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Fla. L. Weekly D1240fTop of Form

Attorney’s
fees — Proposal for settlement — Trial court erred in denying motion for
attorney’s fees on basis that a proposal for settlement must strictly comply
with the content requirements of rule 1.442(c)(2) in order for the movant to be
entitled to attorney’s fees and costs — Nominal offer — For purposes of the
offer of judgment statute, a nominal offer is made in good faith where the
offeror has a reasonable basis to believe that its exposure to liability is
minimal

TAYLOR ENGINEERING, INC. &
ROBERT J. WAGNER, P.E., Appellants, v. DICKERSON FLORIDA, INC., a Florida
corporation, Appellee. 1st District. Case No. 1D15-4782. Opinion filed May 31,
2017. An appeal from the Circuit Court for Duval County. Karen K. Cole, Judge.
Counsel: George R. Truitt and Kathryn L. Ender of Cole, Scott & Kissane,
P.A., Miami, for Appellants. Peter A. Robertson, Erin Rohan Smith, William
Douglas Stanford, Thomas J. Tollefsen, and William Collins Cooper of the
Robertson Firm, St. Augustine; James C. Hauser of Attorney’s Fees in Florida
PL, Maitland, for Appellee.

(WINOKUR, J.) Appellants
(collectively “Taylor”) filed a post-trial motion for attorneys’ fees and costs
pursuant to section 768.79(1), Florida Statutes, and Florida Rule of Civil
Procedure 1.442. The trial court denied the motion on the authority of Borden
Dairy Co. of Alabama, LLC v. Kuhajda, 171 So. 3d 242 (Fla. 1st DCA 2015)
(holding that a proposal for settlement must strictly comply with the content
requirements of rule 1.442(c)(2) in order to entitle the movant to attorneys’
fees and costs). Taylor appealed. However, while this appeal was pending, the
Florida Supreme Court quashed our decision in Borden Dairy. Kuhajda
v. Borden Dairy Co. of Alabama, LLC, 202 So. 3d 391 (Fla. 2016). Based on
the supreme court’s decision, Appellee (“Dickerson”) concedes that the trial
court erred in holding that Taylor’s proposal for settlement was invalid for
failing to strictly comply with the content requirements of rule 1.442.
Accordingly, we reverse and remand for the trial court to reconsider Taylor’s
motion in light of the supreme court’s decision in Kuhajda.

The Kuhajda decision does
not, however, fully resolve this appeal. Dickerson also argued that Taylor’s
proposal for settlement was a nominal offer that was not made in good faith,
and for this reason the trial court should disallow an award of costs and
attorneys’ fees. § 768.79(7)(a), Fla. Stat. The parties contend that this Court
has made inconsistent rulings concerning the standard in determining whether a
nominal offer is made in good faith. While we find that the case law is not
inconsistent, we reiterate that, for purposes of the offer of judgment statute,
a nominal offer is made in good faith where the offeror has a reasonable basis
to believe that its exposure to liability is minimal.

The apparent inconsistency in the
good-faith standard involves Arrowood Indemnity Co. v. Acosta, Inc., 58
So. 3d 286 (Fla. 1st DCA 2011), and General Mechanical Corp. v. Williams,
103 So. 3d 974 (Fla. 1st DCA 2012). The Arrowood court noted “[i]n the
context of a nominal offer of judgment, this court has held that where the
offeror has a reasonable basis to believe that exposure to liability is minimal,
a nominal offer is appropriate.” Arrowood, 58 So. 3d at 289 (emphasis
supplied). However, in the same context, we held in General Mechanical
that “a reasonable basis [for a nominal offer] exists only where the undisputed
record strongly indicates that the defendant had no exposure.” Gen.
Mech., 103 So. 3d at 976 (emphasis supplied). At first glance, it appears
that the General Mechanical court would disqualify a nominal offer from
the offer of judgment statute unless the defendant had “no exposure” at all to
liability, whereas the Arrowood court would permit a nominal offer under
the statute as long as the defendant’s exposure to liability could be
characterized as “minimal.” However, a review of the relevant case law reveals
no such inconsistency.

The offer of judgment statute
provides in pertinent part as follows:

(1) In any
civil action for damages filed in the courts of this state, if a defendant
files an offer of judgment which is not accepted by the plaintiff within 30
days, the defendant shall be entitled to recover reasonable costs and
attorney’s fees incurred by her or him . . . from the date of filing of the
offer if the judgment is one of no liability[.]

. . . .

(7)(a) If
a party is entitled to costs and fees pursuant to the provisions of this
section, the court may, in its discretion, determine that an offer was not made
in good faith. In such case, the court may disallow an award of costs and
attorney’s fees.

§ 768.79(1) & (7)(a), Fla. Stat.1

In determining whether a nominal
offer was made in good faith, we have previously applied the standard articulated
in Arrowood. See Zachem v. Paradigm Prop. Mgmt. Team, Inc.,
867 So. 2d 1263 (Fla. 1st DCA 2004) (“A nominal offer is appropriate where the
offeror has a reasonable basis to believe that exposure to liability is
minimal.”). See also Connell v. Floyd, 866 So. 2d 90, 94 (Fla. 1st DCA
2004) (Benton, J., dissenting) (stating that the rule is that “a minimal offer
can be made in good faith if the evidence demonstrates that, at the time it was
made, the offeror had a reasonable basis to conclude that its exposure was
nominal”).2 The apparently different standard
used by this Court in General Mechanical cites for that rule to Event
Services America, Inc., v. Ragusa, 917 So. 2d 882 (Fla. 3d DCA 2005). In
fact, Event Services does not necessarily set a different standard.

The Event Services court held
as follows:

A
reasonable basis for a nominal offer exists only where “the undisputed record
strongly indicate[s] that [the defendant] had no exposure” in the case.
Therefore, a nominal offer should be stricken unless the offeror had a
reasonable basis to conclude that its exposure was nominal.

Id. at 884 (citations omitted; emphasis supplied) (citing
Peoples Gas Sys., Inc. v. Acme Gas Corp., 689 So. 2d 292, 300 (Fla. 3d DCA
1997)). In other words, Event Services appears to utilize both
the no-exposure and the minimal-exposure standard. However, we find that Event
Services can be reasonably read as using the phrase “no exposure” as
synonymous with “nominal exposure.” This conclusion is bolstered by the fact
that, aside from Event Services and Peoples Gas, the Third
District has consistently held that the standard is whether there is a reasonable
basis to indicate that a defendant’s exposure was nominal. See, e.g., Key
West Seaside, LLC v. Certified Lower Keys Plumbing, Inc., 208 So. 3d 718
(Fla. 3d DCA 2015) (holding that good faith exists as a matter of law where at
the time an offer was made the offeror had a reasonable basis to conclude that
its exposure was nominal); Isaias v. H.T. Hackney Co., 159 So. 3d 1002,
1004-05 (Fla. 3d DCA 2015) (footnote omitted) (“The determination of whether a
‘nominal’ offer is in good faith requires the trial court to consider whether
the offeror had a reasonable basis to conclude, at the time of making the
offer, that its exposure was nominal.”); Downs v. Coastal Sys. Int’l, Inc.,
972 So. 2d 258 (Fla. 3d DCA 2008) (applying standard requiring a reasonable belief
of nominal exposure); Dep’t of Highway Safety & Motor Vehicles, Fla.
Highway Patrol v. Weinstein, 747 So. 2d 1019, 1020 (Fla. 3d DCA 1999)
(applying standard requiring reasonable belief of nominal exposure). Moreover,
the fact that the Third District has not seen fit to address the seeming
discrepancy supports the proposition that it does not consider Event
Services or Peoples Gas to be inconsistent with its other cases.

Even if Event Services did
set a “no exposure” standard, we continue to follow the “minimal exposure”
standard. The Fourth District has suggested that Event Services did
specifically establish a no-exposure standard for a good-faith offer, but has
rejected that standard. In Citizens Property Insurance Corp. v. Perez,
the Fourth District distinguished Event Services and clarified that it
had consistently held that “[t]he rule is that a minimal offer can be made in
good faith if the evidence demonstrates that, at the time it was made, the
offeror had a reasonable basis to conclude that its exposure was
nominal.” 164 So. 3d 1, 3 (Fla. 4th DCA 2014) (quoting State Farm. Mut.
Auto. Ins. Co. v. Sharkley, 928 So. 2d 1263, 1264 (Fla. 4th DCA 2006)
(emphasis original)). The Fourth District opined that the no-exposure standard
is “too onerous.” Id. at 3; see also Sharaby v. KLV Gems Co., 45
So. 3d 560, 564 (Fla. 4th DCA 2010) (Warner, J., concurring) (disagreeing with
the Event Services standard and also stating she did not “think that Peoples
Gas intended to set a rule that requires an undisputed record, showing no
liability, in order to prove that a minimal offer was made in good faith”).

The Second and Fifth District Courts
of Appeal also apply the standard articulated in Arrowood. See, e.g.,
Gawtrey v. Hayward, 50 So. 3d 739, 743 (Fla. 2d DCA 2010) (“In assessing
whether Ms. Gawtrey’s nominal offer was made in good faith, the trial court was
required to look at whether Ms. Gawtrey had a reasonable basis when the offer
was made to conclude that her exposure in the case was nominal.”); Gurney v.
State Farm Mut. Auto. Ins. Co., 889 So. 2d 97, 99 (Fla. 5th DCA 2004)
(explaining that a nominal offer can be made in good faith if the evidence
demonstrates that, at the time it was made, the offeror had a reasonable basis
to conclude that its exposure was nominal).

In summary, it appears that the
no-exposure standard articulated in General Mechanical originated from
language in Peoples Gas, which was then adopted in Event Services
— but neither opinion clearly adopts this standard. In turn, this Court cited Event
Services in explaining the appropriate standard to determine whether a
nominal offer is made in good faith. Because this Court and other district
courts have generally applied the Arrowood minimal-exposure standard,
and because Event Services — the case on which General Mechanical
relies — appears to be a deviation from the standard generally used in the
Third District, the appropriate standard is whether the offeror had a
reasonable basis to conclude that his/her exposure was nominal or minimal.3 This is the standard the trial court
should apply on remand to determine whether Taylor’s offer of judgment was made
in good faith, pursuant to section 768.79(7)(a).

REVERSED AND REMANDED. (OSTERHAUS
and BILBREY, JJ., CONCUR.)

__________________

1Similarly,
Florida Rule of Civil Procedure 1.442(h)(1) provides that the court may
“determine that a proposal [for settlement] was not made in good faith” and
“disallow an award of costs and attorneys’ fees.”

2While this
observation was made in a dissenting opinion, the majority based its ruling on
the lack of particularity of the settlement offer, not the lack of exposure to
liability.

3We also
note the well-established rule that “a three-judge panel of a district court
should not overrule or recede from a prior panel’s ruling on an identical point
of the law.” In re Rule 9.331, 416 So. 2d 1127, 1128 (Fla. 1982). The General
Mechanical panel would not have been authorized to overrule Arrowood without
an en banc proceeding. See Adams v. State, 188 So. 3d 849 (Fla. 1st DCA
2012).

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