In MYD Marine Distributor, Inc. et al. v. International Paint, Ltd. et al., No. 4D13-2946 (4th DCA April 13, 2016), an intermediate Florida appellate court ruled that a prevailing party (here the defendants) could recover attorneys fees under a state law permitting fee-shifting on damage claims after the opposing party rejected an offer of judgment, even in a case where non-monetary relief was also sought. In MYD Marine, the court found that although plaintiff had sought both monetary and non-monetary relief, where defendants’ offers of judgment were solely for the claims seeking monetary relief and plaintiff did not pursue its claims for non-monetary relief, the true relief sought was monetary in nature and the fee-shifting statute properly applied.

An Offer of Judgment, commonly referred to as a Proposal for Settlement (“PFS”), is a fee-shifting mechanism provided by Florida Statute §786.79. The statute creates a substantive right to attorney’s fees for a defendant when, among other scenarios, a plaintiff refuses to accept a PFS and the ensuing judgment is in favor of the defendant. Considering the risk to the plaintiff of having to pay for the defendant’s attorney’s fees, the rule incentivizes plaintiffs to consider and accept reasonable settlement offers instead of the risks of trial.

Here, plaintiff MYD Marine and its subsidiaries (“MYD”) filed suit against several of its business competitors alleging a “price fixing” scheme to oust MYD from the marketplace. MYD alleged claims for conspiracy and breach of contract, and sought damages, fees, and permanent injunctive relief. Following discovery, defendants served carefully crafted Offers of Judgment which applied only to MYD’s claim for money damages, as follows:

This Proposal does not attempt to resolve [MYD’s] claims for injunctive relief, and if accepted, the claims for money damages will be resolved, but the claims for injunctive relief will remain pending.

MYD did not accept the offers and the defendants then obtained final summary judgment. Defendants moved for their fees and costs under §786.79 based on the rejected offers. MYD argued that the statute did not apply because MYD sought both damages and equitable relief. Defendants countered that their offers were enforceable because they were limited to MYD’s monetary claims and MYD never sought any relief on its equitable claim. The trial court agreed, based on the fact that MYD did not pursue injunctive relief in the trial court and only litigated its claims for damages.

On appeal, the Fourth District Court of Appeal specifically addressed the award of attorney’s fees. It first noted that §786.79 applies only to “civil actions for damages,” and thus, an Offer of Judgment which attempts to resolve both monetary and nonmonetary causes of actions is invalid. What the Court found less clear, however, is whether an offer purporting to resolve only monetary claims in a suit also containing non-monetary claims is valid. Although the court did not issue a broad ruling on this issue, it affirmed based on the trial court’s finding that the true relief sought by MYD was monetary in nature. The Fourth DCA ruled that the trial court correctly applied the “true relief” analysis from Diamond Aircraft Indus., Inc. v. Horowitch, 107 So. 3d 362 (Fla. 2013), in finding that MYD “did not actually pursue any nonmonetary relief during the course of litigation and instead only sought money damages.” The Diamond Aircraft opinion had reiterated that a court should “look behind the procedural vehicle used in the complaint to discover what true relief is being sought.”

Plaintiffs commonly attempt to evade the fee-shifting effect of § 786.79 by including a petition for declaratory relief in the complaint. This strategy has become standard practice in the context of first-party property insurance cases. An insured will bring a two-count complaint asserting breach of contract and a petition for declaratory relief. Under breach of contract, the insured claims the carrier breached the policy when denying or underpaying a claim. For declaratory relief, the insured will ask the Court for a ruling that the subject loss is covered by the policy and that the insured is entitled to insurance proceeds. In doing so, plaintiffs and their counsel commonly argue that because §786.79 only applies to civil actions for damages, a PFS which attempts to resolve both monetary and non-monetary claims is invalid.

The MYD Marine ruling is thus an instructive case for attorneys and litigants alike, especially in the context of first-party property insurance cases. There are two major takeaways: First, to ensure enforcement of a PFS in a case where non-monetary relief is also sought, defense counsel must craft a narrow PFS directed to only the claims for money damages. Second, defense counsel should utilize written discovery and depositions to secure evidence indicating that, despite the claim for non-monetary relief, the “true relief” sought is money damages, such as by establishing that the plaintiff’s main concern is recovery of insurance proceeds, not declaratory relief. Further, a plaintiff’s failure to serve or obtain discovery on a claim for declaratory relief would also be relevant. In sum, Offers of Judgment are a vital tool in insurance-related litigation, and may be more effective now that Florida courts are taking a harder look at a plaintiff’s claim for non-monetary relief when assessing the validity of such an offer.

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