ARBITRATIONS
Nitro-Lift Techs., L.L.C. v. Howard, 2012 U.S. LEXIS 8897 (U.S.
Nov. 26, 2012) rejected the Oklahoma rationale for not applying the
Federal Arbitration Act using the statutory construction principle that “where
two statutes address the same subject, one specific and one general, the
specific will govern over the general.”
The Supreme Court of Oklahoma reasoned that their state statute
restricting non-compete clauses in contracts trumped the general federal
act. The U.S. Supreme Court stated:
But the
ancient interpretive principle that the specific governs the general (generalia specialibus non derogant)
applies only to conflict between laws of equivalent dignity. Where a specific
statute, for example, conflicts with a general constitutional provision, the
latter governs. And the same is true where a specific state statute conflicts
with a general federal statute. There is no general-specific exception to the
Supremacy Clause, U.S. Const. Art.VI, cl.2.
The
moral of the story is that state supreme courts are being directed to tow the
line and stop placing obstacles in the path to arbitration, which I consider a
salutary goal now that I am an arbitrator/mediator.
http://www.supremecourt.gov/opinions/12pdf/11-1377_3e04.pdf
ARBITRATION / WAIVER / FEDERAL
The case reversed an order denying Santander’s motion to
compel arbitration based on waiver. The
plaintiff filed a putative class action in state court against Santander on
March 9, 2010, alleging violations of various Maryland consumer protection laws
for undisclosed finance charges and other unfair business practices. On April
13, 2010, Santander removed the complaint to federal court on the basis of
diversity. Santander filed an answer the next day, and within a month the
parties had agreed on a bifurcated discovery schedule. During the brief
discovery period that ensued, Santander took plaintiff’s deposition on both
stage one and stage two issues, and plaintiff took another deposition and
sought production of various documents.
On September 30, 2010, Santander moved to compel non-class
arbitration, claiming the delay in seeking arbitration was caused by
uncertainty in the law regarding whether it would be forced into class
arbitration, which was clarified by Stolt-Nielsen
S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1775 (2010). Santander
waited longer, until a district court had applied Stolt-Nielsen in the consumer context, to file its motion.
In denying Santander's motion, the district court deemed the
underlying transaction purely intrastate in nature, and applied Maryland law rather
than the Federal Arbitration Act. The
court found there was an enforceable arbitration agreement but found that
Santander had waived its right to compel arbitration through unjustified delay
and by having participated significantly in discovery.
The circuit court first determined that the parties’
agreement fell within the scope of the FAA, noting that the reach of the
statute is broad, as it includes “a contract evidencing a transaction involving
commerce.” 9 U.S.C. § 2. The underlying
transaction was a consumer credit arrangement between a citizen of one state
and a financing company in another. Although diversity of citizenship is not by
itself enough to determine the nature of a transaction, the financing originated
from a foreign state. Reliance upon
funds from a foreign source in a transaction is sufficient to implicate the
FAA.
Under the FAA, a party may lose its
right to compel arbitration if
it “is in default in proceeding with such arbitration.” 9 U.S.C. § 3. This principle of “default” is
akin to waiver, but not identical. Unlike some waiver doctrines, the
circumstances giving rise to a statutory default are limited and, in light of
the federal policy favoring arbitration,
are not to be lightly inferred and the party opposing arbitration bears a heavy burden to prove default.
Generally, a litigant defaults on its right to invoke the
FAA where it so substantially utilizes the litigation machinery that to permit arbitration would prejudice the party
opposing it. Where a party fails to
demand arbitration during
pretrial proceedings, and, in the meantime, engages in pretrial activity
inconsistent with an intent to arbitrate, the party later opposing a motion to
compel arbitration may more
easily show that its position has been compromised, i.e., prejudiced.
The dispositive determination is whether the opposing party
has suffered actual prejudice. Two factors are instructive: (1) the amount of
the delay; and (2) the extent of the moving party’s trial-oriented
activity. The moving party’s reason for
delay is not relevant.
Here, the length of delay was deemed relatively short—at most,
six and a half months—from the date plaintiff filed her complaint in state
court—to the filing of the motion to compel arbitration in federal court.
Also nothing in the record supported a finding that plaintiff was
prejudiced by the length of the delay itself. Her general assertion that she “committed
substantial resources to the case on the premise that the Court would have an
opportunity to rule on a motion for class certification,” was both
unsubstantiated and unconvincing. Although
incurring significant expense as a result of extended litigation can be part of
actual prejudice, such cases usually involve resources expended specifically in
response to motions filed by the party who later seeks arbitration. Consequently,
the court concluded the district court erred to the extent it based its
determination of default on the length of delay.
The second factor looks to the nature and extent of
Santander’s litigation activities. Here, Santander “utilized the litigation
machinery” in a few—mostly minimal—ways: it removed the complaint to federal
court, filed an answer, proposed a bifurcated discovery plan, took plaintiff’s deposition
on both phase one and phase two issues, and waited for clarity in the law. No
dispositive motions were filed. Plaintiff engaged in some discovery as
well, but she failed to tether her discussion of litigation activities to any
actual prejudice. She does not explain how either her deposition or the
documents produced would be to Santander’s advantage, or unavailable in arbitration. The mere participation in
discovery is not sufficient to indicate default. Consequently, plaintiff failed
to establish the prejudice necessary to justify finding Santander defaulted on
its right to enforce the arbitration
agreement under the FAA.
http://www.ca4.uscourts.gov/Opinions/Published/111597.P.pdf
THE NAKED TRUTH REVISITED
L.B. v The Naked Truth III, Inc., ---
So. 3d --- (Fla. 3d DCA November 28, 2012)
On
rehearing, Judge Rothenberg filed a long dissent from the prior decision to
reverse the trial judge (the learned Scott Silverman) for certain evidentiary
rulings. See the original post here:
http://www.blogger.com/blogger.g?blogID=3150784884521823845#editor/target=post;postID=6599906294881477864
and
the dissent here:
http://www.3dca.flcourts.org/Opinions/3D10-0975.rh.pdf.
FORECLOSURES / POST-JUDGMENT MOTION
Vargas
v. Deutsche Bank Nat'l Trust Co., 2012 Fla. App. LEXIS 20336 (Fla. 3d DCA Nov.
28, 2012) affirmed the trial court for ratifying the report and
recommendation of the general magistrate finding that no loan modification
agreement had been reached by the parties.
The majority reasoned that Vargas never filed a motion under either rule
1.530 or 1.540. Judge Rothenberg
dissented after reviewing the record and concluding that the magistrate’s
findings were not supported by competent substantial evidence. She also took issue with the majority using
the statute of frauds when it was never argued below or on appeal. But she did not address how the Vargases’
motion to enforce loan modification agreement was cognizable after a final
judgment had been entered and it did not qualify either under rule 1.530 or
1.540.
http://www.3dca.flcourts.org/Opinions/3D11-0554.pdf
MOTION TO VACATE
Wolff
v. Piwko, 2012 Fla. App. LEXIS 20339 (Fla. 3d DCA Nov. 28, 2012)
reversed an order vacating a default final judgment based on a motion filed 364
days after the entry and recordation of the judgment. Instead of reviewing the motion under rule
1.540(b), the trial court vacated the judgment on the basis that the pleading
and notices did not comport with due process, even though sent to defendant’s
address of record in the court order authorizing the withdrawal of his counsel.
http://www.3dca.flcourts.org/Opinions/3D12-1257.pdf
JUDGMENT ON THE PLEADINGS
Carr v. Eslinger, ---
So. 3d --- (Fla. November 30, 2012) reversed an order granting judgment on the
pleadings. The court rejected the
argument that the trial court could not grant the motion because a prior judge
had denied a motion to dismiss based on the same grounds. A successor judge may revisit any nonfinal
order previously entered. But it
nevertheless reversed because the trial judge should have granted leave to
amend.
http://www.5dca.org/Opinions/Opin2012/112612/5D12-1776.op.pdf
ENGLE / SMOKING VERDICT
Philip
Morris United States, Inc. v. Kayton, 2012 Fla. App. LEXIS 20440 (Fla.
4th DCA November 28, 2012) involved a verdict for $8 million in compensatory
and $16 million in punitive damages. The
court rejected Philip Morris’ arguments that the trial court erred in: (1)
using the Engle Phase I findings conclusively to establish the conduct
elements of plaintiff's claims; (2) denying Philip Morris’s motion for judgment
on plaintiff’s claim for conspiracy to commit fraudulent concealment; and (3)
denying Philip Morris’s motion for new trial or remittitur of the jury’s awards
of compensatory damages, but the court reversed the punitive damages award
because the trial court erred in barring Philip Morris from asserting the
statute of repose as an affirmative defense to plaintiff’s claim for conspiracy
to commit fraudulent concealment. The
court approved the amount of punitive damages but remanded to determine
entitlement, which will be resolved when the jury determines whether the
decedent reasonably relied on statements or omissions made by Philip Morris’s
co-conspirators within the statute of repose.
The trial court had stricken defendant’s statute of repose defense based
on the generalized Engle Phase I
findings, but this is an individualized defense that can only be adjudicated
based on the particular circumstances of each plaintiff’s case.
http://www.4dca.org/opinions/Nov%202012/11-28-12/4D10-3573.op.pdf
CLAIM FILE / DISCOVERY
State
Farm Fla. Ins. Co. v. Aloni, 2012 Fla. App. LEXIS 20445 (Fla. 4th DCA Nov. 28,
2012) quashed an order allowing discovery, prior to a
determination of coverage, of activity log notes, emails and photographs
contained in the claim file as work product.
In this case, the trial court departed from the essential requirements
of the law in compelling disclosure of the claim file materials without the
requesting party proving need and the inability to obtain the substantial
equivalent of this material without undue hardship.
http://www.4dca.org/opinions/Nov%202012/11-28-12/4D11-4798.op.pdf
PROCEEDINGS SUPPLEMENTARY / SERVICE OF
PROCESS
To initiate proceedings supplementary, the statute requires
that the judgment creditor have an unsatisfied judgment and file an affidavit
averring that the judgment is valid and outstanding. § 56.29(1). The statutory procedure was designed to avoid
the necessity of the judgment creditor initiating an entirely separate action.
While § 56.29(1) provides that an affidavit be filed to commence the
proceedings, motions are commonly used also. Once entitlement to the
proceedings has been established, third parties not before the court may be
brought into the proceedings by impleader. Unless the civil rules provide to the
contrary, the statutory procedure set forth in § 56.29 controls.
The court concluded that there is no explicit rule requiring
that a plaintiff wishing to initiate proceedings supplementary against a new
third party must file an impleader complaint and serve process of that
complaint on the new third party. It therefore
looked to the procedure in § 56.29, which directs a plaintiff to file an
affidavit attesting that the plaintiff holds an unsatisfied judgment as well as
a motion to require the defendant in execution to appear before the court. The
trial court is then to enter an order requiring the defendant to appear before
the court for an examination concerning the defendant's property.
The appellate court reviewed a series of cases and concluded
that they only implicitly suggested that an impleader complaint must be filed. The court also reviewed a series of cases
where the impleading of new defendants had occurred by motion and concluded that
the Estate properly followed the procedure set forth in section 56.29.
Therefore, the trial court did not lack personal jurisdiction over the
appellants on the basis of insufficient service of process.
http://www.2dca.org/opinions/Opinion_Page_2012/Nov/2D12-394.pdf
