Cornerstone SMR, Inc. v. Bank of America, N.A.
163 So. 3d 565
| Fla. Dist. Ct. App. | 2015Background
- Cornerstone, a small company, discovered in 2007 that its bookkeeper had embezzled funds by depositing 126 checks totaling $478,490 into a company she controlled and pled guilty in criminal proceedings.
- In 2008 Cornerstone sued the bookkeeper, her company (JustTime), and Bank of America (Bank) for conversion and related claims; Cornerstone later settled with the bookkeeper in 2010 for cash, future payments, and stock.
- After the settlement Cornerstone dismissed the bookkeeper and JustTime; the Bank asserted a right to set off the settlement amount against any judgment.
- At bench trial the court found a four-year statute of limitations barred recovery on many checks and awarded Cornerstone $146,743.23 for post‑limitation checks plus interest.
- The trial court applied a pro rata offset of the bookkeeper settlement (reduced to present value and including stock) against the awarded judgment, yielding a partial recovery for Cornerstone.
- Bank appealed the pro rata approach and argued the entire settlement should offset the judgment; Cornerstone cross‑appealed arguing no set‑off or that set‑off should apply to the full claimed loss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a settlement with a third party must reduce the plaintiff’s recovery | Cornerstone: No set-off (or apply only against full claimed loss) because settlement did not duplicate the judgment | Bank: Settlement must reduce any judgment under §768.041(2) | Court: Set-off applies; statute requires reduction of the amount of any judgment at time of rendering judgment |
| Whether set-off is applied to plaintiff’s total claimed damages or to the judgment amount | Cornerstone: Apply set-off to total claimed damages ($478,490) per pretrial stipulation | Bank: Apply set-off against the actual judgment amount Cornerstone is entitled to when rendered | Court: Set-off must be applied to the amount of the judgment to which plaintiff is otherwise entitled at time of rendering judgment |
| Whether an undifferentiated settlement must be applied pro rata or in full against the verdict | Cornerstone: Pro rata allocation is appropriate (court did this) | Bank: Full settlement amount (undifferentiated) must be applied against the award | Court: Undifferentiated settlement must be set off against the judgment; here settlement exceeded the judgment, so Bank entitled to judgment in its favor |
| Preservation: Could Cornerstone argue joint‑tortfeasor common‑law release rule? | Cornerstone: Release of one tortfeasor should not permit set-off because defendants were not joint tortfeasors | Bank: Set-off proper under statute regardless | Court: Argument not considered—raised first in reply brief and thus unpreserved |
Key Cases Cited
- Devlin v. McMannis, 231 So. 2d 194 (Fla. 1970) (undifferentiated settlements may require set-off against total verdict absent allocation)
- Dionese v. City of West Palm Beach, 500 So. 2d 1347 (Fla. 1987) (private apportionments ignored; total settlement offsets total award when settlement is undifferentiated)
- Sompo Japan Ins., Inc. v. Nippon Cargo Airlines Co., 522 F.3d 776 (7th Cir. 2008) (discussed and distinguished; Illinois statute differs from Florida’s)
- Gordon v. Marvin M. Rosenberg, D.D.S., P.A., 654 So. 2d 643 (Fla. 4th DCA 1995) (set-off provision prevents duplicate/overlapping compensation)
- D’Angelo v. Fitzmaurice, 863 So. 2d 311 (Fla. 2003) (de novo review of pure legal questions such as proper set-off)