Florida courts have been veering away from the bright-line rule that the offer of judgment/proposal for settlement (“PFS”) statute, Fla. Stats. § 768.79(1), does not apply in cases involving equitable relief. The most recent example is the Third DCA’s opinion in Tower Hill Signature Ins. Co. v. Javellano, which involved an action by homeowners against their property insurer for both monetary damages (breach of contract) as well as equitable relief (declaratory judgment). In that case the Third DCA found that the offer of judgment statute applied because the lawsuit was in fact a civil action for damages under section 768.79 and the “true relief” sought by the homeowners was an award of monetary damages.

Section 768.79 of the Florida Statutes creates a substantive right to attorney’s fees when a plaintiff refuses to accept an offer of judgment from the defendant and the ensuing judgment is one of no liability on the part of the defendant or the judgment obtained is at least twenty-five percent less than the offer. The purpose of section 768.79 is to lead litigants to settle by penalizing those who decline offers that satisfy the statutory requirements. This is because encouraging settlement lowers litigation costs for the parties and reduces the fiscal impact of litigation on the court system. The relevant portion of section 768.79 provides:

(1) In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney’s fees against the award.

By its own terms, section 768.79 applies only to “civil actions for damages.” On the contrary, a party is not entitled to fees under section 768.79 where the plaintiff seeks only nonmonetary relief. For example, in National Indemnity Company v. Consolidated Insurance Services, decided by the Fourth DCA in 2001, an insurance broker’s declaratory judgment action was found not to be a “civil action for damages” within the meaning of the offer of judgment statute, so as to support an award of attorney fees. The real issue in that case was insurance coverage for the underlying tort action and importantly no money damages or payment of money was directly requested in suit.

In its 2013 opinion styled Diamond Aircraft Industries, Inc. v. Horowitch, the Florida Supreme Court held that an offer of judgment purporting to resolve all claims is invalid if the case includes both monetary and nonmonetary causes of action. The reasoning behind this is that strict construction of the phrase “any civil action for damages” in the offer of judgment statute does not include a claim for equitable relief, or one that involves claims for both monetary and nonmonetary relief. However, there is an exception to this general holding in cases where the “true relief” sought is monetary damages.

Courts are increasingly more inclined to look beyond the face of the pleadings to determine whether an action is truly seeking monetary damages as opposed to equitable relief. For example, DiPompeo Construction Corp. v. Kimmel & Associates, Inc. involved an employer who brought a declaratory action against a professional recruiting company, seeking a declaration that it did not owe the recruiting company a commission arising out of the employer’s hiring of an employee. The recruiting company then filed a counterclaim, seeking to recover its commission on theories of breach of contract and unjust enrichment. The trial court denied the employer’s motion for attorney’s fees based upon an offer of judgment served upon, and not accepted by, the recruiting firm, ruling that the declaratory judgment action was not a “civil action for damages” and therefore the PFS was invalid under section 768.79. The Fourth District reversed and advised that, in construing the term “action for damages”, courts should look behind the procedural vehicle used to bring a lawsuit and focus on whether the “real issue” in the case is one for damages. In DiPompeo, the “real issue” involved damages – whether the employer owed a commission to the recruiting company – so that the PFS statute applied.

Likewise, Nelson v. Marine Group of Palm Beach, Inc. involved a declaratory action arising from a breach of contract in which an offer of judgment was made. The only matter at issue was entitlement to money held in escrow. The district court held that the dispute over the money held in escrow clearly framed the action as one for damages and, with that predicate, the offer of judgment statute applied. These cases are distinguishable from National Indemnity, a declaratory judgment action where no money damages or payment of money was directly requested and the “real issue” in the case was insurance coverage in a tort action.

There are nuances to this analysis but the focus remains on the “true relief” sought. In that regard, in a case seeking both monetary as well as non-monetary damages, if a PFS is directed solely toward the monetary damages it will likely be enforceable if all other statutory requirements are met. For example, MYD Marine Distributor, Inc. v. International Paint Ltd., a 2016 case decided by the Fourth DCA, involved a paint manufacturer that moved for costs and attorney’s fees after prevailing in a paint distributor’s antitrust action against the manufacturer, in which the manufacturer had served offers of judgment. The offers of judgment expressly stated that they were only directed toward the claims for monetary damages and that each PFS did not attempt to resolve any claims for injunctive relief. While the complaint alleged several causes of action for conspiracy in restraint of trade and breach of contract and MYD asked for damages, costs and fees, and permanent injunction relief, MYD did not actually pursue any nonmonetary relief during the course of litigation and instead only sought money damages. For that reason the PFS directed toward the claims for monetary damages was held to be enforceable under Fla. Stats. § 768.79.

Likewise, a passing reference to “equitable relief” in a complaint does not automatically render a PFS invalid. In Faith Freight Forwarding Corp. v. Anias, another 2016 opinion, theThird DCA reversed the trial court’s order holding that the employee’s offer of judgment pursuant to section 768.79 was invalid. That case is analogous to DiPompeo, where the plaintiff’s claim was found to be an action for damages because the “real issue” before the court was whether the recruiting firm was owed a commission. The employee’s reference to equitable relief in the operative complaint did not change the court’s conclusion, particularly where the employer could not identify any equitable relief that was ever actually at issue in discovery or at trial.

This trend of enforcing proposals for settlement in cases involving claims for equitable relief paves the path for defense attorneys to be creative in drafting proposals for settlement. If a PFS is carefully worded and directed only toward claims for monetary damages, or if the “true relief” sought is for monetary damages (even in a purported claim for declaratory relief), courts are inclined to uphold offers of judgment. Long gone are the days when plaintiff’s attorneys could avoid a PFS by including a claim for declaratory relief in their pleadings.