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Proceed With Caution When Deciding Whether to Reject an Offer of Judgment in Your Florida Commercial Litigation

checkbook-6With commercial litigation comes the need to make many very important decisions, both before and during trial. In some cases, one of those decisions is whether or not to accept an offer of judgment from the other side. One should weigh this decision carefully, since a refusal could potentially leave you on the hook for the other side’s attorneys’ fees. A recent Fourth District Court of Appeal case upheld an award of attorneys’ fees, rejecting the plaintiff’s claim that the offer of judgment statute did not apply to its situation.

The case started as a dispute between two competitors in the yacht paint business. MYD Marine Distributor, Inc. and MYD Mid-Atlantic, Inc. sued International Paint LLC, International Paint, Ltd., Donovan Marine, Inc. and Gold Coast Marine Distributor, claiming that International, Donovan, and Gold Coast all violated state antitrust laws by conspiring to eliminate MYD as the distributor of a particular brand of yacht paint, which had the effect of fixing the market price of that paint. The lawsuit also included claims for breach of contract and restraint of trade.

MYD asked the court to award it money damages and an injunction to stop the continued operation of the conspiracy. While the case was still pending before the trial court, International sent each of the MYD entities an offer of judgment. Offers of judgment are a statutory creation designed to open up additional opportunities to resolve cases through settlement, short of a full trial and judgment. The offer of judgment International made to MYD involved International paying a sum of money to MYD to settle all of MYD’s claims for money damages. The offer did not purport to settle MYD’s request for an injunction. MYD declined the offers.

Some time later, the trial court awarded summary judgment to International, Donovan, and Gold Coast. MYD appealed but lost at the appellate level as well. As unfavorable as this was, the case would get worse for MYD. International followed up by asking for an order making MYD pay its attorneys’ fees. International contended that, since it made an offer that MYD refused, and then International prevailed on the merits, the offer of judgment statute allowed it to recover its attorneys’ fees from MYD. MYD argued that, since it also asked for an injunction as part of its lawsuit, and the offer did not address its claim for injunctive relief, the offer of judgment statute did not authorize an award of attorneys’ fees in this situation.

The trial court sided with International and entered the order awarding the attorneys’ fees. MYD appealed but was not successful. The offer of judgment statute establishes a “substantial right” to the recovery of attorneys’ fees when the offer is made by a defendant in a case, the plaintiff refuses the offer, and the court ultimately reaches a judgment finding no liability on the part of the defendant. This statutory right exists as an inducement to settle cases by penalizing plaintiffs who continue to pursue cases against defendants that, in the judgment of the trial court, committed no legal wrong.

MYD lost because, according to the court, all of its claims, both the ones seeking money damages and the ones seeking injunctive relief, were essentially monetary in nature. The Florida Supreme Court suggested in 2013 that the offer of judgment statute was available to defendants in cases in which the plaintiff has asked for both monetary and non-monetary judgments if the “true nature” of the relief the plaintiff is really seeking is monetary. The court in MYD’s case used this “true nature” analysis to decide whether the law applied. Based upon MYD’s conduct of the case, specifically that MYD failed to “actually pursue any non-monetary relief during the course of the litigation and instead only sought money damages,” the statute properly applied, and MYD was liable for International’s attorneys’ fees.

As you consider undertaking a commercial lawsuit, it is important to have skillful counsel to help you weigh each of the decisions you will face throughout the process. The knowledgeable Florida commercial litigation attorneys at Stok Folk + Kon have extensive experience helping a wide array of business clients in dealing with the challenges of a commercial lawsuit.

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

More blog posts:

New York Broker Gets New Opportunity to Prove that It Was Entitled to Commission in Central Florida Commercial Lease Renewal, Florida Business Lawyers Blog, Feb. 19, 2016

Offers of Judgment and Commercial Litigation in Florida, Florida Business Lawyers Blog, Dec. 4, 2015