Tampa, Fla. (October 4, 2021) - Florida's Proposal For Settlement (PFS) provision was created to encourage early settlement of litigation and is governed by Florida Statute 768.79 and Florida Rule of Civil Procedure 1.442. In Florida, a PFS can be a strategic move that carries financial consequences if rejected. For example, if a plaintiff files a PFS for say $100,000, and this PFS is either rejected or not accepted within 30 days, if the "judgment obtained" by the plaintiff is at least 25% more than the PFS amount, the plaintiff will be entitled to attorneys' fees and costs. The amount of fees and costs included are those incurred up to the date the PFS was filed. In some cases, this amount is significant.
The comparison of the PFS amount versus the "judgment obtained" is critical in determining whether a plaintiff's right to shift fees and costs has been triggered. Until recently, Florida courts have been split on what determines the amount of "judgment obtained" and at what point are fees and costs no longer factored in. Then, the Florida Supreme Court in CCM Condominium Association, Inc., v. Petri Positive Pest Control, Inc., 2021 WL 4096926 (Fla. Sept. 9, 2021), gave the defense a favorable ruling by affirmatively answering the following question of great public importance:
For purposes of calculating whether a plaintiff has met the threshold amount of the difference between an offer of judgment and the judgment entered for purposes of Section 768.79, Florida Statutes, must post-offer prejudgment interest be excluded from the amount of the "judgment obtained"?
In CCM, the Florida Supreme Court held that post-offer prejudgment interest must be excluded from the amount of the "judgment obtained" when calculating whether a party has met the threshold amount to recover attorneys' fees pursuant to a PFS. Adhering to its precedent, the Florida Supreme Court noted that courts have consistently excluded amounts that were not present on the date of the offer, including damages for claims that had not yet been added.
The court continued by stating that it simply does not have a definite and firm conviction that its prior interpretation of the PFS statute and the terms "judgment" and "judgment obtained" and "net judgment entered" were wrong. The court concluded by holding that post-offer prejudgment interest is excluded from the "judgment obtained" when determining entitlement to attorneys' fees and costs under Section 768.79 of the Florida Statutes.
A PFS can be an effective tool in creating settlement opportunities. The flipside is that it can impose significant financial risk if not accepted. The Florida Supreme Court's ruling in CCM benefits defendants by limiting exposure and creating some certainty on the monetary risk of a rejected PFS. Ultimately, a strategically-filed PFS cannot be ignored and your attorney's knowledge and advice on its consequences must be considered as part of the overall litigation strategy.
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