Proposal for Settlement, an Elimination of the "Good Faith" Requirement?

A 2017 case decided in the Third District illustrates one of the (numerous) nuances of offers of judgment and proposals for settlement pursuant to Florida Statutes § 768.79 and Florida Rule of Civil Procedure 1.442.  Case law has traditionally referred to a requirement that these procedural mechanisms for triggering liability for attorneys' fees must be made in "good faith" with respect to the amount offered.   There have been numerous cases exploring the issue of whether offers are made in good faith and whether certain offer amounts can lead to a finding that the offer was not made in good faith.  

As the Court notes in its opinion UNITED AUTOMOBILE INSURANCE COMPANY, Appellant, v. PARTNERS IN HEALTH CHIROPRACTIC CENTER (24 Fla. L. Weekly Supp. 785a), "[t]he rule is that 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.” E.g., State Farm Mut. Auto. Ins. Co. v. Sharkey928 So. 2d 1263, 1264 (Fla. 4th DCA 2006) [31 Fla. L. Weekly D1445a] (citations and quotation marks omitted)."  However, the important part of that ruling could be argued to be that the party could reasonably believe "its exposure" was nominal.  The instant case seems to expand that ruling. 

In this action, the defendant proposed settlement for a total amount of $500.  The defendant argued after the fact that the offer was made in good faith since the insurance company believed the whole time that it was very likely to win the case.  Having litigated many dozens of cases, this blog's author has yet to meet a party that did not feel it was right and at least fairly likely to win the case.  However, the Court noted that, since the defendant was consistent (or perhaps persistent) in its belief that it was, indeed, correct and would win at trial, the offer was made in good faith. 

What was argued--and ultimately dismissed by the Court--was that the defendant's exposure could never really have been anywhere close to $500. Since there were legal issues being decided on both a helpful and hurtful side of the fence for defendants during the action, the insurer would eventually be proven right or wrong.  Although the chances of being proven right may have been on the side of the insurer, leading to its confidence in its position, its exposure if incorrect would have always been far greater than the $500 offered.  Therefore, the rule of assessing reasonable expectations of "exposure" could be argued to have melded into the concept of self-confidence in the likelihood of success.  Based on this ruling, any party who ultimately prevails will need to show only that an offer was made and that the party was very sure throughout the case that it would win and the proposal is likely to be upheld (especially so since it is very difficult to argue that an expectation of winning was unreasonable when a party does indeed win down the road).  

If you have questions about your case or the complex world of offers of judgment or proposals for settlement, contact one of our litigation attorneys today.