Sunday, May 23, 2010

WIND News to Use: FIGA v. Olympus

In its weekly newsletter, "WIND News to Use: Insurance News and Notes," The Windstorm Isurance Network quoted THIS blog post on Florida Insurance Guaranty Association v. Olympus Association, Inc., - So. 3d -, 4D09-11, 2010 WL 1979242, 2010 Fla. App. LEXIS 6941 (Fla. 4th DCA May 19, 2010).  The WIND newsletter is below:
WIND News to Use - Insurance News and Notes 05.21.2010

Gag Order Reversed By Fourth District

In E.I. Du Pont De Nemours and Company v. Aquamar, S.A. (4D09-5166), the Fourth District reversed an order preventing the parties, their counsel or anyone associated with the parties or their counsel from talking to the press and specifically stated they could not "participate, encourage, assist, or abet in the dissemination of any out-of-court publicity in this matter.”  The Fourth District stated:
“In Florida, the limitations imposed by the court on communications between the media and lawyers and/or litigants must be for good cause to assure fair trials." Rodriguez ex rel. Posso-Rodriguez v. Feinstein, 734 So. 2d 1162, 1164 (Fla. 3d DCA 1999). Thus, a gag order should be supported by evidence and findings that any extrajudicial statements made by counsel or the parties pose a substantial or imminent threat to a fair trial. Id.; see also News-Press Publ’g Co. v. Hayes, 493 So. 2d 1, 2 (Fla. 2d DCA 1986) (quashing order restricting extrajudicial statements because it was entered sua sponte without a proper evidentiary hearing). As in Rodriguez, the order on review was not supported by any showing that it was necessary to preclude a substantial likelihood of material prejudice to the trial of the case. Furthermore, there was no evidence presented and there were no findings made that any out-of-court publicity posed a substantial and imminent threat to the fairness of the trial proceedings. Finally, the injunction was entered without proper notice, and is unrestricted in scope and time limit. See Rodriguez, 734 So. 2d at 1165. 

Standard For Successor Judge In Ruling on Motion for New Trial

In Sullivan v. Kanarek, M.D. (2D08-6242), the Second District reversed the trial court's order denying a motion for new trial.  After a trial, the defense moved to recuse a trial court judge based upon comments made after trial by the judge that the conduct of defense counsel caused her great concern about the fairness of the trial.  The motion was granted.  Eventually, a third successor judge denied a motion for new trial.  The Second District stated:
In this case, because of the particular credibility issues concerning defense counsel's courtroom behavior—much of which was alleged to be nonverbal and, by its nature, not reflected in the transcribed record—the successor judge was not in a position to fairly rule on the merits of the motion for new trial....In short, this case is precisely the "extraordinary case" we referred to in Cascio, 725 So. 2d at 1191, where "the successor judge may...grant a new trial on the ground that he cannot fairly rule upon the specific motion for new trial in light of particular credibility issues." Id. at 1193-94. While the issue in Cascio involved the manifest weight of the evidence, we believe that the alleged improper conduct of trial counsel is an analogous issue of credibility. It appears that the successor judge in this case felt constrained to rule on the merits of the motion for new trial, even though a granting of the motion without consideration of the merits would have been consistent with this court's holding in Cascio. The successor judge erred in not following his instincts and, instead, denying the motion for new trial. A new trial must be granted where, as here, defense counsel's tactics prevented the presiding trial judge, who witnessed the inappropriate behavior, from considering and ruling on whether the totality of his behavior deprived the parties of a fair trial.

Friday, May 21, 2010

Order Denying Lender's Motion to Set Aside Foreclosure Sale Reversed

In LaSalle Bank National Association v. Alicea (5D09-2129),  the Fifth District reversed the trial court's denial of a lenders motion to stop, and later set aside, a foreclosure sale.  The lender and the borrower reached an agreement prior to the sale and attempted to stop the sale.  The court stated:
appeals the trial court's non-final order denying its objection to sale and emergency motion to vacate summary final judgment and to vacate foreclosure sale and to return funds to the third party purchaser


LaSalle filed an objection to the sale and an emergency motion to vacate summary final judgment and to vacate foreclosure sale and to return funds to the third party purchaser. It asserted that the judicial sale of the property should be set aside because the sale price was grossly inadequate. LaSalle stated that Alicea "purchased the property for the amount of $225,000.00 on 03/28/2007" and that the current tax appraisal value was $160,644.00. LaSalle noted other irregularities: that the affidavits filed in support of its motion for summary final judgment were not in compliance with the time requirements of Florida Rule of Civil Procedure 1.510(c), and the sale should not have taken place because proof of publication of the notice of sale had not been filed with the Clerk prior to the sale date. The trial court again denied LaSalle's objection and motion without a hearing, using the "DENIED" stamp with a handwritten date of May 20, 2009.


LaSalle filed a motion for rehearing or in the alternative motion to vacate certificates of sale and title...


In this case, as in the Wells Fargo and U.S. Bank cases, there is nothing establishing that the documents bearing these executed "denied" stamps were filed with the clerk of the court or when they were filed. As with the Wells Fargo and U.S. Bank cases, these orders cannot be considered properly rendered or final. We elect to treat this matter as a premature appeal and relinquish jurisdiction to the trial court for a period of thirty days for properly rendered orders. Because the trial judge involved in these cases is no longer on the bench, the successor judge will necessarily have to consider the motions de novo.

In this case, as in the Wells Fargo and U.S. Bank cases, there is also no reason we can discern why denial of the plaintiff lender's repeated motions to cancel the foreclosure sale should not have been granted, and the procedure followed by the trial judge leaves us in doubt that the motions were given any merits consideration. Accordingly, in order to enable meaningful appellate review, if the trial court again denies LaSalle's motions, it must provide reasons.

Thursday, May 20, 2010

Interpretation Of Purchase Option Clause After Lease Default

In Welde v. Top Video & Productions USA, Inc. (3D08-3115), the Third District reversed the trial court's order and disagreed with its interpretation of a purchase option in a lease.  The trial court rejected the lessor's main argument but accepted its alternative argument that because the lessee had been in default it could not exercise a purchase option.  The Third District disagreed and stated:
The purchase option said, “Lessor hereby grants to Lessee, during the term of this Lease, and provided that the Lessee is not in default of any part of this Lease Agreement, an option to purchase the property for the following prices . . . .” The trial court took this language to mean that if the lessee had ever been in default at any time in the past, the lessee could not exercise the option to purchase–even if the lessee had brought all obligations current by the time the lessee exercised the option. We respectfully disagree with the trial court’s interpretation. The language means that the lessee must not be in default on the date that the lessee exercises the option.
The evidence showed the lessee sent the lessor written notices of his intention to exercise the option on three separate occasions. If on any of these three dates the lessee was not in default, then the lessee was entitled to exercise the option. If the lessee was in default on all three exercise dates, then the lessee was not entitled to exercise the option.

Denial Of Motion To Intervene Is Reviewed As A Final Order

In Superior Fence & Rail of North Florida, Inc., et al v. Lucas, et al (5D09-4213), the Fifth District, sitting en banc, clarified that an order denying a motion to intervene is reviewable as a final order.  The court stated:
We take this opportunity to clarify decisional law from this Court regarding whether the denial of a motion to intervene is reviewed by certiorari or appeal....We believe that an order denying a motion to intervene is appealable as a matter of right, by plenary appeal, because the order constitutes a final determination of the proceeding as to the parties seeking to intervene.
Additionally, in a footnote the court stated: "Conversely, an order granting intervention is necessarily interlocutory and can only be reviewed by certiorari."

Wednesday, May 19, 2010

Insurer Can Challenge Coverage After Appraisal

In Florida Insurance Guaranty Association v. Olympus Association, Inc., - So. 3d -, 4D09-11, 2010 WL 1979242, 2010 Fla. App. LEXIS 6941 (Fla. 4th DCA May 19, 2010), the Fourth District reversed the trial court's order confirming an appraisal award and entry of a 5.5 million dollar judgment in favor of Olympus.  The court concluded that "As explained in Kennedy and supported by Fisher, FIGA could contest part of the liability without challenging coverage as a whole."  The court described the facts as follows:
Olympus’s public adjuster, Joseph Zevuloni, demanded an appraisal for Buildings 500, 600, and 2500...Tony Allogia was the appraiser for FIGA, and Michelle L. Antinucci was appointed as the Umpire. On May 30, 2008, the Umpire submitted an Appraisal of Insurance Claim—Award Form (Appraisal Award) to the appraisers. Zevuloni signed it on May 31, 2008, making the award valid and binding. The Appraisal Award totaled $7,102,879.76...There was also a separate sheet indicating the line-item appraisal amounts for each building, which in part indicated that of the total amount, $3,785,000 was allotted for Waterproofing/Painting.
[FIGA's] second Affirmative Defense stated that “[p]ursuant to the Policy, Form CP 01 25 06 95, painting or waterproofing material is not covered.” This policy provision, labeled “Windstorm Exterior Paint and Waterproofing Exclusion,” indicates that the policy does not cover loss or damage to paint or waterproofing material applied to the exterior of the buildings.
Olympus filed a Motion to Confirm Appraisal Award and Entry of Final Judgment. The trial court heard the motion, entered an Order granting it, and entered Final Judgment allowing Olympus to recover from FIGA the sum of $7,102,879.76 in principal, less $2,550,545.78 in building deductibles and a $100.00 FIGA deductible, for a total amount of $4,552,233.98.
With regard to the law, the court stated:
Appraisal clauses are preferred, as they provide a mechanism for prompt resolution of claims and discourage the filing of needless lawsuits. Issues relating to coverage challenges are questions exclusively for the  judiciary....In Liberty American Insurance Co. v. Kennedy, 890 So. 2d 539, 541 (Fla. 2d DCA 2005), the second district concluded that “the submission of the claim to appraisal does not foreclose Liberty American from challenging an element of loss as not being covered by the policy.”
Thus, the trial court erred by entering final judgment in favor of Olympus without first determining FIGA’s liability as to the coverage claims contested in its affirmative defenses. Although Licea made mention of challenging a “whole loss,” it is not reasonable to order an insurer to pay for all elements set forth by an appraiser if the insurer raises an issue of coverage as to only one element and not the whole claim. See Fisher v. Certain Interested Underwriters at Lloyds Subscribing to Contract No. 242/99, 930 So. 2d 756, 759 (Fla. 4th DCA 2006) (stating, with regard to construing a policy too narrowly, that “[t]o do so would require us to turn a blind eye to what common sense dictates”). It is the appraiser’s duty to determine the amount of coverage, while questions of coverage liability are left for the judiciary. Licea, 685 So. 2d at 1287. Then, “[i]f a court decides that coverage exists, the dollar value agreed upon by the appraisal process will be binding upon both parties.” Id. at 1287–88. 
Our holding in Fisher v. Certain Interested Underwriters at Lloyds Subscribing to Contract No. 242/99, 930 So. 2d 756, 759–60 (Fla. 4th DCA 2006), further supports FIGA’s contention that the trial court erred in not permitting it to contest one element of the coverage.
Based on the above, we conclude that the trial court erred by entering final judgment in favor of Olympus and awarding it the amount set forth in the appraisal (less the deductibles), without first deciding the issue of coverage liability. When FIGA filed its affirmative defenses in response to Olympus’s complaint, the trial court should have first decided FIGA’s liability. As explained in Kennedy and supported by Fisher, FIGA could contest part of the liability without challenging coverage as a whole.
The entire opinion is below:

The briefs can be viewed at the following links: Initial Brief; Answer Brief; and Reply Brief.

*Disclaimer: Jeffrey Kuntz and/or GrayRobinson, P.A. were involved in the above-referenced action.

Sunday, May 16, 2010

Proposal For Settlement Conditioned Upon Acceptance of Two Defendants Is Not Valid

In Traynor v. Delmonico (4D09-881), the Fourth District affirmed the trial court's order concluding that a proposal for settlement conditioned upon the acceptance of two defendants is invalid.  The court quoted a recent decision of the Florida Supreme Court which stated:
a joint offer of settlement or judgment that is conditioned on the mutual acceptance of all of the joint offerees . . . is invalid and unenforceable because it is conditioned such that neither offeree can independently evaluate or settle his or her respective claim by accepting the proposal.
Attorneys Title Ins. Fund, Inc. v. Gorka, 35 Fla. L. Weekly S196 (Fla. Apr. 1, 2010).

Monday, May 10, 2010

Appraisal: When Are You Entitled To Fees And What Are You Entitled To Recover?

In Hill v. State Farm Florida Ins. Co. (2D07-2311), the Second District reversed the trial court's order denying the insured attorneys fees and stated "Although the trial court may very well have reached the correct outcome in this case, we conclude that its legal analysis is inconsistent with our more recent cases."  The court stated:
Accordingly, we reverse the final summary judgment and remand the case for a renewed determination of whether Ms. Hill filed her lawsuit in good faith in order to force State Farm to adjust the claim or whether she filed suit merely as an effort to seek attorneys' fees for the normal process of adjusting the claim. If she filed her lawsuit in good faith in order to force State Farm to adjust the claim, then she is entitled to attorney's fees. If not, then State Farm is not liable for the attorney's fees she incurred as a result of filing suit.
Discussing its recent decision in Goff v. State Farm Florida Insurance Co., 999 So. 2d 684 (Fla. 2d DCA 2008) [discussed HERE]; the Court stated:
It is apparent that some lawyers have read more into Goff than this court intended. Adjusting and settling property claims under insurance policies is never an easy process. It requires a level of good faith and cooperation from all parties. The law does not provide any general mechanism to impose attorneys' fees against one party or the other merely because the negotiation process is difficult. It is only when the claims adjusting process breaks down and the parties are no longer working to resolve the claim within the contract, but are actually taking steps that breach the contract, that the insured may be entitled to an award fees under section 627.428, Florida Statutes (2004). See, e.g., Lewis v. Universal Prop. & Cas. Ins. Co., 13 So. 3d 1079, 1081 (Fla. 4th DCA 2009) (stating that the underlying rationale of awarding attorneys' fees under section 627.428 is the notion that the insureds filed suit "to resolve a legitimate dispute" and not simply to collect attorneys' fees).
Lewis was discussed HERE.  The court continued:
The line between rigorous negotiations and breach of contract is undoubtedly difficult to describe and it is a determination that is fact intensive. This court recently expanded on this issue in reversing a summary judgment in Clifton. 35 Fla. L. Weekly at D365-D366 (holding that summary judgment in favor of the insurer is improper when there was a "bona fide" dispute between the parties that prompted the insured to sue). From the record in this appeal, we question whether this lawsuit was filed to force State Farm to conduct an appraisal or whether it was merely a preemptive lawsuit intended to obtain attorneys' fees for the usual efforts in negotiating an insurance claim. The trial court, however, did not decide this case based on our recent decisions and, thus, none of the parties addressed the issue of whether Ms. Hill needed to file this lawsuit to force State Farm to comply with its contract. Because this issue was not considered at the hearing on the motion for summary judgment, it is not appropriate for this court to base its decision on those cases. Instead, we reverse and remand the case to the trial court to determine whether Ms. Hill may be entitled to fees under the reasoning in Goff and Clifton. In all other respects, we affirm the judgment on appeal.
Clifton was discussed HERE.  Finally, the Court discussed what fees are recoverable:
On remand, if the trial court determines that Ms. Hill is entitled to an award of attorneys' fees, we observe that the scope of the remedy we envisioned in Goff has clearly been misconstrued by Ms. Hill's attorneys in this case. The fees we envisioned in Goff were the fees necessary to force State Farm back to the negotiations table to resolve the dispute within the terms of the insurance contract. The appraisal process, for example, is not legal work arising from an insurance company's denial of coverage or breach of contract; it is simply work done within the terms of the contract to resolve the claim. Thus, except under the most extraordinary of circumstances, we do not envision fees for such work to be recoverable under the rule announced in Goff. Instead, the fees should normally be limited to the work associated with filing the lawsuit after the insurance carrier has ceased to negotiate or has breached the contract and the additional legal work necessary and reasonable to resolve the breach of contract.

Tuesday, May 4, 2010

Assignee's Requirement to Sit for An Examination Under Oath

In Shaw v. State Farm Fire and Casualty Company (5D07-3136), the Fifth District issued a divided en banc opinion and certified a question of great public importance to the Florida Supreme Court.  The divided panel opinion, which is now vacated by the en banc opinion, was discussed HERE.  Notably, the trial Judge whose decision was under review is now Florida Supreme Court Justice James E.C. Perry.

The en banc opinion was written by Judge Griffin, who was joined by Chief Judge Monaco, Judge Orfinger, Judge Torpy, Judge Lawson, Judge Evander, Judge Cohen and Judge Jacobus.  The dissent was written by Judge Sawaya, who was joined by Judge Palmer.  Judge Sawaya wrote the original panel opinion which was discussed HERE.

The majority stated that the "issue before the court is whether an EUO clause in an automobile insurance policy is binding on an assignee of the right to payment of no-fault benefits."  The facts were described as follows:
After St. Louis was involved in a motor vehicle accident, he received medical care from Appellants, David Shaw, David G. Shaw, D.C., P.A., d/b/a Central Florida Chiropractic Center, DC Services, LLC, DC Supply, LLC, and Charles Machler [collectively, “Shaw”]. At the time of treatment, St. Louis assigned his no-fault benefits under the State Farm policy, to the extent of the services provided, to Shaw.  When Shaw sought payment from State Farm under the assignments for the services rendered to St. Louis, State Farm demanded that Shaw appear for an EUO. Shaw refused to submit to the EUO and State Farm refused payment. Shaw subsequently filed suit seeking a declaratory judgment that, as assignees of the right to payment, they are not required to attend an EUO. The trial court entered judgment in favor of State Farm. We reverse.
The court noted that:
It is undisputed that a provision in an insurance policy that requires the insured to submit to an EUO qualifies as a condition precedent to recovery of policy benefits....The question that arises in this case is whether an insurer can include in the policy a provision that extends the duty to submit to an EUO to assignees of the insured's right to insurance proceeds. Under Florida law, the assignment of a contract right does not entail the transfer of any duty to the assignee, unless the assignee assents to assume the duty.  See Dependable Ins. Co. v. Landers, 421 So. 2d 175, 179 (Fla. 5th DCA 1982). Assignment of a right to payment under a contract does not eliminate the duty of compliance with contract conditions, but a third-party assignee is not liable for performance of any duty under a contract, unless he was a party to the agreement or has become a party by subsequent agreement. Absent such an event, which is in the nature of a novation, the duty of performance of the conditions to the right of payment remains with the assignor. In other words, the assignee of a contract right owes no duty of performance to the obligor.
Here, St. Louis has agreed that whatever monies he is entitled to receive from his automobile insurance policy on account of the care he has been given is payable to Shaw. If no monies are due and owing because of the failure of St. Louis to perform some covenant under the policy, including the examination under oath, then Shaw has no claim against State Farm, precisely because it is subject to State Farm's defenses against the insured. But State Farm may not include in the insurance contract any requirement of performance on the part of the assignee that conditions the right to payment. To the extent that State Farm's policy may have such a provision, it is simply unenforceable. It does not matter whether it is the requirement to submit to an examination under oath, to pay a fee, to accept a discount or anything else. Shaw did not undertake any duty of performance, and State Farm cannot unilaterally impose an obligation on the assignee by putting it in the policy.
As the policy expressly recognizes by classifying the duty to submit to an EUO as an "insured's dut[y]," the duty can only belong to the insured. The duty was never delegated by St. Louis, and Shaw never agreed to assume it. Both as a matter of contract law and common sense, State Farm's attempt to impose it on Shaw cannot succeed. Nevertheless, because this en banc decision is not unanimous and because of the potentially wide-ranging impact of this issue, we certify to the Florida Supreme Court the following question of great public importance:
The introductionof the dissents 18 page opinion stated:
The majority erroneously eliminates a valuable contract provision that State Farm Fire and Casualty Company has every right to enforce against a claimant making a claim for PIP benefits; the majority fails to properly distinguish a condition precedent to recovery or suit that must be complied with by a claimant from a contract obligation that an assignee of benefits must otherwise agree to be bound by; the majority misinterprets section 627.736(6), Florida Statutes (2007), to require State Farm to obtain what is in essence a bill of discovery in order to receive information regarding the validity of a claim from the very person or organization making the claim or seeking payment from State Farm; the majority misinterprets the clear and unambiguous examination under oath (EUO) clause in the insurance policy issued by State Farm; and the majority cites cases that do not stand for the proposition for which they are cited. Indeed, there is no precedent that the majority can cite for its general holding that an assignee of PIP benefits must actually agree to be bound by an EUO clause in an insurance contract that is a condition precedent to recovery.