Case Notes

CASE NOTE – PROPOSAL FOR SETTLEMENT – WAS IT MADE IN GOOD FAITH?

By April 4, 2015 May 4th, 2015 No Comments

By: Chance Arias, Esq.

The Third District Court of Appeals became the latest Florida court to chime in on Proposals for Settlement with their opinion in Isaias v. HT Hackney Co., 40 Fla. L. Weekly D753a (Fla. 3d DCA 2015). In Isaias, the Court found that a nominal $500.00 settlement offer was made in good faith, therefore allowing the defendants to collect attorney’s fees and costs under Rule 1.442(h)(1).

Isaias stemmed from a breach of contract suit between a drive-thru convenience store chain, Farm Stores, and a grocery distributor to Farm Stores, HT Hackney Co. (“Hackney”). Roberto Isaias (“Isaias”) and two Isaias controlled companies, REW Dairy Investments, Inc. (“REW Dairy”), and Toni Gas & Food Stores, Inc. (“Toni Gas”), had an interest in several Farm Stores franchises. Hackney alleged these Farm Stores franchises had not paid for invoices from September 1998 to some time in 2001.

Isaias moved for and was granted a partial summary judgment on the issue of whether he would be liable for any invoices after he sold his stake in Farm Stores. Following this ruling, Hackney filed sworn answers to interrogatories verifying that all invoices had been paid at the time Isaias, REW Dairy, and Toni Gas had divested their respective positions in Farm Stores in November 1999. Based on Hackney’s answers to interrogatories, Isaias, REW Dairy, and Toni Gas moved for a final summary judgment, which the trial court denied. Immediately following the trial court’s denial, each defendant filed a proposal for settlement, pursuant to Fla. Stat. § 768.79 and Fla. R. Civ. P. 1.442, of $500.00.

The case then came to abrupt end when Hackney’s pleadings were stricken for spoliation of evidence and the case was dismissed with prejudice. Following the dismissal by the trial court, Isaias, REW Dairy, and Toni Gas moved for attorney’s fees and costs, pursuant to their proposals for settlement. The trial court denied REW Dairy and Toni Gas’s motion due to their nominal offers not being made in good faith, but determined Isaias’s nominal offer was made in good faith due to the partial summary judgment he had obtained.[1]

The Third District Court of Appeals reversed the trial court, holding that REW Dairy and Toni Gas were in fact entitled to attorney’s fees even though they had not been granted the same partial summary judgment that Isaias was granted. The Court reasoned that it is the discovery in the case is what provides “an objectively reasonable basis …. to make a nominal offer[2].” The Court specifically mentions that “a motion for summary judgment [having] been denied without elaboration does not control the assessment” of a proposal for settlement. Hackney’s answers to interrogatories provided REW Dairy and Toni Gas with an objectively reasonable basis to make a nominal offer, making Hackney unable to show that the separate proposals for settlement were not made in good faith.[3]

 

[1] The trial court awarded Isaias 1/3 of the attorney’s fees plus all the costs of defending this claim due to all three defendants being represented by the same law firm. This decision was also reversed by the appellate court. The appellate court held that the award for attorney’s fees and costs is joint and several as to all defendants entitled to such an award.

[2] When making the determination whether a nominal offer is in good faith, the trial court must consider whether the offeror had a reasonable basis to conclude that its exposure was nominal at the time of making the offer. State Farm Fla. Ins. Co. v. Laughlin-Alfonso, 118 So.3d 314 (Fla. 3d DCA 2013).

[3] “The offeree bears the burden of proving the offeror’s proposal was not made in good faith.” Segundo v. Reid, 20 So.3d 933 (Fla. 3d DCA 2009)(citing Liggett Group, Inc. v. Davis, 975 So.2d 1281, 1285 (Fla. 4th DCA 2008).

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