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Excusable Negligence Saves the Day for Party that Conveyed a Proposal for Settlement with the Wrong Monetary Amount

Legal17

A recent opinion from the Fourth District Court of Appeal clarified a party’s ability to withdraw a proposal for settlement after an opposing party accepts the proposal. Florida Rule of Civil Procedure 1.442 governs proposals for settlements and provides that a proposal for settlement, made pursuant to applicable Florida law authorizing the proposal for settlement, may be filed after 90 days have passed, since the commencement of the action. Further, the rule prohibits proposals for settlement made within 45 days before the date in which the action is set for trial. Regarding a withdrawal of the proposal for settlement, the rule states that a proposal may be withdrawn by the offering party, in writing, and before the proposal is accepted by the opposing party. In Dale v. Schaub, decided in mid-August 2020, however, the Court permitted an exception where the defendant accepted the proposal for settlement, before the plaintiff’s counsel could withdraw an erroneous proposal.

Dale involved injuries that the plaintiff sustained in an automobile collision with the defendant. The plaintiff sought to recover from the defendant’s auto insurance carrier, and demanded the $100,000 policy limit. Unfortunately, in filing the proposal for settlement, the plaintiff’s attorney made a mistake, and instead of requesting $100,000, the proposal purported to request only $10,000. The proposal was immediately accepted by opposing counsel who sent a check for the $10,000 amount the next day. Plaintiff’s counsel, realizing the mistake, filed a motion to withdraw the proposal for settlement, but the motion was denied.

On appeal, the plaintiff argued that the error was obvious. Based on previous settlement attempts, it was apparent that the defendant had offered more than $10,000 in the past, so opposing counsel should have known this proposal was made in error. Plaintiff’s counsel also argued that he did not have authorization, from his client, to settle the matter for $10,000. The defendant contended simply that, “[t]here was an offer, acceptance [,] and valid consideration,” and according to the rule, a withdrawal can no longer be made.

In deciding this case, the Fourth District applied some basic Florida contract law, and specifically relied on the doctrine of unilateral mistake. The Court stated that:

“In Florida, ‘a contract [can] be set aside on the basis of unilateral mistake unless (a) the mistake is the result of an inexcusable lack of due care or (b) the other party has so changed its position in reliance on the contract that recession would be unconscionable.’”

The Court also examined multiple cases to provide examples of when it is, and when it is not appropriate to rescind a proposal for settlement based on unilateral mistake. Maryland Cas. CO. v. Krasnek, was a similar case which involved an injured motorist attempting to collect insurance proceeds. There, the court permitted the insurer to rescind a proposal for settlement because it was later discovered that the coverage had lapsed. In doing the court reasoned:

“It seems to us not unreasonable for the trial judge to have seen in these ingredients the making of this kind of mistake, whether by clerical error, bad communications, or otherwise. No doubt there was some degree of negligence involved here. But, after all, mistakes do not ordinarily result from the exercise of due care.”

While the court found that there was some negligence on behalf of the insurance company, it did not rise to the level of inexcusable negligence.

The Court also considered BMW of N. Am., Inc. v. Krathen in making its decision. In BMW the court did find inexcusable negligence. This case involved a commercial dispute over a car purchased from BMW. BMW offered a settlement of $20,500, attorney’s fees, and costs, which was subsequently accepted and judgement was entered. After, BMW requested to clarify the settlement, insisting that the settlement was always contingent on the plaintiff returning the vehicle. The court denied BMW’s request stating that:

“BMW ‘cannot now be heard to complain that a condition precedent should be read into the offer merely because the attorney who drafted the offer “assumed” that both parties contemplated return of the vehicle in exchange for the $25,500.’”

The court added that counsel’s negligence, rose to the level of inexcusable negligence because counsel failed to include an important term of the settlement, and this omission “fell below acceptable professional standards.”

The Court also found a case decided in the Second District Court of Appeal, helpful in deciding Dale. Florida Insurance Guaranty Association, Inc. v. Love, again, featured a plaintiff seeking recovery on an insurance claim. This time however, the insurer made an offer in which they later sought withdrawal. There, the insurer, in declining a settlement offer from the plaintiff in the amount of $210,000, mistakenly proposed a counter-offer of $215,000. The counter-offer should have been $115,000, but for the error. Unlike BMW the court found that the error was an honest mistake and equity would permit the error to be corrected.

In the end, the Court in Dale ruled in favor of the plaintiff. The Court found that the facts were more consistent with cases involving excusable neglect, and highlighted that the plaintiff’s attorney’s error was a simple mistake and the attorney was never actually given authority to enter into a settlement for $10,000. While there may have been an offer and an acceptance, the Court found no reason to disallow rescission based on this unilateral mistake. The attorney’s actions did not constitute inexcusable negligence, therefore, the motion to withdraw the proposal for settlement should have been granted.

            Sweeney Law, P.A. Has Vast Experience Litigating Complex Claims

Brendan A. Sweeney, Esq., LL.M., of Sweeney Law, P.A., a boutique firm in Fort Lauderdale, Florida, regularly handles complex litigation throughout Florida. Brendan A. Sweeney, Esq., LL.M. is an AV Preeminent Martindale Rated Attorney, that has been recognized as a Florida Super Lawyer in 2020 and 2019, Florida Legal Elite in 2020 and 2019, and as a Florida Super Lawyer Rising Star in 2018, 2017, 2016, 2015, and 2014. If you have any questions and/or issues regarding proposals for settlement/offers of judgment then contact Sweeney Law, P.A. at (954) 440-3993 immediately to protect your rights.

www.sweeneylawpa.com.

 

Sources:

  1. R. Civ. P. 1.442
  2. Dale v. Schaub, No. 4D19-900, 2020 Fla. App. LEXIS 11785 (4th DCA Aug. 19, 2020).
  3. Maryland Cas. Co. v. Krasnek, 174 So. 2d 541 (Fla. 1965).
  4. BMW of N. Am., Inc. v. Krathen, 471 So. 2d 585, 588 (Fla. 4th DCA 1985).
  5. Florida Insurance Guaranty Association, Inc. v. Love, 732 So. 2d 456 (Fla. 2d DCA 1999).
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