State Farm Mut. Auto. Ins. Co. v. Nichols
| Decision Date | 01 June 2006 |
| Docket Number | No. SC03-1483.,No. SC03-1653.,SC03-1483.,SC03-1653. |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner, v. Shannon NICHOLS, Respondent. Shannon Nichols, Petitioner, v. State Farm Mutual Automobile Insurance Company, Respondent. |
| Court | Florida Supreme Court |
Kenneth P. Hazouri of de Beaubien, Knight, Simmons, Mantzaris and Neel, LLP, Orlando, FL, for Petitioner/Respondent.
Thomas P. Hockman of Law Offices of Hockman and Hockman, Winter Park, FL, for Respondent/Petitioner.
Philip D. Parrish, P.A., Miami, Florida on behalf of the Academy of Florida Trial Lawyers, as Amicus Curiae.
In this case, we decide whether, in a suit for benefits under a personal injury protection policy, an insurer may ever recover attorney's fees pursuant to the offer of judgment statute. We review Nichols v. State Farm Mutual, 851 So.2d 742 (Fla. 5th DCA 2003), which held that an insurer could recover such fees but certified to us a question of great public importance. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.; State Farm Mut. Auto. Ins. Co. v. Nichols, 913 So.2d 598 (Fla.2005) (granting review). As we explain below, we agree with the district court in this case, as well as the other district courts that have considered this issue, and hold that a suit for PIP benefits is a "civil action for damages" to which the offer of judgment statute applies. We also agree with the district court, however, that in this case the insurer's offer did not satisfy the requirements of Florida Rule of Civil Procedure 1.442. We therefore approve the district court's decision in full.
After suffering injuries in a car accident in 1996, Shannon Nichols requested personal injury protection benefits from her insurer, State Farm. While agreeing to pay her early medical bills, State Farm requested that Nichols undergo an independent medical examination to determine the need for further treatment. Despite repeated rescheduling, she ultimately failed to attend the exam. Under the PIP statute, "[i]f a person unreasonably refuses to submit to an examination, the personal injury protection carrier is no longer liable for subsequent personal injury protection benefits." § 627.736(7)(b), Fla. Stat. (1999). Relying on the statute, State Farm refused to pay any additional benefits.
Nichols filed a complaint against State Farm in county court, alleging breach of their insurance contract. While the PIP suit was pending, State Farm served Nichols with a proposal for settlement in the amount of $250. As a condition of the settlement, however, Nichols would have been required to "execute a General Release in favor of State Farm, which will be expressly limited to all claims, causes of action, etc., that have accrued through the date of Nichols's acceptance of this Proposal." At the time, she also had an outstanding uninsured motorist ("UM") claim arising from the same accident, which later settled for $13,000. Fearing that the release would extinguish both the PIP claim and the UM claim, Nichols rejected the offer. State Farm later claimed that it did not intend for the release to extinguish the UM claim.
At trial, the jury found that Nichols unreasonably refused to submit to a medical examination, which meant she was not entitled to any recovery. State Farm therefore requested attorney's fees and costs under the offer of judgment statute. See § 768.79, Fla. Stat. (1999). The county court initially denied the request, concluding that the offer of judgment statute does not apply to PIP suits. Only days later, however, the Third District held that the offer of judgment statute does apply to such suits. See U.S. Sec. Ins. Co. v. Cahuasqui, 760 So.2d 1101 (Fla. 3d DCA 2000), review dismissed, 796 So.2d 552 (Fla.2001). Upon reconsideration, the county court awarded $23,199 to State Farm. It also certified to the Fifth District a question of great public importance, asking whether the offer of judgment statute applies to PIP suits.
The Fifth District answered yes. Nichols, 851 So.2d at 744. Applying the statute's plain language, which encompasses "any civil action for damages filed in the courts of this state," § 768.79(1), Fla. Stat. (1999), the district court concluded that the Legislature "clearly and unambiguously" intended for the statute to cover PIP suits. Nichols, 851 So.2d at 745. While acknowledging "thoughtful policy arguments" for the opposite result, the district court advised that they would be "more appropriately addressed to the Legislature." Id.
Judge Sawaya dissented in part. He argued that "the Legislature never intended a suit to recover PIP benefits to be an action for damages under section 768.79." Id. at 747 (Sawaya, J., concurring in part and dissenting in part). The purpose of the PIP system, he wrote, was to guarantee swift payment to insureds without regard to fault. In his view, "application of section 768.79 to PIP cases, with its inherent uncertainties and risks, has completely abrogated the security and the assurance that injured insureds were promised by the Legislature through the No-Fault Act." Id. at 750. He joined the majority, however, in certifying to us a question of great public importance: "May an insurer recover attorney's fees under rule 1.442, Florida Rules of Civil Procedure, and section 768.79, Florida Statutes, in an action by its insured to recover under a personal injury protection policy?" Id. at 747.
On appeal, Nichols raised another issue: whether State Farm's settlement proposal satisfied Florida Rule of Civil Procedure 1.442, which demands that such proposals "state with particularity any relevant conditions" and "state with particularity all nonmonetary terms." Fla. R. Civ. P. 1.442(c)(2)(C)-(D). She argued that State Farm's offer was too ambiguous because it arguably required her to release not only her PIP claim, but also her outstanding UM claim. Nichols, 851 So.2d at 745. At the attorney's fees hearing, she even accused State Farm of attempting in bad faith to kill two claims with one release. Id. But State Farm, professing to have been "unaware of the existence of the UM claim at the time," testified "that had the proposal for settlement been accepted, [it] would not have required that the release include the UM claim." Id. at 745-46. The trial court accepted State Farm's explanation and deemed the settlement proposal valid under rule 1.442. Id. at 746.
The Fifth District concluded, however, that because the scope of the release "could not be determined without resort to clarification or judicial interpretation," id., the settlement proposal was too ambiguous to satisfy rule 1.442. According to the district court, "[t]he terms and conditions of the proposal should be devoid of ambiguity, patent or latent." Id. It therefore reversed the award of attorney's fees to State Farm.
Both parties petitioned us for review. Nichols relied on the certified question, whereas State Farm alleged express and direct conflict with other district court decisions regarding rule 1.442's particularity requirement. We granted review based on the certified question and consolidated the cases. State Farm, 913 So.2d at 598. We now approve the Fifth District's reasoning on both issues, which we analyze separately.
The certified question asks whether the offer of judgment statute applies to PIP suits. The Fifth District answered yes, Nichols, 851 So.2d at 745, as have the other two district courts to consider the issue. See Tran v. State Farm Fire & Cas. Co., 860 So.2d 1000 (Fla. 1st DCA 2003); Cahuasqui, 760 So.2d at 1101. Two of those cases, however, produced dissents. See Nichols, 851 So.2d at 747 (Sawaya, J., concurring in part and dissenting in part); Cahuasqui, 760 So.2d at 1107 (Fletcher, J., dissenting). We agree with the three district courts and hold that the offer of judgment statute applies to PIP suits. To explain our decision, we discuss (A) whether the offer of judgment statute includes PIP suits, (B) whether the separate attorney's fees provision in the PIP statute precludes application of the offer of judgment statute, and finally (C) whether applying the offer of judgment statute to PIP suits would render unconstitutional the entire PIP system.
The first issue is whether the offer of judgment statute applies to PIP suits. The statute provides:
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 . . . from the date of filing of 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.
§ 768.79(1), Fla. Stat. (1999) (emphasis added). The district courts, emphasizing the plain meaning of the statute, have consistently held that a PIP suit is a "civil action for damages." See Nichols, 851 So.2d at 745; Cahuasqui, 760 So.2d at 1104. But Nichols maintains that her suit is better characterized as an action for "benefits" or "security."
We find this characterization to be a distinction without a difference. The purpose of a PIP suit is to recover damages for breach of an insurance contract. In fact, in Nichols's initial complaint, and again in her amended complaints, she expressly referred to her suit as "an action for damages." While the contractual breach may consist of a failure to pay insurance "benefits" or "security," the plaintiff, if successful, nevertheless will receive court-ordered compensation for her loss, which is the very definition of damages. See, e.g., Black's Law Dictionary 416 (8th ed.2004) (defining damages as "[m]oney claimed by, or ordered to be paid to, a person as...
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