How Settlement Credits Work: FloridaJune 2019 – Article
Because the Florida legislature largely eliminated joint and several liability in favor of a pure comparative fault scheme in 2006, settlement credits (or “set-offs” as they are known in Florida) are unavailable in most tort actions.
Prior to the 2006 amendment to Florida’s Comparative Fault Statute, Fla. Stat. § 768.81, set-off was available with respect to some types of damages in a tort action. Florida allows set-off with respect to damages for which joint and several liability exists. D’Angelo v. Fitzmaurice, 863 So. 2d 311, 314 (Fla. 2003) (recognizing that the set-off statutes, Fla. Stat. §§ 46.015(2), 768.041(2), and 768.31(5), presuppose “the existence of multiple defendants jointly and severally liable for the same damages”). The pre-2006 version of the Comparative Fault Statute retained joint and several liability to a limited extent for economic damages. Thus, under the pre-amendment statute, a defendant could obtain a partial set-off to reflect settlements that the plaintiff had reached with other defendants and nonparties. Because set-off was allowed only for economic damages, however, the parties and the court had to determine the percentage of the amount received in settlement that represented economic damages. See D’Angelo, 863 So. 2d at 314-16.
The 2006 amendment to the Comparative Fault Statute eliminated joint and several liability entirely for most tort actions and adopted a pure comparative fault scheme. (Joint and several liability remains in place for a few types of actions, such as intentional torts.) As amended, the Comparative Fault Statute provides that damages in a “negligence action” must be apportioned among parties and nonparties according to their respective percentages of fault: “In a negligence action, the court shall enter judgment against each party liable on the basis of such party’s percentage of fault and not on the basis of the doctrine of joint and several liability.” Fla. Stat. § 786.81(3). The statute defines a “negligence action” as including, without limitation, “a[ny] civil action for damages based upon a theory of negligence, strict liability, products liability, professional malpractice whether couched in terms of contract or tort, or breach of warranty and like theories.” Fla. Stat. § 768.81(1)(c); see also Fla. Stat. § 768.81(1)(d) (defining “product liability action”). The statute provides that “[t]he substance of an action, not conclusory terms used by a party, determines whether an action is a negligence action.” Fla. Stat. § 768.81(1)(c).
Because the existence of joint and several liability is a prerequisite for set-off, the elimination of joint and several liability for “negligence actions” also resulted in the elimination of set-off for those actions. Instead of asking for a settlement credit or set-off from the court after trial, a defendant who wants to reduce its liability to reflect the fault of a nonparty or former codefendant must affirmatively plead the fault of the nonparty or former codefendant, prove that fault at trial by a preponderance of the evidence, and ensure that the nonparty or former codefendant is included on the verdict form. Fla. Stat. § 768.81(3)(a). Neither the fact that the nonparty or former codefendant settled nor the amount of the settlement has any impact on the damages awarded.
Only one Florida appellate court has expressly ruled on the effect of the elimination of joint and several liability on the availability of set-off. In Port Charlotte HMZ, LLC v. Suarez, 210 So.3d 187, 190-91 (Fla. 2d Dist. Ct. App. 2016), the court ruled that set-off is no longer available due to the abolition of the doctrine of joint and several liability. In addition, two federal courts have made the same ruling. West v. Poindexter, No. 2:18-CV-14155, 2019 U.S. Dist. LEXIS 67148, at *2-3 (S.D. Fla. Apr. 18, 2019); Schippers v. United States, Case No. 5:11-CV-163-OC-37TBS, 2011 U.S. Dist. LEXIS 141356, at *5, 2011 WL 6112354 (M.D. Fla. Dec. 8, 2011). In a few other cases, state and federal courts have discussed the issue without ruling on it. See Sterbenz v. Anderson, Case No. 8:11-CV-1159-T-33TBM, 2013 U.S. Dist. LEXIS 44568, at *13-19, 2013 WL 1278160 (M.D. Fla. March 28, 2013) (discussing plaintiff’s argument that set-off was unavailable due to abolition of joint and several liability but ultimately disposing of issue on different ground); Wal-Mart Stores, Inc. v. Strachan, 82 So.3d 1052, 1053-55 (Fla. 4th Dist. Ct. App. 2011) (discussing issue but denying petition for certiorari because issue could be raised in appeal from final judgment).
The issue was also presented in Honeywell International, Inc. v. Guilder, 23 So. 3d 867 (Fla. 3d Dist. Ct. App. 2009), but the court did not expressly discuss the elimination of joint and several liability or its effect on the availability of set-off. Instead, the court ruled that set-off should have been allowed with respect to economic damages, relying on case law antedating the 2006 amendment to the Comparative Fault Statute—even though the plaintiffs’ claims accrued in 2007 and thus should have been governed by the 2006 amendment. See Guilder, 23 So. 3d at 871. Guilder technically could be viewed as precedent for the continued availability of set-off of economic damages despite the elimination of joint and several liability for such damages. If so, however it is weak precedent given its inconsistency with statutes and Florida Supreme Court case law and its failure to discuss the elimination of joint and several liability.