Southeast Floating Docks, Inc. v. Auto-Owners Insurance Co.
37 Fla. L. Weekly Supp. 63, 2012 WL 301029, 82 So. 3d 73 (2012)
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Rule of Law:
Florida's offer of judgment statute, § 768.79, creates a substantive right to attorney's fees and therefore does not apply when parties have a valid contractual choice-of-law provision that selects the substantive law of another jurisdiction.
Facts:
- Auto-Owners Insurance Company (Auto-Owners) issued a performance bond for work Southeast Floating Docks, Inc. (Southeast) was to perform for Rivermar Contracting Company (Rivermar).
- The agreement between Auto-Owners and Southeast contained a choice-of-law clause specifying that the substantive law of Michigan would govern any disputes.
- A dispute arose over Southeast's performance, leading Rivermar to file an action against both Southeast and Auto-Owners.
- Auto-Owners settled the dispute with Rivermar for $956,987.
- Auto-Owners then sought indemnification from Southeast for the settlement amount based on their agreement.
Procedural Posture:
- Auto-Owners sued Southeast in the U.S. District Court for the Middle District of Florida for indemnification.
- A jury returned a verdict for Southeast, finding Auto-Owners had settled in bad faith.
- The district court granted Auto-Owners' motion for a new trial, setting aside the jury verdict.
- Before the new trial, Southeast made an offer of judgment to Auto-Owners pursuant to Fla. Stat. § 768.79, which Auto-Owners rejected.
- The district court then granted summary judgment in favor of Auto-Owners.
- Southeast, as appellant, appealed to the U.S. Court of Appeals for the Eleventh Circuit.
- The Eleventh Circuit reversed the district court and reinstated the original jury verdict in favor of Southeast.
- Southeast then moved in the district court for attorney’s fees under § 768.79, which the court denied as untimely.
- Southeast appealed the denial of attorney's fees to the Eleventh Circuit, which then certified questions of law to the Supreme Court of Florida.
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Issue:
Does Florida's offer of judgment statute, § 768.79, apply to cases governed by the substantive law of another jurisdiction based on the parties' contractual agreement?
Opinions:
Majority - Lewis, J.
No. Because an award of attorney's fees under Florida’s offer of judgment statute is a substantive right, section 768.79 will not apply in instances where the parties have agreed to be governed by the substantive law of another jurisdiction. The court determined that § 768.79 is substantive law because it creates a right to attorney's fees, altering the common law American rule which requires each party to pay its own fees. While parties' choice-of-law provisions can be invalidated if they contravene a strong public policy of Florida, the court found that the policy of encouraging settlement behind § 768.79 does not rise to the level of a 'strong public policy' sufficient to override the parties' freedom to contract. Thus, the contractual agreement to apply Michigan's substantive law prevails, rendering the Florida statute inapplicable.
Dissenting - Perry, J.
Yes. Section 768.79 should be considered procedural for conflict of law purposes and therefore applicable to the case. The statute's plain language stating it applies '[i]n any civil action for damages filed in the courts of this state' demonstrates the legislature's clear intent for it to apply to all cases litigated in Florida, regardless of the substantive law governing the dispute. Furthermore, even if the statute were considered substantive, the strong public policy of preserving scarce judicial resources by encouraging settlement should outweigh the parties' freedom of contract. This policy is a core concern for Florida's judiciary and should not be avoided by a choice-of-law provision.
Analysis:
This decision clarifies that Florida's offer of judgment statute is substantive for conflict of law purposes, prioritizing freedom of contract over the state's procedural goal of encouraging settlements. By siding with the enforceability of choice-of-law provisions, the court provides certainty for commercial parties, confirming that such clauses will effectively waive the application of § 768.79. This ruling resolves conflicting lower court opinions and significantly impacts litigation strategy, as the potential for recovering attorney's fees under the statute is a major consideration in deciding whether to accept a settlement offer in Florida.
