What is a Proposal for Settlement (PFS)
Proposals for settlement (“PFS”) are governed by section 768.79, Florida Statutes, and Florida Rule of Civil Procedure 1.442. Some refer to a PFS as an Offer of Judgment. Florida litigators are well aware of the power of a properly used PFS and the potentially devastating consequences of rejecting such a proposal. Proposals for settlement are powerful tools designed to facilitate settlement by potentially exposing parties who reject good-faith settlement offers to attorney’s fee awards. See § 768.79(1), Fla. Stat.
In Florida, a PFS can be filed by either party to a lawsuit and was created to encourage early resolution of disputes. Attorneys’ Title Ins. Fund, Inc. v. Gorka, 989 So.2d 1210, 1213 (Fla. 2d DCA 2008) (“The purpose of section 768.79 is to encourage the settlement of lawsuits.”); Lieff v. Sandoval, 726 So.2d 335, 336 (Fla. 3d DCA 1999) (“The creation of the right to attorney’s fees is the reason, or among the reasons, why any litigant makes an offer under section 768.79. It is the carrot held out by the statute to encourage early settlements.”). When properly drafted and served, a PFS allows for the recovery of attorney’s fees incurred in prosecuting or defending claims where fees may not otherwise be available. While this tool is routinely used in personal injury cases, it is also a useful negotiation tool in other types of cases as well.
Both the statute and the rule enumerate detailed requirements for what a valid PFS must contain. To be valid, a proposal shall: (A) name the party or parties making the proposal and the party or parties to whom the proposal is being made; (B) state that the proposal resolves all damages that would otherwise be awarded in a final judgment in the action in which the proposal is served, subject to subdivision (F); (C) exclude nonmonetary terms, with the exceptions of a voluntary dismissal of all claims with prejudice and any other nonmonetary terms permitted by statute; (D) state the total amount of the proposal; (E) state with particularity the amount proposed to settle a claim for punitive damages, if any; (F) state whether the proposal includes attorneys’ fees and whether attorneys’ fee are part of the legal claim; and (G) include a certificate of service in the form required by Florida Rule of General Practice and Judicial Administration 2.516. See Fla. Stat. § 768.79; Fla. R. Civ. P. 1.442(c)(2). It also should be noted, as one would expect given its implication in the litigation process, the PFS are often part of challenges from both sides and the Courts have grappled with various styles of arguments over the years. While this article does not address the recent trends on material terms of a PFS, Joint PFS or other recent laws on whether a PFS is valid or not, these topics can be discussed with one of Moran Kidd’s General Liability or Commercial Attorneys.
If a PFS is not accepted and the matter proceeds to trial, attorney’s fees can be sought depending on the difference between the judgment amount and the amount included in the PFS. The rule states that if a Defendant files a PFS, the Plaintiff must obtain a judgment that is at least 75% of the amount proposed by the Defendant. Fla. Stat. § 768.79(1). If there is a judgment entered for the Defendant or the judgement is less than 75% of the proposal, then the Plaintiff is responsible for the Defendant’s attorney’s fees and costs. Id. Likewise, a Plaintiff may submit a PFS to a Defendant and if the Plaintiff secures a final judgment that is 25% above the amount of the offer, then the Plaintiff will be entitled to attorney’s fees. Id.
For example, say you submit a PFS to the Plaintiff for $100,000, and the Plaintiff fails to accept that proposal within thirty days. After trial, Plaintiff’s net judgment is less than $75,000. Under these facts, the PFS would be triggered and the Plaintiff is liable for the defense’s reasonable attorneys and costs from the date the PFS was filed and forward.
Trend of Plaintiff’s Tendering Early Proposals for Settlement:
Fla. R. Civ. P. 1.442(b) dictates that a PFS may not be served upon a Defendant earlier than 90 days after service of process. Typically, a PFS is not served that early in a case. In some situations, we are seeing an uptick in early PFS filings by Plaintiffs as a strategic decision. In fact, some recent advertisements are encouraging Plaintiffs to file an early PFS, citing the pressure this will place on the defendants. Although, this is still not the norm. An early PFS filed by the Plaintiff is seen as a strategic advantage, because in most cases the Plaintiff and their attorneys have the benefit of knowing the damages, medical bills, etc. long before Defendants do. When one party holds more of the cards, “starting the clock” on attorney’s fees earlier in litigation is a clear advantage.
When a PFS is triggered because a Plaintiff obtains a judgement greater than 25% of the offered PFS, only those attorney fees which were incurred after the rejection of the PFS will be awarded. Consequently, when a Plaintiff issues a PFS early in litigation, they are attempting to obtain a judgement in which the majority of Plaintiff’s legal fees will be paid by Defendant if the PFS is triggered—this leaves more of the recovered judgement for the Plaintiff. Other reasons for filing a PFS early in litigation is to obtain leverage over the Defendant where Plaintiff has the intention of beating the proposal to shift payment of their attorney fees to the Defendant.
In most cases, at the outset Plaintiffs and their attorneys are typically in a better position when it comes to serving a PFS; as often times suit is not filed until the medical damages and bills are mostly developed–apart from March 23, 2023 due to the Florida tort reform. Experience also tells us that rarely do Plaintiffs and their attorneys give all the relevant medical records and medical bills pre-suit, so the Defendants are often at a disadvantage when attempting to evaluate the case and in turn an early PFS. To be fair, in some situations the Plaintiffs and their attorneys may not have all the relevant records to provide, but regardless one could see how the Plaintiffs are in a stronger position to evaluate their claim for strategic determination of a PFS amount. Absent formal pre-suit discovery, if Defendants are not afforded all the relevant records pre-suit they are then forced to find this valuable information during the litigation discovery process.
Understanding the basic timeline of a lawsuit between the answer period, initial written discovery period and then the subpoena period, it almost always takes longer than 90 days to gather the relevant information needed to evaluate the Plaintiff’s PFS. Thus, if the law allows the Plaintiff to file a PFS at the 90 day mark, the question is whether that time is fair to the Defense. One can easily argue the Florida PFS law gives the Plaintiff a strategic advantage. This puts the Defendant behind the eight ball because defense must do their own investigation, but only after be afforded the ability to do so in litigation. Therefore, by the time a response to the PFS is due, the defense is usually not in a position to have fully developed the facts and/or medical records and bills involved with the case to properly evaluate the PFS to determine an appropriate response.
Importance of Competent Counsel:
It is important to have competent attorneys that understand these complex issues and employ techniques and strategies to help navigate the ever-changing waters of Florida tort law. The attorneys at Moran Kidd have been successful with these early PFS filings. One such strategy is filing a motion to strike the PFS, or at the very least, obtaining an extension to respond, which provides defense the extended opportunity to fully evaluate the proposal, the merits of Plaintiff’s claim, and allegations of damages so an appropriate response to the PFS can be provided. It is our position, due process of all parties requires it. Defense strategies like this can help to balance the playing field.
Parties to Florida lawsuits should continue to utilize the PFS as a negotiating tool, attorney fee shifting can provide great incentive to resolve even the most contested lawsuits before the uncertainty and expense of a trial. However, it should continue to be just one of the tools available to creatively resolve lawsuits. The PFS and tort laws in Florida are ever evolving, but the highly skilled and competent defense attorneys at Moran Kidd have and continue to develop defense strategies and techniques to help find a successful resolution of these claims.
Authored by: Daren Dorminy, Esq. and Shannon Thomas, Esq. Daren Dorminy is a partner in Moran Kidd’s Litigation Department, and can be contacted at 407-841-4141 or ddorminy@morankidd.com. Shannon Thomas, Esq. is an associate attorney in Moran Kidd’s Litigation Department, and can be contacted at 407-841-4141 or sthomas@morankidd.com.
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