22 Fla. L. Weekly Supp. 516a
Online Reference: FLWSUPP 2205BERMInsurance — Personal injury protection — Attorney’s fees — Proposal for settlement — Good faith offer — Error to place burden on insurer to prove that its nominal offer for settlement was made in good faith, rather than requiring medical provider to prove that offer was not made in good faith — Where benefits were exhausted at time insurer made nominal offer, trial court abused its discretion by finding that there was lack of evidence that insurer had reasonable basis for offer
UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellant, v. VIRTUAL IMAGING SERVICES, INC., A/A/O RENE BERMUDEZ, Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 12-443 AP. L.T. Case No. 07-10052 SP 23. December 10, 2014. An Appeal from the County Court for Miami-Dade County, Sheldon R. Schwartz, Judge. Counsel: Douglas H. Stein, Seipp & Flick, LLP, for Appellant. Joseph R. Littman, Greenspan Law Firm, P.A., for Appellee.
(Before HIRSCH, DE LA O, and VERDE, JJ.)
(DE LA O, Judge.) Appellant, United Services Automobile Association (“USAA”), appeals the trial court’s Order denying its Motion for Entitlement to Attorney’s Fees and Costs.FACTUAL AND PROCEDURAL HISTORY
On January 7, 2006, Rene Bermudez was involved in a motor vehicle accident in which he sustained injuries. Mr. Bermudez was covered by a no-fault policy issued by USAA. Mr. Bermudez sought treatment and assigned his benefits to Virtual Imaging Services, Inc. (“Virtual Imaging”). Virtual Imaging provided an MRI for Mr. Bermudez and filed a claim with USAA. At the time that USAA received Virtual Imaging’s claim, $10,000.00 remained in available benefits under Mr. Bermudez’s policy. USAA denied payment of the bill because Virtual Imaging did not put a professional license number in box 31 of the claim form.
The $10,000.00 in PIP benefits under Mr. Bermudez’s policy was exhausted on July 6, 2006. Virtual Imaging sent a pre-suit demand letter to USAA prior to the exhaustion of benefits. USAA responded to the demand letter after July 6, 2006 by sending Virtual Imaging an Explanation of Reimbursement advising them that the PIP benefits had been exhausted. Approximately eight months later, Virtual Imaging filed its Complaint against USAA. About four months after the lawsuit was filed, USAA served a proposal for settlement offering Virtual Imaging the total sum of $1.00 as full and final settlement of all claims against USAA. Virtual Imaging did not accept the offer.
Subsequently, both parties filed motions for summary judgment. Virtual Imaging also filed a motion for leave to amend its complaint to allege that USAA had acted in bad faith. The trial court granted USAA’s Motion for Summary Judgment. The trial court entered a Final Judgment in favor of USAA. Although Virtual Imaging filed a Motion for Rehearing, the trial court denied its motion.1
USAA then filed a Motion for Entitlement to Attorney’s Fees and Costs based on the unaccepted proposal for settlement. The trial court denied USAA’s motion for entitlement to attorney’s fees. In denying USAA’s motion for entitlement to attorney’s fees, the trial court noted in its finding of facts that the proposal for settlement was not made in good faith. In its order, the trial court explained:
(1) that it was concerned with Virtual Imaging’s allegation that “USAA’s general pattern of behavior, as of the date that the subject proposal for settlement was made, P.A.,[sic] was to make $1.00 proposals for settlement in all cases — regardless of the degree of exposure to liability it faces.” (emphasis in original);
(2) “The Court finds a lack of any evidence in record which shows why the Defendant made its proposal for settlement in the amount of $1.00 — other than the statutory authority which requires than an amount must be placed — and that there is a lack of evidence of what went into the decision-making of the Defendant regarding the amount of the proposal for settlement.” (emphasis in original).
USAA timely appealed from the trial court’s denial of its motion for attorney’s fees.
STANDARD OF REVIEW
The standard of review on a finding that a proposal for settlement was not made in good faith is whether the trial court abused its discretion. Downs v. Coastal Sys. Int’l, Inc., 972 So. 2d 258 (Fla. 3d DCA 2008) [33 Fla. L. Weekly D107a].
ANALYSIS
USAA asserts that the trial court erred in ruling that its proposal for settlement was not made in good faith merely because it served a nominal offer of $1.00 in eighteen (18) other cases. Further, USAA contends that there was nothing in the record to suggest that its proposal for settlement was not made in good faith. Conversely, Virtual Imaging argues that the trial court acted within its discretion in determining that USAA’s $1.00 proposal for settlement was not made in good faith, and USAA’s motion for attorney’s fees was untimely.2 We agree the trial court erred in denying USAA’s motion for attorney’s fees and reverse for the reasons provided below.
Section 768.79(7)(b), Florida Statutes, gives a trial court discretion to disallow an award of costs and attorney’s fees if it determines that an offer was not made in good faith.3 “The determination of whether an offer was served in good faith turns entirely on whether the offeror had a reasonable foundation upon which to make the offer.” Hall v. Lexington Ins. Co., 895 So. 2d 1161, 1166 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D466a]; accord Talbott v. Am. Isuzu Motors, Inc., 934 So. 2d 643, 647 (Fla. 2d DCA 2006) [31 Fla. L. Weekly D2021b]. Reasonableness is determined at the time the offer is made. See Donovan Marine, Inc. v. Delmonico, 40 So. 3d 69, 71 (Fla. 4th DCA 2010) [35 Fla. L. Weekly D1495a] (finding that offeror’s belief of no liability based on the discovery and the posture of the case when the offer was extended was a reasonable basis for the proposal); Gurney v. State Farm Mut. Auto. Ins. Co., 889 So. 2d 97, 99-100 (Fla. 5th DCA 2004) [29 Fla. L. Weekly D2641a] (recognizing that there was reasonable basis for the proposal at the time the offer was made).
“The offeree bears the burden of providing that the offeror’s proposal was not made in good faith.” Segundo v. Reid, 20 So. 3d 933, 936-37 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D1995a]; Ryan v. Lobo de Gonzalez, 841 So. 2d 510, 521 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D573a] (“the burden is upon the offeree to prove that the offeror acted without good faith.”). Thus, Virtual Imaging, not USAA, bore the burden of proving that USAA’s proposal for settlement was not made in good faith.
Yet, the trial court denied USAA’s motion for attorney’s fees because it found a lack of evidence in the record which (1) demonstrated why USAA made its proposal for settlement in the amount of $1.00, and (2) explained what went into the decision-making of USAA regarding the amount of the proposal for settlement. Thus, the trial court incorrectly placed the burden on USAA to prove that its proposal for settlement was made in good faith.
“Offers are not suspect merely because they are nominal.” State Farm Mut. Auto. Ins. Co. v. Sharkey, 928 So. 2d 1263, 1264 (Fla. 4th DCA 2006) [31 Fla. L. Weekly D1445a]. A trial court should find that an offeror had a reasonable foundation to make a nominal offer where the offeror had a nominal exposure in the case. See Connell v. Floyd, 866 So. 2d 90, 94 (Fla. 1st DCA 2004) [29 Fla. L. Weekly D175b] (“[A] minimal offer can be made in good faith if the evidence demonstrates that, at the time it was made, the offeror had a reasonable basis to conclude that its exposure was nominal.”). To determine if the offeror had a reasonable basis to conclude that its exposure was nominal, the trial court should look at the subjective motivations of the offeror at the time an offer of judgment was made. Arrowood Indem. Co. v. Acosta, Inc., 58 So. 3d 286, 289 (Fla. 1st DCA 2011) [36 Fla. L. Weekly D355a]; Dep’t of Highway Safety & Motor Vehicles, Fl. Highway Patrol v. Weinstein, 747 So. 2d 1019, 1021 (Fla. 3d DCA 2000) [24 Fla. L. Weekly D2799b].
The record here reflects that at the time USAA made its proposal for settlement it had a reasonable basis to believe that its exposure was nominal based on an exhaustion of PIP benefits. Consequently, there was a reasonable basis to support USAA’s contention that it could not be liable to Virtual Imaging because the PIP benefits had been exhausted. As such, we find that the trial court abused its discretion in determining that that there was a lack of evidence in the record to show why USAA made its proposal for settlement in the amount of $1.00 and also ruling that there was a lack of evidence of what went into the decision-making of USAA regarding the amount of the proposal for settlement.4
CONCLUSION
We find that the trial court abused its discretion in denying costs and attorney’s fees to USAA. Therefore, this case is REVERSED and REMANDED to the trial court for proceedings consistent with this opinion. In addition, USAA filed a motion of attorney’s fees pursuant to Florida Rule of Appellate Procedure 9.400(b) and section 768.79(3), Florida Statutes. USAA’s motion is granted, contingent on meeting the requirements set forth in section 768.79(3), Florida Statutes. (HIRSCH and VERDE, JJ., concur.)
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1Virtual Imaging appealed the Final Judgment. Another Circuit Court Appellate Panel per curiam affirmed the final judgment without a written opinion. Thereafter, Virtual Imaging sought review by filing a Petition for Writ of Certiorari in the Third District Court of Appeal, which was summarily denied.
2We do not find merit in Virtual Imaging’s argument that USAA’s motion for entitlement to attorney’s fees was untimely. Virtual Imagining filed its Notice of Appeal based on the March 9, 2010 Final Judgment. In its Notice of Appeal, Virtual Imaging does not reference the order entered by the trial court on February 10, 2010. If the February 10, 2010 Order was the final appealable order, then the Virtual Imaging’s appeal would have been untimely. The record reflects that the Notice of Appeal references the March 9, 2010 Final Judgment and the order denying its motion for rehearing dated October 21, 2010.
3The statute provides: “[i]f a party is entitled to costs and fees pursuant to the provisions of this section, the court may, in its discretion, determine that an offer was not made in good faith. In such case, the court may disallow an award of costs and attorney’s fees.” § 768.79(7)(a), Fla. Stat. (2007); see also Florida Rule of Civil Procedure 1.442(h)(1): “[i]f a party is entitled to costs and fees pursuant to applicable Florida law, the court may, in its discretion, determine that a proposal was not made in good faith. In such case, the court may disallow an award of costs and attorneys’ fees.”
4Although the trial court expressed concern with Virtual Imaging’s allegation that USAA makes $1.00 proposals for settlement in all cases regardless of the degree of exposure to liability it faces, the record evidence does not demonstrate that Virtual Imaging met its burden in establishing that eighteen (18) proposals for settlement were a sufficient sample size of all of USAA’s cases to demonstrate that the offer was not made in good faith or was a general practice of behavior. Moreover, such raw data, stripped of its context, is unhelpful in determining whether USAA acted in good faith. Obviously, if USAA had no (or minimal) liability exposure in those 18 cases, its $1.00 offers were made in good faith.
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