United States District Court, M.D. Florida, Jacksonville Division
MORALES HOWARD United Slates District Judge
CAUSE is before the Court on the Report and Recommendation
(Doc. No. 141; Report), entered by the Honorable James R.
Klindt, United States Magistrate Judge, on February 2, 2017.
In the Report, Judge Klindt recommends that the Court grant,
in part, and deny, in part, Defendant Rockhill Insurance
Company's (Rockhill) Verified Motion for Attorneys'
Fees and Costs in the Trial Court and for Appellate Fees and
Costs (Doc. No. 129; Motion), which Rockhill filed on August
18, 2016. See Report at 23-24. Rockhill filed its
Notice of Objection to the Magistrate's February 2, 2017
Report and Recommendation (Doc. No. 142; Objections) on
February 16, 2017, and Plaintiff Divine Motel Group, LLC
d/b/a Royal Inn (Divine) responded in opposition on February
28, 2017, see Plaintiff's Response in Opposition
to Defendant's Objection to the Magistrate's February
2, 2017 Report and Recommendation (Doc. No. 145).
Accordingly, this matter is ripe for review.
Court “may accept, reject, or modify, in whole or in
part, the findings or recommendations made by the magistrate
judge.” 28 U.S.C. § 636(b). If no specific
objections to findings of fact are filed, the district court
is not required to conduct a de novo review of those
findings. See Garvey v. Vaughn, 993 F.2d 776, 779
n.9 (11th Cir. 1993); see also 28 U.S.C. §
636(b)(1). However, the district court must review legal
conclusions de novo. See Cooper-Houston v.
Southern Ry. Co., 37 F.3d 603, 604 (11th Cir. 1994);
United States v. Rice, No. 2:07-MC-8-FTM-29SPC, 2007
WL 1428615, at *1 (M.D. Fla. May 14, 2007).
review of the record, the Court determines that Judge Klindt
correctly found that Rockhill is not entitled to an award of
attorneys' fees pursuant to section 768.79, Florida
Statutes (Florida's Offer of Judgment Statute).
See Report at 22. Additionally, Judge Klindt
correctly concluded that Rockhill is entitled to taxable
costs in the amount of $24, 858.90 pursuant to Federal Rule
of Civil Procedure (Rule(s)) 54(d) and 28 U.S.C. § 1920.
As such, the Court writes only to address Rockhill's
contention that “Florida Rule of Civil Procedure
1.442(b) is procedural in nature and thus, cannot be applied
in Federal Court [sic] as substantive
law.” Objections at 3. In doing so, the Court
will not restate, but instead incorporates, the
“Relevant Background” set forth by Judge Klindt
in the Report. See Report at 2-7.
Rule 1.442(b) provides in part that “a proposal [for
settlement] to a plaintiff shall be served no earlier than 90
days after the action has been commenced.” Report at 16
(citing Fla. R. Civ. P. 1.442(b)). Here, the action was
commenced in state court on November 14, 2013, and Rockhill
served its offer of judgment on January 17, 2014 - less than
90 days later. See id. As such, if Florida Rule
1.442(b) applies, then Rockhill's offer was premature and
is therefore invalid. See id. at 18 (citing
Regions Bank v. Rhodes, 126 So.3d 1259, 1261 (Fla.
Dist. Ct. App. 2013)). Conversely, if Florida Rule 1.442(b)
does not apply in this proceeding, then the offer may be
valid and - because it was rejected by Divine - Rockhill as
the prevailing party would be entitled to recover its
reasonable costs and attorneys' fees incurred from the
date it filed the offer with the Court until the final
judgment was rendered. See Fla. Stat. § 768.79.
United States Court of Appeals for the Eleventh Circuit
previously determined that Florida's Offer of Judgment
Statute applies in diversity cases where the substantive law
of Florida applies. See, e.g., Menchise v.
Akerman Senterfitt, 532 F.3d 1146, 1150 (11th Cir.
2008). However, the court has yet to reach the same general
conclusion with respect to all of the provisions of Rule
1.442 of the Florida Rules of Civil Procedure. See,
e.g., Horowitch v. Diamond Aircraft Indus., 645
F.3d 1254, 1257-59 (11th Cir. 2011) (concluding that Florida
Rule 1.442(c)(2)(F) - requiring a proposal for settlement to
indicate whether the proposal includes attorneys' fees -
is substantive and therefore applicable in federal court,
while Florida Rule 1.442(c)(2)(G) - requiring the
proposal's certificate of service to comply with a
specific format - is procedural and therefore inapplicable);
see also Primo v. State Farm Mut. Auto. Ins. Co.,
661 Fed.Appx. 661, n.1 (11th Cir. 2016) (observing, without
deciding the issue, that Florida Rule 1.442(c)(2)(B) -
requiring a proposal for settlement to identify the claims it
is attempting to resolve - is “likely
substantive”). Put differently, while the Eleventh
Circuit has previously conducted an analysis of certain
subsections of Florida Rule 1.442 pursuant to the
Erie doctrine, it has yet to do so for all
subsections of the rule.
the only Eleventh Circuit opinion specifically applying
Florida Rule 1.442(b) is that of Auto-Owners Ins. Co. v.
Southeast Floating Docks, Inc., 632 F.3d 1195 (11th Cir.
2011). However, while the Auto-Owners court applied
Florida Rule 1.442(b), the court did not consider whether
this subsection was substantive in accordance with the
Erie doctrine. See id. at 1198-1200. A number
of Florida's federal courts have relied largely upon
other Eleventh Circuit decisions as precedent in concluding
that Florida Rule 1.442, as a whole, is substantive. See
Five for Entm't, S.A. v. Ayala Rodriguez, No.
11-24142-CV-SEITZ/Turnoff, 2017 WL 511085, at *2 (S.D. Fla.
Feb. 2, 2017) (citing Menchise, 532 F.3d at 1150);
Hernandez v. Target Corp., No.
14-21062-CIV-WILLIAMS/SIMONTON, 2016 WL 4006656, at *2 (S.D.
Fla. March 30, 2016) (citing Horowitch, 645 F.3d at
1258); Guerra v. Southeastern Freight Lines, No.
13-22070-CIV, 2014 WL 6751589, at *1 (S.D. Fla. Aug. 8, 2014)
(citing Menchise, 532 F.3d at 1150); Evanston v.
Premium Assignment Corp., No. 8:11-CV-2630-T-33TGW, 2013
WL 3285274, at *2 (M.D. Fla. June 26, 2013) (citing
Horowitch, 645 F.3d at 1258). Notably, these
Eleventh Circuit decisions do not specifically address
subsection (b) of Florida Rule 1.442, much less why it is
appropriate to classify Florida Rule 1.442 as substantive in
its entirety. See Horowitch, 645 F.3d at 1257-59
(concluding that Florida Rule 1.442(c)(2)(F) is substantive,
while Florida Rule 1.442(c)(2)(G) is procedural);
Menchise, 532 F.3d at 1152-53 (holding that Rule 68
does not preempt Florida Statutes section 768.79).
the lack of binding precedent, in an effort to determine
whether Florida Rule 1.442(b) is procedural or substantive
for Erie purposes, Judge Klindt first concluded that
this particular subsection does not conflict with any federal
Rule, and therefore that the subsection is not preempted by
federal law. See Report at 18 (citing Smith v.
R.J. Reynolds Tobacco Co., No. 3:09-CV-10048-WGY-JBT,
2014 WL 12621252, at *1 (M.D. Fla. June 19,
2014)). Rockhill does not challenge this finding.
See generally Objections. Next, Judge Klindt applied
the ‘outcome determinative' test propounded by the
Supreme Court in Erie and its progeny to reach the
conclusion that “it would be unfair not to apply
[Florida Rule 1.442(b)] in federal court, and that [this
subsection] is therefore substantive for Erie
purposes.” See Report at 18-19.
Objections, Rockhill now argues that Judge Klindt deviated
from the proper parameters when applying the outcome
determinative test to Florida Rule 1.442(b). See
Objections at 8. Specifically, Rockhill avers that the Report
failed to: (1) account for “potential competing
factors, including the background of the state law;”
(2) apply the test with reference to the “two aims of
Erie” - namely, discouragement of forum
shopping and avoidance of the inequitable administration of
the laws; (3) ensure that any potential change in outcome
would be substantial and not trivial; and (4) apply the test
from the vantage point of the commencement of the litigation.
support of it first contention, Rockhill cites to two recent
state-court decisions suggesting that Florida Rule 1.442 is
solely procedural in nature. See Objections at 3
(citing Kuhajda v. Borden Dairy Co. of Ala, LLC.,
202 So.3d 391, 393-95 (Fla. 2016); Floyd v. Smith,
160 So.3d 567, n.1 (Fla. Dist. Ct. App. 2015)). However, as
the Supreme Court instructed in Guaranty Trust Co. of
N.Y. v. York, 326 U.S. 99, 109 (1945), “it is 
immaterial whether [laws] are characterized either as
‘substantive' or ‘procedural' in State
court opinions in any use of those terms unrelated to the
specific issue” of making a determination regarding the
law's applicability pursuant to the Erie
doctrine. Hence, because the state courts in Kuhajda
and Floyd were not analyzing Florida Rule 1.442
under the Erie doctrine, the Court does not find
their reasoning persuasive.
Court is similarly unpersuaded by the reasoning of
Florida's only federal court that has thus far determined
that Florida Rule 1.442(b) is procedural in nature. In
Safranek v. Wal-Mart Stores, Inc., No. 07-61533-CIV,
2011 WL 766218, at *2 (S.D. Fla. Feb. 25, 2011), the court
concluded that “the timing provision of Florida Rule 
1.442 is strictly procedural and therefore  not applicable
in this federal court case.” In doing so, the court
relied upon Tiara Condo. Ass'n v. Marsh USA,
Inc., 697 F.Supp.2d 1349, 1357-58 (S.D. Fla. 2010).
However, in Tiara, the court did not even discuss
Florida Rule 1.442(b) and instead concluded that another,
unrelated subsection of the rule was procedural because its
application was not outcome determinative. See id.
at 1357-58. In doing so, the Tiara court also noted
that the offer of judgment in question complied with
“the substantive portions of Rule 1.442.”
Id. at 1358, n. 6. That said, it is unclear why
Safranek cited to Tiara for the proposition
that Florida Rule 1.442(b) is “strictly
procedural.” Thus, the Court determines that there is
no authority - state or federal - that is controlling or
sufficiently persuasive with respect to this narrow issue.
Court now turns to Rockhill's remaining arguments
regarding the application of the ‘outcome
determinative' test. As a starting point, Rockhill is
correct that this test is properly applied from the point of
view of the commencement of litigation, and that “it
cannot be read without reference to the twin aims of the
Erie [doctrine]: discouragement of forum shopping
and avoidance of inequitable administration of the
laws.” Hanna v. Plumer, 380 U.S. 460, 468, 469
(1965). As Hanna further instructs, substantial
variations between state and federal law are more likely to
bear upon these twin aims as compared to those which are
insubstantial or trivial. Id. at 467-68. With this
in mind, the Court agrees that the failure to apply Florida
Rule 1.442(b) in federal proceedings would result in the
inequitable administration of the laws inasmuch as
Florida's Offer of Judgment Statute provides prevailing
parties with costs and fees “incurred from the date the
[rejected] offer was served.” See Fla. Stat.
§ 768.79(6)(a). In other words, failure to apply Florida
Rule 1.442(b) in federal court would allow for the submission
of settlement proposals earlier than in state court -
potentially at a time when the receiving party does not have
adequate information to determine whether to accept the offer
- with the understanding that such a practice could
potentially increase both the likelihood that an offer may be
rejected and the period of time for which the offering party
would be entitled to fees. For this same reason, the Court finds
that failure to apply the rule would encourage forum shopping
inasmuch as parties would be more likely to choose federal
court in order to avail themselves of this earlier timeframe,
during which the possibility of fee-shifting would be
foreclosed in state court.
the Court concurs with Judge Klindt's assessments that
the application of Florida Rule 1.442(b) is outcome
determinative, that the rule is substantive pursuant to the
Erie doctrine, and that the rule is therefore
applicable in this federal proceeding. Indeed, Florida Rule
1.442(b) directly impacts the Court's ability to apply
the substantive law of Florida's Offer of Judgment
Statute. In this way, it is not so much a “manner and
means” to a right to recovery, see Objections
at 9, but rather an absolute threshold to recovery itself.
Accordingly, and for the reasons stated herein and in Judge
Klindt's Report, the Court will overrule the
Defendant's Objections and accept and adopt the legal and
factual conclusions recommended by Judge Klindt as
supplemented in this Order. Although the result ...