In Pacheco v. Gonzalez, 43 Fla. L. Weekly D1084b (Fla. 3d DCA May 16, 2018), the appellants challenged a final judgment for attorneys’ fees based on a Proposal for Settlement served pursuant to section 768.79, Florida Statutes (2011), and Florida Rule of Civil Procedure 1.442. The Third District agreed with the appellants because “the conditional nature of the Proposal divested [the Appellants] of their ability to independently evaluate and accept the Proposal irrespective of the other party’s decision.”

Gonzalez, the plaintiff and subsequently the appellee, served a Proposal on the defendant-appellants, Ramon Pacheco and Ramon Pacheco and Associates, Inc. The Proposal stated that “the Pacheco Defendants” would pay the Plaintiff a total of $300,000 with each defendant being responsible for a $150,000 payment.

Ultimately, a final judgment holding the appellants jointly and severally liable for $377,019.45 was entered. The appellee moved for fees based on section 768.79 arguing the Proposal offered to resolve all outstanding claims against the Pacheco Defendants for a $300,000.00 settlement payment. The appellee also stated that his Proposal included terms that “Ramon Pacheco, individually, and Ramon Pacheco and Associates, Inc., would each pay Gonzalez $150,000.00.” The appellants argued that the Proposal was facially invalid based on rule 1.442 and Gonzalez was not entitled to fees based on section 768.79 because the Proposal required acceptance by both defendants and failed to provide each with the ability to independently accept the Proposal. The trial court ruled in Gonzalez’s favor, the parties stipulated to the amount of fees, and the court entered a final judgment allowing Gonzalez to “recover from Pacheco and the Corporation, jointly and severally,” the attorney’s fees.

In reversing the award of fees, the Third District concluded Attorneys’ Title Insurance Fund, Inc.v. Gorka, 36 So. 3d 646 (Fla. 2010), governed the issue. In Gorka a similar proposal was made, in that an offer was made to two offerees that was conditioned on mutual acceptance. The Florida Supreme Court held in Gorka that joint offers “conditioned on the mutual acceptance of all joint offerees” are “invalid and unenforceable because it is conditioned such that neither offeree can independently evaluate or settle his or her respective claim by accepting the proposal.” Pacheco, 43 Fla. L. Weekly D1084b (quoting Gorka, 36 So. 3d at 647). The supreme court in Gorka explained “A review of our precedent reveals that this principle inherently requires that an 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.” Id. (emphasis added by Pacheco) (quoting Gorka, 36 So. 3d at 650). The Pacheco court pointed out that the reasoning behind the holding is that offers that cannot unilaterally be accepted to create a binding settlement are illusory offers.

The Third District explained that Gorka presents two limitations. First, Gorka does not apply to proposals made by multiple offerors to a single offeree. The second limitation is found in Florida Rule of Civil Procedure 1.442(c)(4), which provides “when a party is alleged to be solely vicariously, constructively, derivatively, or technically liable, . . . a joint proposal made or served on such a party need not state the apportionment or contribution as to that party.” Gonzalez argued that because the liability of Pacheco and the Corporation was vicarious, the Proposal was valid.

The Third District disagreed and concluded that rule 1.442(c)(4), did not apply. The rule applies only “to scenarios where a party’s liability is alleged to be solely vicarious or otherwise indirect.” The focus is on whether the claims are direct or solely claims of vicarious or other forms of indirect liability, rather than whether a party is liable for the full amount of damages. Because the complaint in Pacheco did not allege either Pacheco or the Corporation was vicariously liable, the trial court had made findings that Pacheco and the Corporation were each directly liable, and the Third District had affirmed those findings in an earlier appeal, rule 1.442(c)(4) did not apply.

The court concluded the Proposal was invalid under Gorka, noting that while the Proposal apportioned $150,000 to each defendant, it was unclear how much either would have to pay to settle individually. Additionally, the Proposal’s terms conditioned settlement on mutual acceptance and joint action on the Proposal.

This case provides two points that parties should be aware of when offering a joint proposal of settlement in cases in which there are multiple offerees. First, unless the complaint alleges a party is solely vicarious, constructive, derivative, or technically liable, rule 1.442(c)(4) does not apply, and the proposal must apportion the joint proposal as to each party. Second, a joint proposal must include a method for each offeree to evaluate or settle its respective claim independently of the other offeree. Offerors should be specific as to each in their proposals to avoid this trap.

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