White v. Steak and Ale of Florida, Inc.

• Decision Date: 18 April 2002
• Docket Number: No. SC01-96.,SC01-96.
• Citation: 816 So.2d 546
• Parties: William J. WHITE, Petitioner, v. STEAK AND ALE OF FLORIDA, INC., d/b/a Bennigan's, Respondent.
• Court: Florida Supreme Court

816 So.2d 546

William J. WHITE, Petitioner, v. STEAK AND ALE OF FLORIDA, INC., d/b/a Bennigan's, Respondent.

No. SC01-96.

Supreme Court of Florida.

April 18, 2002.

Joseph A. Eustace, Jr. of Anthony J. Laspada, P.A., Tampa, FL, for Petitioner.

Charles Tyler Cone of Fowler, White, Gillen, Boggs, Villareal and Banker, P.A., Tampa, FL, for Respondent.

Thomas R. Thompson of Thompson, Crawford & Smiley, Tallahassee, FL, for Florida Defense Lawyers Association, Amicus Curiae.

PARIENTE, J.

We have for review the decision of the Second District Court of Appeal in White v. Steak & Ale of Florida, Inc., 779 So.2d 527, 528 (Fla. 2d DCA 2000), which certified conflict with the decision of the Third District Court of Appeal in Perez v. Circuit City Stores, Inc., 721 So.2d 409 (Fla. 3d DCA 1998),review dismissed, 729 So.2d 390 (Fla.1999). The issue in this case is whether, under the offer of judgment statute, section 768.79, Florida Statutes (1993), pre-offer taxable costs are included in calculating the "judgment obtained" for the purpose of determining whether the party making the offer is entitled to attorneys' fees under section 768.79. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.

BACKGROUND

Petitioner William White filed a personal injury lawsuit against Steak and Ale for injuries arising out of an incident that occurred on December 16, 1993, claiming Steak and Ale was negligent in the maintenance of its premises. On August 27, 1996, Steak and Ale served on White an "Offer of Settlement and Dismissal Pursuant to Florida Statutes § 768.79," in the total amount of $15,000. White rejected the offer and the case proceeded to trial, resulting in a net verdict of $8,025.

Steak and Ale then moved to recover fees and costs under section 768.79(6), Florida Statutes (1993). This statute provides that when the plaintiff rejects an offer and the judgment obtained is "at least 25% less" than the offer, the defendant who makes the offer is entitled to recover its post-offer attorneys' fees and costs. At the same time, White separately filed a motion to tax costs incurred before Steak and Ale's offer in the amount of $4,243, and the trial court entered a cost judgment for White in that amount. White then asserted that Steak and Ale was not entitled to recover its fees and costs under the offer of judgment statute because the judgment obtained was $12,268, consisting of the jury verdict of $8,025 plus the pre-offer taxable costs of $4,243. Thus, White argued the judgment obtained exceeded the 25%-of-offer threshold of $11,250 (75% of $15,000).

Although the trial court granted White's motion to tax $4,243 as pre-offer costs in his favor as prevailing party, the trial court felt bound by Mincin v. Short, 662 So.2d 1323 (Fla. 2d DCA 1995), not to consider those pre-offer costs in determining whether the judgment obtained exceeded the 25%-of-offer threshold. The trial court then found Steak and Ale's fees and costs to be $96,487.59 and, after making appropriate statutory adjustments, entered a final judgment for Steak and Ale in the amount of $98,624.40. White appealed to the Second District, which affirmed the trial court, citing Mincin, and certified conflict with Perez. See White, 779 So.2d at 528

.

ANALYSIS

In resolving the conflict between the district courts, we begin with the language of the controlling statute, section 768.79. Specifically, section 768.79(6) sets forth how the court must determine whether the offeror is entitled to recover attorneys' fees and costs:

Upon motion made by the offeror within 30 days after the entry of judgment or after voluntary or involuntary dismissal, the court shall determine the following:

(a) If a defendant serves an offer which 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 shall be awarded reasonable costs, including investigative expenses, and attorney's fees, calculated in accordance with the guidelines promulgated by the Supreme Court, incurred from the date the offer was served, and the court shall set off such costs in attorney's fees against the award. When such costs and attorney's fees total more than the amount of the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the award to the plaintiff.

(b) If a plaintiff serves an offer which is not accepted by the defendant, and if the judgment obtained by the plaintiff is at least 25 percent more than the amount of the offer, the plaintiff shall be awarded reasonable costs, including investigative expenses, and attorney's fees, calculated in accordance with the guidelines promulgated by the Supreme Court, incurred from the date the offer was served.

For purposes of the determination required by paragraph (a), the term "judgment obtained" means the amount of the net judgment entered, plus any postoffer collateral source payments received or due as of the date of the judgment, plus any postoffer settlement amounts by which the verdict was reduced. For purposes of the determination required by paragraph (b), the term "judgment obtained" means the amount of the net judgment entered, plus any postoffer settlement amounts by which the verdict was reduced.

§ 768.79(6), Fla. Stat. (1993) (emphasis added).

Pursuant to this statutory scheme, if a defendant properly serves an offer on a plaintiff who rejects the offer, then an amount 25% less than the offered amount constitutes the judgment threshold. If the plaintiff later obtains a judgment that is at or below this threshold, then the defendant may recover any attorneys' fees and taxable costs incurred after the plaintiff rejected the offer, and the plaintiff is entitled only to the taxable costs incurred before receiving the offer.

The statute operates in a parallel manner with regard to offers made by a plaintiff.¹ If a plaintiff serves an offer on a defendant, then an amount that is 25% more than the amount demanded constitutes the judgment threshold. If the plaintiff later obtains a judgment that is at or above the threshold, then the plaintiff may recover any attorneys' fees and taxable costs incurred after rejecting the offer.²

In determining whether the threshold amount has been met, the components included in the judgment obtained become critical. The question presented by this case is whether a prevailing party's preoffer taxable costs are included for purposes of calculating the "judgment obtained." The Second and Fifth District Courts of Appeal have defined the term "judgment obtained" as limited to "the amount of the judgment for damages awarded by the jury." Mincin, 662 So.2d at 1325 (quoting Williams v. Brochu, 578 So.2d 491, 493 (Fla. 5th DCA 1991)); see also Gulf Coast Transp. v. Padron, 782 So.2d 464, 467 (Fla. 2d DCA 2001)

. The Third District in Perez and the Fourth District Court of Appeal have disagreed, concluding that a trial court is required to add taxable costs incurred up to the time of the offer when calculating the judgment obtained for purposes of determining entitlement to attorneys' fees and costs under section 768.79. See Perez, 721 So.2d at 412; Herzog v. K-Mart Corp., 760 So.2d 1006, 1009, n. 3 (Fla. 4th DCA 2000),

disapproved on other grounds by Allstate Indem. Co. v. Hingson, 808 So.2d 197 (Fla. 2002).

We conclude that the "judgment obtained" is not limited to or equated solely with the amount of the judgment for damages. As the Third District reasoned in Perez, the amount of the judgment for damages awarded by the jury is the "verdict," not the judgment. Perez, 721 So.2d at 411 (citing Black's Law Dictionary 1559 (6th ed.1990)). The Third District explained in Perez that "[w]hile a jury's verdict is certainly an important part of the `judgment obtained,'" the judgment obtained could not be equated with the jury verdict. Perez, 721 So.2d at 411. See also State Farm Mut. Auto. Ins. v. Kujawa, 782 So.2d 1003, 1005 (Fla. 4th DCA 2001)

(citing Perez and holding that "the correct source from which to determine whether to award section 786.79 attorneys' fees is the judgment, not the verdict").

In fact, the "judgment obtained," as defined by statute, is 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. See § 768.79(6)(b). This definition does not limit the net judgment entered to the verdict.

In excluding the calculation of the amount of costs from the term "judgment obtained," the Mincin and Williams courts relied upon cases holding that costs are incidental to an action for jurisdictional purposes. See Mincin, 662 So.2d at 1324

(citing Golub v. Golub, 336 So.2d 693 (Fla. 2d DCA 1976)); Williams, 578 So.2d at 493 n. 3 (citing Louisville & Nashville Railroad Co. v. Sutton, 54 Fla. 247, 44 So. 946 (1907)). However, although costs may be incidental for determining the jurisdictional threshold, they are not incidental for determining the judgment threshold because a prevailing party is entitled to a judgment for taxable costs.³

Moreover, common sense, fairness, and the purpose of the offer-of-judgment statute, which is to encourage settlements of lawsuits, also lead us to this conclusion. In determining both the amount of the offer and whether to accept the offer, the party necessarily must evaluate not only the amount of the potential jury verdict, but also any taxable costs, attorneys' fees, and prejudgment interest to which the party would be entitled if the trial court entered the judgment at the time of the offer or demand.⁴ As we stated in Danis Industries Corp. v. Ground Improvement Techniques, Inc., 645 So.2d 420, 421-22 (Fla.1994):

[A]ny offer of settlement shall be construed to include all damages, attorney fees, taxable costs, and prejudgment interest which would be included in a final judgment

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