Appellate Court Reverses Fee Award, Clarifies ‘Judgment Obtained’ Under Florida’s Offer of Judgment Statute
This case arises from a dispute regarding a Hurricane Irma homeowners’ insurance claim. SFR Services, LLC, a Florida restoration company, performed repairs for the homeowners, and in exchange the homeowners executed an agreement assigning their insurance benefits to SFR Services. Ultimately, SFR Services filed suit against the insurance company, seeking payment of its invoices in addition to recovering “damages, together with interest, costs and attorneys’ fees” under section 627.428, Florida Statutes.
During the underlying litigation, Avatar Property and Casualty Insurance Company, the homeowners’ insurance company, served a proposal for settlement (PFS) to SFR Services for $15,000, which included the language that the settlement amount was “exclusive of all taxable costs and attorneys’ fees.” SFR Services did not accept the PFS, and the matter proceeded to trial.
At trial, the jury found in favor of SFR Services and concluded that the insurance company owed $20,000 in damages to SFR Services. The trial court subsequently reduced the damages amount to $9,000 to account for both the insurance policy’s applicable $6,000 hurricane deductible and to account for a prior directed verdict motion judgment for $5,000 regarding the interior damages.
Afterwards, both the insurance company and SFR Services filed competing motions for attorneys’ fees and costs. The insurance company sought fees and costs under F.S. § 768.79(1), based on SFR Services’ rejection of the $15,000 PFS. Under Florida law, when a defendant serves a PFS that “is not accepted by the plaintiff, and if the judgment obtained by the plaintiff is at least 25 percent less than the amount of the offer, the defendant” is entitled to reasonable attorneys’ fees and costs “incurred from the date the offer was served.” F.S. § 768.79(7)(a). Regarding offers made by defendants to plaintiffs, “the term ‘judgment obtained’ means the amount of the net judgment entered, plus any post-offer collateral source payments received or due as of the date of the judgment, plus any post-offer settlement amounts by which the verdict was reduced.” F.S. § 768.79(7).
Thus, the insurance company argued that the final damages amount ($9,000) plus SFR Service’s pre-offer interest ($1,364.93) was 25% less than the $15,000 PFS, triggering fee shifting under the statute. In response, SFR Services argued that its pre-offer attorneys’ fees and costs also had to be factored in, in order to calculate the correct “judgment obtained.” By doing so, SFR Services argued that this would place the “judgment obtained” above the $11,250 threshold, thereby eliminating the fee triggering.
After a hearing, the trial court sided with the insurance company and concluded that the “judgment obtained” by SFR Services, exclusive of taxable costs and attorneys’ fees, was $9,000. Because this $9,000 amount was less than the $11,250 threshold (at least 25% less than the $15,000 PFS), the trial court determined that the insurance company was entitled to recover its attorneys’ fees and costs incurred from the date the PFS was served. SFR Services subsequently appealed.
Upon appeal, the Sixth District Court of Appeals agreed with SFR Services and determined that the trial court erred by not applying the Florida Supreme Court’s decision in White v. Steak & Ale of Fla., Inc. when calculating the “judgment obtained.”
In the White decision, the Florida Supreme Court held “that the ‘judgment obtained’ . . . includes the net judgment for damages and any attorneys’ fees and taxable costs that could have been included in a final judgment if such final judgment was entered on the date of the offer.” Id., 816 So. 2d at 551. This judgment calculation (which includes pre-offer attorneys’ fees and costs as of the date of the PFS offer) has become known as the White formula. Application of the White formula does not turn on whether the PFS includes attorneys’ fees or costs. Id. at 552.
Thus, the appellate court concluded that the trial court erred in failing to apply the White formula in calculating the “judgment obtained” because they failed to include the pre-offer attorneys’ fees or costs amount incurred by SFR Services. As of the date of the offer, SFR Services had incurred $2,384.90 in costs. Following the White formula and factoring this amount into the $9,000 damages amount, “the judgment obtained” was not “at least 25 percent less than the amount of the [$15,000.00] offer.” F.S. § 768.79(7)(a). Thus, the District Court determined that the insurance company was not entitled to attorneys’ fees and costs under the offer of judgment statute.
The final judgment in favor of the insurance company was reversed, and the case was remanded to the trial court for proceedings consistent with this opinion.
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