Fla. Supreme: Plaintiff Can’t Pull Out of Settlement Because Lienholder Named as Payee

Adam J. Sounders agreed to settle his personal-injury lawsuit against a trucking company for $500,000, but pulled out of the deal when he received a settlement check that included a workers’ compensation lien holder as a payee.

A Florida jury rewarded that decision with a $1,883,302.89 net judgment against Suarez Trucking Co. That was enough to reimburse Guarantee Insurance Co. for the $522,607 in workers’ comp benefits it paid with plenty left over for Sounders and his lawyers.

The Florida Supreme Court, however, quashed that verdict on Thursday by ruling that Sounders had no right to withdraw his settlement offer in the first place. The high court said in a 5-1 decision that the settlement became enforceable when Suarez Trucking filed its acceptance with the court, even though the payout check named Guarantee Insurance Co. as a payee.

“This notice of acceptance created a binding settlement contract by unequivocally and fully assenting to the terms of the offer,” the opinion says. “It is hard to imagine a form of acceptance that could be more clear or more effective.”

The decision overturned a ruling by the 2nd District Court of Appeals and the Hillsborough County trial court.

Sounders was injured on Feb. 20, 2014 when his vehicle collided with a dump truck owned by Suarez. He filed a lawsuit, and then offered to settle the case if Suarez paid $500,000 within 10 days.

Suarez accepted the deal and sent a check that listed Sounders, his attorneys’ law firm and Guarantee as payees. The workers’ compensation carrier had paid nearly $500,000 for medical treatment and indemnity benefits as Sounders recovered.

Sounders refused to accept the check, saying he did not intend for the workers’ compensation carrier to be a fellow payee. The trial court denied a motion by Suarez to enforce the settlement agreement.

A Hillsborough County jury awarded damages of $1,960,000 and found Suarez Trucking liable for 96% of that amount. The company appealed, but the Second District Court of Appeals affirmed the trial court. Suarez took the case to the state’s top court.

The Supreme Court majority said the Second District’s ruling conflicted with a decision in a similar case decided by the Fourth District Court of Appeals in 2012, titled Cirrus Design Corp. v. Sasso. In that case, the appellate panel ruled that a contract was formed as soon as the tortfeasor in the case accepted the settlement offer.

The Supreme Court said the Fourth District’s decision correctly interprets Florida contract law. But the high court did not decide whether Suarez had breached the settlement contract by making the check out to the leinholder.

“Those issues should be resolved on remand, uninfluenced by the erroneous view of contract formation adopted by the Second District,” the majority opinion says.

Justice Charles T. Canaday would have gone further. He said in a concurring opinion that contracts are formed within the confines of state law. Florida statute Section 440.39 entitles an insurance carrier to a pro rata share of an employee’s recovery in a third-party action. Once a lien is filed, a plaintiff has no right to the proceeds of the award until the trial court determines what portion of the payment should go to the workers’ compensation carrier, he said.

“When the contract is understood in light of these existing relationships and obligations, as is required by the well-established rule of incorporation, it is hard to see how Suarez Trucking’s tender of the settlement check with the workers’ compensation carrier named as a payee could be a breach—much less a material breach—of the settlement agreement,” Canady’s concurring opinion says.

Justice Jorge Labarga dissented. He said the failure of the parties in Sounders case to have a “meeting of minds” rendered the settlement agreement unenforceable.