During the course of litigation, there is almost always strategic consideration given to the idea of settling the matter before trial. Settlement can be accomplished in a number of ways. Mediation and negotiation are formal methods requiring the use of a neutral third party. There are also informal methods, generally simply contacting the opposing attorney with a settlement offer. Offers and Demands for Judgment are “semi-formal” as they do not require the use of a third party but, when made, the terms of these offers have more significant consequences than an email or phone call might.
Offers and Demands for Judgment differ primarily in who initiates the request for settlement and are controlled by Fla. R. Civ. P. 1.442 and Fla. Stat. 768.79. Defendants make Offers for Judgment, while Plaintiffs make Demands for Judgment. Regardless of the nomenclature, the two operate the same way. Note that the language refers to “judgments” these are not the only remedy available and frequently monetary payment is agreed to. The offer must be in writing, served on the appropriate party, state the law, facts, and claims supporting the offer, as well as the actual terms of the settlement – any monetary damages or other conditions of the offer.
Once made, the opposing party has 30 days to accept. If the opposing party does nothing before time expires, the offer is deemed rejected. The originating party, in writing, can also withdraw the offer before the other side accepts. Once the offer is withdrawn, it cannot be accepted. In order to accept an offer or demand, it must be in writing and within 30 days of the request in order be timely. Finally, making one offer does not preclude the making of subsequent offers or counter-offers.
The most significant aspect of offers or demands for judgment is often attorney’s fees. Under the statute, if a Plaintiff makes a Demand for Judgment and Defendant does not accept, should Plaintiff recover 125% of the offer, Plaintiff is entitled to attorney’s fees. Similarly, if the Defendant makes an offer that is not accepted by Plaintiff, if Plaintiff does not recover at least 75% of the offer, then Defendant is entitled to fees. No fees are awarded under the offer/demand for judgment unless these thresholds are met.
For example, if Plaintiff makes a demand for judgment and states that $1,000.00 will settle the case, if Defendant fails to accept and Plaintiff actually recovers anything more that $1,250.00, then Defendant will owe not only that amount, but will also bear the cost of Plaintiff’s attorney’s fees. Similarly, if Defendant makes an offer for judgment and states that $1,000.00 will settle the case, if Plaintiff fails to accept, Plaintiff must earn a judgment of at least $750.00, or Plaintiff will have to pay Defendant’s fees.
It is easy to see how these provisions for attorney’s fees are designed to encourage both the offer and acceptance of fair and reasonable offers to settle a case rather expend additional judicial resources to have a judge or jury decide it.
Note however, that these offers and demands can be made strategically. If a claim’s value is $1,000.00, a Plaintiff may make a demand for $1,200.00. This puts Defendant in the position of either accepting a high offer or rolling the dice at trial that a judge or jury will not award damages in excess of $1,500.00. Notice that not only the principal amount of the claim applies, but also any prejudgment interest on the claim, or any interest applied to the loan. If punitive damages are awarded, those will also apply towards this amount.
Defendants can similarly make strategic offers of judgment. Once again, the value of the claim is $1,000.00 and Defendant offers $800 for settlement. Now the tables are turned from our previous example. Plaintiff must either accept a low offer or risk not proving damages in excess of $600.00. This may apply when certain offsets or credits are owed to the Defendant that have not been properly applied.
Unlike most other settlement devices, both the offer and acceptance are filed with the Court, so they are public record – visible to almost anyone. Once both the offer and acceptance are filed the Court has jurisdiction to enforce the terms of the settlement and failure to abide by the terms of a settlement agreement may be met with sanctions and even contempt of court.
In conclusion, receiving or making a Demand or Offer of Judgment is a significant event in the course of litigation and can have dire ramifications in the event that the threshold for attorney’s fees is met. It requires the careful assessment of the value of the case and the strength of any evidence in support of your claims or defenses.