Nominal Proposals for Settlement are Held Valid Where the Offeror Has a Reasonable Basis to Believe that Exposure to Liability is Minimal
By Karma Hall, Esq.
On May 31, 2017, Florida's 1st DCA was asked to resolved alleged inconsistencies in prior holdings involving the question of whether a nominal proposal for settlement offer can be made in good faith. In Taylor Eng'g, Inc. v. Dickerson Fla., Inc., Case No. 1D15-4782 (Fla. 1st DCA May 31, 2017), the Appellee, Dickerson, argued that the Taylor's proposal for settlement was a nominal offer that was not made in good faith, and for this reason the trial court should disallow an award of costs and attorneys' fees. To support his argument, Dickerson pointed to § 768.79(7)(a), Fla. Stat., which provides:
If 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.
The 1st DCA disagreed it made inconsistent rulings concerning the standard in determining whether a nominal offer is made in good faith, stating:
While we find that the case law is not inconsistent, we reiterate that, for purposes of the offer of judgment statute, a nominal offer is made in good faith where the offeror has a reasonable basis to believe that its exposure to liability is minimal.
The court then discussed the apparent inconsistency in prior holdings:
The apparent inconsistency in the good-faith standard involves Arrowood Indemnity Co. v. Acosta, Inc., 58 So. 3d 286 (Fla. 1st DCA 2011), and General Mechanical Corp. v. Williams, 103 So. 3d 974 (Fla. 1st DCA 2012). The Arrowood court noted "[i]n the context of a nominal offer of judgment, this court has held that where the offeror has a reasonable basis to believe that exposure to liability is minimal, a nominal offer is appropriate." However, in the same context, we held in General Mechanical that "a reasonable basis [for a nominal offer] exists only where the undisputed record strongly indicates that the defendant had no exposure."Emphasis added. The court acknowledged:
At first glance, it appears that the General Mechanical court would disqualify a nominal offer from the offer of judgment statute unless the defendant had "no exposure" at all to liability, whereas the Arrowood court would permit a nominal offer under the statute as long as the defendant's exposure to liability could be characterized as "minimal." However, a review of the relevant case law reveals no such inconsistency.
The Court explained that the standard applied in Arrowood is the proper standard that has been used consistency in other cases. The apparently different standard in General Mechanical stems from Event Services America, Inc., v. Ragusa, 917 So. 2d 882 (Fla. 3d DCA 2005). Yet, the court concluded that Event Services does not necessarily set a different standard. In Event Services, Florida's 3d DCA held:
A reasonable basis for a nominal offer exists only where "the undisputed record strongly indicate[s] that [the defendant] had no exposure" in the case. Therefore, a nominal offer should be stricken unless the offeror had a reasonable basis to conclude that its exposure was nominal.
This was considered to be utilization of both the no-exposure and the minimal-exposure standard. Nonetheless, the 1st DCA found that Event Services can be reasonably read as using the phrase "no exposure" as synonymous with "nominal exposure." The court noted "[t]his conclusion is bolstered by the fact that, aside from Event Services and Peoples Gas, the Third District has consistently held that the standard is whether there is a reasonable basis to indicate that a defendant's exposure was nominal.
Hence, it is clear. In Florida nominal proposals for settlement are valid where the offeror has a reasonable basis to believe that exposure to liability is minimal.