Proposals for Settlement: Their Role, Sanctions, and Whether Time to Decide Can Be Enlarged by Court

Kimberly Sands, a partner with Upchurch Watson White & Max, has been a civil litigator and has been involved with difficult and complex disputes as litigator or mediator for over 30 years. To schedule a mediation with Kimberly, please call her case manager, Cathy McCleary, at (800) 863-1462, or visit our online calendar.

UWWM Partner and Mediator Kimberly Sands UWWM Partner and Mediator Kimberly Sands

Every now and then some of your failures come back to humble you.  Little did I know that after 15 years mediating cases, my 25 years as a civil litigator would result in a conflict case that may go to the Supreme Court of Florida. That may happen in Ochoa v Koppel, 41 Fla. Law Weekly D1196 (Fla. 2nd DCA May 20, 2016), wherein the 4th District Court concluded that the trial court erred in finding the plaintiff timely accepted a proposal for settlement where it was not accepted in the 30-day period; the Court ruled that a Rule 1.090 motion to enlarge time did not toll the acceptance period set forth in Rule 1.442. The Court certified its opinion in conflict with a 5th District Court decision in a case I handled from trial through multiple appeals. In that case, the court ruled that a Rule 1.090 motion to enlarge would toll the 30 day time period to accept or reject and my client’s offer under Rule 1.442.

The devil may be in the details. In my case, there was a hearing and ordering enlarging the time period under Rule 1.442. Under Ochoa, a motion was filed, but never scheduled for hearing. If I knew then what I know now about the defendant’s decision-making process, I might have asked my client to keep the offer open, but the offer was for policy limits; the plaintiff’s damages undisputedly exceeded the policy limits; and added fees would not have significantly enhanced the recovery without a multiplier. An enlargement of time to respond to the offer relieved the defendant of the necessity to promptly evaluate its risk and deprived the plaintiff of the benefit of a timely response. Consequently, we withdrew the offer rather than allow it to be tolled by court order. On appeal, not only did we challenge the trial court’s authority to enlarge the time to respond to the offer, we challenged the necessity since everything the defendant needed to know to evaluate the offer was known from the time the claim was filed. Despite the defeat, this history served us well in the third party bad faith case that followed the affirmation of the judgment in the underlying claim.

Proposals for settlement are best used when they make a serious attempt to create a number and/or terms that the opposing party could and perhaps should accept given the dynamics of the case. If timed correctly, and with well-considered terms, they can be an excellent settlement tool. Unfortunately, they can also be used to pressure a risk-adverse litigant to accept what may be regarded as an unreasonable offer, particularly if there is a significant difference of opinion regarding liability or damages. Since the apparent merit or lack of merit in the claim and the closeness of questions of fact and law at issue are factors which the court should consider in evaluating the appropriate sanction under the Rule, a legitimate dispute regarding liability should be a mitigating factor. The same is true for the information available to a party at the time a proposal is served. Thus the Rule itself appears to address most issues that may justify an enlargement of time.

The market has also responded to the risk created by proposals for settlement with insurance coverage for fees and costs in the event of such claim. While many find the Rule burdensome, unpredictable, and fraught with the possibility of error, it can be used to advantage while minimizing risk as a possible tool for settlement. Those who see it as a “threat” may not be sufficiently open to the idea that a proposal for settlement can represent a reasonable effort at timely resolving a disputed claim. Those who see it as a burden feel that it is an unfair obstacle to access to the courts to those who do not have the resources of an industry or entity that considers these risks the cost of doing business. In application, it is a sanction for which the entitlement should be strictly construed and the amount of the sanction subject to the mitigation set forth in the Rule.

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