ROY W. PERSONS, APPELLANT,
v.
ARNALDO PELAEZ, APPELLEE
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Persons contracted with Pelaez for home repairs, sued for breach after Pelaez failed to fix water leaks, obtained a judgment of $15,881.61 (including prejudgment interest), and appealed denial of attorney's fees after Pelaez rejected a settlement offer. The court held that prejudgment interest must be included when calculating whether an offer of judgment was unreasonably rejected under Florida law.
Yes. Prejudgment interest is an element of damages and must be included in calculating the total judgment amount for purposes of determining whether an offer of judgment was unreasonably rejected under section 45.061. When the final judgment (including prejudgment interest) exceeds the rejected settlement offer by 25 percent or more, the offer is presumed to have been unreasonably rejected and the offeree is liable for attorney's fees.
[1] An offer of judgment is unreasonably rejected when the subsequent judgment, including prejudgment interest, is at least 25 percent greater than the offer.
[2] Prejudgment interest is considered an element of damages for the purpose of evaluating settlement offers under statutory fee-shifting provisions.
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Join FLexlaw to unlock all legal intelligence“For the purposes of this section, the amount of the judgment shall be the total amount of money damages awarded plus the amount of costs and expenses reasonably incurred by the plaintiff or counter-plaintiff prior to the making of the offer for which recovery is provided by operation of other provisions of Florida law.”
Statutory definition of 'judgment' for purposes of section 45.061, establishing that all damages elements must be included in calculating settlement offer comparison.
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Join FLexlaw to unlock all legal intelligencePelaez agreed to repair and seal leaks in Persons' house, including removing and reinstalling eight skylights, with a two-year warranty against leaks.…
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FRANK, Judge.
Roy Persons sued Arnaldo Pelaez alleging that Pelaez failed in his contractual undertaking to repair and seal leaks, cracks, and holes that were causing water damage to Persons’ house. Pelaez was to remove and properly reinstall eight skylights in a new addition to the home and to repair any leaks in the premises occurring within two years from completion of the project. Persons paid Pelaez $9,000.00, the contract price, in June of 1984. By August, however, the house began to leak and Pelaez never remedied the problem.
After this action was instituted, Persons tendered an offer of judgment pursuant to section 45.061, Florida Statutes (1987), but Pelaez failed to respond within the 45-day limit prescribed in the statute. Persons prevailed in the trial and received a $11,-293.75 verdict. The court subsequently entered an amended final judgment in the amount of $15,881.61, which included the verdict amount, prejudgment interest and costs. Jurisdiction was retained to consider Persons’ motion for attorneys’ fees. After a hearing, the motion was denied, and Persons appealed.
The heart of Persons’ contention is that the trial court ignored the effect of prejudgment interest in determining the merits of the offer of judgment. With the addition of prejudgment interest, the judgment entered was 25 percent greater than the settlement offer rejected by Pelaez. Thus, according to section 45.061(2), such an offer “shall be presumed to have been unreasonably rejected by a defendant.” Once the court has determined that an offer was unreasonably rejected, the offeree is liable for sanctions in the form of attorneys’ fees.
The plain language of the statute and cases interpreting similar provisions compel the conclusion we reach. Section 45.-061 provides that:
For the purposes of this section, the amount of the judgment shall be the total amount of money damages awarded plus the amount of costs and expenses reasonably incurred by the plaintiff or counter-plaintiff prior to the making of the offer for which recovery is provided by operation of other provisions of Florida law.
Prejudgment interest is an element of damages. Argonaut Ins. Co. v. May Plumbing Co., 474 So. 2d 212 (Fla.1985). In Phillips v. Parrish, 585 So. 2d 1038 (Fla. 1st DCA 1991), the first district noted: “Since prejudgment interest is merely another element of damages, it is properly included in determining whether a judgment is so deficient as to activate the provisions of section 768.79, Florida Statutes.” See also Lee County v. Sager, 595 So. 2d 177 (Fla. 2d DCA 1992) (“prejudgment interest is a part of the judgment in determining whether the award is below the level which activates entitlement to fees and costs pursuant to section 73.092(7), Florida Statutes (1987)”). This analysis is equally applicable to settlement offers under section 45.-061.
Accordingly, we reverse and vacate the order denying Persons’ motion for attorneys’ fees and remand for further proceedings consistent with this opinion.
DANAHY, A.C.J., and CURRY, CHARLES B., Associate Judge, concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Leyton F. Perez v. Cir. City Stores, Inc., 721 So. 2d 409 (Fla. 3d DCA 1998)…The trial court properly did not subtract prejudgment interest from the judgment for Section 768.79 purposes. See Baker Protective Services v. FP Inc., 659 So. 2d 1120 (Fla. 3d DCA 1995), review denied, 669 So. 2d 250 (Fla.1996); Persons v. Pelaez, 613 So. 2d 509 (Fla. 2d DCA 1993); Phillips v. Parrish, 585 So. 2d 1038 (Fla. 1st DCA 1991). . The courts in Mincin and Williams interpreted an earlier version of the demand for judgment statute. See Mincin v. Short, 662 So. 2d at 1324 n. 1; Williams v. Brochu, 5…
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Baker Protective Servs. v. FP Inc. & Fid. & Deposit Co. of Md., 659 So. 2d 1120 (Fla. 3d DCA 1995)…her element of damages, it is properly included in determining whether a judgment is so deficient as to activate the provisions of section 768.79, Florida Statutes.” Phillips v. Parrish, 585 So. 2d 1038 (Fla. 1st DCA 1991); accord Persons v. Pelaez, 613 So. 2d 509, 510 (Fla. 2d DCA 1993) (applying the prejudgment interest rule in Phillips to settlement offers under Section 45.061); cf. Lee County v. Sager, 595 So. 2d 177 (Fla. 2d DCA), review denied, 606 So. 2d 1165 (Fla.1992) (stating that "prejudgment inter…
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Arnaldo Pelaez v. Persons, 664 So. 2d 1022 (Fla. 2d DCA 1995)…nterest. Mr. Persons appealed that order. In the second appeal, this court reversed, holding that prejudgment interest should be included in the judgment when the trial court decides whether the judgment exceeds the offer by 25%. Persons v. Pelaez, 613 So. 2d 509 (Fla. 2d DCA 1993). Except for one sentence in the middle of an argument, Mr. Pelaez’s answer brief in the second appeal never pointed out that most of the prejudgment interest described in the second final judgment is actually postjudgment interest…
Authorities Cited
- Argonaut Ins. Co. v. MAY Plumbing Co., 474 So. 2d 212 (Fla. 1985)
- Phillips v. Parrish, 585 So. 2d 1038 (Fla. 1st DCA 1991)
- LEE Cnty. v. Sager, 595 So. 2d 177 (Fla. 2d DCA 1992)