Third District Reverses Denial of Attorneys’ Fees Entitlement Pursuant to “Proposal for Settlement”
The general rule in Florida—though not without exception—is that a defendant is the “prevailing party” for purposes of attorneys’ fee entitlement when a plaintiff voluntarily dismisses a civil lawsuit. In Three Lions Construction, Inc. v. The Namm Group, Inc. (Case No. 3D14-880, July 22, 2015), the Third District adhered to that principle in the context of a “proposal for settlement.”
Pursuant to the “American Rule,” litigants in state and federal courts generally are required to bear their own attorneys’ fees unless there is independent entitlement pursuant to a contract or a statute. Under Section 768.79, Florida Statutes, as implemented by Florida Rule of Civil Procedure 1.442, a defendant may serve a written “proposal for settlement” on a plaintiff which, if not timely accepted by the plaintiff, can entitle the defendant to recover attorneys’ fees if the judgment obtained by the plaintiff is at least 25% less than the amount of the offer. (The framework also can be invoked by a proposal from a plaintiff to a defendant, in which case the plaintiff can be entitled to recover fees if the judgment obtained is at least 25% more than the offer). This framework is intended to induce parties to settle disputes on reasonable terms under threat of incurring liability for attorneys’ fees in cases where there is no other independent basis for fee liability pursuant to statute or contract.
In Three Lions, the defendant served a proposal for settlement on the plaintiff. Pursuant to the framework, the plaintiff had 30 days in which to formally accept the proposal, failing which it would automatically be deemed rejected. Before the 30 days expired, the plaintiff filed a motion for extension of time to consider the proposal, but the defendant never agreed to the extension and the plaintiff never had the motion heard by the court. Approximately 90 days later, the plaintiff served a notice purporting to “accept” the proposal, which the defendant immediately rejected as untimely. Nevertheless, the plaintiff proceeded to voluntarily dismiss the case. The defendant, claiming to be the “prevailing party,” then moved for an award of attorneys’ fees against the plaintiff pursuant to the proposal for settlement.
The trial court denied the defendant’s fee motion without explanation, but the Third District reversed because the plaintiff’s motion for extension of time “was ineffective to toll the time for acceptance of the proposal, where [the defendant] did not agree to the extension and [the plaintiff] did not obtain a hearing on the motion prior to the expiration of the time for acceptance of the Proposal.” The defendant was thus deemed entitled to attorneys’ fees as a result of the plaintiff’s voluntary dismissal, because the proposal for settlement met the technical requirements of the framework. Diamond Aircraft Industries, Inc. v. Horowitch, 107 So. 3d 362, 277 (Fla. 2013) (“The language of section 768.79, as well as Florida Rule of Civil Procedure 1.442, must be strictly construed because those provisions are in derogation of the common law rule that a party is responsible for its own attorney’s fees, and because they are penal in nature.”).
The Three Lions decision serves as a reminder of the impact of the proposal for settlement framework on civil litigation, the danger of voluntarily dismissing a case without ensuring the absence of fee liability, and, perhaps most importantly, the importance of setting a motion for extension of time for hearing or obtaining agreement from an opposing party, as opposed to simply filing such a motion and letting it sit unattended in the court file.
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