40 Fla. L. Weekly D41a
Torts — Attorney’s fees — Proposal for settlement — Proposal addressed to
one defendant which stated that plaintiff would dismiss action against both
defendants after second defendant or his agents tenders the proposed settlement
amount was invalid — Proposal deprived defendant to whom proposal was addressed
of the ability to evaluate and independently act to resolve the case against
her
one defendant which stated that plaintiff would dismiss action against both
defendants after second defendant or his agents tenders the proposed settlement
amount was invalid — Proposal deprived defendant to whom proposal was addressed
of the ability to evaluate and independently act to resolve the case against
her
SARITHA REDDY PADURU and RAVI ANUGU, Appellants/Cross-Appellees, v. ALLISON
W. KLINKENBERG, Appellee/Cross-Appellant. 1st District. Case Nos. 1D12-5712,
13-2562, 13-4597. Opinion filed December 17, 2014. An appeal from the Circuit
Court for Duval County. W. Gregg McCaulie, Judge. Counsel: Michael C. Clarke and
Betsy E. Gallagher of Kubicki Draper, P.A., Tampa, for
Appellants/Cross-Appellees. John S. Mills and Courtney Brewer of The Mills Firm,
P.A., Tallahassee, for Appellee/Cross-Appellant.
W. KLINKENBERG, Appellee/Cross-Appellant. 1st District. Case Nos. 1D12-5712,
13-2562, 13-4597. Opinion filed December 17, 2014. An appeal from the Circuit
Court for Duval County. W. Gregg McCaulie, Judge. Counsel: Michael C. Clarke and
Betsy E. Gallagher of Kubicki Draper, P.A., Tampa, for
Appellants/Cross-Appellees. John S. Mills and Courtney Brewer of The Mills Firm,
P.A., Tallahassee, for Appellee/Cross-Appellant.
(PER CURIAM.) In these consolidated appeals, Saritha Reddy Paduru and Ravi
Anugu, appellants, challenge the second amended final judgment awarding Allison
Klinkenberg, appellee, attorney’s fees and costs pursuant to the offer of
judgment statute. Because we find that Klinkenberg’s offer of judgment failed to
satisfy the exacting requirements of the statute and implementing rule, we
reverse and remand, without reaching the other issues raised on appeal.
Anugu, appellants, challenge the second amended final judgment awarding Allison
Klinkenberg, appellee, attorney’s fees and costs pursuant to the offer of
judgment statute. Because we find that Klinkenberg’s offer of judgment failed to
satisfy the exacting requirements of the statute and implementing rule, we
reverse and remand, without reaching the other issues raised on appeal.
Following a traffic accident between Klinkenberg and Paduru, Klinkenberg
sought damages from Paduru, as the negligent driver, and Anugu, Paduru’s husband
and the owner of the vehicle Paduru was driving. Prior to trial, Klinkenberg
served Paduru with a proposal for settlement pursuant to section 768.79, Florida
Statutes, and rule 1.442, Florida Rules of Civil Procedure. The proposal
identified Klinkenberg as the party making the proposal; identified Paduru as
the party to whom the proposal was made; offered to settle any and all of
Klinkenberg’s claims against Paduru arising out of the accident which formed the
basis of Klinkenberg’s lawsuit; and stated $50,000 was the total amount of the
proposal. In paragraph 5, the proposal stated there were no relevant conditions
for acceptance, other than those provided in the applicable statute and rule.
Paragraph 6, entitled “Non-monetary terms of proposal,” stated, “[t]he Plaintiff
will dismiss with prejudice the above-styled action against Defendants Saritha
Reddy Paduru and Ravi Anugu after the defendant Anugu (or his agents) tenders
the proposed settlement amount.” Paduru did not respond to the proposal.
sought damages from Paduru, as the negligent driver, and Anugu, Paduru’s husband
and the owner of the vehicle Paduru was driving. Prior to trial, Klinkenberg
served Paduru with a proposal for settlement pursuant to section 768.79, Florida
Statutes, and rule 1.442, Florida Rules of Civil Procedure. The proposal
identified Klinkenberg as the party making the proposal; identified Paduru as
the party to whom the proposal was made; offered to settle any and all of
Klinkenberg’s claims against Paduru arising out of the accident which formed the
basis of Klinkenberg’s lawsuit; and stated $50,000 was the total amount of the
proposal. In paragraph 5, the proposal stated there were no relevant conditions
for acceptance, other than those provided in the applicable statute and rule.
Paragraph 6, entitled “Non-monetary terms of proposal,” stated, “[t]he Plaintiff
will dismiss with prejudice the above-styled action against Defendants Saritha
Reddy Paduru and Ravi Anugu after the defendant Anugu (or his agents) tenders
the proposed settlement amount.” Paduru did not respond to the proposal.
Immediately before trial, Paduru and Anugu conceded negligence, so the trial
focused on the issues of causation and the apportionment of liability for
Klinkenberg’s damages. Following trial, the jury returned a verdict for
Klinkenberg in the amount of $498,822.55. The trial court entered judgment on
the verdict, which we affirmed on appeal.
focused on the issues of causation and the apportionment of liability for
Klinkenberg’s damages. Following trial, the jury returned a verdict for
Klinkenberg in the amount of $498,822.55. The trial court entered judgment on
the verdict, which we affirmed on appeal.
Thereafter, Klinkenberg moved for an award of attorney’s fees and costs
pursuant to section 768.79 and
pursuant to section 768.79 and
rule 1.442. Paduru argued the proposal was
invalid because it was unclear who would be released from liability as to what
claims, and the proposal contained a settlement condition over which Paduru had
no control. The trial court granted Klinkenberg’s motion for attorney’s fees and
costs, finding that, “the offer is clear and understandable when considered in
its totality in light of the issues in the case and the nature of the action.”
After a hearing on the reasonable number of hours and reasonable hourly rate,
the trial court entered the fee and cost judgment currently under review.
invalid because it was unclear who would be released from liability as to what
claims, and the proposal contained a settlement condition over which Paduru had
no control. The trial court granted Klinkenberg’s motion for attorney’s fees and
costs, finding that, “the offer is clear and understandable when considered in
its totality in light of the issues in the case and the nature of the action.”
After a hearing on the reasonable number of hours and reasonable hourly rate,
the trial court entered the fee and cost judgment currently under review.
Appellate courts apply the de novo standard to “review a trial court’s
ruling on a motion to tax attorney’s fees and costs pursuant to the offer of
judgment statute . . . .” Ambeca, Inc. v. Marina Cove Village Townhome Ass’n,
Inc., 880 So. 2d 811, 812 (Fla. 1st DCA 2004). Generally, section 768.79(1),
Florida Statutes (2011), otherwise known as the offer of judgment statute,
entitles a plaintiff to reasonable costs and attorney’s fees when the plaintiff
files a demand for judgment that is rejected by the defendant and the plaintiff
ultimately recovers a judgment that is at least twenty-five percent greater than
the settlement offered in the demand for judgment. Jacksonville Golfair, Inc.
v. Grover, 988 So. 2d 1225, 1227 (Fla. 1st DCA 2008). The statute further
instructs:
ruling on a motion to tax attorney’s fees and costs pursuant to the offer of
judgment statute . . . .” Ambeca, Inc. v. Marina Cove Village Townhome Ass’n,
Inc., 880 So. 2d 811, 812 (Fla. 1st DCA 2004). Generally, section 768.79(1),
Florida Statutes (2011), otherwise known as the offer of judgment statute,
entitles a plaintiff to reasonable costs and attorney’s fees when the plaintiff
files a demand for judgment that is rejected by the defendant and the plaintiff
ultimately recovers a judgment that is at least twenty-five percent greater than
the settlement offered in the demand for judgment. Jacksonville Golfair, Inc.
v. Grover, 988 So. 2d 1225, 1227 (Fla. 1st DCA 2008). The statute further
instructs:
An offer must:
(a) Be in writing and state that it is being made pursuant to this
section.
(b) Name the party making it and the party to whom it is being
made.
(c) State with particularity the amount offered to settle a claim
for punitive damages, if any.
(d) State its total amount.
§ 768.79(2).
Rule 1.442, Florida Rules of Civil Procedure (2011), sets forth the
appropriate procedure for making a proposal under the offer of judgment statute:
appropriate procedure for making a proposal under the offer of judgment statute:
(c) Form and Content of Proposal for Settlement.
(1) A proposal shall be in writing and shall identify the applicable
Florida law under which it is being made.
(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) identify the claim or claims the proposal is attempting to
resolve;
(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’ fees are part of the legal claim; and
(G) include a certificate of service in the form required by rule
1.080(f).
Fla. R. Civ. P. 1.442(c)(1)-(2).
We recently observed that the statutory and rule language must be strictly
construed because they are in derogation of the common law custom that each
party pay its own fees and costs, and because the statute creates a sanction
against the party which unreasonably rejects an offer for settlement. R.J.
Reynolds Tobacco v. Ward, 141 So. 3d 236, 238-39 (Fla. 1st DCA 2014).
construed because they are in derogation of the common law custom that each
party pay its own fees and costs, and because the statute creates a sanction
against the party which unreasonably rejects an offer for settlement. R.J.
Reynolds Tobacco v. Ward, 141 So. 3d 236, 238-39 (Fla. 1st DCA 2014).
In Attorneys’ Title Ins. Fund v. Gorka, 36 So. 3d 646, 647 (Fla.
2010), the supreme court reviewed whether a joint offer, requiring the mutual
acceptance of all offerees, was valid and enforceable under the offer of
judgment statute and rule. Reviewing its precedent on the question presented,
the supreme court distilled the following principle:
2010), the supreme court reviewed whether a joint offer, requiring the mutual
acceptance of all offerees, was valid and enforceable under the offer of
judgment statute and rule. Reviewing its precedent on the question presented,
the supreme court distilled the following principle:
[A]n offer of judgment must be structured such that either offeree
can independently evaluate and settle his or her respective claim by accepting
the proposal irrespective of the other parties’ decisions. Otherwise, a party’s
exposure to potential consequences from the litigation would be dependently
interlocked with the decision of the other offerees.
Id. at 650.
Applying that principle to the question before it, the supreme court found
the proposal at issue was invalid because it prevented “either party from
independently evaluating and accepting” the proposal. Id. at 651. The
court specifically rejected the contention, expressed by the dissent, “that a
party could protect itself from future sanctions by filing a notice of
acceptance of the offer that would never result in settlement.” Id. The
court reasoned that under that flawed interpretation of the offer of judgment
statute, the offeror could ensure its entitlement to fees by making an offer
“conditioned on an event entirely outside the independent control of the
offerees that would never occur . . . . An offer that cannot be unilaterally
accepted to create a binding settlement is an illusory offer.” Id. at
651-52.
the proposal at issue was invalid because it prevented “either party from
independently evaluating and accepting” the proposal. Id. at 651. The
court specifically rejected the contention, expressed by the dissent, “that a
party could protect itself from future sanctions by filing a notice of
acceptance of the offer that would never result in settlement.” Id. The
court reasoned that under that flawed interpretation of the offer of judgment
statute, the offeror could ensure its entitlement to fees by making an offer
“conditioned on an event entirely outside the independent control of the
offerees that would never occur . . . . An offer that cannot be unilaterally
accepted to create a binding settlement is an illusory offer.” Id. at
651-52.
More recently, in Gonzalez v. Claywell, 82 So. 3d 1000 (Fla. 1st DCA
2011), we addressed the validity of a proposal for settlement which formed the
basis of an attorney’s fee award under section 768.79 and rule 1.442. The
proposal in that case was directed from the plaintiff, Claywell, to the
defendant, Gonzalez, and offered to settle Claywell’s personal injury claim for
$240,000, “if Gonzalez’s insurance company, GEICO, tendered a check in the
amount of $240,000 made payable to her.” Id. at 1000. We determined that
the proposal was “invalid and unenforceable because it was impossible for
Gonzalez to meet the conditions of the proposal,” where settlement was
predicated on a non-party insurance company tendering payment well in excess of
its policy limits. Id. at 1001. The proposal was invalid and
unenforceable because it deprived Gonzalez of the independent control of the
decision to settle by including a settlement condition he “could not possibly
perform.” Id. (quoting Gorka, 36 So. 3d at 649). We further
concluded “[a]t a minimum, the proposal is ambiguous because Gonzalez could not
effectively evaluate the condition that GEICO tender the settlement check.”
Id.
2011), we addressed the validity of a proposal for settlement which formed the
basis of an attorney’s fee award under section 768.79 and rule 1.442. The
proposal in that case was directed from the plaintiff, Claywell, to the
defendant, Gonzalez, and offered to settle Claywell’s personal injury claim for
$240,000, “if Gonzalez’s insurance company, GEICO, tendered a check in the
amount of $240,000 made payable to her.” Id. at 1000. We determined that
the proposal was “invalid and unenforceable because it was impossible for
Gonzalez to meet the conditions of the proposal,” where settlement was
predicated on a non-party insurance company tendering payment well in excess of
its policy limits. Id. at 1001. The proposal was invalid and
unenforceable because it deprived Gonzalez of the independent control of the
decision to settle by including a settlement condition he “could not possibly
perform.” Id. (quoting Gorka, 36 So. 3d at 649). We further
concluded “[a]t a minimum, the proposal is ambiguous because Gonzalez could not
effectively evaluate the condition that GEICO tender the settlement check.”
Id.
Here, the trial court found that the offer was “brief, concise, and
straightforward” in that “for the sum of $50,000, [Klinkenberg] would settle the
claim and dismiss her case, with prejudice, against both Defendants upon receipt
of the payment. So what is the issue?”
straightforward” in that “for the sum of $50,000, [Klinkenberg] would settle the
claim and dismiss her case, with prejudice, against both Defendants upon receipt
of the payment. So what is the issue?”
The issue is that pursuant to the plain language of paragraph 6, settlement
was predicated on payment of the settlement amount by Anugu or his agents,
presumably a reference to his insurance company. Although Klinkenberg’s proposal
stated it was directed only to Paduru, the language in paragraph 6 could
reasonably lead one to believe that the offer also implicated Anugu or his
agents. Even though the proposal stated that the only relevant conditions of
acceptance were those provided in the offer of judgment statute and implementing
rule, a reasonable interpretation of the proposal could be that the claims
against Paduru would only be dismissed after Klinkenberg had received the
settlement amount. As evidenced by the trial court’s interpretation, payment of
the settlement amount by Anugu or his agents could logically be understood to be
required in order to settle the case.
was predicated on payment of the settlement amount by Anugu or his agents,
presumably a reference to his insurance company. Although Klinkenberg’s proposal
stated it was directed only to Paduru, the language in paragraph 6 could
reasonably lead one to believe that the offer also implicated Anugu or his
agents. Even though the proposal stated that the only relevant conditions of
acceptance were those provided in the offer of judgment statute and implementing
rule, a reasonable interpretation of the proposal could be that the claims
against Paduru would only be dismissed after Klinkenberg had received the
settlement amount. As evidenced by the trial court’s interpretation, payment of
the settlement amount by Anugu or his agents could logically be understood to be
required in order to settle the case.
Klinkenberg urges us to interpret the proposal settlement’s paragraph 6 as
simply extending an alternative means for reaching settlement of the case as to
both Paduru and Anugu. Paragraph 6, however, does not state that an alternative
means of obtaining dismissal of the case is for Anugu or his agents to tender
the settlement amount. Instead, the non-monetary terms of the deal are that
Klinkenberg will dismiss the case against Paduru and Anugu, with prejudice, once
Anugu or his agents tender payment. Aside from paragraph 4, which sets forth the
settlement amount, paragraph 6 provides the only terms of the proposal. These
terms are distinct from the conditions of acceptance, provided in paragraph 5,
that merely refer to the acceptance procedures provided in the statute and rule.
simply extending an alternative means for reaching settlement of the case as to
both Paduru and Anugu. Paragraph 6, however, does not state that an alternative
means of obtaining dismissal of the case is for Anugu or his agents to tender
the settlement amount. Instead, the non-monetary terms of the deal are that
Klinkenberg will dismiss the case against Paduru and Anugu, with prejudice, once
Anugu or his agents tender payment. Aside from paragraph 4, which sets forth the
settlement amount, paragraph 6 provides the only terms of the proposal. These
terms are distinct from the conditions of acceptance, provided in paragraph 5,
that merely refer to the acceptance procedures provided in the statute and rule.
The only part of the proposal specifically referring to dismissal of the
claim against Paduru, therefore, is paragraph 6, which can be interpreted to
link dismissal to payment of the settlement amount by Anugu or his agents, with
the result that Paduru was unable to evaluate the terms of the proposal.
Gonzalez, 82 So. 3d at 1001; Gorka, 36 So. 3d at 650. It is now a
well settled principle, espoused in our previous decisions as well as those from
sister districts, that offers of judgment must strictly comply with section
768.79 and rule 1.442, with any drafting deficiencies being construed against
the drafter. Ward, 141 So. 3d at 238-39; Alamo Fin., L.P. v.
Mazoff, 112 So. 3d 626, 628 (Fla. 4th DCA 2013); Tran v. Anvil Iron
Works, Inc., 110 So. 3d 923, 925 (Fla. 2d DCA 2013); Andrews v. Frey,
66 So. 3d 376, 378 (Fla. 5th DCA 2011).
claim against Paduru, therefore, is paragraph 6, which can be interpreted to
link dismissal to payment of the settlement amount by Anugu or his agents, with
the result that Paduru was unable to evaluate the terms of the proposal.
Gonzalez, 82 So. 3d at 1001; Gorka, 36 So. 3d at 650. It is now a
well settled principle, espoused in our previous decisions as well as those from
sister districts, that offers of judgment must strictly comply with section
768.79 and rule 1.442, with any drafting deficiencies being construed against
the drafter. Ward, 141 So. 3d at 238-39; Alamo Fin., L.P. v.
Mazoff, 112 So. 3d 626, 628 (Fla. 4th DCA 2013); Tran v. Anvil Iron
Works, Inc., 110 So. 3d 923, 925 (Fla. 2d DCA 2013); Andrews v. Frey,
66 So. 3d 376, 378 (Fla. 5th DCA 2011).
As did the trial court in this case, many jurists have lamented that the
offer of judgment statute has had the unfortunate and unintended consequence of
spawning additional litigation, even though the statute was enacted to have
exactly the opposite effect. See, e.g., Schantz v. Sekine, 60 So.
3d 444, 446-47 (Fla. 1st DCA 2011) (Thomas, J., specially concurring);
Campbell v. Goldman, 959 So. 2d 223, 227-28 (Fla. 2007) (Pariente, J.,
specially concurring). Nevertheless, because the proposal in this case deprived
Paduru of the ability to evaluate and independently act to resolve the case
against her, we conclude that the proposal is invalid, unenforceable, and may
not form the basis of an award of attorney’s fees and costs under section
768.79.
offer of judgment statute has had the unfortunate and unintended consequence of
spawning additional litigation, even though the statute was enacted to have
exactly the opposite effect. See, e.g., Schantz v. Sekine, 60 So.
3d 444, 446-47 (Fla. 1st DCA 2011) (Thomas, J., specially concurring);
Campbell v. Goldman, 959 So. 2d 223, 227-28 (Fla. 2007) (Pariente, J.,
specially concurring). Nevertheless, because the proposal in this case deprived
Paduru of the ability to evaluate and independently act to resolve the case
against her, we conclude that the proposal is invalid, unenforceable, and may
not form the basis of an award of attorney’s fees and costs under section
768.79.
Accordingly, we REVERSE the second amended final judgment awarding attorney’s
fees and costs, and REMAND for further proceedings consistent with this opinion.
(CLARK, WETHERELL, and MAKAR, JJ., CONCUR.)
fees and costs, and REMAND for further proceedings consistent with this opinion.
(CLARK, WETHERELL, and MAKAR, JJ., CONCUR.)
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