January 4, 2019 Florida Supreme Court opinions

Proposals for Settlement

By offering sanctions, including attorney’s fees, against those who unreasonably reject settlement offers, Florida’s settlement statute laudably attempts to reduce unnecessary litigation. But do proposals for settlement need to comply with the service requirements for pleadings and filings? In the strange case of Wheaton v. Wheaton, the supreme court replies with a firm “No.”

The opinion gives us little in the way of background, but we can surmise a chain of events. Girl meets boy, marries boy, moves in with boy, divorces boy, gets sued by boy’s mother for unlawful detainer, and responds with an emailed proposal for settlement. A tale as old as time.

After the ex-daughter-in-law won her motion for summary judgment, she moved for attorney’s fees under the settlement statute, as mother had declined her settlement offer. Mother, however, argued that the proposal failed to strictly comply with email service requirements—for example the inclusion of a certificate of service. The trial court agreed and denied girl’s motion for fees.

Appealing the decision to the Third District, young Wheaton argued that because the proposal was neither a pleading nor a filing, it was not actually subject to general service requirements. But the Third District focused on a different portion of the service rule, which provides that any document permitted to be served must be served by email, and found that a proposal for settlement was a document permitted to be served. So the proposal had to be served by email, and service by email, the rule provides, must comply with service requirements, including a certificate of service.

But the supreme court, in an opinion written by Justice Quince, agreed with young Wheaton that a proposal for settlement was neither a pleading nor a filing and thus was not subject to the general rule of service at all. As for the rule providing that any document permitted to be served must comply with service requirements, the supreme court ruled that proposals for settlement are actually not permitted to be served—instead, if a proposal for settlement is made at all, the statute provides that it “shall be served” on the opposing party.

Long story short, proposals for settlements must comply with the requirements of the settlement statute, including service, but they do not need to comply with the service requirements of pleadings or filings, and they do not need to be served via email. And, while settlement offers need to comply with the procedural rule specific to settlement offers, the court noted that slight violations of that rule will not defeat the enforceability of a proposal for settlement so long as the substantive portions of the statute are fulfilled.

Justice Canady’s dissent, however, agreed with the Third District. He noted that when the email requirements were written into the rules of procedure, they were explicitly intended as a “comprehensive” overhaul of an antiquated system and were meant to apply to all documents required or permitted to be served, not just pleadings and filings.

Attorney’s Fees

In the United States, unlike in most of the rest of the world, the general rule is that a party pays its own attorney’s fees, win or lose. But there are some exceptions to the “American rule.” Attorney’s fees can be derived from contract, for example, or through statute. Or they can be derived from both, regardless of the parties’ intention as expressed through contract. The theory behind this is that the big-wigs write the contracts while those with smaller wigs sign them (or don’t) without negotiating the details.

For its part Florida has corrected this imbalance through a reciprocity statute, which provides that a contract entitling one party to attorney’s fees as the prevailing party in litigation applies to both parties equally. But to prove entitlement the party seeking attorney’s fees must show not only that it prevailed, but that it was a party to the contract at issue. Which brings us to Glass v. Nationstar Mortgage, in which Nationstar sued to foreclose on Glass’s home equity loan, while Glass argued that Nationstar had failed to properly allege standing in its complaint. Although Nationstar amended its complaint, Glass maintained her argument, the trial court agreed, and the complaint was dismissed with prejudice.

Nationstar appealed, briefed the issues, but dismissed its own appeal before the Fourth District could make a decision. Having secured another victory, however temporary, Glass took a lap and moved for appellate attorney’s fees under the contract as the prevailing party on appeal. But the Fourth District Court denied her request, citing her lack-of-standing argument at trial. In other words, the district court reasoned, if a borrower wins at trial by arguing that a lender has no right to enforce a contract, the borrower can’t turn around and claim attorney’s fees under that very contract.

But a majority of the supreme court, led by Justice Quince, disagreed with the fourth district’s characterization of the suit. Although Glass had asked for attorney’s fees based on the voluntary dismissal on appeal, the Fourth District had denied her request based on what the supreme court termed the “ancillary issue” of dismissal at trial. Yet the trial court had provided no reasoning for its dismissal of Nationstar’s complaint, the supreme court reasoned, so the case could have been dismissed for standing, or it could have been dismissed for any of the other reasons Glass argued in her motion.

Most importantly, the four-part majority noted, there was no dispute that a contract existed between Glass and Nationstar, even if Nationstar had (through technical deficiencies in its pleadings) lacked standing to enforce the contract’s terms. This distinguished the case at bar from a case the Fourth District had relied on in its decision—a case in which the third district ruled that no contract existed. In short, for purposes of contractual attorney’s fees there is a difference between prevailing, on the one hand, by arguing that there is no contract to enforce, and on the other, by arguing that a lender has no right to enforce a contract that does exist.

Three members of the court, in a dissent written by Justice Polston, questioned the supreme court’s jurisdiction over the case, reasoning that the case supposedly conflicting with the Fourth District’s decision dealt with the prevailing-party prong, while Glass dealt with the privity prong. While this is in a sense true, the majority did find that the prevailing-party prong was at issue since the Fourth District had improperly analyzed the dismissal at trial rather than the dismissal on appeal.