6 Fla. L. Weekly Supp. 777a
Insurance — Offer of settlement — Attorney’s fees — Florida Statutes, section 627.428 which exclusively grants an award of attorney’s fees to successful insureds who are forced to sue their insurer does not directly conflict with section 768.79 which gives defendant insurers opportunity to be awarded their attorney’s fees if their offer of judgment, which must be made in good faith, is rejected and resulting award is less the 75% of offer of settlement if plaintiff prevails — Motion to strike insurer’s proposal for settlement denied — If the insured prevails in any amount, insured, despite a less favorable award than offer of judgment, is nevertheless entitled to fees and costs incurred prior to time when offer of judgment was made, which will need to be compared to insurer’s entitlement and, if necessary, appropriate set-offs made
MACALINE DADAILLE, Plaintiff, v. ALLSTATE INDEMNITY CO., Defendant. County Court of the 11th Judicial Circuit in and for Miami-Dade County. Case No. 98-2085 SP 05. September 15, 1999. Roger A. Silver, Judge.
ORDER DENYING PLAINTIFF’S MOTION TO STRIKE DEFENDANT’S PROPOSAL FOR SETTLEMENT
THIS MATTER is before the Court on Plaintiff’s Motion to Strike Defendant’s Proposal for Settlement. The Court, having considered the Memoranda of Law submitted by the parties, having heard the argument of counsel, and being otherwise fully informed in the premises, decides as follows:
BACKGROUND
The Court notes that the Defendant, on July 6, 1999, filed its Notice of Filing the Proposal for Settlement (the actual offer was made on July 2, 1999, for $100) pursuant to Fla. Stat. § 768.79 and Fla. R. Civ. P. 1.442. In response, on July 8, 1999, Plaintiff filed her Motion to Strike Allstate’s Proposal for Settlement arguing that Allstate’s offer of $100 for settlement contravenes Fla. Stat. § 627.428 (award of attorney’s fees to plaintiff after rendition of judgment adverse to insurer). Subsequently, Allstate submitted its Opposition to Plaintiff’s Motion to Strike arguing that the Fifth District in Weesner v. United Service Auto. Assoc., 711 So. 2d 1192 (Fla. 5th DCA 1998) ruled that § 627.428 did not preclude an award of attorney’s fees to an insurer pursuant to § 768.79. Accordingly, the question for the Court’s consideration is whether Fla. Stat. § 768.79 conflicts with Fla. Stat. § 627.428 so as to preclude an award of attorney’s fees to an insurer under the offer of judgment statute. This question remains one of first impression because no appellate court has directly addressed the issue.
CONCLUSIONS OF LAW
Given the above posture, the Court is cognizant that the interesting problem presented by the case at bar is that Fla. Stat. § 627.428 exclusively grants an award of attorney’s fees to successful plaintiffs who are forced to sue their insurer. However, Fla. Stat. § 768.79 gives defendant insurers the opportunity to be awarded their attorney’s fees if their offer of judgment (which must be made in good faith) is rejected. Then, even if the plaintiff prevails, if the resulting award is less than 75% of the offer of settlement, the insurer may be awarded fees. Given the absence of any clearly binding precedent (despite Defendant’s argument to the contrary), this Court, after analyzing the competing lines of reasoning, concludes that Plaintiff’s Motion to Strike is DENIED because no direct conflict exists between the two statutes. This conclusion is reached as a result of the following analysis.
The Florida Supreme Court has noted that § 627.428
is a one-way street offering the potential for attorneys’ fees only to the insured or beneficiary. The apparent public policy underlying this aspect of the statute is to discourage insurers from contesting valid claims and to reimburse successful policy holders forced to sue to enforce their policies. Danis Industries Corp. v. Ground Improvement Techniques, Inc., 645 So. 2d 420, 421 (Fla. 1994).
The purpose of § 627.428 is “to encourage early and fair settlement of valid claims.” Scottsdale Insurance Co. v. DeSalvo, 24 Fla. L. Weekly S422 (Fla. September 9, 1999). However, when a good faith offer of judgment is made, a party stops the running of further costs and attorney’s fees under this rule requiring the party who obtains a final judgment that is not more favorable than settlement offered to pay costs incurred after the offer is made and rejected. Hernandez v. Travelers Ins. Co., 331 So. 2d 329 (Fla. 3d DCA 1976). Thus, despite § 627.428, it is well-settled law that if a defendant files a good faith 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 after the offer is made if the judgement recovered by the plaintiff is not more favorable than the offer or if the judgment is one of no liability. Peoples Gas System, Inc. v. Acme Gas Corp., 689 So. 2d 292 (Fla. 3d DCA 1997).
The public policy underlying the offer of judgment statute is also to promote early elimination of litigation by encouraging realistic views of claims made. Hartford Cas. Ins. Co. v. Silverman, 689 So. 2d 346, 348 (Fla. 3d DCA 1997); McMullen Oil Co., Inc. v. ISS Intern. Service System, Inc., 698 So. 2d 372 (Fla. 2d DCA 1997). Consequently, it is apparent that the spirit of the offer of judgment statute is to encourage and promote the early resolution of law suits by settlement and to discourage frivolous law suits while accommodating the interest of judicial economy and the avoidance of the unnecessary dissipation of the court’s resources and ultimately to reduce the costs of litigation. It also serves as a penalty for parties who fail to act reasonably and in good faith in settling lawsuits. See Goode v. Udhwani, 648 So. 2d 247, 248 (Fla. 4th DCA 1994).
Thus, the problem, as previously noted, is in reconciling the two statutes (and their separate but equally valid and important underlying policies). Pursuant to the offer of judgment statute, the plain and ordinary meaning of the words making attorney fees available “in any civil action for damages” seems to cover any claim by a party in a civil action in which money damages are sought from another party to the action. Beyel Bros. Crane and Rigging Co. of South Florida, Inc. v. Ace Transp., Inc., 664 So. 2d 62 (Fla. 4th DCA 1995) (recovery not limited to negligence actions); see also Oruga Corp. v. AT&T Wireless of Fla., 712 So.2d 1141 (Fla. 3d DCA 1998) (offer of judgment statute applies to all civil actions including class actions and court could not by “judicial fiat” exclude any type of case from its dictates).
This Court also notes that the various courts (none of which have produced binding precedent) which have faced this precise issue are divided over its resolution. For example, the Defendant cites this Court to Weesner v. United Service Auto. Assoc., 711 So. 2d 1192, 1194 (Fla. 5th DCA 1998) for the proposition that § 627.428 does not preclude an award of attorney’s fees to an insurer pursuant to § 768.79. However, that precise conclusion was not the holding in Weesner and the court only mentioned that issue in the last paragraph of its opinion as follows:
[w]e also reject [appellants’] arguments that section 627.428, Florida Statutes, precludes attorney’s fees to an insurance carrier under section 768.79, Florida Statutes.
Therefore, while the Fifth District has undeniably made a strong and persuasive statement in favor of the instant Defendant’s argument, this Court is not actually bound by Weesner.
Of a similar tenor, but not as persuasive, the Fourth District held in Allstate Ins. Co. v. Silow, 714 So. 2d 647 (Fla. 4th DCA 1998) that the insurer, who in good faith offered $100 to settle a suit brought by its uninsured motorist (“UM”) insured, was entitled to attorney’s fees. However, this holding rests squarely on the fact that Allstate’s liability in that case, as the UM insurer, did not actually begin unless and until the judgment recovered exceeded the policy limits of the tortfeasor’s primary insurer. Thus, in Silow, because Silow chose to join Allstate (his own UM insurer) in the event the judgment he obtained exceeded the tortfeasor’s policy — a gamble on his part — when the judgment did not exceed the policy, Silow had to pay the price of gambling and losing. Allstate was found to have appropriately investigated the case through discovery; consequently, it was entitled to make the good faith offer that it did and to then reap the benefits of making the offer by having its fees and costs paid. While this case is distinguishable from the facts at bar, it nevertheless provides an interesting analogous example.
An intriguing case from the Third District can also be analogized to support the conclusion that § 627.428 does not preclude an award of fees and costs pursuant to § 768.79. In Westinghouse Electric Corp. v. Shafer & Miller, Inc., 515 So. 2d 248 (Fla. 3d DCA 1987), the Third District Court holds in a very short opinion that because the defendant had tendered an offer of judgment that was greater than the judgment that was subsequently obtained, the plaintiff was not entitled to attorney’s fees as a prevailing party under § 627.428. Although the opinion is very scant with few details or legal analysis; it is a clear example of a situation in which the offer of judgment was not trumped by § 627.428.
As the final means of supporting its argument, Allstate has submitted to the Court several decisions from other courts where § 627.428 has been held to not bar a recovery under §768.79. For example, in Beck v. State Farm Fire and Casualty Co., No. 93-4795 (Fla. 13th Cir. Ct. App. Div. May 11, 1994), the court, in a personal injury protection (“PIP”) case, held that because State Farm had offered $3500 and the subsequent verdict was only for $1065, Beck was not the prevailing party and hence she was not entitled to recover her fees pursuant to § 627.428. In like fashion, in Devaux v. State Farm Mut. Auto. Ins. Co., 6 Fla. L. W. Supp.512 (Fla. 13th Cir., Cty. Ct. April 19, 1999), the county court was bound by Beck, supra, and finding Weesner, supra, authoritative, granted State Farm’s motion for fees and costs. Similarly, in Cayirci v. U.S. Security Ins. Co., 5 Fla. L. Weekly Supp. 846 (Fla. 17th Cir., Cty. Ct. August 24, 1998), the county court held that despite plaintiff’s argument which supported the proposition that in PIP cases an insurer could not obtain fees and costs because the court was compelled to follow the Fifth District’s holding in Weesner, supra, and thus denied plaintiff’s motion to strike defendant’s settlement proposal. The court also certified the following question as being one of great public importance.
[w]hether an insurer can make an offer of judgment (FS § 768.79) and recover attorney’s fees against an insured in a first-party PIP suit.1
The issue of whether conflict exists between § 768.79 and § 627.428 was recently addressed in the case of Silva v. U.S. Security Ins. Co., 734 So. 2d 429 (Fla. 3d DCA 1999) where the Third District concluded that given the procedural posture of the case, it was unable to reach the merits of the question. Accordingly, the court let stand a county court award of attorney’s fees to an insurer pursuant to the offer of judgment statute. While Silva did not expressly address the issue of whether § 768.79 conflicts with § 627.428, the court held that where Silva failed to raise the issue now posed in this appeal during the prior appeal, the court’s prior order and mandate awarding the insurer its fees pursuant to the offer of judgment statute became the law of the case so as to foreclose any relitigation of the issue on remand.
Consonant with the holdings above, the final discernable case with sound reasoning is Smith v. State Farm, 5 Fla. L. Weekly Supp. 557 (Fla. 13th Cir., Cty.Ct. April 2, 1998) where the court in a PIP case found that the offer of judgment statute embodied a clear legislative purpose to encourage
the early elimination of litigation by encouraging realistic views of the claims made. (citation omitted). Had the legislature intended to carve out an exception to the offer of judgment statute to exclude cases between an insured and an insurer, it could have done so. Florida courts have not hesitated to award attorneys fees to an insurer against an insured under the offer of judgment statute. E.g., State Farm Mut. Auto Ins. Co. v. Marker, 695 So. 2d 874 (Fla. 2d DCA 1997).
Finally, Allstate has attached two form orders from two county court cases (one here in Miami-Dade County, the other from Broward County) wherein the courts have denied the plaintiffs’ motions to strike defendants’ offers of judgments.
Despite all of this seemingly favorable persuasive precedent, other courts that have considered this precise issue have reached the opposite conclusion. For example, in Holcomb v. Fortune Ins. Co., 4 Fla. L. Weekly Supp. 479 (Fla. 11th Cir. Cty. Ct. July 26, 1996), the county court held that in a PIP suit, an award of attorney’s fees under § 768.79 is unavailable to an insurer because § 768.79 directly conflicts with § 627.428 which allows an award of fees only to an insured in PIP cases. Consequently, the county court struck the defendant’s offer of judgment. In that case, the court reasoned that the proper resolution to this dilemma lay in § 768.71(3) which provides that
[i]f a provision of this part2 is in conflict with any other provision of the Florida Statutes, such other provision shall apply.
The county court thus determined that reading the conflicting statutes in pari materia, the ineluctable conclusion was that if given effect, § 768.79 would vitiate § 627.428 and applying § 768.71(3), the court resolved the conflict by prohibiting the application of § 768.79 to § 627.428 cases. Additionally, like the Broward county court in Cayirci, supra, Judge Linda Singer Stein certified the following question as of great public importance:
[c]an an insurer make an Offer of Judgment and recover attorney’s fees against an insured in a first-party PIP suit?3
Employing similar reasoning, and citing with approval to Holcomb, supra, in Zeverino v. State Farm, 5 Fla. L. Weekly Supp. 631 (Fla. 18th Cir., Cty. Ct. March 31, 1998), the county court, also using the provision of § 768.71(3), found that because the statutes were in conflict, § 768.71(3) provided a means of disallowing the application of § 768.79 to § 627.428. Similarly, in Cruz & Cruz v. Allstate Ins. Co., 5 Fla. L. Weekly Supp. 303 (Fla. 11th Cir. Ct. November 12, 1997), Judge Murray Goldman, in a matter in the circuit court relied on Holcomb and granted plaintiff’s motion to strike defendant’s offer of judgment.
A final prong of the analysis advanced by the county court in Ramirez v. U.S. Security Ins. Co., 6 Fla. L. Weekly Supp. 179 (Fla. 11th Cir., Cty. Ct. November 18, 1998) involves the timing of the amendments of the two statutes and specific versus general language. Judge Bonnie Rippingille reasoned that although the offer of judgment statute was amended last in time (and hence should control), she found that that statute was a general statute. In contrast, the PIP statute is a specific statute and hence under the rules of statutory construction, the court should consider the more specific statute as an exception to the more comprehensive statute. Thus, the court distinguished Weesner, finding that § 768.79 was not applicable to § 627.428 cases especially, as noted previously, because § 768.71(3) provided a means of avoiding any conflict. This decision was followed by Judges Shelley Kravitz and Linda Dakis who adopted Judge Rippingille’s analysis in Santiesteban v. Fortune Ins. Co., 6 Fla. L. Weekly Supp. 291 (Fla. 11th Cir., Cty. Ct. February 4, 1999) and Cahuasqui v. U.S. Security Ins. Co., 6 Fla. L. Weekly Supp. 180 (Fla. 11th Cir., Cty. Ct. November 19, 1998)4 respectively.
While the preceding reasoning is not without some merit, it seems, with all due respect, that the more correct analysis, especially in light of the Fifth District’s opinion in Weesner, and the Third District’s unmistakably clear language in Oruga Corp. v. AT&T Wireless of Fla., supra, (offer of judgment statute applies to all civil actions including class actions and court could not by “judicial fiat” exclude any type of case from its dictates), is to conclude that there is no conflict between the two statutes. And ultimately, for the sake of clarity, in the scenario above, if the insured prevails in any amount, that insured, despite a less favorable award than the offer of judgment is nevertheless entitled to fees and costs incurred prior to the time when the offer of judgment was made. This amount will then need to be compared to the insurer’s entitlement (as a result of the offer of judgment that exceeds the insured’s award) and, if necessary, the appropriate set-offs made. Supporting this conclusion, the Florida Supreme Court has very recently noted, “the failure to recover more than an offer of settlement does not mean that an insured that is awarded some recovery is precluded from being awarded any portion of their fees and costs.” Scottsdale Insurance Co. v. DeSalvo, 24 Fla. L. Weekly S422 (Fla. September 9, 1999).5
Based on the foregoing, Plaintiff’s Motion to Strike is DENIED.
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1To date, that question has not been answered.
2Ostensibly, “part” refers to the location of this chapter in the negligence statutes — specifically the portion dealing with “damages” and also containing the offer of judgment section, 768.79.
3As in Cayirci, this question has not yet been answered because in J. Goldman’s order in the matter of Cruz v. Allstate Ins. Co., supra, the court cites to Holcomb and points out that the matter was taken to the Third District (App. Case No. 96-2564) but was dismissed without a consideration on the merits.
4Judge Dakis also certified the question as being one of great public importance.
5It should be noted that the Florida Supreme Court in this case, while not asked the specific question which is the subject of this order, nevertheless in rendering its opinion did not note that there was any inherent conflict between the two statutes. This can only serve to buttress this Court’s finding of no conflict.
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