13 Fla. L. Weekly Supp. 309a

Attorney’s fees — Insurance — Personal injury protection — Offer of judgment — Vagueness — No abuse of discretion in denying motion for attorney’s fees based on offer of judgment where offer was unclear as to which of multiple claims insurer was trying to settle — Good faith — Nominal offer — Even if offer was valid, no abuse of discretion in denying attorney’s fees where offer was not made in good faith — Offer was not made in good faith where insurer made nominal offer which did not bear reasonable relationship to amount of damages suffered and which was not realistic assessment of insurer’s liability based on patient brokering defense about which law was unsettled at time of offer — Appellate fees — Insured’s motion for appellate fees is denied where insured did not prevail below and insurer’s appeal was not frivolous or devoid of merit on facts and law

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. SUZANNE RING, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA 1 05-24. L.C. Case No. SCO 00-3545. January 27, 2006. Appeal from County Court for Orange County, C. Jeffery Arnold, Judge. Counsel: Donald J.

Masten and Guy S. DiMartino, Rissman, Weisberg, Barrett, Hurt, Donahue & McLain, P.A., Orlando, for Appellant. Peter A. Shapiro, Orlando, for Appellee.

(Before THORPE, MIHOK, and KEST, JJ.)

ORDER AFFIRMING THE LOWER COURT’S ORDER

(PER CURIAM.) Appellant State Farm Mutual Automobile Insurance Company (“State Farm”) seeks review of a Final Judgment entered by the lower court on March 8, 2005, denying its claim for entitlement to attorney’s fees and costs, in favor of Appellee Suzanne Ring (“Ring”). We have jurisdiction pursuant to Florida Rule of Appellate Procedure 9.030(c).

Factual and Procedural Background

On March 17, 1999, Ring was involved in an automobile accident in which she sustained personal injuries. At the time of the accident, Ring was covered under her automobile insurance policy with State Farm. As a result of the accident, Ring sought treatment for injuries with the following healthcare providers: (1) Florida Physicians Medical Group (“Florida Physicians”); (2) Physicians Injury Care Center (“Care Center”); (3) Primenet Radiology (“Primenet”); (4) Dr. Robert Roberts. On April 28, 2000, Ring filed suit against State Farm for breach of contract, alleging that State Farm did not properly pay or reimburse for necessary medical treatment, mileage expenses, wage loss, and prescription expenses under her Personal Injury Protection (“PIP”) benefits with State Farm.

On July 18, 2000, Ring filed her amended complaint. In the amended complaint, Ring alleged that State Farm failed to properly pay or reimburse the following: (1) $799.00 Primenet MRI bill; Florida Physicians for dates of service 3/18/99-3/23/99; Dr. Roberts for date of service 10/26/99; Care Center for dates of service 3/22/99-4/28/00; (2) 197 miles of travel expense; (3) lost wage claim; and (4) $37.78 in prescription expenses. On August 16, 2000, State Farm filed four Motions for Partial Summary Judgment with regard to: (1) mileage expenses and prescriptions; (2) the Care Center bills; (3) lost wages; and (4) the Florida Physicians bills. On August 18, 2000, State Farm also moved for a partial summary judgment with regard to Dr. Roberts’ bills.

On August 21, 2000, Ring filed a notice of voluntary dismissal with regard to Dr. Roberts’ bills and the Florida Physicians bills. Ring also filed a response opposing State Farm’s motions for partial summary judgment. In Ring’s response, she alleged that State Farm did not pay the bills within 30 days of receipt and the interest paid was not the correct amount. On August 22, 2000, State Farm served its proposal for settlement of $50.00, inclusive of attorney’s fees and costs. Ring did not accept the proposal. On August 29, 2000, Ring moved to strike State Farm’s Proposal for Settlement. On August 31, 2000, State Farm filed its amended answer and affirmative defenses to Ring’s amended complaint. In State Farm’s response, it alleged that the MRI bill received from Primenet was not properly payable because the Health Care Finance Administration Form (“HCFA”) form submitted by Primenet was incomplete.¹

On September 18, 2000, Ring moved for a competing motion for summary judgment with regard to lost wages, prescription and mileage reimbursement, and the Care Center bills. On November 7, 2000, the lower court heard arguments on Ring’s and State Farm’s competing summary judgments. After hearing on the matter, the lower court granted State Farm’s motions for partial summary judgment with regard to the prescription and mileage reimbursement, lost wages, and the Care Center bills. On April 2, 2001, State Farm filed two motions for summary judgment with regard to the Primenet radiology bill. On April 3, 2001, State Farm filed a cross-motion for final summary judgment on the Primenet bill. Ring also filed a competing motion for summary judgment with regard to the Primenet bill, alleging she was entitled to payment because she had paid the Primenet bill. A hearing was held on the matter on April 23, 2001. On October 10, 2002, the lower court orally issued its findings and ruled in favor of State Farm on the Primenet bill.² On May 6, 2003, the lower court entered an order granting State Farm’s motions for summary judgment and entered a final judgment in favor of State Farm.³

On May 23, 2003, State Farm moved for attorney’s fees and costs pursuant to section 57.105, Florida Statutes, and the offer of judgment. At the February 16, 2004 hearing, State Farm dismissed its claim for attorney’s fees under section 57.105, and proceeded solely on the offer of judgment. On March 8, 2005, thirteen months after the initial hearing, the lower court entered an order denying State Farm’s motion for attorney’s fees and costs. On April 7, 2005, State Farm filed the instant appeal.

Standard of Review

State Farm seeks to have this Court determine whether the lower court erred in denying its request for attorney’s fees pursuant to Florida Rules of Civil Procedure 1.442 and section 768.79, Florida Statutes. Whether an offer of settlement comports with rule 1.442 and section 768.79, Florida Statutes, is subject to a de novo standard of review. This is because a proposal for settlement is in the nature of a contract. See Hall v. Lexington Ins. Co., 895 So. 2d 1161, 1165 (Fla. 4th DCA 2005) (citation omitted). On the other hand, whether a demand for judgment was made in good faith for purposes of awarding attorney’s fees is subject to an abuse of discretion standard of review. Id at1165. This is because section 768.79 leaves to the trial court the decision of whether to award attorney’s fees based upon the facts of the case. Id. See also Nichols v. State Farm Mut., 851 So. 2d 742 (Fla. 5th DCA 2003); Fox v. McCaw Cellular Communications of Florida, Inc., 745 So. 2d 330 (Fla. 4th DCA 1998). The test for whether discretion has been abused is one of reasonableness, i.e., “[i]f reasonable men could differ as to the propriety of the action taken by the trial court, then the action is not unreasonable and there can be no finding of an abuse of discretion.” Canakaris v. Canakaris, 382 So. 2d 1197, 1203 (Fla. 1980).

Discussion

The issue on appeal is whether the lower court abused its discretion when it denied State Farm’s motion for entitlement to attorney’s fees. We do not find that the trial court abused its discretion in disallowing the award of attorney’s fees to State Farm.

I. Sufficiency of Offer

Florida Rule of Civil Procedure 1.442 governs settlement and provides that a settlement made pursuant to section 768.79, Florida Statutes, must “identify the claim or claims the proposal is attempting to resolve.” Fla. R. Civ. P. 1.442(c)(2)(B). In addition, since the statute and rule are in derogation of the common law rule that each party pays their own fees, they must be strictly construed. Hall, 895 So. 2d at 1165.

The proposal for settlement by State Farm reads in pertinent part:

Defendants, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (hereinafter “STATE FARM”), pursuant to Florida Statute § 768.79 and Florida Rule of Civil Procedure 1.442, hereby proposes a settlement between Plaintiff, SUZANNE RING, and Defendant, STATE FARM, in the amount of Fifty and No/100 Dollars ($50.00), said amount includes taxable costs and attorney’s fees accrued to date.

Here, the proposal for settlement is unclear as to which claims State Farm was trying to settle with Ring. See Nichols, 851 So. 2d at 746 (stating that a proposal for settlement should be as specific as possible, leaving no ambiguities so the offeree can fully evaluate its terms and conditions). At the time State Farm made the proposal, Ring had multiple claims pending which included the Primenet bill, the mileage and prescription claim, wage loss claim, and the Care Center bills. State Farm’s proposal merely suggests a settlement, and does not state whether the offer encompasses all the claims raised in the complaint. State Farm cites to MGR Equip. Corp. v. Wilson Ice Enterprises, Inc., 731 So. 2d 1262 (Fla. 1999) for the proposition that offers should be read as encompassing all damages which might be awarded in the final judgment. However, the MGR decision was based on the 1995 version of the Florida Rules of Civil Procedure, which did not require that proposal identify the claim or claims it is attempting to resolve. Id. at1264 n.2. Even if there was a finding that State Farm’s proposal was valid, we do not share State Farm’s contention that the proposal was made in good faith under the facts of the case.

II. Good Faith Requirement

Florida law is consistent that the court can only award attorney’s fees and costs pursuant to either a contract or statute. Paz v. Hernandez, 654 So. 2d 1243, 1244 (Fla. 3d DCA 1995). The offer of judgment statute creates a right to reasonable attorney’s fees and costs. Section 768.79(1), Florida Statutes, provides, in pertinent part:

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. . . .

§ 768.79(1), Fla. Stat. (2000). However, the lower court may, in its discretion, deny an award of attorney’s fees and costs under section 768.79 if it determines that the offer was not made in good faith by the offeror. § 768.79(7)(a), Fla. Stat. (2000); Allstate Ins. Co. v. Manasse, 715 So. 2d 1079 (Fla. 4th DCA 1998). See also Camejo v. Smith, 774 So. 2d 28 (Fla. 2d DCA 2000) (stating that the lower court can disallow an award of fees and costs if it determines the proposal was not made in good faith). The determination of whether an offer was served in good faith depends on whether the offeror had a reasonable foundation upon which to make the offer, i.e., whether the offer bears a reasonable relationship to the damages and liability. Gurney v. State Farm Mut. Auto., 889 So. 2d 97 (Fla. 5th DCA 2004); Disney v. Vaughen, 804 So. 2d 581 (Fla. 5th DCA 2002). Moreover, the issue of good faith in making an offer of judgment is determined solely by the subjective motivations and beliefs of the offeror, not the reactions of the offeree. Wagner v. Brandeberry, 761 So. 2d 443 (Fla. 2d DCA 2000).

State Farm contends that its proposal was made in good faith because it had determined that the “brokering” of MRI service was not compensable under Florida law. In addition, State Farm asserts that it had a reasonable basis to conclude its exposure in the case was nominal because Ring breached her policy with State Farm by paying Primenet directly. In support of its contention, State Farm cites to Nants v. Griffin, 783 So. 2d 363 (Fla. 5th DCA 2001), State Farm Mut. Auto. Ins. v. Marko, 695 So. 2d 874 (Fla. 2d DCA 1997), and Peoples Gas Sys. v. Acme Gas Corp., 689 So. 2d 292 (Fla. 3d DCA 1997), for the proposition that a nominal offer can be made in good faith if the evidence shows that the offeror had a reasonable basis upon which to conclude that its exposure was nominal at the time the offer was made. However, the facts in those cases cited by State Farm in support of its position are dissimilar to the facts in this case.

In Nants, the jury rendered a verdict in favor of Griffin after concluding she was not the legal cause of Nants’ injuries. Nants, 783 So. 2d at 364. Thereafter, Griffin moved for costs and fees based on the offer of judgment of $101.00 during the litigation. Id. At the fee hearing, the trial court found Griffin’s offer of judgment was made in good faith and awarded attorney’s fees to Griffin. Id. The Fifth District affirmed the trial court’s award and found the evidence supported the trial court’s decision that the offer was made in good faith. Id. in reaching its decision, the Fifth District noted that Griffin’s offer of judgment was made approximately two years after suit was filed, after discovery had been taken, and IME’s had been obtained. Id. at 365. Moreover, the Fifth District found that there was questionable liability prior to the offer of judgment since the information available to Griffin showed no reported injuries at the scene, and the $2,000.00 in unpaid medical bills were the potential responsibility of State Farm, not Griffin. Id.

Unlike Nants, the facts are uncontroverted that Ring suffered injuries as a result of the automobile accident on March 17, 1999. In the instant case, State Farm made the offer of judgment just four months after the suit was filed. During the hearing, attorney for Ring stated that at the time State Farm made the offer, depositions had not been taken and discovery had not been completed. Attorney for Ring also indicated that the parties had only exchanged limited written discovery when State Farm served its proposal on August 22, 2000. This was not disputed by State Farm’s attorney. More importantly, at the time State Farm made the offer, there was an outstanding MRI bill of $799.00 from Primenet that State Farm was potentially liable for. Thus, at the time State Farm made its proposal, there was no reasonable basis to believe that State Farm’s exposure in the case was nominal.

Next, in Marko, the plaintiff, Marko, filed suit against the tortfeasor who had liability insurance coverage of $50,000.00. Marko, 695 So. 2d at 875. Marko, who had an additional $25,000.00 in uninsured/underinsured motorist coverage with State Farm, elected to join State Farm as a defendant in the suit. Id. State Farm made an offer of judgment of $1.00 which was rejected by Marko. Id. The case went to trial and the jury returned a verdict for $30,000.00 in favor of Marko. Id. A separate judgment was entered in favor of State Farm, finding no damages were assessed against State Farm. Id. State Farm then sought its attorney’s fees and costs based on the offer of judgment pursuant to section 768.79, Florida Statutes. Id. The lower court concluded that section 768.79 did not apply and denied State Farm’s motion for costs and fees and State Farm appealed. Id. The Second District rejected Marko’s argument that since the verdict in the amount of $30,000.00 exceeded State Farm’s offer of $1.00, the offer of judgment under section 768.79 was not viable. Id. at 786. In reversing the trial court’s order, the Second District ruled that the $1.00 offer of judgment by State Farm was made in good faith since State Farm believed that it had no liability and should not be part of the litigation to begin with. Id. In addition, the Second District held that State Farm as the underinsured liability carrier, could make an offer of judgment under section 768.79 independent of any offer by the tortfeasor. Id.

Contrary to Marko, StateFarm was potentially liable for the Primenet bill in the amount of $799.00 at the time of the offer. Of particular importance in the instant case is the fact that State Farm did not file its motions for summary judgment with regard to the Primenet bill until April 2, 2001, eight months after it had filed the offer of judgment. While the lower court ultimately found in favor of State Farm on the Primenet bill, the lower court did not issue a ruling on the matter until October 10, 2002, approximately eighteen months after State Farm filed its motions for summary judgment. The law as it existed at the time of the offer was in a state of flux on whether Primenet, as a broker, was entitled to be paid for its services. State Farm’s argument that the patient brokering/fee splitting statute found under section 817.505, Florida Statutes, was already in place prior to Ring filing suit ignores the fact that the case law decisions at the time were unsettled on how “brokering” of medical services applies to section 627.736 of the PIP statute. See, e.g., Patricia Del Valle v. State Farm Mut. Auto. Ins. Co., 7 Fla. L. Weekly Supp. 688a (Fla. Broward Cty Ct. 2000); Nuwave Diagnostics v. State Farm Mut. Auto. Ins. Co., 6 Fla. L. Weekly Supp. 522a (Fla. Broward Cty. Ct. 1999).

Moreover, the 2000 version of section 627.736, Florida Statutes, which is applicable to this case, did not address whether an insurer or insured is required to pay a claim made by a broker such as Primenet. See § 627.736(5), Fla. Stat. (2000). The law was unsettled until 2001 when the legislature added a provision in chapter 627, Florida Statutes, which specifically provides that an insurer or insured is not required to pay a claim made by a broker or by a person making a claim on behalf of a broker. See § 627.736(5)(b)(1), Fla. Stat. (2001). Under the facts of the case, the $50.00 offer by State Farm did not bear a reasonable relationship to the amount of damages suffered, nor was it a realistic assessment of State Farm’s liability as the law existed in August of 2000. See Event Services America, Inc. v. Ragusa, 30 Fla. L. Weekly D1913 (Fla. 3d DCA Aug. 10, 2005) (finding the nominal offer was made in bad faith where there was sufficient basis at the time of offer to suggest that offeror would reasonably face liability). Thus, State Farm’s contention that it believed it had no liability in this case at the time of the offer is simply unsupported by the evidence in the record.

Lastly, in Peoples Gas, the appellant, Peoples, filed a third party action for indemnity and contribution against members of Gas Central seeking payment for a settlement it had offered to an injured party. Peoples Gas, 689 So. 2d at 295. Two members of Gas Central, Metrogas and Siegal Gas (“offerors”), each filed offers of judgment for $2,5000.00 in the third-party action. Id at298. Peoples refused either of the offers of judgment. Id. at300. Peoples argued that its rejection of the offers was reasonable because the combined offers by the offerors were only a fraction of the $3.5 million settlement amount it sought in its third-party complaint, and thus, the proposals for settlement were not made in good faith. Id. Third District rejected Peoples’ argument and affirmed the trial court’s order awarding attorney’s fees. Id. The Third District found the record indicated Peoples was the entity who responded to the consumer report of a gas leak on its personal telephone line. Id. at 299. Moreover, the Third District found the service call to Peoples’ personal telephone number was initiated as a result of Peoples’ advertisement in the yellow pages. Id. Further, the Third District noted that members of Gas Central did not have any involvement in the advertisement or in the incident which resulted in injuries to the party in the case. Id. Therefore, the Third District held that where the record clearly showed the offerors had no exposure in the case, the offerors had a reasonable basis to make nominal offers to Peoples. Id. at 300.

Unlike members of Gas Central in Peoples Gas, Ring contracted with State Farm to pay for PIP benefits in the event she is involved in an automobile accident. While State Farm may have obtained information supporting its motions for partial summary judgment regarding some of Ring’s pending claims when it filed its offer of judgment, there was still a remaining claim on the Primenet bill which was potentially the responsibility of State Farm.

State Farm also argues that the trial court denied its motion for attorney’s fees and costs because of the trial court’s personal view on the rule of law concerning proposals for settlement. In the instant case, the lower court did not articulate, discuss or recite its findings regarding the facts and circumstances surrounding State Farm’s order. However, there is no statutory requirement that the court state specific findings to justify its use of discretion. See Ragusa, 30 Fla. L. Weekly at D1913 (stating whether a proposal was made ingood faith or not is a matter of judicial discretion to be resolved by the trial court). (citation omitted). Contrary to State Farm’s assertion, the record demonstrates that the trial court heard arguments from counsel for State Farm and Ring on the issue of good faith and carefully examined the evidence before ruling on the matter. As stated by the trial court at the end of the fee hearing, the trial court would review the entire file to “see what actually did exist on August 22nd of 2000” before making its decision. Moreover, and more importantly, the record supports the trial court’s decision.

Accordingly, under the facts of the instant case, we find that the trial court did not abuse its discretion in denying State Farm’s entitlement to fees.

Appellate Attorney’s Fees

Ring has timely filed a motion seeking an award of appellate attorney’s fees. Ring has requested an award of appellate attorney’s fees pursuant to sections 627.428 and 57.105, Florida Statutes, and Florida Rule of Appellate Procedure 9.410. Because Ring was not the prevailing party in the summary judgment below, section 627.428 is inapplicable. Also, unlike State Farm Mut. Auto. Ins. Co. v. Motion X-Ray, 12 Fla. L. Weekly Supp. 704a (Fla. 9th Cir. Ct. 2005), there is no finding that the appeal filed by State Farm is frivolous or devoid of merit both on the facts and the law under section 57.105, and Florida Rule of Appellate Procedure 9.410. Therefore, Ring’s motion for appellate attorney’s fee is denied.

Based upon the foregoing, it is hereby ORDERED AND ADJUDGED that the lower court’s final judgment entered on March 8, 2005 is AFFIRMED.

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¹Ring, however, felt that the HCFA was fine and paid the total amount due to Primenet on April 25, 2000 to preserve her credit rating.

²In its ruling, the trial court found Primenet did not render the service to Ring or interpret the results. Rather, Primenet only arranged to have the test done with Open MRI and then billed State Farm in the amount of $799.00. Primenet would then pay Open MRI a negotiated fee of $400.00. The lower court held that since Primenet did not actually render the MRI service, it was not entitled to the payment of PIP benefits from State Farm.

³The order indicates it was signed by the lower court on May 6, 2002, which was of course a clerical error. The correct year it was signed was 2003, not 2002.

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