Attorneys’ Fees for Breach of a Mediated Settlement Agreement

As explained in a February, 2023, blog entitled Mediated Settlement Agreements – No Signed Writing = No Enforceable Agreement, the enforceability of a mediated settlement agreement requires that the agreement be in the form of a signed writing.  A mediated settlement agreement lacking in specificity or one that fails to contain the material terms of the agreement reached by the parties at mediation may be unenforceable.  The prior blog contained a few common provisions for the reader to consider including in his or her next mediated settlement agreement to help insure the clarity and enforceability of the agreement.  One provision not addressed in the prior blog was an attorneys’ fees provision.     

As most readers know, Florida follows the “American Rule”, which means each party to a civil lawsuit is responsible for his or her own attorney’s fees regardless of who prevails in the suit.  In the Sunshine State, generally speaking, attorney fees may only be awarded to one party or the other if such an award is expressly authorized by contract, statute or court rule.  See Moakley v. Smallwood, 826 So. 2d 221, 223-224 (Fla. 2002).  One such rule that provides for the recovery of attorney’s fees is Fla. R. Civ. P. 1.730(d).  A court also has the inherent authority to award attorneys’ fees for bad faith conduct against a party under the inequitable conduct doctrine.  See Id. at 224 citing Bitterman v. Bitterman, 714 So. 2d 356, 365 (Fla. 1998). 

Under Rule 1.730(d) “[i]n the event of any breach or failure to perform under [a mediated settlement] agreement, the court upon motion may impose sanctions, including costs, attorneys’ fees, or other appropriate remedies including the entry of judgment on the agreement.”  Fla. R. Civ. P. 1.730(d).  An award of attorney fees under Fla. R. Civ. P. 1.730(d) is, therefore, a sanction.  “In order to impose such a sanction, [a] trial court is required to make express findings of bad faith conduct on the part of [the breaching or non-performing party].”  Johnson v. Beznar, 910 So. 2d 398, 401 (Fla. 4th DCA 2005).  “In effect, [the holding in Johnson] adopted the procedural requirements for a final judgment awarding fees under the inequitable conduct doctrine, which “permits the award of attorney’s fees where one party has exhibited egregious conduct or acted in bad faith.””  Cox v. Great Am. Ins. Co., 88 So. 3d 1048, 1049 (Fla. 4th DCA 2012) quoting Bitterman v. Bitterman, 714 So. 2d at 365.  In exercising its power to impose attorney’s fees under the inequitable conduct doctrine, a court is required to make “an express finding of bad faith conduct … supported by detailed factual findings describing the specific acts of bad faith conduct that resulting in the unnecessary incurrence of attorneys’ fees.”  Moakley v. Smallwood, 826 So. 2d 221, 227 (Fla. 2002).  “The procedures a trial court must follow in exercising its power to impose attorney’s fees against a party under the inequitable conduct doctrine “are the same as those prescribed by the supreme court” in Moakley v. Smallwood, 826 So. 2d 221 (Fla. 2002), which involved the imposition of attorney’s fees against a party’s attorney.”  Cox v. Great Am. Ins. Co., 88 So. 3d 1048, 1049 (Fla. 4th DCA 2012) citing N. Cnty. Co., Inc. v. Bologna, 816 So. 2d 842, 844 (Fla. 4th DCA 2002); T/F Sys., Inc. v. Malt, 814 So. 2d 511, 513 (Fla. 4th DCA 2002).     

In Cox v. Great Am. Ins. Co., 88 So. 3d 1048, 1049 (Fla. 4th DCA 2012), the court reversed a final judgment awarding attorney’s fees as a sanction under Fla. R. Civ. P. 1.730(d)[1]  for a party’s failure to perform under a mediated settlement agreement and awarding attorney’s fees for litigating the amount of the fee, as opposed to merely entitlement to fees.  In Cox, the appellate court found that to comply with the procedural requirements that Johnson v. Beznar imposes for a fee award under Fla. R. Civ. P. 1.730(d), the lower court should have made specific factual findings detailing Cox’s breach or failure to perform under the terms of the mediated settlement agreement and identified those attorney’s fees and costs Great American incurred as a result of such conduct.  Cox v. Great Am. Ins. Co., 88 So. 3d at 1048 citing Moakley v. Smallwood, 826 So. 2d at 227.

The court in Cox determined that the basis for an award of attorney’s fees in favor of Great American, to wit: Rule 1.730(d), is closer to §57.105, Fla. Stat., than it is to the inequitable conduct doctrine.  Cox v. Great Am. Ins. Co., 88 So. 3d at 1050.  Indeed, an award of attorney’s fees could be justified under Fla. R. Civ. P. 1.730(d) for conduct that would not trigger entitlement to fees under the inequitable conduct doctrine.  Id. at 1050.  Nevertheless, to insure the validity and enforceability of an attorney’s fee award under Fla. R. Civ. P. 1.730(d), the order awarding fees should contain specific factual findings detailing a party’s breach or failure to perform under a mediated settlement agreement and should identify those attorney’s fees and costs the non-breaching party incurred as a result of the breaching party’s conduct.

[1]  The prior rule was Fla. R. Civ. P. 1.730(c), which is now Fla. R. Civ. P. 1.730(d).