How to Factor a Postoffer Settlement into a Proposal for Settlement Analysis
A plaintiff may serve a proposal for settlement (a/k/a offer of judgment) to create a mechanism to recover attorney’s fees as the prevailing party. When it comes to proposals for settlement served by the plaintiff on the defendant, Florida Statute s. 768.79 provides:
(b) If a plaintiff serves an offer which is not accepted by the defendant, and if the judgment obtained by the plaintiff is at least 25 percent more than the amount of the offer, the plaintiff shall be awarded reasonable costs, including investigative expenses, and attorney’s fees, calculated in accordance with the guidelines promulgated by the Supreme Court, incurred from the date the offer was served.
For purposes of the determination required by paragraph (a), the term “judgment obtained” means the amount of the net judgment entered, plus any postoffer collateral source payments received or due as of the date of the judgment, plus any postoffer settlement amounts by which the verdict was reduced. For purposes of the determination required by paragraph (b), the term “judgment obtained” means the amount of the net judgment entered, plus any postoffer settlement amounts by which the verdict was reduced.
Of interest is the underlined language talking about adding back “post offer settlement amounts” to the calculation.
For example, say the plaintiff sues multiple defendants. It serves a proposal for settlement on a defendant and the defendant does not accept the proposal. During the case, the plaintiff settles with the other defendant and proceeds to trial against the defendant that refused to accept the proposal. The plaintiff’s net judgment would be reduced by the amount of the settlement BUT when it comes to determine whether the plaintiff should be entitled to its fees against the defendant it proceeded to trial against, this postoffer settlement is added back to the net judgment to see if plaintiff’s judgment is at least 25 percent more than the offer.
This was the situation in Wilcox v. Neville, 2019 WL 5584878 (Fla. 1st DCA 2019). In this car accident case, a plaintiff sued two defendants. During the case, the plaintiff served a proposal for settlement on each defendant. One of the defendants accepted the proposal against him for $60,400. The other defendant did not accept the plaintiff’s proposal and the case moved to trial. At trial, the jury returned a verdict for $126,592.33. The trial judge reduced this amount by the $60,400 settlement with the co-defendant and insurance benefits, to come up with a net judgment amount of $58,856.73. The issue, for purposes of determining whether the plaintiff should be entitled to attorney’s fees pursuant to its proposal, was whether the $60,400 should be added back to the net judgment of $58,856.73 for purposes of the attorney’s fees calculation. The appellate court held the trial court was required to add this back:
Thus, the clear and unambiguous language of section 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. Here, it is undisputed that [plaintiff] reached a $60,400 settlement with [co-defendant] after serving her offer on [other defendant] and the verdict was reduced by that amount. Accordingly, the trial court was required to add the $60,400 settlement amount to the net judgment in calculating the judgment obtained and determining [plaintiff’s] entitlement to fees.
Wilcox, 2019 WL at *4.
Hence, when it comes to the attorney’s fees calculation for purposes of proposal for settlements, keep in mind that postoffer settlements will be added back into the calculation, even if the verdict or judgment is reduced by virtue of this settlement.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.