Third District Court of Appeal Condemns Use of Joint Proposals for Settlement

October 11, 2018 by on News

The Third District Court of Appeal recently issued an opinion concerning the danger of joint proposals for settlement.  In Atlantic Civil, Inc. v. Swift, 3D15-1594, 43 Fla. L. Weekly D2253a (Fla. 3d DCA Oct 3, 2018) Atlantic Civil contracted to excavate fill material in Monroe County and temporarily store it on property owned by Key Haven and managed by Swift.  This civil action by Atlantic Civil against Key Haven and Swift arose out of a dispute over ownership of the fill material.

Atlantic Civil served a single proposal for settlement on Swift and Key Haven to resolve all claims.  Atlantic proposed that Defendants pay a total of $50,000 to resolve the action broken down as follows:  $25,000 from Swift to Atlantic Civil and $25,000 from Key Haven to Atlantic Civil.  The proposal was conditioned on a mutual exchange of general releases attached to the proposal.

Ultimately, Atlantic Civil prevailed and moved for attorneys’ fees.  The Defendants argued the proposal was invalid because it was conditioned on both Swift and Key Haven accepting the proposal, which deprived them of independent control over their respective decisions to settle.  The trial court agreed and denied the motion for attorneys’ fees.

The appellate court affirmed.  The proposal at issue was a “joint proposal” made by one plaintiff to resolve all pending claims against two defendants.  Joint proposals are required to state the amount and terms attributable to each offeror or offeree under Florida Rule of Civil Procedure 1.442(c)(3).  The Court looked to Attorneys’ Title Insurance Fund, Inc. v. Gorka, 26 So. 3d 646 (Fla. 2010) which invalidated a joint proposal made by one defendant conditioned on acceptance by both plaintiffs because it precluded the plaintiffs from independently evaluating or settling their respective claims.

Applying Gorka, the Third DCA invalidated Atlantic Civils’ joint proposal for settlement.  “The proposal . . . seeks the single sum of $50,000.  And although the Proposal apportions that total sum as payment from Swift to Atlantic Civil in the amount of $25,000 and a payment from Key Haven to Atlantic Civil in the amount of $25,000, it does not state how much either party would be required to pay to settle Civil Atlantic’s claim on his or its own.  Additionally, the Proposal requires that the ‘Defendants will execute a general release’ and that the Proposal ‘shall be deemed rejected unless the Defendants accept it,’ thereby conditioning settlement on Swift and Key Haven’s mutual acceptance of the offer and joint action in accordance with its terms.”  Thus, the Proposal failed to meet the requirement that both offerees be able to independently evaluate or settle their respective claims by accepting the proposal.

The Third DCA concluded with a cautionary statement:  “[A]lthough expressly permitted under rule 1.442(c)(3), joint proposals have become a trap for the wary  and unwary alike . . . .  For that reason, we once again take the opportunity to caution counsel in our district to avoid joint proposals.”

The Third DCA sends clear message to avoid joint proposals in its district, which should be followed in the other four districts as well.  It invalidated the subject proposal, in part, because it conditioned settlement on both Defendants executed general releases.  This prevented each individual Defendant from independently controlling their respective decisions to settle.  Interestingly, the Proposal appeared to comply with rule 1.442(c)(3) by stating the amount that each Defendant would pay to settle ($25,000); yet, the Third DCA found this inadequate.  To be valid, the Third DCA required the Proposal to state how much either party would be required to pay to settle Plaintiff’s claim on his or its own.

As the Third DCA cautions, it is best to avoid joint proposals.  Instead, it is recommended to serve separate, independent proposals on each plaintiff.

If you have any questions about this case or would like to refer an appellate matter, please contact our appellate attorneys.

Kevin D. Franz
Senior Associate
Direct: 954.622.0093

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