18 Fla. L. Weekly Supp. 35a
Online Reference: FLWSUPP 1801HERN
Insurance — Personal injury protection — Attorney’s fees — Proposal for settlement — Section 768.79 provides sufficient procedural guidance to make it an independent authority for award of attorney’s fees without invocation of rule 1.442 in small claims cases — Error to conclude that medical provider is prevailing party because it prevailed on significant issue where jury found that some of treatment was reasonable, related and necessary but returned zero-damages verdict — Remand for consideration of validity of insurer’s proposal for settlement
BRISTOL WEST INSURANCE CO., Appellant, vs. CARE THERAPY & DIAGNOSTICS, INC. (a/a/o Emanuel Hernandez), Appellee. Circuit Court, 13th Judicial Circuit (Appellate) in and for Hillsborough County. Case No. 05-11365, Division X. County Case No. 02-13616-SC. BRISTOL WEST INSURANCE CO., Appellant, vs. CARE THERAPY & DIAGNOSTICS, INC. (a/a/o Emanuel Hernandez), Appellee. Case No. 06-3025, Division X. County Case No. 02-13616-SC. May 22, 2008. On review of a final order of the County Court, Hillsborough County, Florida. The Honorable Charlotte Anderson, Judge. Counsel: Richard A. Sherman, Sr., Ft. Lauderdale; and Kevin Fitzsimmons, Tampa, for Appellant. Timothy Patrick, Tampa; and Mark A. Boyle, Fink & Boyle, Ft. Myers, for Appellee.
[County court order at 12 Fla. L. Weekly Supp. 1092a.]
(ISOM, Judge.) In this appeal, Appellant Security National Insurance Company, formerly known as Bristol West (“insurer”), appeals the trial court’s award of attorney’s fees to Appellee Care Therapy & Diagnostics, Inc. (“provider”), after the jury awarded the provider zero damages for its claim. The insurer claims that the trial court erred both when it awarded fees to the provider when the provider received zero damages and when it failed to award attorney’s fees to the insurer in light of the offer of judgment. We agree that the trial court erred in awarding fees to the provider and remand this cause for the trial court to conduct proceedings to determine the validity of the insurer’s offer.
This case involved highly contentious “small claims” under $5000. The insurer stopped paying personal injury protection (PIP) benefits after an independent medical examination determined that the insured had reached maximum medical improvement. The parties engaged in extensive discovery prior to a jury trial, which was held May 12, 2005. Prior to trial, on March 25, 2005, the insurer served the provider with a proposal for settlement pursuant to Rule 1.442, Florida Rule of Civil Procedure and section 768.79, Florida Statutes. The proposal offered to settle the matter for a total of $251, exclusive of attorney’s fees.
At the conclusion of the trial, the jury returned a verdict on a two-part verdict form agreed to by the parties. The first question on the form asked the jury to determine whether “any of the treatment rendered by [the provider] was reasonable, necessary, and related to the motor vehicle accident that occurred on March 20, 2002?” If the response to the foregoing was affirmative, which it was, the jury was to proceed to the second part which was “what amount of the charges submitted does the defendant owe?” To this question, the jury responded “$0.” Despite the zero verdict, the trial court entered an order awarding attorney’s fees to the provider in the amount of $184,000, finding that the provider prevailed on the significant issue in the case, that issue being the reasonableness, relatedness and necessity of the treatment. Also, the trial court stated that it “could envision no scenario in which section 768.79, Florida Statutes would apply without the operation of Rule 1.442,” Florida Rules of Civil Procedure.1 The trial court’s order added that even if the rule had been invoked, the insurer’s proposal was not timely. This appeal followed.
Although not clearly framed, the issues before the court are whether section 627.428, Florida Statutes, supports the award of attorney’s fees when a plaintiff recovers a zero verdict; whether Rule 1.442 applies and, if not, whether 768.79, Florida Statutes can stand alone to support an award of attorney’s fees based upon an offer of judgment, and whether the significant issues test applies to awards of attorney’s fees. While we agree that the trial court erred in awarding attorney’s fees to the provider in this case, and that proposals for settlement may be filed in small claims, for reasons discussed below, we disagree with the insurer that Rule 1.442 applies.
This case involves the interplay between the Small Claims Rules and the Rules of Civil Procedure. According to Rule 7.020, Florida Small Claims Rules, only certain rules of civil procedure apply to small claims. The small claims rules are, as one might guess, less formal than the civil procedure rules. Less formality in small claims promotes the interest of quickly moving cases through the court system.2 Many parties are not represented by counsel and most cases do not require the formality that the civil rules provide. Small Claims Rule 7.020 requires additional Rules of Civil Procedure to be specifically invoked, either by the parties or by the court. We could find no decisional authority on whether an invocation of the formal rules may be effected by ‘waiver’ or ‘consent’ and we do not make that determination here. There is no dispute that Rule 1.442 was not specifically invoked.
Applicability of §768.79 without the operation of Rule 1.442: Because there is no doubt that the offer exceeded the verdict, we do not discuss that aspect of the offer. But assuming that the small claims rules apply and that Rule 1.442 was not properly invoked, we disagree with the trial court that section 768.79, Florida Statutes is inapplicable. See Tran v. State Farm Mutual Automobile Ins. Co., 860 So. 2d 1000 (Fla. 1st DCA 2003) [28 Fla. L. Weekly D2471a]; State Farm Mut. Automobile Ins. Co. v. Nichols, 932 So. 2d 1067 (Fla. 2006) [31 Fla. L. Weekly S358a] (Section 768.79, Florida Statutes applies to small claims). Although the provider stopped short of arguing that section 768.79, Florida Statutes could apply without the operation of Rule 1.442, the trial court’s order clearly demonstrates that she considered the matter and concluded that the former could not operate without the latter.
Section 768.79, Florida Statutes states:
(1) In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney’s fees against the award. Where such costs and attorney’s fees total more than the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the plaintiff’s award. If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand. If rejected, neither an offer nor demand is admissible in subsequent litigation, except for pursuing the penalties of this section.
(2) The making of an offer of settlement which is not accepted does not preclude the making of a subsequent offer. An offer must:
(a) Be in writing and state that it is being made pursuant to this section.
(b) Name the party making it and the party to whom it is being made.
(c) State with particularity the amount offered to settle a claim for punitive damages, if any.
(d) State its total amount.
The offer shall be construed as including all damages which may be awarded in a final judgment.
(3) The offer shall be served upon the party to whom it is made, but it shall not be filed unless it is accepted or unless filing is necessary to enforce the provisions of this section.
(4) An offer shall be accepted by filing a written acceptance with the court within 30 days after service. Upon filing of both the offer and acceptance, the court has full jurisdiction to enforce the settlement agreement.
* * *
(6) Upon motion made by the offeror within 30 days after the entry of judgment or after voluntary or involuntary dismissal, the court shall determine the following:
(a) If a defendant serves an offer which is not accepted by the plaintiff, and if the judgment obtained by the plaintiff is at least 25 percent less than the amount of the offer, the defendant shall be awarded reasonable costs, including investigative expenses, and attorney’s fees, calculated in accordance with the guidelines promulgated by the Supreme Court, incurred from the date the offer was served, and the court shall set off such costs in attorney’s fees against the award. When such costs and attorney’s fees total more than the amount of the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the award to the plaintiff.
Courts have already said that proposals for settlement may be made in small claims cases.3 In response to a certified question as to the applicability of Rule 1.442 in such cases, the companion rule, the Florida Supreme Court has not decided whether one may exist without the other.4 We conclude that it does. Although the rule of procedure does provide the procedural framework in which an offer of judgment must proceed, for reasons discussed below, we determine that the statute provides sufficient procedural guidance to make it an independent authority for the award of attorney’s fees without the invocation of Rule 1.442 in small claims cases.
The Supreme Court is charged with the rule making authority for the courts.5 When a rule is adopted by the Supreme Court concerning practice and procedure and such rule conflicts with a statute, the rule supersedes the statutory provision.6 In the absence of a procedural provision in the Rules, procedural provisions in statutes may nonetheless apply.7
Because the parties must invoke Rules of Civil Procedure, it is unlikely that a party who may be subject to an offer filed under the auspices of Rule 1.442 will agree to invoke it. Given this, and the Supreme Court’s determination that Section 768.79, Florida Statutes applies in small claims cases, aside from the insurer’s argument that Rule 1.442 is self-executing, with which this court disagrees, the only conclusion one can reach is that the Rule is unnecessary to effect the intent of section 768.79.
If section 768.79, Florida Statutes, applies without the operation of Rule 1.442, the time for filing an offer of judgment/proposal for settlement would be somewhat more relaxed. Indeed, as long as the offeree had 30 days to respond after service8 but before trial, an offer could be deemed timely under the statute, even if it were filed fewer than 90 days after the complaint. Under the facts of this case, the offer, which was served on March 25, 2004, 46 days before the trial week, afforded the provider 35 days, including an additional five day’s mailing time, in which to accept the offer. That was 11 days before the scheduled trial week.
Prevailing Party/Significant Issue: We turn our attention to the prevailing party/significant issue question. The trial court concluded that the provider prevailed on the significant issue because the jury answered the question whether any of the treatment was reasonable, related, and necessary in the affirmative. This, too, was error. At least one district court has said that the “significant issues” test does not even apply to cases in which attorney’s fees can be awarded pursuant to section 627.428, Florida Statutes.9 All of the cited authority for the award of attorney’s fees in this context actually applied to costs, not attorney’s fees.
As for the prevailing party, some decisional authority exists to support that a net judgment is not always the sole consideration in determining the prevailing party.10 But in the absence of an equitable principle on which to base the conclusion that the provider was the prevailing party in this case, we conclude that this rationale is inapplicable to the situation in the present case. If section 768.79, Florida Statutes applies, and in light of a zero verdict, the insurer is the prevailing party.11
In light of the foregoing, the attorney’s fee award must be set aside. Although we conclude that offers of judgment may be filed in small claims cases, the trial court never reached the question of the substantive validity of the offer; therefore, we remand the matter for further proceedings to determine the validity of the offer of judgment.12 If the trial court finds that it is valid, then it should conduct a hearing to determine the amount of attorney’s fees due the insurer, keeping in mind the trend begun in Progressive Exp. Ins. Co. v. Schultz,13 which said, regarding an exorbitant award for attorney’s fees, that “[n]o court is obliged to approve a judgment which so obviously offends even the most hardened appellate conscience and which is so obviously contrary to the manifest justice of the case; indeed, it is obliged not to.” Courts should take into account the amount in controversy in awarding fees. An award of attorney’s fees in the amount of $184,000 for a small claim does not reflect that this was done. Indeed, in light of the zero judgment, not only was any award in favor of the provider wrong, it appears to be punitive.
If, on the other hand, the court concludes that the offer is invalid, each party would bear its own fees. Where the dispute involves monies owed, if the judgment is $0, then the party receiving $0 cannot recover costs.14 (PENDINO and NIELSEN, JJ. Concur.)
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1Neither party had expressly invoked Rule 1.442 or any other rule of civil procedure.
2Metro Ford, Inc. v. Green, 724 So. 2d 706, 707 (Fla. 3d DCA 1999) [24 Fla. L. Weekly D279a] (small claims designed for speedy resolution of disputes over minor claims).
3U.S. Security Ins. Co. v. Cahuasqui, 760 So. 2d 1101 (Fla. 3d DCA 2000) [25 Fla. L. Weekly D1666f] Tran v. State Farm Mutual Automobile Ins. Co., 860 So. 2d 1000 (Fla. 1st DCA 2003); State Farm Mut Automobile Ins. Co. v. Nichols, 932 So. 2d 1067 (Fla 2006) [31 Fla. L. Weekly S358a] (Section 768.79, Florida Statutes applies to small claims).
4Tran v. State Farm Mutual Automobile Ins. Co., 939 So. 2d 96 (Fla. 2006).
5Art. V, § 2(a), Fla. Const.
6Section 25.371, Florida Statutes.
7See generally National Leasing Corp. v. Bombay Hotel, Inc., 159 So. 2d 111 (Fla. 3d DCA 1964)([i]n absence of provision in Rules of Civil Procedure governing proceedings in replevin, statutory provisions for procedure in replevin as were in existence at time of adoption of Rules continued to control form, content, procedure, and time for pleading in replevin actions).
8We note that §769.79(1) uses the term “files” which, when read in conjunction with subsection (3), cannot be what the legislature intended. Rather, the term should be “serves.” Applying the rules of statutory construction which require us to give effect to the legislature’s intent while not leading to an absurd result, it is clear to this court that the term that should have been used is “served,” so that that subsection (1) reads “. . .if a defendant serves an offer of judgment. . .”
9Danis Industries Corp. v. Ground Improvement Techniques. Inc., 645 So.2d 420 (Fla. 1994).
10See generally Prosperi v. Code, Inc., 626 So. 2d 1360 (Fla. 1993)([i]n considering whether to apply net judgment rule for purposes of award of attorney’s fees in mechanics’ lien foreclosure action, fact that claimant obtains net judgment is significant factor but need not control determination of who should be considered prevailing party).
11This assumes that the offer of judgment, which was for an amount of $251 excluding attorney’s fees, was a valid one in all other respects.
12The parties, address the validity of the offer; however, neither has made clear that the trial judge had an opportunity to do so. The trial judge made no finding as to the offer’s validity in the order, and, given that the trial judge determined that the offer was invalid on purely procedural grounds, it seems unlikely that she ever addressed its substantive aspects.
13948 So. 2d 1027 (Fla. 5th DCA 2007) [32 Fla. L. Weekly D548b]
14Tacher v. Mathews, 845 So. 2d 332 (Fla. 3d DCA 2003) [28 Fla. L. Weekly D1236a] ([a] zero-damages award constitutes a defense judgment for purposes of a cost award under statute providing that a party “recovering judgment” is entitled to costs).
