Plaintiff may not be able to meet the second part of the standard.  In contrast, if the witnesses cannot recall the circumstances of the accident, then plaintiff may be able to meet the second part of the standard.

From a defense perspective, Paladino underscores the need for quick attorney involvement of the investigation of claims to preserve any applicable claims of privilege.   Further, Paladino exemplifies the importance of well-prepared witnesses at the time of depositions which could untimely serve as the “substantial equivalent” of a recorded statement.