Thursday, December 20, 2012

New Cases

Hasan v. Garvar, --- So. 3d --- (Fla. December 20, 2012) held that Fla. Stat. § 456.057 prohibits ex parte private pre-deposition between an attorney hired by an insurance company to represent a dentist who rendered treatment to plaintiff after the alleged malpractice was committed by another dentist, where the same insurance company insured both dentists.  Polston and Canady dissented.

Spring Lake NC, LLC v. Figueroa, 2012 Fla. App. LEXIS 21521 (Fla. 2d DCA Dec. 14, 2012) is another example of the judicial hostility to arbitration that led to the enactment of the Federal Arbitration Act (FAA) in 1925.  The plaintiff in a personal injury case was contesting a motion to compel arbitration arguing that the phrase “nationally recognized arbitration association” was ambiguous. Ultimately, the circuit court found the phrase was unambiguous. The court nevertheless denied the motion.  The circuit court was found to have erred in multiple ways in denying the motion to compel arbitration.
First, the court should have concluded the hearing when it determined that the phrase “nationally recognized arbitration association” was not ambiguous, a conclusion with which it agreed. Second, even if the court could have found ambiguity in that phrase, the evidence submitted was insufficient to establish multiple, reasonable interpretations of the phrase. The third, which was the trial court’s reason for denying the motion to compel, was an impossibility argument—that that the only nationally recognized arbitration associations would not take this type of case.  This was ostensibly based on counsel’s personal knowledge, which did not qualify as evidence.  It also failed because the purpose for which the agreement was drafted—arbitration—was not rendered impossible given the FAA’s provision in 9 U.S.C.A. §5 that the court may appoint arbitrators.
Steuer v. Jaylene Inc., 2012 Fla. LEXIS 2590 (Fla. December 20, 2012) represents another case where the Florida Supreme Court is proceeding on a different track that the U.S. Supreme Court by quashing a decision stating that the arbitrator (as opposed to the trial court) initially must determine whether an arbitration agreement’s limitation on statutory remedies renders the agreement unenforceable on public policy grounds.
Smith v. R.J. Reynolds Tobacco Co., 2012 Fla. App. LEXIS 21520 (Fla. 2d DCA Dec. 14, 2012) a divided court held in this Engle case that when the plaintiff died, the court must grant the personal representative’s motion for substitution of parties and amendment of the complaint.  See Ramirez, 1-10 Florida Civil Procedure § 10-8, n.338.  The court certified conflict with Capone v. Philip Morris U.S.A. Inc., 56 So. 3d 34 (Fla. 3d DCA 2010), rev. granted, 75 So. 3d 1243 (Fla. 2011), and Ruble v. Rinker Material Corp., 59 So. 3d 137 (Fla. 3d DCA 2011), rev. granted, 75 So. 3d 1245 (Fla. 2011) .
Clark v. Bluewater Key Rv Ownership Park, 2012 Fla. App. LEXIS 21719 (Fla. 3d DCA Dec. 19, 2012) granted rehearing and reversed a previously well-written and well-reasoned opinion reported at: Clark v. Bluewater Key RV Ownership Park, 2012 Fla. App. LEXIS 5482 (Fla. 3d DCA Apr. 11, 2012).  The dissenter wrote the majority opinion, which simply adopted “the opinion of the trial court, upon which we cannot improve and therefore adopt en [sic] haec verba.”  To save you a trip to the dictionary, “in haec verba” is Latin for “in these words,” and refers to incorporating verbatim text into some other legal document.  To which I say: “non necessario recte sed ultimus.”
Otaola v. Cusano's Italian Bakery, 2012 Fla. App. LEXIS 21714, 1-2 (Fla. 3d DCA Dec. 19, 2012) reversed a dismissal with prejudice a widow’s wrongful death lawsuit against defendant based on a pre-suit settlement and payment of policy limits ($1,000,000.00) by one of defendant’s insurers (Allstate Insurance, a non-party) without a release of defendant or its excess coverage insurer (AIG, also a non-party).  Defendant argued that either the settlement should be rescinded as an incomplete settlement (and all funds disgorged) or, alternatively, it should be enforced as if the wrongful death lawsuit was completely settled.  The court concluded that defendant was not entitled to such relief and remanded the case so that the wrongful death lawsuit could be prosecuted to its conclusion (though giving full effect to the substantial recovery realized by plaintiff through Allstate’s tender and payment of its coverage limits).

Monday, December 10, 2012

New Federal and State Decisions


In Oxford Health Plans LLC V. Sutter, Case No. 12-135, the U.S. Supreme Court granted certiorari review in another class action arbitration.  In Stolt-Nielsen v. AnimalFeeds International Corp., 130 S. Ct. 1758, 1776 (2010), the Court made clear that “class-action arbitration changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to arbitration.” In this case, an arbitrator concluded that the parties affirmatively consented to class arbitration on the basis of a contract provision stating: “No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration.”

The question presented is:

Whether an arbitrator acts within his powers under the Federal Arbitration Act (as the Second and Third Circuits have held) or exceeds those powers (as the Fifth Circuit has held) by determining that parties affirmatively "agreed to authorize class arbitration," Stolt-Nielsen, 130 S. Ct. at 1776, based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract.

          The circuit court opinion seems to interpret Stolt-Nielsen narrowly.  See Sutter v. Oxford Health Plans LLC, 675 F.3d 215, 224 (3d Cir. N.J. 2012).  More likely to prevail is the reasoning in Reed v. Fla. Metro. Univ., 681 F.3d 630, 642 (5th Cir. Tex. 2012), where even more expansive contractual provisions were held not to encompass class action arbitrations.


907 Whitehead St. v. Sec'y of the USDA, 2012 U.S. App. LEXIS 25106 (11th Cir. December 7, 2012) held that the Hemingway Museum was subject to the jurisdiction of the U.S. Department of Agriculture and its animal inspection service could regulate the museum as an animal exhibitor for the progeny of a polydactyl cat named Snowball.


Bahamas Sales Assoc., LLC v. Byers, 2012 U.S. App. LEXIS 24887 (11th Cir. Fla. Dec. 4, 2012) involved real property located in the Bahamas.  The mortgage contained a forum selection clause in which the obligor agreed to the jurisdiction of the courts in Florida.  Thus, the clause was only binding on Byers as the obligor under the mortgage and not on the mortgagee, Bahamas Sales.  The court next held that the counterclaim alleging appraisal fraud did not relate to the lot purchase contract.  Nor did equitable estoppel apply.  It therefore reversed the order dismissing Byers’ counterclaim based on the forum selection clause in the lot purchase contract.


Goheagan v. Am. Vehicle Ins. Co., 2012 Fla. App. LEXIS 20897 (Fla. 4th DCA Dec. 5, 2012) reversed a summary judgment in favor of the insurer in this bad faith claim.  The court had previously affirmed, 2 to 1, and now reversed, 2 to 1.  Evidently Judge Polen changed his mind on rehearing.

          This was a catastrophic accident with only a $10,000 policy limit.  The insurer promptly tried to settle the claim.  The victim was in a coma, so the adjuster contacted the family and was told that they had retained an attorney, but despite repeated attempts, she was not given the attorney’s name.  When she learned that suit had been filed against its insured, she attempted to tender the policy limits.  A majority thought there was an issue as to whether the insurer had acted in good faith. 

It appears the adjuster had done everything, except tender an offer.  “If in fact [the victim’s family] had retained an attorney, the assistance of the attorney may have been necessary to finalize a settlement but would not have precluded an offer. With the catastrophic injuries, clear liability, and the limited available liability limits of $10,000, a jury could decide that there was not much to negotiate; and the representation by an attorney would not have been an impediment to at least make an offer to settle.”


Dominko v. Wells Fargo Bank, N.A., 2012 Fla. App. LEXIS 20895 (Fla. 4th DCA Dec. 5, 2012) reversed a summary judgment granted after the defendant filed a motion arguing that the bank had not complied with the pre-suit notice requirement in the acceleration clause of the mortgage.  “When a plaintiff moves for summary judgment before the defendant answers the complaint, the plaintiff must not only establish that no genuine issue of material fact is present in the record as it stands, but also that the defendant could not raise any genuine issues of material fact if the defendant were permitted to answer the complaint.”  The court further stated:  “Although Wells Fargo made the general allegation in its complaint that all conditions precedent to the foreclosure action had occurred, there was no evidence in the record that Wells Fargo complied with [the requirement]. Wells Fargo’s affidavit in support of summary judgment did not mention the conditions precedent.”


Exotic Motorcars & Jewelry, Inc. v. Essex Ins. Co., 2012 Fla. App. LEXIS 20896 (Fla. 4th DCA Dec. 5, 2012) reversed a judgment that contained no findings of fact, conclusions of law, or other indication of the basis for the trial court’s ruling.  The court explained that orders that contain no meaningful findings, “effective review may be deemed impossible and the cause remanded for findings, notwithstanding that such findings may not be mandated by rule or statute…. This may particularly be the case where the action is one for declaratory relief.”


Kirrie v. Indian River County Code Enforcement Bd., 2012 Fla. App. LEXIS 20905 (Fla. 4th DCA Dec. 5, 2012) quashed, on second-tier review, the circuit court or denying procedural due process where it denied the Kirries’ motion to supplement the record because it thwarted review of their appeal on the merits.


Cemex Constr. Materials v. Ross, 2012 Fla. App. LEXIS 21088 (Fla. 5th DCA Dec. 7, 2012) affirmed an order vacating a final judgment based on unsworn representations of counsel even though “the general rule in Florida is that absent a stipulation, unsworn representations by counsel about factual matters may not serve as the basis for a trial courts factual determination.”  The rule, however, is subject to the requirement that the opposing party make a contemporaneous objection.”  Here, there was no objection.  Had there been an objection, the trial court could have simply placed counsel under oath.


Monday, December 3, 2012

New Federal and State Opinions from Florida


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 Oklahoma decision was reversed in a per curiam unanimous opinion.  It follows a similar path as the decision out of the West Virginia Supreme Court in Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201 (U.S. 2012).

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.


Rota-Mclarty v. Santander Consumer United States, 2012 U.S. App. LEXIS 24447 (4th Cir. Nov. 28, 2012) shows the difference between how a federal court as opposed to a Florida court deals with a claim of waiver of arbitration.  Florida courts would have found waiver under the facts of this case.  The Fourth Circuit did not.

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.


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:;postID=6599906294881477864

and the dissent here:


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.


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.


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.


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.


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.


Fundamental Long Term Care Holdings v. Estate of Jackson, 2012 Fla. App. LEXIS 20323 (Fla. 2d DCA Nov. 28, 2012) rejected the argument that proceedings supplementary under F.S. § 56.29 require that a newly impleaded defendant be served with a summons and complaint for the court to have personal jurisdiction over that newly impleaded defendant.  The court explained that proceedings supplementary under § 56.29 are special statutory proceedings subsequent to judgment to aid a judgment creditor in collecting his judgment against the judgment debtor. 

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.