Settlement Offers are Inadmissible as Evidence to Prove Liability
Public policy encourages settlements of legal claims and one way this is accomplished is by making settlement offers inadmissible as evidence to prove liability. For example, a plaintiff in a negligence lawsuit cannot introduce a defendant’s offer to settle the claims as evidence to prove the defendant is liable for negligence. Otherwise, defendants would never make settlement offers out of fear that the very act of making an offer would be used against them in court.
Florida’s Evidence Code provides, “Evidence of an offer to compromise a claim which was disputed as to validity or amount, as well as any relevant conduct or statements made in negotiations concerning a compromise, is inadmissible to prove liability or absence of liability for the claim or its value.” Fla. Stat. § 90.408 (emphasis added). The fundamental premise underlying application of Fla. Stat. § 90.408 is that the offer must relate to a claim disputed in the lawsuit. See Ritter v. Ritter, 690 So. 2d 1372, 1376 (Fla. 2d DCA 1997).
In order for Fla. Stat. § 90.408 to apply, the offer or statement must have been made after the controversy or dispute arose. Fla. Stat. § 90.408 does not exclude statements made prior to the controversy since there cannot be a compromise before there is a controversy. See H.R.J. Bar-B-Q, Inc. v. Shapiro, 463 So. 2d 403, 404 (Fla. 3d DCA 1985) (“[E]vidence of an offer made to the plaintiff when he was fired by one of the defendants was not inadmissible as an offer of compromise because there was then, within the meaning of the statute, no existing claim which was disputed as to validity or amount.”).
Likewise, in Frank v. Ruwitch, 318 So. 2d 188 (Fla. 3d DCA 1975), the Court held that admissions of liability that were made before the cause of action was instituted, were not inadmissible on the theory that they were settlement or compromise offers. “If there is no dispute as to validity or amount, the section 90.408 prohibition does not apply because there is nothing to compromise; any statements made by a party would be admissible if relevant.” Bankers Trust Co. v. Basciano, 960 So. 2d 773, 780 (Fla. 5th DCA 2007). The statements could also be admissible if they were relevant and were admissions by a party-opponent. Charles W. Ehrhardt, Florida Evidence § 408.1 (2006 ed.). In addition, a gratuitous offer to pay monies which is not intended as a compromise of a claim would not be barred by Fla. Stat. § 90.408. Id.
In Miller Yacht Sales, Inc. v. Lee, 368 So. 2d 916, 918 (Fla. 4th DCA 1979) the Court noted, “More cogently, however, we determine that this agreement was not an offer of settlement. An offer of settlement presupposes that a dispute exists between the parties. At the time the purchase agreement was prepared there was no dispute and no litigation contemplated. The parties still expected the sale to be completed and the Defendant was not attempting to settle a legal claim which Ms. Cohen had asserted. The public policy of encouraging settlements by rendering settlement offers inadmissible therefore is not involved and not contravened in the instant case.”
Settlement Offers are Admissible as Evidence for Purposes Other than Proving Liability
Importantly, Fla. Stat. § 90.408 “only excludes evidence offered to prove ‘liability or absence of liability for the claim or its value.’ Bankers Trust Co., 960 So. 2d at 780 (quotation omitted). “If the evidence is offered for another purpose, the evidence is not barred by section 90.408 and will be admissible if it is relevant to prove a material fact or issue ….” Id.
For example, suppose a plaintiff slips and falls on a puddle of water and is injured. The plaintiff then brings a negligence lawsuit against the owner of the property where he fell. Early in the case, the defendant makes a settlement offer but the plaintiff rejects it. Later in the case the defendant denies owning the property where the plaintiff fell. However, defendants do not make settlement offers for something that happened on property they do not own. In this instance, the settlement offer could be admissible as evidence that the defendant owns the property but not that the defendant was negligent.
In Wolowitz v. Thoroughbred Motors, Inc., 765 So. 2d 920 (Fla. 2d DCA 2000) in order to resolve a dispute over the title to an automobile, the parties entered into a series of discussions concerning how to resolve the situation. Ultimately, the plaintiff sought to memorialize these discussions in writing. Id. at 922. He put the terms of the resolution in writing, had the document reviewed by an attorney, and then presented it to the defendant. Id. The document was signed by both parties in front of a witness. Id. When the defendant failed to meet his obligations, the plaintiff brought suit over the original title dispute. Id. At trial, the document was admitted into evidence over the plaintiff’s objections. Id.
On appeal, the plaintiff argued that the document was not relevant to the title dispute and that even if it was relevant it should nevertheless be excluded under Fla. Stat. § 90.408. Wolowitz, 765 So. 2d at 925. After finding that the document was relevant, the Court also found that § 90.408 did not bar its admission. Id. The plaintiff contended that the statute bars all evidence of unsuccessful settlement negotiations. Id. The Court disagreed, “this is too broad a reading of the statute. Section 90.408 excludes evidence of settlement negotiations only when the evidence is offered to prove liability, the absence of liability, or value.” Id. (emphasis added). The Court went on to note, “Thus, evidence of settlement negotiations is admissible to establish other relevant facts.” Id.