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Offers of Judgment and Commercial Litigation in Florida

South_Palm_Beach_condominium_lakesideA condominium complex owner, embroiled in a lawsuit with a plumbing subcontractor, recently received good news in its pursuit of an award of attorneys’ fees and costs from the subcontractor. The 3d District Court of Appeal ruled that, since¬†the owner made a good-faith offer of settlement that was rejected and was later found not liable, Florida law required the trial court to award attorneys’ fees and costs.

The case involved a condominium project in Key West. Key West Seaside LLC was the owner of the project and hired Current Builders of Fla., Inc. as its general contractor. Current was contracted to construct improvements on Seaside’s property. Current then subcontracted out the plumbing work on the project to Certified Lower Keys Plumbing, Inc.

Certified agreed to accept payment from Current when Current received compensation from Seaside. Seaside ultimately was unable to pay Current and worked out a compensation arrangement in lieu of cash. Current never paid Certified, and Certified sued Seaside, Current, and Current’s president, among others.

While the matter was going forward, each of the parties the subcontractor sued submitted an offer of judgment. Florida Statutes Section 768.79 says that a defendant can submit a proposed offer to settle the case. The party receiving the offer can accept or decline, but if that party refuses and, at the conclusion of trial, loses or receives a judgment amounting to less than 75% of the offer, the party receiving the offer owes the party making the offer its attorneys’ fees and costs, as long as the offer was made in good faith.

As an example, if A sues B and B submits an offer of judgment of $400,000, A must win at trial and receive a judgment of at least $300,000, or else it is obligated to pay B’s attorneys’ fees and costs.

In Certified’s case, it rejected all of the offers of judgment it received. The trial court later ruled that Current was liable to Certified, but it found Seaside not liable to the subcontractor. Seaside asked the court to award it attorneys’ fees and costs, but the court refused because Seaside’s attorneys fees were actually paid by Current as part of an agreement between the owner and the general contractor.

The appeals concluded that this was an incorrect application of the law and that Seaside was entitled to recover. The appeals court explained that, under the statute, the only way that the trial court could appropriately refuse to award Seaside its attorneys’ fees and costs was if the court first ruled that Seaside’s offer of judgment to Certified was not made in good faith. The court never made any ruling stating that Seaside’s offer was in bad faith.

The fact that someone other than Seaside paid its legal bills was irrelevant. The facts that Seaside and Current used the same lawyer and that this lawyer at times advanced arguments not beneficial to Seaside’s position also were¬†irrelevant. The only relevant factors were that Seaside made an offer of judgment, the offer was never found to be in bad faith, and Seaside was found not liable. This meant that Seaside was entitled to the fees and costs.

Offers of judgment can be an important tool in dealing with settling business lawsuits. For thoughtful advice regarding making, or responding to, an offer of judgment in your commercial litigation, contact the Florida commercial litigation attorneys at Stok Folk + Kon. Our attorneys have a long track record of helping business clients like yours navigate the commercial litigation process.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

More blog posts:

What to Do When Your Florida Business is Not Paid for Services Rendered, Florida Business Lawyers Blog, Aug. 21, 2015

Calculating When the Clock Starts Running on Statutes of Repose in Florida Construction Litigation, Florida Business Lawyers Blog, June 17, 2015