Friday Florida Law Update- Offers of Judgment Under Lemon Law

Hello all, and welcome to your Friday Florida Law Update.  For the second time in the short history of this Friday blog, we look at a case involving the controversial “Offer of Judgment” under Florida Statute Section 768.79 as interpreted by the Florida Supreme Court in the case of Mady v. DaimlerChrysler Corp., 2011 WL 1045598 (Fla. March 24, 2011).

For non-lawyers, a brief explanation of Offers of Judgment is warranted.  An Offer of Judgment is a statutory procedure which can be employed by either party during the course of a case up through 45 days prior to trial.  The “Offer” is an official settlement offer, which, if not accepted within 30 days, subjects the rejecting party to a potential award of attorney’s fees if it does 25% worse at trial than it could have done had it accepted the offer.  As a simple mathematical example, if a defendant serves an offer for $10,000, and the plaintiff rejects it and later prevails at trial, but obtains a judgment for only $7,000, the defendant may move for fees incurred from the date of the offer. 

In Mady, the plaintiff sued under the federal Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, an “anti-lemon” law.  Significantly, the Act requires claimants to go through an informal administrative process to attempt to work out the claim prior to filing suit.  The Act also permits an attorney’s fee award for successful claimants. 

During the course of discovery, the defendant served an Offer of Judgment.  As is required in the Offer, defendant admitted that attorney’s fees were a potential component of the plaintiff’s claim.  Plaintiff accepted the Offer, and executed a Release.  However, Plaintiff moved for attorney’s fees under the statute as a prevailing party.  The trial court rejected the claim, finding that Plaintiff was not a “prevailing party” because defendant did not admit liability.  The Fourth District Court of Appeal affirmed. 

The Supreme Court of Florida accepted review of the case based on a conflict between the Fourth DCA opinion and conflicting views from the Second and Third DCAs.  The Supreme Court reversed, focusing on two factors.  One, the Court focused on how defendants under the Magnuson Act have the opportunity to resolve the case cheaply during the administrative phase, the absence of which requires the claimant to expend significant time and expense to file a civil action.  Second, the Court found, conversely to the ruling by the trial court, that acceptance of an Offer of Judgment is in fact the equivalent of a consent decree because the trial court retains jurisdiction to enforce the settlement, as opposed to a typical private settlement, which divests the Court of jurisdiction.  Thus, the Court found that the plaintiff was indeed a “prevailing party.”   

Accordingly, in addition to the amount of the Offer of Judgment, the plaintiff was entitled to pursue attorney’s fees.  I can assure you that this is a result that defense counsel never fathomed when the Offer was served.  This decision could impact other statutory claims where administrative remedies must be exhausted prior to filing suit, and should provide caution to defendants in such cases considering use of the Offer of Judgment.

Explore posts in the same categories: Florida Law Updates

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