DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

CORNERSTONE SMR, INC.,

Appellant,

v.

BANK OF AMERICA, N.A., a Foreign Corporation,

Appellee.

No. 4D13-2064

[April 8, 2015]

Appeal and cross-appeal from the Circuit Court for the Seventeenth 

Judicial Circuit, Broward County; Mily Rodriguez Powell, Judge; L.T. Case 

No. CACE08040096.

Andrew S. Berman of Young, Berman, Karpf & Gonzalez, P.A., Miami, 

for appellant.

Tricia J. Duthiers and J. Randolph Liebler of Liebler, Gonzalez & 

Portuondo, Miami, for appellee.

WARNER, J.

After appellant, Cornerstone, obtained a judgment against appellee, 

Bank of America, for conversion arising from embezzlement by one of 

Cornerstone’s employees, the Bank moved to offset the recovery by monies 

Cornerstone obtained in settlement with the employee. Cornerstone 

objected that it would not be made whole, because the judgment against 

the Bank did not compensate Cornerstone for all of its losses, due to the 

expiration of the statute of limitations on many of the embezzled funds. 

The trial court allowed a “pro rata” set-off, to which the Bank objected. 

Both parties appeal, Cornerstone claiming that no set-off should have been 

allowed and the Bank claiming that a full set-off of the entire settlement 

amount should have resulted in no recovery for Cornerstone. Because we 

conclude that section 768.041(2), Florida Statutes (2012), compels a full 

set-off, we agree with the Bank’s position on both the appeal and cross 

appeal and reverse.

Cornerstone, a small start-up company in the radio-dispatch business, 

was developing its business and operating with a handful of employees. 
2

Its bookkeeper was responsible for overseeing the day-to-day financial 

operations. Between July 2002 and June 2007, the bookkeeper stole 

money from Cornerstone by taking checks made out to Cornerstone to 

Bank of America, where Cornerstone had an account, and depositing them 

into an account owned by JustTime, Inc., a corporation controlled by the 

bookkeeper. Her theft was not discovered until 2007.

Cornerstone commenced suit against the bookkeeper, JustTime, and 

the Bank in August 2008. It sued the bookkeeper for civil theft, 

conversion, and breach of fiduciary duty; it sued JustTime for civil theft 

and conversion; and it sued the Bank for conversion of an instrument 

pursuant to section 673.4201, Florida Statutes, breach of good faith and 

fair dealing, and breach of fiduciary duty. As to the Bank, Cornerstone 

alleged the Bank “had an obligation to and was solely responsible to verify 

the genuineness of the endorsements, the identity of the persons 

presenting the checks for deposit, and that the checks were deposited to 

the account in the name of the payee.” The Bank answered, raising 

multiple defenses, including the four-year statute of limitations, which it 

claimed began to run on each check when it was cashed. Cornerstone 

responded that the statute did not begin to run until Cornerstone 

discovered the theft in 2007.

In April of 2010, Cornerstone settled with the bookkeeper as part of her 

entry of a guilty plea to criminal charges. She agreed to: (1) pay 

Cornerstone a lump-sum payment of $32,000 on execution of the 

agreement; (2) pay Cornerstone $1,500 a month for ten years; (3) assign 

her interest in Cornerstone shares to Cornerstone; and (4) testify in the 

pending civil lawsuit against the Bank. Cornerstone filed notice of the 

settlement and dismissed the bookkeeper and JustTime. The Bank then 

amended its answer to claim that any award should be set-off by the value 

of the bookkeeper settlement.

At trial, the parties stipulated that the case involved 126 checks totaling 

$478,490. The parties stipulated that the bookkeeper had paid 

Cornerstone $41,000 under the settlement and would pay Cornerstone 

$212,000 over a period of ten years. They also stipulated that “BANK OF 

AMERICA is entitled to a setoff that will reduce CORNERSTONE’s claim 

against BANK OF AMERICA in the value of [the bookkeeper’s] settlement 

with CORNERSTONE.” As one of the issues to be determined at trial, they 

identified: “Whether the award in favor of CORNERSTONE be [sic] set off 

or reduced by any recovery received from third parties.”

Cornerstone presented damage calculations totaling $582,354.63, 

which it reached by adding the face value of the checks to the accrued 
3

interest and then subtracting the value of the settlement reduced to 

present money value. The Bank contested Cornerstone’s reduction-topresent value calculation. The Bank also argued Cornerstone’s 

calculations failed to account for the value of the stock the bookkeeper 

assigned back to the company. Cornerstone took the position that the 

stock had no value.

Following the bench trial, the court entered an order finding for 

Cornerstone only on its conversion claim. On the statute of limitations 

defense, the court found the four-year statute began to run upon the 

deposit of each check, and therefore barred recovery on all but forty-eight 

checks, totaling $146,743.23. The court found the Bank was entitled to a 

“pro rata offset” based on the value of the settlement with the bookkeeper, 

and that the offset – which would consist of the cash settlement and stock, 

plus payments over time calculated at present money value – should be 

applied to the Bank’s $146,743.23 post-statute-of-limitations liability. It

determined that the stock collected by Cornerstone from the bookkeeper 

had value. It ordered the parties to submit calculations to accomplish the 

court’s intent.

Instead, Cornerstone moved for rehearing of the order, contending that 

the set-off should be taken against the total amount of its damages, 

including those checks which it was barred from recovering from the Bank 

by the statute of limitations. Based upon its calculations using the larger 

numbers, the amount of its uncompensated loss exceeded the amount 

found due from the Bank. So Cornerstone argued that recovery of the 

entire $146,743.23 (the value of the post-statute-of-limitation checks) 

would “not create a windfall for Cornerstone nor constitute a duplicative 

payment, and therefore, there is no basis to reduce the amount found to 

be due from [the] Bank[.]”

The Bank opposed rehearing. Among the many arguments it made, it 

pointed to section 768.041(2), Florida Statutes (2012), which required that 

the set-off should be applied to “any judgment to which the plaintiff would 

be otherwise entitled at the time of rendering judgment[.]” Moreover, the 

Bank argued that to apply the offset as advocated by Cornerstone would 

not result in reduction of the Bank’s liability, which was not the intent of 

the statute. Instead, the Bank contended that only two numbers were 

needed to calculate the set-off: the amount of damages recovered against 

the Bank ($146,743.23) and the present money value of the settlement. 

The present money value amount would be offset against the damages 

recovered to determine the net judgment.
4

The court denied the motion for rehearing but, as neither party had 

submitted proposed calculations, the court made its own.

The court later entered a final judgment, which contained the following 

calculation:

Checks converted from 10/ 11/ 2005 $146,743.23

to 6/ 11/ 2007 

 

Interest on above checks from conversion to + 61,794.65

date of trial 

 $208,537.88

Pro-rata offsets for settlement payments reduced 

to present value, shares of Cornerstone, and 

LLC shares - 86,676.00

For a total of $121,861.88

The court entered judgment for the total against the Bank, which then 

moved for rehearing itself, arguing that settlement should not be applied 

pro rata. Instead, the full amount of settlement should be applied against 

the amount the trial court found due to the bank, which would result in a 

zero recovery for Cornerstone. The trial court denied the motion for 

rehearing, prompting an appeal by Cornerstone and cross-appeal by the 

Bank.

Whether the trial court awarded a proper set-off is a pure question of 

law reviewed de novo, and “no deference is given to the judgment of the 

lower courts.” D’Angelo v. Fitzmaurice, 863 So. 2d 311, 314 (Fla. 2003). 

Nevertheless, the issues presented must have been properly preserved. 

For this reason, we do not address Cornerstone’s argument that set-off 

should not apply at all, because the Bank and the bookkeeper were not 

joint tortfeasors and not necessarily liable on the same theories. This 

argument was first made in the reply brief. See Duncan-Osiyemi v. 

Osiyemi, 117 So. 3d 882, 883 n.1 (Fla. 4th DCA 2013) (“We decline to 

consider any issue raised for the first time in the reply brief.”).

“The common law . . . provided that a release of one joint tortfeasor 

discharged the obligation or liability of any other joint tortfeasor.” Thomas 

D. Sawaya, 6 Fla. Prac., Personal Injury & Wrongful Death Actions § 7:11

(2014-15 ed.). The Florida Legislature abolished this common law rule in 

section 768.041, Florida Statutes (2012), which provides:
5

(1) A release or covenant not to sue as to one tortfeasor for 

property damage to, personal injury of, or the wrongful death of 

any person shall not operate to release or discharge the liability 

of any other tortfeasor who may be liable for the same tort or 

death.

However, in the same statute, the Legislature also established a method 

for setting off the damages recovered against one tortfeasor:

(2) At trial, if any defendant shows the court that the plaintiff, or 

any person lawfully on her or his behalf, has delivered a release 

or covenant not to sue to any person, firm, or corporation in 

partial satisfaction of the damages sued for, the court shall set 

off this amount from the amount of any judgment to which 

the plaintiff would be otherwise entitled at the time of 

rendering judgment and enter judgment accordingly.

§ 768.041(2), Fla. Stat. (2012) (emphasis added); accord § 46.015(2), Fla. 

Stat. (2012) (containing materially identical language); see also § 

768.31(5), Fla. Stat. (2012) (effect of release or covenant not to sue on 

rights of contribution).

The set-off provision in section 768.041(2) “was designed to prevent 

duplicate or overlapping compensation for identical damages.” Gordon v. 

Marvin M. Rosenberg, D.D.S., P.A., 654 So. 2d 643, 644 (Fla. 4th DCA 1995) 

(citing Devlin v. McMannis, 231 So. 2d 194, 196 (Fla. 1970)). Cornerstone 

argues there would be no double recovery here, and therefore there should 

be no set-off applied, because the settlement amount could be applied to 

those checks not barred by the statute of limitations; thus, Cornerstone 

would not be making a recovery for overlapping items of damages.

As the Bank points out, however, the settlement agreement did not 

allocate the damages between claims. Where a settlement is 

undifferentiated and general, the aggregate of the amount of the settlement 

should be set off against the judgment.

Two cases illustrate this principle. In Devlin, a joint tortfeasor in a 

wrongful death action settled with the plaintiff, executing two releases 

apportioning the settlement between claims of the estate and claims of the 

deceased’s parents as individuals. 231 So. 2d at 195. The trial judge set 

off the aggregate amount of the settlement against the aggregate verdict, 

rather than applying the settlement as apportioned. Id. The supreme 

court found this to be error, reasoning that “each count in the complaint 
6

in the instant case constituted a distinct cause of action, each embracing 

distinctive damage elements.” Id. at 196. However, the court noted:

[W]e are not unaware that there may be occasions where a 

settlement is effected so as to fail to preserve or otherwise 

differentiate settlement sums pertaining to the damages 

distinctive and peculiar to the underlying causes of action.

Under such circumstances, subsequent verdicts entered against 

another joint tort-feasor on the same causes of action may 

indeed occasion the necessity of offsetting against the total sum 

of the verdicts the total amount of the prior settlement. However, 

we need not explore such possibility under the present set of 

facts.

Id. at 196-97.

Later, in Dionese v. City of West Palm Beach, 500 So. 2d 1347 (Fla. 

1987), the court was presented with such an undifferentiated settlement 

agreement. However, the plaintiffs claimed they had privately agreed with 

the settling tortfeasors to apportion the settlement among the plaintiffs in 

a particular manner. Id. at 1348. The supreme court held: “Both existing 

case law and fairness to the parties involved require us to ignore a private 

unilateral apportionment of settlement proceeds among plaintiffs, when 

the settlement agreement itself fails to apportion the proceeds among the 

plaintiffs.” Id. Citing the above-quoted language from Devlin, the supreme 

court ruled that, because “[t]he settlement agreement failed to apportion 

the proceeds among the separate and distinctive causes of action[,] . . . 

[t]he total amount of the settlement must be set off from the entire verdict.” 

Id. at 1349. The court held:

Private unilateral agreements by plaintiffs to divvy up the 

proceeds of a general settlement agreement are contrary to all 

concepts of fairness. Private unilateral agreements to apportion 

settlement proceeds would often result in a windfall recovery. . . 

The only proper method of ensuring against duplicate 

recoveries in an undifferentiated lump sum settlement 

situation is to set-off the total settlement funds against the 

total jury award. If necessary, the settlement can then be 

allocated proportionally against the jury verdict for each cause 

of action tried, thus preserving the distinct nature of the separate 

claims.
7

Id. at 1350; see also Nauman v. Eason, 572 So. 2d 982, 983-85 (Fla. 1st 

DCA 1990) (error for trial court to apportion settlement agreement among 

plaintiffs, where settlement was silent on the subject; ruling that, in 

absence of allocation by settling parties, entire settlement should have 

been offset against jury damages).

Although Cornerstone contends that the settlement with the 

bookkeeper did not duplicate the judgment it received against the bank, 

without differentiating the settlement, it is impossible to know whether 

Cornerstone would be receiving a duplicate payment. The bookkeeper did 

agree to pay substantially less than the value of all of the converted checks. 

For all we know, the statute of limitations would also bar recovery against 

the bookkeeper for the same payments as Cornerstone was barred from 

collecting from the Bank and thus the settlement covered only those 

payments not barred by the limitations. We understand that we are 

speculating as to the nature of the recovery, but we do so only to point out 

the necessity of a settlement agreement that provides the allocation of its 

proceeds. Otherwise, consistent with Devlin and Dionese, we must apply 

the total amount as a set-off to the judgment.

Alternatively, Cornerstone argues that any set-off should be applied to 

the face value of its losses ($478,490 plus interest) and not to the judgment 

obtained against the Bank. It bases this argument on the pretrial 

stipulation wherein the bank agreed: “BANK OF AMERICA is entitled to a 

setoff that will reduce CORNERSTONE’s claim against BANK OF 

AMERICA in the value of [the bookkeeper’s] settlement with 

CORNERSTONE.” (Emphasis added.) Thus, the set-off would be applied 

to the entirety of its claimed damages against the Bank, rather than the 

ultimate amount Cornerstone recovered from the Bank. This 

interpretation appears a slender reed, when the parties identified the 

following issue to be resolved at trial: “Whether the award in favor of 

CORNERSTONE [should] be set off or reduced by any recovery received 

from third parties.” (Emphasis added.) Moreover, the Bank’s affirmative 

defense clearly demanded a set-off of the Settlement amount against any 

judgment entered against it.

Under the plain language of section 768.041(2), Florida Statutes, the 

set-off must be applied to “the amount of any judgment to which the 

plaintiff would be otherwise entitled at the time of rendering judgment 

. . . .” § 768.041(2), Florida Statutes (2012). Because Cornerstone was 

not entitled to recover the full amount of its claimed injury ($478,490) at 

the time judgment was rendered, due to the statute of limitations, the setoff must be applied only against the recovery that Cornerstone obtained 

against the Bank ($146,743.23).
8

While Cornerstone contends that applying the plain meaning of the 

statute in this case reaches an absurd result of providing a windfall to the 

Bank whose liability could be reduced to nothing, it is Cornerstone’s own 

failure to allocate the settlement agreement which has produced this 

result. As noted before, the bookkeeper’s settlement amounted to in 

excess of $300,000. If the statute of limitations applied to most of 

Cornerstone’s claims against the bookkeeper, then the result is not at all 

absurd but would accomplish the legislative purpose of not permitting a 

double recovery. It is the lack of specificity in the settlement agreement 

which has created the problem in this case, not the plain meaning of the 

statute.

We distinguish Sompo Japan Insurance, Inc. v. Nippon Cargo Airlines 

Co., 522 F.3d 776 (7th Cir. 2007), relied upon by Cornerstone. There, the 

plaintiff’s ultimate recovery against the defendant was limited by the 

international Warsaw Convention, and the federal court concluded that, 

under the Illinois set-off statute, a set-off for a settlement with other 

defendants should be applied to the total amount of the plaintiff’s proven 

damages, rather than the limited amount ultimately recoverable under the 

convention. Id. 787-89. The federal court found this consistent with 

Illinois case law treating the set-off right as “plaintiff-centered” and 

consistent with the convention’s purpose to limit defendants’ liability to 

predictable amounts. Id. The Illinois set-off statute construed in Sompo, 

however, uses materially different language than the Florida statute. It 

allows for a set-off to “reduce[] the recovery on any claim[,]” and the parties 

were disputing the meaning of “recovery.” Id. at 783. In contrast, the 

Florida statute refers to the “amount of the judgment.” Furthermore, the 

Warsaw Convention involved a “hardline liability cap[]” regardless of the 

circumstances, whereas here the statute of limitations prevents recovery 

only where a plaintiff fails to timely file its claim. Whereas the plaintiff in 

Sompo could not avoid the limitation of the Convention, Cornerstone could 

have avoided the statute of limitations had it acted sooner. Therefore, 

Sompo provides no guidance for the interpretation of the Florida statute.

Finally, the Bank cross-appeals the court’s pro rata allocation of the 

settlement to the amount it awarded against the Bank. It contends that 

Devlin and Dionese require the court to apply the total amount of the 

settlement against the total award. See Dionese, 500 So. 2d at 1350 (“The 

only proper method of ensuring against duplicate recoveries in an 

undifferentiated lump sum settlement situation is to set-off the total 

settlement funds against the total jury award.”) (emphasis added). 

Here, the total settlement funds, reduced to present money value, were 

approximately $285,625 (cash settlement reduced to present money value 
9

of $178,000 and stocks of $107,625). The total award against the Bank

was $146,743.23. Therefore, the value of the settlement exceeded the 

amount due from the Bank. Thus, the court erred in entering judgment 

for Cornerstone.

For the foregoing reasons, we reverse the final judgment and remand 

for entry of judgment for the Bank. 

MAY and GERBER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.