41
Fla. L. Weekly S471aTop of Form

Civil
procedure — Proposal of settlement — Attorney’s fees — An offer of
settlement is not invalid for failing to state, as required under Rule of Civil
Procedure 1.442(c)(2)(F), whether the proposal includes attorney’s fees and
whether attorney’s fees are part of the legal claim, where attorney’s fees are
not sought in the pleadings

SUSANNE
L. KUHAJDA, Petitioner, vs. BORDEN DAIRY COMPANY OF ALABAMA, LLC., et al.,
Respondents. Supreme Court of Florida. Case No. SC15-1682. October 20, 2016.
Application for Review of the Decision of the District Court of Appeal —
Certified Direct Conflict of Decisions. First District — Case No. 1D14-4706
(Bay County). Counsel: Talley L. Kaleko of the Law Offices of Robert Scott Cox,
PL, Tallahassee, for Petitioner. Charles Franklin Beall, Jr. of Moore, Hill
& Westmoreland, P.A., Pensacola, for Respondents.

(CANADY,
J.) In this case we consider whether an offer of settlement that fails to
address attorney’s fees is invalid even though no attorney’s fees have been
sought in the case. The case is before the Court for review of the decision of
the First District Court of Appeal in Borden Dairy Co. of Alabama, LLC v.
Kuhajda, 171 So. 3d 242 (Fla. 1st DCA 2015), which held that such an offer
of settlement is invalid. The First District certified that its decision is in
direct conflict with the decision of the Fourth District Court of Appeal in Bennett
v. American Learning Systems of Boca Delray, Inc., 857 So. 2d 986 (Fla. 4th
DCA 2003). We have jurisdiction. See art. V, § 3(b)(4), Fla. Const. For
the reasons that follow, we hold that if attorney’s fees are not sought in the
pleadings an offer of settlement is not invalid for failing to state whether
the proposal includes attorney’s fees and whether attorney’s fees are part of
the legal claim. We therefore quash the decision of the First District in Borden
Dairy and approve the decision of the Fourth District in Bennett on
the conflict issue.

I.
BACKGROUND

In
the case on review, Susanne L. Kuhajda served Borden Dairy Company of Alabama,
LLC, and Major O. Greenrock with identical offers of judgment specifying that
the offers included costs, interest, and all damages or monies recoverable
under the complaint and by law. Borden Dairy, 171 So. 3d at 242-43.
Ultimately, Kuhajda prevailed on her negligence claim against Borden Dairy and
Greenrock, and the jury awarded her damages sufficiently in excess of the
amount contained in her offers of judgment to trigger the payment of fees under
section 768.79(1), Florida Statutes. Following entry of judgment in her favor,
the trial court granted Kuhajda’s motion to tax attorney’s fees and costs in
accordance with section 768.79 and Florida Rule of Civil Procedure 1.442. Id.
at 242. The trial court determined that the failure to include the attorney’s
fees language in the offer of judgment did not create an ambiguity because
Kuhajda never sought attorney’s fees in her complaint. Id. at 243.

On
appeal, the First District held that an offer of judgment must strictly comply
with Florida Rule of Civil Procedure 1.442(c)(2)(F) even when the complaint
does not include a claim for attorney’s fees. Id. The First District
explained that in Diamond Aircraft Industries, Inc. v. Horowitch, 107
So. 3d 362 (Fla. 2013) — a case where the plaintiff sought attorney’s fees in
the complaint — this Court held that an offer of judgment failed to strictly
comply with rule 1.442(c)(2)(F) because it did not state that the offer
included attorney’s fees and whether attorney’s fees were part of the legal
claim. Id. The First District reasoned that because Diamond Aircraft
made the test for determining the validity of an offer of judgment strict
compliance rather than the absence of ambiguity, an offer must strictly comply
with rule 1.442(c)(2)(F) even when attorney’s fees are not sought in the
complaint. Id. The First District thus reversed the order granting
Kuhajda’s motion to tax attorney’s fees and costs and certified conflict with
the Fourth District’s decision in Bennett.

II.
ANALYSIS

“The
certified conflict issue involves the interpretation of the Court’s rules and
is a question of law subject to de novo review.” Saia Motor Freight Line,
Inc. v. Reid, 930 So. 2d 598, 599 (Fla. 2006). “The eligibility to receive
attorney’s fees and costs pursuant to section 768.79 and rule 1.442 is reviewed
de novo.” Pratt v. Weiss, 161 So. 3d 1268, 1271 (Fla. 2015).

Section
768.79 and Rule 1.442

“The
Legislature has modified the American rule, in which each party pays its own
attorney’s fees, and has created a substantive right to attorney’s fees in
section 768.79 on the occurrence of certain specified conditions.” TGI
Friday’s, Inc. v. Dvorak, 663 So. 2d 606, 611 (Fla. 1995). Florida Rule of
Civil Procedure 1.442 implements section 768.79. See Willis Shaw Exp., Inc.
v. Hilyer Sod, Inc., 849 So. 2d 276, 278 (Fla. 2003). In 1996, we amended
rule 1.442 to require greater detail in an offer of settlement under section
768.79. See id. When this Court adopted the amended rule requiring an
offer to state whether it included attorney’s fees, we explained that these
provisions were “procedural” in nature and thus within the province of the
Court to adopt. In re Amends. to Fla. Rules of Civ. Proc., 682 So. 2d
105, 106 (Fla. 1996); see article V, § 2(a), Fla. Const. (providing this
Court with exclusive authority to adopt rules for practice and procedure in the
courts of this State); Se. Floating Docks, Inc. v. Auto-Owners Ins. Co.,
82 So. 3d 73, 79 (Fla. 2012) (“The current version of the offer of judgment
statute is procedurally buttressed by Florida Rule of Civil Procedure 1.442,
which details the requirements to properly file a proposal of settlement.”).

Rule
1.442 provides:

(2) 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) state with particularity
any relevant conditions;

(D) state the total amount of
the proposal and state with particularity all nonmonetary terms 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 rule 1.080.

Fla.
R. Civ. P. 1.442(c)(2) (emphasis added).

This
Court has held that section 768.79 and rule 1.442 must be strictly construed
because they are in derogation of the common law rule that each party should
pay its own fees. See, e.g., Audiffred v. Arnold, 161 So. 3d 1274, 1279
(Fla. 2015) (analyzing an offer of settlement “[u]nder the required strict
construction of the rule and the statute”); Pratt, 161 So. 3d at 1273
(analyzing an offer of settlement “under a strict construction of section
768.79 and rule 1.442”); Attorneys’ Title Ins. Fund, Inc. v. Gorka, 36
So. 3d 646, 649 (Fla. 2010) (“This Court strictly construes the language of the
statute and rule when reviewing the several requirements.”); Campbell v.
Goldman, 959 So. 2d 223, 227 (Fla. 2007) (“[S]trict construction is
applicable to both the substantive and procedural portions of the rule and
statute.”); Lamb v. Matetzschk, 906 So. 2d 1037, 1040 (Fla. 2005)
(reaffirming a strict construction of rule 1.442); Willis Shaw, 849 So.
2d at 278 (stating that section 768.79 and rule 1.442 were to be strictly
construed because they are in derogation of the common law rule that each party
should pay its own fees).

This
Court required a strict construction of rule 1.442 — and thus a strict
enforcement of the rule’s requirements — in Audiffred, Pratt, Gorka,
Campbell, Lamb, and Willis Shaw in contexts in which the provisions
of the rule implemented the substantive requirements of section 768.79.
Notably, none of those cases explicitly addresses whether a provision of rule
1.442 must be strictly enforced when the provision is a requirement that does
not implement a substantive requirement of section 768.79.

Diamond
Aircraft

In Diamond
Aircraft, this Court considered four questions of Florida law certified by
the United States Court of Appeals for the Eleventh Circuit. Two of the
certified questions related to Florida’s offer of judgment law. This Court’s
negative answer to the first certified question concerning Florida’s offer of
judgment law determined that the offer of judgment law had no application in
the circumstances presented by the case. The Court nonetheless answered the
second question regarding whether “a defendant’s offer of judgment [is] valid
if, in a case in which the plaintiff demands attorney’s fees, the offer
purports to satisfy all claims but fails to specify whether attorney’s fees are
included and fails to specify whether attorney’s fees are part of the legal
claim[.]” Diamond Aircraft, 107 So. 3d at 376 (emphasis added). In
concluding that such an offer would be invalid, we relied on the rule of strict
construction.

In
our analysis, we discussed the Fourth District’s decision in Bennett and
recognized that the facts in Diamond Aircraft were distinguishable:
“Unlike the complaint in Bennett, the complaint [in Diamond Aircraft]
contained a legal claim for attorney’s fees, which created an ambiguity in
Diamond Aircraft’s offer of settlement that was not present in Bennett,
thereby necessitating the presence in the offer of settlement of a specific
statement regarding attorney’s fees.” Id. at 377. We went on to question
dicta contained in Bennett, in which the Fourth District “state[d] that
a general offer of settlement . . . (i.e., one that stipulates settlement of
all claims) is broad enough to include any claim for attorney’s fees.” Id.
In the context of our discussion of this dicta, we observed that our post-Bennett
case law requiring the strict construction of the statute and rule “draws the
continuing validity of Bennett into question.” Id. Although we
acknowledge that this statement might be understood as questioning the holding
of Bennett, we believe that it is instead properly understood in context
as an observation regarding the dicta in Bennett concerning an offer
that “stipulates [a] settlement of all claims[.]” Id.

The
Instant Case

Here,
we consider a circumstance in which rule 1.442(c)(2)(F) contains a requirement
to include in a settlement proposal a specific element that section 768.79 does
not require. The purpose of section 768.79 is to “reduce litigation costs and
conserve judicial resources by encouraging the settlement of legal actions.” Gorka,
36 So. 3d at 650; see Unicare Health Facilities, Inc. v. Mort, 553 So.
2d 159, 161 (Fla. 1989) (explaining that rule 1.442 “was implemented solely to
encourage settlements in order to eliminate trials if possible”). The only
purpose of rule 1.442 is to provide a procedural framework to implement the
substantive requirements of section 768.79 regarding settlement proposals. See
Se. Floating Docks, 82 So. 3d at 79; Willis Shaw, 849 So. 2d at 278.
Rule 1.442(c)(2)(F)’s requirements relating to attorney’s fees are totally
irrelevant to the settlement of a case in which attorney’s fees are not sought.

We
decline to invalidate Kuhajda’s offers of judgment solely for violating a
requirement in rule 1.442 that section 768.79 does not require. The procedural
rule should no more be allowed to trump the statute here than the tail should
be allowed to wag the dog. A procedural rule should not be strictly construed
to defeat a statute it is designed to implement.

Kuhajda
is entitled to attorney’s fees under section 768.79 because the offers of
judgment at issue in this case are not ambiguous. As explained previously,
Kuhajda served Borden Dairy and Greenrock with identical offers of judgment
specifying that the offers included costs, interest, and all damages or monies
recoverable under the complaint and by law. Borden Dairy, 171 So. 3d at
242-43. The failure to include the attorney’s fees language in the offer of
judgment did not create an ambiguity because Kuhajda never sought attorney’s
fees in her complaint. Id. at 243. Neither Borden Dairy nor Greenrock
argues to the contrary, and it is indisputable that Kuhajda fully complied with
the relevant requirements of the rule that implement the substantive
requirements of section 768.79.

We
agree with Bennett that “[i]t would make no sense to require a defendant
to state in its offer of judgment that the offer does not include attorney’s
fees, when plaintiff did not claim an entitlement to them and could not recover
them because of failure to plead” and “there [is] no ambiguity in the
proposal.” Bennett, 857 So. 2d at 988-89. As this Court has recognized,
“a claim for attorney’s fees, whether based on statute or contract, must be [pleaded]”
unless “a party has notice that an opponent claims entitlement to attorney’s
fees, and by its conduct recognizes or acquiesces to that claim or otherwise
fails to object to the failure to plead entitlement[.]” Stockman v. Downs,
573 So. 2d 835, 837-38 (Fla. 1991).

We
therefore hold that an offer of settlement is not invalid for failing to state
whether the proposal includes attorney’s fees and whether attorney’s fees are
part of the legal claim under rule 1.442(c)(2)(F) if attorney’s fees are not sought
in the pleadings. Bennett correctly concluded that an offer of judgment
need not strictly comply with the requirements of rule 1.442(c)(2)(F) when
attorney’s fees are not sought in the pleadings. Borden Dairy erred in
disagreeing with Bennett.

III.
CONCLUSION

We
approve Bennett on the conflict issue and quash Borden Dairy, and
remand to the First District for proceedings consistent with this opinion.1

It
is so ordered. (LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, and PERRY, JJ.,
concur. POLSTON, J., concurs in result.)

__________________

1We
also disapprove Colvin v. Clements & Ashmore, P.A., 182 So. 3d 924
(Fla. 1st DCA 2016), which follows the reasoning of Borden Dairy.

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