A recent Daily Business Review story by Steven Meyerowitz, “Ambiguous Settlement Proposals Doom Insurer’s Bid for Attorney Fees,” reports that the Third District Court of Appeal affirmed an order denying an insurer’s motion for attorney fees and costs, concluding the indemnity provision in settlement proposals was ambiguous and would cause additional litigation rather than fair settlement of the dispute. On July 31, 2015, Shanika Brown and Juanita Reid filed a claim with their insurer, Safepoint Insurance Company, for water damage. Brown and Reid subsequently sued Safepoint to recover damages for the alleged loss.
On May 11, 2017, Safepoint served separate proposals for settlement on both Brown and Reid, offering $2,500 each. If either accepted the proposal, she would agree to indemnify Safepoint for attorney fees and costs, including any incurred from continuing litigation should the other party not settle.
Safepoint’s proposal to Reid stated: “Upon acceptance of this Proposal, Plaintiff shall defend and indemnify Safepoint Insurance Company, against any and all claims in any way related to the subject matter of this litigation, including, but not limited to, any remaining claims by Shanika Brown, any other named or omnibus insured(s), any mortgagees, any public adjusters, and any and all attorney’s fees, costs, and expenses incurred by Safepoint Insurance Company in defending the same, as well as any attorney’s fees and costs incurred in defense of such claims.” Brown received an identical proposal, except it required indemnification against Reid.
On Sept. 27, 2017, the trial court granted summary judgment in favor of Safepoint. The company then moved to recover attorney fees and costs. After a hearing, Miami-Dade Circuit Judge Bronwyn Miller denied Safepoint’s motion, concluding its proposals were, “at a minimum ambiguous, and violate[d] the differentiation requirement under Florida Rule of Civil Procedure 1.442(c)(3).”
Safepoint appealed, and the appellate court affirmed. In its decision, the appellate court explained Rule 1.442(c)(3) requires that a joint proposal for settlement “state the amount and terms attributable to each party.” It added that Florida Statutes Section 768.79(6)(b) requires courts to weigh “the amount of the offer” against “the judgment obtained.”
The appellate court then pointed out that, in Attorneys’ Title Insurance Fund v. Gorka, 36 So. 3d 646 (Fla. 2010), the Florida Supreme Court held that a proposal by an insurance company to multiple offerees was invalid because the proposal did not allow each individual offeree “to settle the suit knowing the extent of his or her financial responsibility.” The Florida Supreme Court reasoned that if a proposal required mutual agreement and only one party agreed, he or she was forced to participate in further litigation out of his or her control, which went against the goal of ending litigation through settlements.
The Third DCA found Safepoint’s proposals “would only cause further litigation.” If Brown accepted Safepoint’s proposal and Reid continued litigation, Brown would be obligated to pay Safepoint “an indeterminable amount of money,” which went against the particularity requirement of Rule 1.442. The appellate court ruled the trial court could not weigh the proposed amount versus the judgment as required by Section 768.79 because the future legal fees were an unknowable variable to be subtracted from the offered $2,500.
The appellate court observed the proposals prevented Brown and Reid from independently evaluating the offer. “Absent joint acceptance, a settling plaintiff would be unable to evaluate her true financial exposure,” Judge Ivan Fernandez wrote for a unanimous panel. The proposals divested Brown and Reid “of independent control of the decision to settle,” were tacitly contingent upon joint acceptance, failed to identify financial exposure and were “patently ambiguous,” he wrote.