Florida’s Third District Court of Appeal Gets to the 'Real Issue': Damages or Equitable Relief?

A proposal for settlement, or an “offer of judgment,” is a strategic litigation tool born out of Florida Statute Section 768.79 and Florida Rule of Civil Procedure 1.442. Either party may utilize a proposal for settlement as a means of pressuring the other to settle. Speculation as to what a jury might do given the facts of a particular case can be just enough of a motivating factor for one party to accept settlement. However, the requirements for serving a valid, enforceable proposal for settlement can be complex. As such, Florida case law continues to evolve as its courts wrestle with new factual circumstances and distinctive legal arguments in assessing attorney’s fees and costs for a prevailing party or for the party that made a reasonable settlement offer prior to trial.

In the Florida insurance arena, an insured can claim entitlement to attorney’s fees and costs pursuant to Florida Statute Section 627.428 if the insured receives a favorable judgment. Yet, the Florida statues do not permit an insurer that prevails in a suit brought by an insured to recover attorney’s fees and costs. Therefore, particularly in first-party property cases, defendants/insurers seek to recover attorney’s fees and costs by way of a proposal for settlement. In these circumstances, Florida Statute Section 768.79 applies such that, if there was a proposal for settlement made pursuant to Rule 1.442 (which was not accepted by the plaintiff) and a defense verdict results or if the plaintiff fails to recover 75% or more than the amount set forth in the proposal for settlement, then the defendant is entitled to recover reasonable attorney’s fees and costs incurred from the date of the filing of the offer.

Still, enforcing a proposal for settlement and clearing the hurdles of multiple plaintiffs, proper apportionment of an offer, or simply resolving ambiguities in the proposal itself can be challenging for defendants looking to even out the burden of risks that come with litigation. In 2013, the Florida Supreme Court’s opinion in Diamond Aircraft Indus., Inc. v. Horowitch, 107 So.3d 362 (Fla. 2013) constricted a defendant/insurer’s ability to serve and enforce a proposal for settlement when it held that Florida Statute Section 768.79 did not apply in cases that seek equitable relief in addition to or in the alternative to monetary damages. Accordingly, and specifically in first-party property law, since 2013 there has been a swell of lawsuits filed that contain counts with both a request for declaratory judgment and for breach of contract.

However, the recent decision in Tower Hill Signature Ins. Co. v. Javellana, 16-2526 & 16-2492 (Fla. Dist. Ct. App. 2017), out of Florida’s Third District Court of Appeals, sheds new light on the Diamond Aircraft ruling, holding that courts can look towards the “real issue” or the “true relief” sought by the plaintiff, i.e., money damages or equitable relief, when determining whether or not a proposal for settlement is enforceable. In Javellana, the appellate court held that the trial court erred in denying the insurers’ motion for attorney’s fees pursuant to the offer of judgment statute on the basis that the insureds’ action sought both equitable relief and money damages because the true relief sought by the insured was money damages for breach of contract, not equitable relief.

Cesar and Sandra Javellanas sued Tower Hill, alleging that Tower Hill underpaid their insurance claim for water damage and, therefore, breached the terms of the insurance policy. The Javellanas served a complaint that contained, among other counts, one count for breach of contract, seeking money damages, and one count for declaratory judgment, seeking the court’s declaration that Tower Hill may not unilaterally determine actual cash value. During litigation, Tower Hill served a proposal for settlement upon each of the plaintiffs. The proposals for settlement were not accepted, the case went to trial and the court entered final judgment in favor of Tower Hill. Tower Hill then moved for attorney’s fees, pursuant to section 768.79, based upon the unaccepted proposals for settlement. However, the trial court, in reliance upon Diamond Aircraft, determined that Tower Hill was not entitled to attorney’s fees under section 768.79 because the complaint sought both money damages and equitable relief. Tower Hill appealed.

In its appeal, Tower Hill argued that there is an exception to Diamond Aircraft’s general holding where, as in its specific case, the plaintiffs’ “true relief” sought was money damages. In reversing the trial court’s order denying Tower Hill’s motion for attorney’s fees and remanding the case back to the trial court for proceedings, the appellate court concluded that the Javellanas’ case was an “action for damages” within the meaning of section 768.79(1) because it was clear that the true relief sought by the Javellanas was money damages for breach of contract rather than equitable relief. The inclusion of a declaratory judgment count by the Javellanas in a cause of action that actually sought money damages did not invalidate Tower Hill’s offer of judgment. The appellate court reached this decision by reading Diamond Aircraft together with two decisions out of the Fourth District Court of Appeal, DiPompeo Construction Corp. v. Kimmel & Associates, Inc., 916 So.2d 17 (Fla. 4th DCA 2005) and Nelson v. Marine Group of Palm Beach, Inc., 677 So.2d 998 (Fla. 4th DCA 1996).

For defendants/insurers that wish to serve proposals for settlement, the recent Javellana decision provides potential for enforcement when faced with lawsuits containing counts for both breach of contract and declaratory relief. The “true relief” sought is what matters.

*Nicole works in our Fort Lauderdale, Florida office. She can be reached at 954.832.3966 or nfpanico@mdwcg.com.

_{Defense Digest, Vol. 24, No. 1, March 2018. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2018 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}