MIAMI BUSINESS LITIGATION: NOMINAL PROPOSAL FOR SETTLEMENT

Attorney’s fees are only recoverable when authorized by statute of by agreement of the parties. Reiterer v. Monteil, 98 So. 3d 586 (Fla. 2d DCA 2012) (“[A]ttorney’s fees may be awarded by a court only when authorized by statute or by agreement of the parties.”). This can make recovering attorney’s fees challenging when there is no applicable statute or contract entitling the prevailing party to his or her attorney’s fees. However, Florida has special statute allowing parties to recover attorney’s fees if the make a special settlement offer known as a proposal for settlement and comply with the statute’s requirements. Fla. Stat. § 768.79. The mechanics of the statute and laws associated with the statute can be complex. Boiled down to its simplest parts, the offering party proposes settlement for a certain dollar figure. If the offer is rejected, the offering party can recover attorney’s fees if (1) the party making the proposal is a plaintiff and the plaintiff recovers a judgment against the defendant in an amount of at least 25 percent more than the offer amount, (2) the party making the offer is a defendant and obtains a judgment of no liability, or (3) the party making the offer is a defendant and the judgment obtained by the plaintiff is at least 25 percent less than the defendant’s offer. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Rejection of a party’s proposal for settlement and satisfaction of the 25% threshold test does not automatically entitle the offeror to his or her attorney’s fees. Courts disallow recovery of fees when offers are made for the sole purpose of shifting attorney’s fees rather than resolving the lawsuit. Fla. Stat. § 768.79 (A “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.”). Therefore, courts employ a reasonableness test to ensure the offer was made in good faith. For example, it is unlikely a defendant could recover its attorney’s fees in a simple slip and fall lawsuit by making an offer to the plaintiff of $10 trillion because the offer amount would probably be construed as unreadable given the totality of circumstances involved in the lawsuit. Therefore, offeror must have a reasonable foundation for the offer. Arrowood Indem. Co. v. Acosta, Inc., 58 So. 3d 286 (Fla. 1st DCA 2011) (The “question of whether the offeror has good faith rests on whether the offeror has a reasonable foundation on which to base the offer.”).

The good faith requirement does not preclude a litigant from making an extreme offer if it is based in good faith. Miccosukee Tribe of Indians of Fla. v. Lewis Tein P.L., 277 So. 3d 299 (Fla. 3d DCA 2019) (“The nominal nature of the offers of judgment does not automatically indicate a lack of good faith.”). Good faith “is determined by the subjective motivations and beliefs of the pertinent actor” and “so long as the offeror has a basis in known or reasonably believed fact to conclude that the offer is justifiable.” Dep’t of Highway Safety & Motor Vehicles, Fla. Highway Patrol v. Weinstein, 747 So. 2d 1019 (Fla. 3d DCA 1999). Therefore, a defendant’s nominal offer to a plaintiff will withstand scrutiny if based on good faith.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.