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In Florida Peninsula Insurance Company v. Brunner, 41 Fla. L. Weekly D1357a (Fla. 3d DCA June 8, 2016), the 3rd DCA held that proposal for settlement language which included the possibility of imposition of liability of other claims upon plaintiff and her attorney was invalid.

Florida Peninsula Insurance Company (FPIC) filed a proposal for settlement based upon a claim made by Ann Brunner under her homeowner's policy. Ms. Brunner did not accept the proposal for settlement and at trial the jury rendered a verdict for FPIC.

The proposal for settlement included the following requirement:

It is agreed upon by Ann Brunner and his [sic] respective counsel that all known liens, attorney charging liens or other claims of third parties, will be satisfied and extinguished by Ann Brunner and his[sic] counsel.

The proposal for settlement and attached release did not indicate any requirement for Ms. Brunner's counsel to execute the documents in any way. The trial court concluded that the language contained in the proposal for settlement required not only Ms. Brunner to accept responsibility for "other claims of third parties" but for her counsel to accept that responsibility as well. Therefore, the trial court denied the motion for fees and costs based upon an invalid proposal for settlement.

Since proposals for settlement are in derogation of common law, the language within the proposal must be strictly construed. The 3d DCA held that the "fatal flaw" was the language which purported to have counsel agree not only to assure that plaintiff's counsel's legal claims to settlement funds are extinguished but also that counsel must satisfy and take care of all "other claims of third parties."

The 3d DCA noted that there was no signature block for the attorney on the release to sign and assent to such "open-ended liability." The problem with the proposal for settlement was the broad and vague language regarding "other claims of third parties" which might exist and for which plaintiff's attorney would be assigned responsibility. In a lawsuit based upon a homeowner's policy, that could include many other claims such as contractor's mechanic's liens and mortgagees' claims as additional insureds.

Last, the 3d DCA also noted that the proposal for settlement appeared to have been a cut and paste job. The language at issue was numbered as paragraph 7. Yet, the paragraphs following paragraph 7 were again numbered in error as 6, 7 and 8. Also, Ann Brunner, a female, was mentioned in the release multiple times using the pronouns "his" and "he."

 

This summary was prepared by Paul Fulmer of our firm.


Paul Fulmer

 

 

41 Fla. L. Weekly D1357a

 

Attorney's fees -- Proposal for settlement -- Validity of proposal -- Insurance -- Action by insured against insurer -- Trial court properly denied defendant insurer's motion for attorney's fees based on proposal for settlement where proposal purported to impose liability for an indeterminate category of other claims of third parties on plaintiff's counsel, a non-party

FLORIDA PENINSULA INSURANCE COMPANY, Appellant, v. ANN BRUNNER, Appellee. 3rd District. Case No. 3D15-1677. L.T. Case No. 13-20018. June 8, 2016. An Appeal from the Circuit Court for Miami-Dade County, Barbara Areces, Judge. Counsel: Cole Scott & Kissane and Kathryn L. Ender, for appellant. Michael A. Nuzzo, for appellee.

(Before WELLS, SALTER and SCALES, JJ.)

(SALTER, J.) Florida Peninsula Insurance Company (FPIC) appeals a final order denying its motion for attorney's fees based on a proposal for settlement. Because the proposal for settlement purported to impose liability for an indeterminate category of "other claims of third parties" on the appellee's counsel, a non-party, we affirm the trial court ruling.

The Proposal for Settlement

The proposal was made on behalf of FPIC, insurer under a homeowner's policy in favor of Ann Brunner, under Florida Rule of Civil Procedure 1.442 and section 768.79, Florida Statutes (2013). The plaintiff/insured, Ms. Brunner, did not accept the proposal for settlement. When the jury rendered a verdict for FPIC, FPIC moved for its attorney's fees pursuant to the rule and statute.

The proposal for settlement included the following requirements in paragraphs 7(a) and (b):1

(a) This Offer of Judgment/Proposal for Settlement is to hold harmless FLORIDA PENINSULA INSURANCE COMPANY, from any and all existing, or potentially existing, liens or other claims which any person or entities may have on the damages sought in the lawsuit arising out of the Plaintiff, ANN BRUNNER's claims or potential claims in this case.

(b) It is agreed upon by ANN BRUNNER and his [sic] respective counsel that all known liens, attorney charging liens or other claims of third parties, will be satisfied and extinguished by ANN BRUNNER and his [sic] counsel.

The proposal, attached form of release, and notice of service did not indicate any requirement for assent or execution by Ms. Brunner's counsel. The trial court concluded that paragraphs 7(a) and (b) purported to require not only Ms. Brunner, but also any counsel representing her in the case, to accept responsibility to FPIC for "other claims of third parties." Concerned that paragraph 7(b) "basically makes the attorney seem to have to agree to this," the trial court denied FPIC's motion for attorney's fees. This appeal followed.

Analysis

Our standard of review applicable to the trial court's ruling regarding the proposal for settlement is de novo. Campbell v. Goldman, 959 So. 2d 223 (Fla. 2007). In Diamond Aircraft Industries, Inc. v. Horowitch, 107 So.3d 362, 372 (Fla. 2013), the Supreme Court of Florida reiterated that the requirements of Rule 1.442 and section 768.79 "must be strictly construed because those provisions are in derogation of the common law rule that a party is responsible for its own attorney's fees, and because they are penal in nature." Id. (citing Campbell, 959 So. 2d at 226, and TGI Friday's, Inc. v. Dvorak, 663 So. 2d 606, 615 (Fla. 1995)).

The fatal flaw in the present case has already been described: Paragraph 7(b) of the proposal purports to require Ms. Brunner's counsel to agree not only to assure that counsel's own legal claims to the settlement funds are extinguished, but also to assure that counsel will satisfy and extinguish "other claims of third parties." Yet there is no signature block or other provision to indicate her attorney's agreement to assume such an open-ended liability. A proposal must be drafted so that the offeree has "the ability to evaluate and independently act to resolve the case against her . . . ." Paduru v. Klinkenberg, 157 So. 3d 314, 318 (Fla. 1st DCA 2014).

FPIC argues that Kee v. Baptist Hospital of Miami, Inc., 971 So. 2d 814 (Fla. 3d DCA 2007), is controlling. In that case, however, the Kees relied "exclusively" on State Farm Mutual Auto Insurance Co. v. Nichols, 932 So. 2d 1067 (Fla. 2006), regarding the alleged ambiguity of the proposal for settlement. Kee, 971 So. 2d at 816. In Nichols, the issue was whether the proposal "failed to eliminate the ambiguity regarding one of the two claims which Nichols had." Kee, 971 So. 2d at 816 (citing Nichols, 932 So. 2d at 1078).2

In a final paragraph, the Kee opinion rejected an argument based on ambiguity "as to whether or not the Kees' counsel must guarantee payment of any hospital liens to the extent that these are satisfied and extinguished." Id. at 817. The present case does not concern hospital liens on the proceeds of a personal injury settlement. The concern shared by the appellee and the trial court in the present case is the breadth of "other claims of third parties" which might reasonably exist and for which counsel might purportedly be ascribed responsibility. In a homeowner's lawsuit against its insured for property damage such as this, such "other claims of third parties" might include a mortgagee's claim under an additional insured endorsement, or a repair contractor's mechanic's lien claim, among others. The appellee's and trial court's concerns regarding the proposal for settlement were not unfounded.

Affirmed.

__________________

1 The written proposal for settlement appears to have been assembled by "cutting and pasting" prior word processing forms (though not by the attorney who argued FPIC's appeal in the present case). Among other indicia of such a process, the first paragraph 7 (containing the clauses identified here) is followed by paragraphs erroneously numbered 6, 7, and 8. In the proposal and attached form of release, the plaintiff in the case, Ann Brunner, is referred to using the pronouns "he" and "his."

2 In Nichols, the two claims were a personal injury protection (PIP) claim and an uninsured motorist claim arising out of the same accident. "It appeared as though Nichols, in order to settle one claim, would have had to sign a general release which would release his second claim as well." Kee, 971 So. 2d at 816. The issue was the preservation of the insured's claims against others, a concern that does not exist in the present case.

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