Escadote I Corp. v. Ocean Three Ltd. P'ship

• Decision Date: 21 December 2016
• Docket Number: No. 3D15–668,3D15–668
• Citation: 211 So.3d 1059
• Parties: ESCADOTE I CORP., Appellant, v. OCEAN THREE LIMITED PARTNERSHIP, etc., et al., Appellees.
• Court: Florida District Court of Appeals

211 So.3d 1059

ESCADOTE I CORP., Appellant,

v.OCEAN THREE LIMITED PARTNERSHIP, etc., et al., Appellees.

No. 3D15–668

District Court of Appeal of Florida, Third District.

Opinion filed December 21, 2016.

Rehearing Denied February 15, 2017

GrayRobinson and Juan C. Martinez, for appellant.

Koeller, Nebeker, Carlson & Haluck and Chad N. Dunigan (Orlando); Kopelowitz Ostrow Ferguson Weiselberg Gilbert and John J. Shahady and Thomas R. Shahady (Fort Lauderdale), for appellees.

Before SUAREZ, C.J., and SHEPHERD and SALTER, JJ.

SALTER, J.

Escadote I Corporation ("Escadote") appeals two aspects of a final judgment entered following years of construction-related litigation: (a) the amount of a set-off allowed by the trial court against Escadote's jury verdict for $2,050,000.00 as against the appellees, and (b) the denial of prejudgment interest on the amount of the collateral settlement that was the basis for the set-off claimed by appellees. We reverse with respect to the order on the amount of the set-off, and we affirm the trial court's denial of prejudgment interest as applied to the corrected set-off amount.

I. Facts and Procedural History

Escadote purchased a high-rise condominium in the Ocean Three Condominium in Sunny Isles, Florida. In 2006, Escadote commenced a circuit court action against the developer (appellee Ocean Three Limited Partnership; "Developer"), the general contractor (appellee John Moriarty & Associates of Florida, Inc.; "Contractor"), and the Ocean Three Condominium Association ("Association"), for claims of water intrusion and mold infestation in Escadote's unit. Escadote's claims included separate counts against the various defendants, but only the statutory claim against the Association¹ included a demand for Escadote's attorney's fees. The basis for attorney's fees against the Association was alleged to be section 718.303, Florida Statutes (2007).

The case proceeded to trial by jury in March 2010. On the last day before submission of the case to the jury, the Association and Escadote reached a settlement for $375,000.00. The jury later returned a verdict against the Developer and Contractor, jointly and severally, for $2,050,000.00. The trial judge at the time granted the Developer's and Contractor's motion for judgment in accordance with prior motions for directed verdict, entering a final judgment for the Developer and Contractor. Escadote appealed that ruling to this Court, which reinstated the jury verdict. John Moriarty & Assocs. of Fla. v. Murton Roofing Corp. , 128 So.3d 58 (Fla. 3d DCA 2013).

In its Order on Plaintiff's Motion for Entry of Judgment entered after remand, the trial court described the Escadote–Association settlement:²

Under the terms of the settlement, the Association was to tender $375,000 in exchange for a full release of all claims. The settlement agreement provided that $500 of the settlement was attributable to damages and the remainder was intended to reimburse Escadote for attorney's fees. Funds were tendered and a joint release was executed on April 28, 2010.

The trial court was aware of the allocation and referred to it in her order on setoff. The fact of allocation and amount of the allocation to Escadote's attorney's fee claim against the Association, $374,500.00, were uncontroverted.

On remand following Escadote's successful appeal and reinstatement of the jury verdict, the Developer and Contractor filed a motion for collateral set-off, claiming that the entire $375,000.00 recovery by Escadote from the Association should be applied to reduce the amount of the jury verdict to be reflected in the final judgment. Escadote argued that only $500.00 of the recovery should be applied to reduce the jury verdict and judgment amount, as $374,500.00 had been apportioned by the settling parties in their settlement agreement to compensate Escadote for a claim unique to its case against the Association—a claim for statutory attorney's fees under the condominium statute.³

The trial court disallowed the apportionment sought by Escadote and instead ordered that the entire amount would be allowed as a set-off to reduce Escadote's judgment against the Developer and Contractor. In a separate order, the trial court also denied Escadote's claim for prejudgment interest on the full set-off amount from the date of loss (found in a previous order to be December 24, 2003) through the date the Association actually paid the $375,000.00 settlement. This appeal followed.

II. Analysis

Each of the issues presented—the determination of the proper set-off amount and Escadote's entitlement to prejudgment interest from the date of loss to the date the settlement amount was paid—is a question of law which we consider under a de novo standard of review. Cornerstone SMR, Inc. v. Bank of Am., N.A. , 163 So.3d 565, 568 (Fla. 4th DCA 2015) (stating that set-off is a pure question of law, with no deference given to the judgment of the trial court); Argonaut Ins. Co. v. May Plumbing Co. , 474 So.2d 212 (Fla. 1985) (finding that prejudgment interest on a party's out-of-pocket pecuniary losses is a legal entitlement once a verdict has liquidated those damages as of a date certain). The trial court's interpretation of the release as a waiver by Escadote of a right to prejudgment interest on the set-off amount is also reviewed de novo. Muniz v. Crystal Lake Project, LLC , 947 So.2d 464 (Fla. 3d DCA 2006).

A. Set-off

Set-offs for collateral recoveries are available pursuant to section 768.041(2), Florida Statutes (2010). The statute specifies that if a defendant demonstrates that a plaintiff has released a "person, firm, or corporation in partial satisfaction of the damages sued for, the court shall set off this amount from the amount of any judgment to which the plaintiff would be otherwise entitled at the time of rendering judgment and enter judgment accordingly." Section 46.015(2), Florida Statutes (2010), includes a nearly-identical provision that, for purposes of this case, operates in the same way as section 768.041(2). Cases interpreting the statutes have established two principles that apply to this case.

1. "The Damages Sued For"

First, as the statute requires, the settlement recovery sought to be set off must be "in partial satisfaction of the damages sued for." If the settlement funds are applicable to a claim asserted only against the settling co-defendant, the non-settling co-defendants are not eligible for a set-off in the amount of the settlement. Wells v. Tallahassee Mem'l Reg'l Med. Ctr. , 659 So.2d 249 (Fla. 1995). Expressed another way, the statutes "presuppose the existence of multiple defendants jointly and severally liable for the same damages." Id. at 253 (emphasis provided); D'Angelo v. Fitzmaurice , 863 So.2d 311, 314 (Fla. 2003) ; Gouty v. Schn ep el , 795 So.2d 959, 965 (Fla. 2001) (the underlying rationale of Wells is that "the operation of the setoff statutes was premised upon the determination that the defendant was jointly and severally liable for the same damages.") (emphasis provided).

The record demonstrates that Escadote responded in interrogatory answers and in pretrial compliance with a distinct articulation that attorney's fees were claimed as damages under Count IV (and only in Count IV) against the Association. In the memorandum in support of their joint motion for set-off in 2014, the Developer and Contractor attached Escadote's responses to interrogatories of August 5, 2009, itemizing $8,508,895.72 in damages through June 26, 2009. Item 8 of that damages list was characterized by Escadote as an affirmative claim under Count IV, the claim against the Association, for attorney's fees in the amount of $496,371.40. The preface to the interrogatory answers included a statement that "The figures for Carrying expenses, Interest, Attorneys' fees and Costs are very likely to change as these damages will continue to accrue until trial and beyond." (Emphasis provided).

The Developer's and Contractor's memo in support of their 2014 motion for set-off acknowledged, in paragraph 6, that "Plaintiff also disclosed damages for attorney's fees in the amount of $496,371.40 against the Association , which represents only 5.8% of [Escadote's] claim." (Emphasis provided). The memo also attached Escadote's pretrial compliance filed in February 2010, which included in its "Specification of Damages" a claim for attorney's fees of $741,000.00. Escadote neither sought nor recovered any attorney's fees from the Developer or the Contractor.

2. Apportionment vs. Undifferentiated Recovery

The second principle applicable to the record in this case is that, in a case in which a settlement recovery is not apportioned between (a) claims for which co-defendants are jointly and severally liable with the settling co-defendant, and (b) claims which were only asserted against the settling co-defendant, the entire amount of the undifferentiated recovery is allowable as a set-off. Dionese v. City of West Palm Beach , 500 So.2d 1347 (Fla. 1987) (reasoning that although plaintiffs apportioned settlement funds among the plaintiffs in a particular manner, the funds were not allocated among the separate and distinctive causes of action, so the total amount of the settlement was allowed as a set-off). In the present case, Escadote and the Association were on opposite sides of the case and Escadote's claim against the Association included an element of damages that was not a part of Escadote's claim against the Developer and the Contractor.

When a settlement recovery is allocated between claims with different and distinctive damage elements, set-off should only be allowed to co-defendants jointly and severally liable for the same claims. Devlin v. McMannis , 231 So.2d 194, 196 (Fla. 1970) (section 768.041(2)"authorizes to be set off from a judgment against one joint tort-feasor only the amount constituting a settlement for the damages or damage elements recoverable in the same cause of action against another joint tort-feasor")...