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4th DCA Judge Calls for Reform of Proposal for Settlement Rule and Statute – RE: Ambiguity

4th DCA Judge Calls for Reform of Proposal for Settlement Rule and Statute – RE: Ambiguity

On February 16, 2022, the Fourth District Court of Appeal ruled in favor of an insurer when it determined that the Insurer’s proposal for settlement was not ambiguous. See Tower Hill Signature Insurance Co. v. Alex Kushch, case no. 4D20-1966 (4th DCA 2022). However, it is Judge Jonathan Gerber’s special concurring opinion that has the legal community talking.

By way of background, this case arose from a dispute involving a homeowner who filed a Complaint against the insurer for unpaid homeowner’s insurance benefits.  During the lawsuit, the insurer served a proposal for settlement on both the homeowner and his wife.  The wife accepted her proposal but the homeowner did not.  The homeowner was then served with a second proposal, which he also rejected.The case proceeded to jury trial, and, ultimately, final judgment was entered in favor of the insurer.  Tower Hill then filed a motion for attorney’s fees and costs pursuant to the proposal for settlement and prevailing party provision.  At the entitlement hearing, the homeowner argued the proposal for settlement contained multiple ambiguities, precluding an award of attorney’s fees under Florida Statute section 768.79 and Florida Rule of Civil Procedure 1.442. The trial court agreed and denied the insurer’s motion for attorney’s fees, costs, and interest, stating that the proposal was “ambiguous” and “statutorily deficient.”

In the appeal, Tower Hill addressed the various issues which the homeowner raised as potential ambiguities during the entitlement hearing: (1) attorney’s fees, (2) punitive damages, (3) apportionment of punitive damages, (4) the homeowner’s wife’s proposal for settlement, (5) the hold harmless, indemnity, and assignment provision, and (6) the confidentiality provision. The Fourth District went through each alleged issue in detail and found no ambiguities. While the discussions regarding each alleged ambiguity are compelling, Judge Gerber’s concurring opinion was the one most worth noting.

In Judge Gerber’s special concurrence, he calls on the Florida Supreme Court or The Florida Bar’s civil rules committee “to consider proposing an amendment to section 768.79 and rule 1.442 requiring that, if the offeree does not specifically identify an ambiguity in a proposal for settlement within a fixed period of time from the proposal’s service, any ambiguity objection should be deemed waived.”

Judge Gerber’s call to action should be of no surprise though. As he mentions in his concurring opinion, he first raised this same issue over eleven years ago in a case called Land & Sea Petroleum, Inc. v. Business Specialists, Inc., 53 So. 3d 348, 353 (Fla. 4th DCA 2011). In that case he stated,

“This case adds to the growing list of cases addressing the alleged ambiguity of a proposal for settlement.  We believe this issue continues to arise because neither section 768.79 nor rule 1.442 requires the offeree to notify the offeror when the offeree considers a proposal to be ambiguous.  Requiring parties to resolve ambiguities in proposals for settlement upon service of the proposals would better serve the purpose for which the statute and rule were intended, that is, “to encourage litigants to resolve cases early to avoid incurring substantial amounts of court costs and attorney’s fees.”  Eagleman v. Eagleman, 673 So. 2d 946, 947 (Fla. 4th DCA 1996).  If the legislature and our supreme court were to amend the statute and the rule to include such a requirement, then perhaps the ambiguity issue would arise less often.  See Nichols, 932 So. 2d at 1078 (“‘A proposal for settlement is intended to end judicial labor, not create more.’”) (citation omitted).  We encourage The Florida Bar’s civil rules committee to consider proposing such an amendment.” Id.

Now, eleven years later, Judge Gerber’s words continue to ring true and the list of cases addressing whether a proposal for settlement was ambiguous has not stopped growing by any means. This is an issue because in Florida, we commonly have state rules which set time limits on when to raise valid objections and/or alleged deficiencies. For instance, the Florida Rules of Civil Procedure has set time limits on when to raise certain defenses (Fla. R. Civ. P. 1.110; 1.140), when to object to discovery requests (Fla. R. Civ. P. 1.340; 1.350; 1.360; 1.370 ), and when to object to subpoenas (Fla. R. Civ. P.  1.351; 1.410), etc. These time limits are important because if a party fails to object to or raise the objection within the set period of time, the objection is commonly deemed waived. Taking all of this into account, one has to wonder why proposals for settlement are without any limit.

Although Judge Gerber’s concurring opinion is not a recitation of the law, at the very least, his message should be a cautionary lesson to all Florida attorneys—If your client receives a proposal for settlement with an alleged ambiguity present, the better practice is to raise any such ambiguity objection as soon as reasonably possible. Likewise, when serving a proposal for settlement, you may want to include a request for notification if the party served anticipates any ambiguity objection. Otherwise, the entire purpose of the proposal for settlement rule and statute (to encourage settlement and reduce litigation costs) is lost.