A proposal for settlement in Florida can be filed by either party to a lawsuit. Section 768.79 of the Florida Statutes provides for the proposal for settlement, a/k/a offer of judgment. Proposals for settlement are most often used in personal injury cases; however, they can be utilized in other cases as well. The proposal itself is simply an offer to pay, or an offer to receive, a certain amount of money to settle the case. For example, an insurance company might give a proposal for settlement to an injured party where they offer to pay the other party $25,000.00 to settle the case. This is obviously an offer to pay. An example of an offer to receive would be where an injured party gives the party that caused the injury a proposal for settlement asking for payment of $25,000.00.
The amount offered varies greatly depending on the facts of the case. Proposals for settlement are often utilized in litigation by insurers before trial once it becomes apparent that the chances for settlement are minimal. The proposal for settlement can potentially bring consequences to the party receiving it if not accepted. Insurers know this, and use the proposals to impact the other party’s decision regarding settlement.
The party to whom the proposal is directed has thirty days from the date of filing to accept the proposal or it is automatically deemed rejected. In my first example, the insurance company gave a proposal to pay $25,000.00 to the injured party. If the proposal for settlement is rejected by the injured party and the injured party is awarded a final money judgment at least 25% less than the amount offered in the proposal (less than $18,750.00), a court can award costs and attorney’s fees to the party that made the proposal. In saying this, it is important to point out that in personal injury cases, generally, neither side is entitled to an award of attorney’s fees and costs. So, an injured party that sues normally will not have an negative consequence if they lose; however, the proposal for settlement changes that. Now that injured party can be on the hook for a very large judgment of attorney’s fees and costs if they lose, or obtain a judgment for 25% less than what is offered.
In my second example, an injured party gives a proposal for settlement to the at fault party for $25,000.00. If the proposal for settlement is rejected by the at fault party and the injured party is awarded a final money judgment at least 25% greater than the amount offered in the proposal (less than $31,250.00), a court can award costs and attorney’s fees to the party that made the proposal.
It is very important that a party to litigation have a detailed discussion with their attorney regarding the consequences of a proposal for settlement if one is made in their case. One topic that should be discussed is proposal for settlement insurance. Recently, some companies in Florida have begun providing insurance coverage for a proposal for settlement in case it results in that party having to pay the other side’s attorney’s fees and costs.
At the Morey Law Firm, P.A. we can help! We can consider your situation and help you determine your rights whether you have given a proposal or have received one. Contact us today at (407) 426-7222 for a free consultation to determine your rights.