September 9, 2021
A recent Law 360 story by Carolina Bolado, “Fla. High Court Won’t Add Interest To Atty Fee Calculations,” reports that the Florida Supreme Court ruled that prejudgment interest should not be added to a judgment when determining if the judgment triggers a party's entitlement to attorney fees under the state's proposal-for-settlement statute. In a 5-2 decision, the high court opted to stand by its precedent and found that prejudgment interest accrued after CCM Condominium Association Inc. made a settlement offer to Petri Positive Pest Control Inc. should not be included in the "net judgment" for the purposes of calculating whether CCM can be awarded attorney fees under the statute.
The court relied on its 2002 ruling in White v. Steak & Ale of Florida, which defined the plaintiff's total recovery as including only attorney fees, costs and prejudgment interest accrued up to the date of its settlement offer. When considered against the text of the offer-of-judgment statute, the White ruling is not clearly erroneous, and the formula set out in that decision has been consistently applied by district courts around the state in the two decades since to exclude amounts that were not present on the date an offer is made, according to the opinion.
"We simply do not have a definite and firm conviction that this court's prior interpretation of the offer of judgment statute and the terms 'judgment,' 'judgment obtained,' and 'net judgment entered' is wrong," the high court said. The ruling is a win for Petri, which was fighting CCM's attempt to recover attorney fees after prevailing in a dispute over a contract for termite extermination. Under Florida's offer-of-judgment statute, a judgment needs to exceed a prior settlement offer by more than 25% to trigger an entitlement to attorney fees.
In this case, CCM had offered to settle its negligence and breach of contract suit against Petri for $500,000, but that offer was rejected. After a trial in November 2016, a jury awarded CCM $551,881 in damages. The trial court entered a judgment of $636,327, which included the jury's damages award plus $84,446 in prejudgment interest. CCM then moved to recover attorney fees based on that figure, which exceeded its settlement offer by more than 25%.
Petri objected, pointing to the White decision, but the trial court disagreed and awarded CCM $73,579 in post-offer attorney fees and costs. On appeal, the Fourth District Court of Appeal ruled that the prejudgment interest should not be included based on Supreme Court precedent, though the Fourth District said it would reach the opposite conclusion based on its own interpretation of the term "judgment entered" in the offer-of-judgment statute.
In a dissenting opinion, Chief Justice Charles T. Canady said the majority's result is "detached from the text of the statute." "A fair reading of the text of the statute cannot support the interpretation articulated in the statements from White relied on by the majority," Justice Canady said. "As the Fourth District explains, the authorities cited in White to support its discussion that is relevant to post-offer fees, costs and interest are cases interpreting a different statute, … which provides for the award of prevailing party fees to an insured in litigation against an insurer."
Petri's attorney, Thomas Hunker, told Law360 the language of the statute left much to the court's interpretation, but ultimately the court reached the right decision with an interpretation that is fair to the party receiving the offer. "A contrary holding would've required an impossible amount of speculation on what might occur later in litigation, which would be unfair to a party who faces the prospect of sanctions when trying to evaluate whether or not to accept or reject a statutory proposal for settlement," Hunker said.