Monday, June 27, 2011

Supreme Court On Personal Jurisdiction, Part II

In a second opinion on personal jurisdiction released today, the Supreme Court reversed an opinion from the Supreme Court of New Jersey that held jurisdiction was permissible based upon the "stream of commerce theory." The Court's judgment was joined by 6 Justices, however, only 4 (including the author) joined the majority opinion. The Court stated:
Here, the Supreme Court of New Jersey, relying in part on Asahi, held that New Jersey’s courts can exercise jurisdiction over a foreign manufacturer of a product so long as the manufacturer “knows or reasonably should know thatits products are distributed through a nationwide distribution system that might lead to those products being sold inany of the fifty states.” Nicastro v. McIntyre Machinery America, Ltd., 201 N. J. 48, 76, 77, 987 A. 2d 575, 591, 592 (2010)....
That decision cannot be sustained. Although the New Jersey Supreme Court issued an extensive opinion with care-ful attention to this Court’s cases and to its own precedent, the “stream of commerce” metaphor carried the decision far afield. Due process protects the defendant’s right not to be coerced except by lawful judicial power. As a general rule, the exercise of judicial power is not lawfulunless the defendant “purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U. S. 235, 253 (1958). There maybe exceptions, say, for instance, in cases involving an intentional tort. But the general rule is applicable in this products-liability case, and the so-called “stream-of-commerce” doctrine cannot displace it.
Based upon the analysis, which is only partially included above, the Court held:
Due process protects petitioner’s right to be subject only to lawful authority. At no time did petitioner engage in any activities in New Jersey that reveal an intent to invoke or benefit from the protection of its laws. New Jersey is without power to adjudge the rights and liabilities of J. McIntyre, and its exercise of jurisdiction would violate due process. The contrary judgment of the New Jersey Supreme Court is REVERSED.
The opinion in J. McIntyre Machinery, Ltd. v. Nicastro can be viewed HERE. Justice Kennedy wrote the opinion and was joined by  Chief Justice Roberts, Justice Scalia and Justice Thomas. Justice Breyer wrote an opinion concurring in the judgment which Justice Alito joined. Justice Ginsburg, who wrote the other personal jurisdiction opinion released today [see HERE], wrote a dissenting opinion and was joined by Justice Sotomayor and Justice Kagan.

Justice Breyer's opinion concurring in the judgment stated that "Because the incident at issue in this case does not implicate modern concerns, and because the factual record leaves many open questions, this is an unsuitable vehicle for making broad pronouncements that refashion basic jurisdictional rules." Therefore, in his view, "on the record present here, resolving thiscase requires no more than adhering to our precedents."

In her dissent, Justice Ginsburg states:
Under this Court’s pathmarking precedent in International Shoe Co. v. Washington, 326 U. S. 310 (1945), and subsequent decisions, one would expect the answer to be unequivocally, “No.” But instead, six Justices of this Court, in divergent opinions, tell us that the manufacturer has avoided the jurisdiction of our state courts, except perhaps in States where its products are sold in sizeable quantities. Inconceivable as it may have seemed yesterday, the splintered majority today “turn[s] the clock back to the days before modern long-arm statutes when a manufacturer, to avoid being haled into court where a user is injured, need only Pilate-like wash its hands of a product by having independent distributors market it.” Weintraub, A Map Out of the Personal Jurisdiction Labyrinth,28 U. C. Davis L. Rev. 531, 555 (1995).

Untimely Claim Reporting & Late Acceptance Of Proposal For Settlement

In Kroener v. Florida Insurance Guaranty Association (4D09-3604 & 4D09-4102), the Fourth District affirmed two orders entered by the circuit court "(1) final summary judgment entered in favor of the Florida Insurance Guarantee Association (FIGA) on their claim for hurricane damage, and (2) denial of their motion to enforce FIGA’s proposal for settlement, which the Kroeners attempted to accept after entry of the final summary judgment."

The appellant's purchased the property in 2007. "When the hurricane struck, however, the prior owners were not residing in the home. They had moved out shortly before the hurricane to rent it out. Although the prior owners were aware of some damage from Hurricane Wilma, they never notified Atlantic of their property damage losses or made a claim on their homeowners’ policy. Sometime after the prior owners sold their home to the Kroeners, the Kroeners discovered a roof leak, which their contractor attributed to Hurricane Wilma. At the request of the Kroeners, on December 5, 2007, the prior owners executed an Assignment of Benefits form..." 

"FIGA filed a motion for summary judgment, arguing that the previous owners had no claim to assign, and no insurable interest, by the time they executed an assignment to the Kroeners, and that the policy’s timely notice requirements had been violated. FIGA further contended that, as a matter of law, a two-year delay for a hurricane loss claim is a violation of the policy’s conditions precedents, without the need to prove prejudice." On the day before the summary judgment hearing, FIGA served a proposal for settlement. The appellants attempted to accept the proposal for settlement after the trial court granted FIGA's summary judgment motion.

With regard to the timely reporting of the claim, the Fourth District held:
Although the trial court entered final summary judgment for FIGA under several theories, we agree with the trial court’s ruling that, as a matter of law, notice to the insurer of a claim of loss more than two years and two months after the loss occurred was not prompt notice; the untimely reporting of the loss violated the insurance policy and was sufficient to bar the claim.
With regard to the proposal for settlement issue, the court held:
As discussed above, the courts which permit acceptance of an offer after a court has entered summary judgment rely on the proposition that the offer is absolutely irrevocable. In Florida, however, the proposal for settlement is revocable at any time before its acceptance by the offeror, Fla. R. Civ. P. 1.442(e). Further, we find more persuasive the reasoning of the courts that preclude a party’s ability to accept a pending offer of judgment after the grant of final summary judgment. This is more in accord with the reasoning of our courts, which do not allow a party to accept an offer of judgment after trial has commenced or a verdict has been announced because it would frustrate the purpose of Rule 1.442 to encourage settlement, obviate the necessity of protracted litigation, and ―totally defeat the ends of justice and allow a mockery of the judicial system." Braham, 514 So. 2d at 73. 

Supreme Court Issues Personal Jurisdiction Opinion Relating To Foreign Subsidiary Of US Corporation

The Supreme Court, in a unanimous opinion written by Justice Ginsburg, held that three Goodyear USA subsidiaries, organized and operating, respectively, in Luxembourg, Turkey, and France, are not subject to personal jurisdiction in North Carolina. The specific question, as phrased by the Court, was: 
Are foreign subsidiaries of a United States parent corporation amenable to suit in state court on claims unrelated to any activity of the subsidiaries in the forum State?
"A bus accident outside Paris that took the lives of two 13-year-old boys from North Carolina gave rise to the litigation" that ended upon the Supreme Court. The court said
Because the episode-in-suit, the bus accident, occurred in France, and the tire alleged to have caused the accident was manufactured and sold abroad, North Carolina courts lacked specific jurisdiction to adjudicate the controversy.The North Carolina Court of Appeals so acknowledged. Brown v. Meter, 199 N. C. App. 50, 57–58, 681 S. E. 2d 382, 388 (2009). Were the foreign subsidiaries nonetheless amenable to general jurisdiction in North Carolina courts? Confusing or blending general and specific jurisdictional inquiries, the North Carolina courts answered yes.
A connection so limited between the forum and the foreign corporation, we hold, is an inadequate basis for the exercise of general jurisdiction. Such a connection does not establish the “continuous and systematic” affiliation necessary to empower North Carolina courts to entertain claims unrelated to the foreign corporation’s contacts withthe State.
The Court's opinion in Goodyear Dunlop Tires Operations, S. A. v. Brown can be viewed HERE.

Thursday, June 23, 2011

Foreclosure Judgment Reversed Because Lender Did Not Establish That Notice Of Default Was Sent

In Valencia v. Deutsche Bank National Trust Company (4D09-3297), the Fourth District reversed a summary judgment in favor of the lender because the lender failed to establish that it had provided notice of default to the borrower prior to filing suit. The Court stated:
For some reason, the lender had not retained a hard copy of the letter notifying the borrowers of the default, but instead produced two possible letters that could have been sent. Both letters contained a cure date of October 8, 2003. Although the original letter was found by appellants after the summary judgment hearing, it contained a different date and different amount owed.
In this case, the Court reversed the judgment and held that:
The burden is on the moving party for summary judgment to show conclusively the complete absence of any genuine issue of a material fact. Id. The date of default alleged in the complaint and the dates referred to in the “cure letters” are not identical. This creates, by definition, a genuine issue of a material fact. 

Wednesday, June 8, 2011

Sanctions Against Counsel Affirmed For Filing Unsupported Defenses

THIS opinion from the Fourth District should cause people to think twice before presenting a defense to a lawsuit solely for the purpose of delay. The Fourth District affirmed an $18,000 sanction against counsel and stated:

Here, we affirm that section 57.105 is applicable in mortgage foreclosure actions to sanction defendants and/or their counsel for asserting defenses which they know or should know are not supported by the material facts of the case, but are nonetheless asserted for the primary purpose of delaying the entry of a final judgment. Furthermore, those who assert such knowingly unsupportable defenses may find themselves liable not just for a portion of the opposing party's attorney's fees, but also for other losses that a trial court finds resulted from the improper delay.

Attorney Fee Judgment Reversed Because FIGA Did Not Deny Claim

In Florida Insurance Guaranty Association v. Smothers (4D09-4597), the Fourth District reversed the trial court's entry of an attorneys' fee judgment against the appellant.

After Mr. Smother's residence was damaged by Hurricane Wilma, his insurer was declared insolvent and "FIGA stepped in to provide a mechanism for the payment of 'covered claims'." "The trial court found that FIGA denied the claim by affirmative action when the independent adjuster found 'NO VISIBLE STORM DAMAGE TO THE INTERIOR'."
FIGA is a statutory creature, “subject to special rules specifically formulated by the Florida legislature.”...While created to cover claims under policies issued by insolvent carriers, “the full gamut of a defunct insurance company's liabilities was not intended to be shifted onto FIGA.”....Chapter 631 was designed to manage, but not bankrupt the statute's funding and payment mechanism....
Here, FIGA never denied coverage. The insured submitted a claim, and FIGA assumed limited responsibility, pursuant to chapter 631. FIGA hired an independent adjuster to inspect the claim and tendered payment. Nothing in FIGA's payment transmittal letter indicated that it denied the claim....Section 631.70 unambiguously creates the boundaries of FIGA's liability for attorney's fees....Here, FIGA did not deny the insured's claim; therefore, section 631.70 bars the application of section 627.428.
To sustain the award of attorney's fees would render the Legislature's creation of section 631.70 meaningless. Therefore, we hold that a dispute about the amount of damages does not constitute a denial of coverage by affirmative action, other than delay, exposing FIGA to attorney's fees under section 631.70. As there was no denial of coverage by affirmative action, we therefore reverse the judgment for the insured and remand the case to the trial court for entry of judgment for FIGA.

Wednesday, June 1, 2011

Trial Court Properly Held Insured Not Entitled To Defense For Injury In Street & Off Insured's Property

In Elliott v. State Farm Florida Insurance Company (4D09-3887), the Fourth District affirmed the trial court's holding that the insurance company was not obligated to provide representation to the insured because the "the trial court correctly determined that the accident was not covered under the homeowners’ policy, inasmuch as it did not occur on the insured premises." 

"The issue presented is whether a homeowners’ insurance policy covered a golf cart accident that occurred on a private road near, but not on, the insured’s residential property." After suit was filed against the appellant by a person injured on a private street, the appellant sought coverage with State Farm. State Farm denied coverage because "Appellee disputed that the allegations in the underlying negligence action would invoke the coverage of the Elliotts’ homeowners’ policy. Appellee claimed that the accident took place outside of the insured premises and was not covered by the homeowners’ policy."

"The main thrust of appellants’ argument is that the private street, within the development, constituted an “insured location” under the homeowners’ policy, and as such, the “motor vehicle” exception did not apply to the golf cart, and appellee would be liable for the injuries Katie sustained in the accident."

The court conducted an analysis of authority on the issue from across the country and determined that the accident was not covered by the homeowner's insurance policy and affirmed the trial court's judgment.