New Chief Judge-Elect; New Opinions

NEW CHIEF JUDGE-ELECT

Congratulations to Judge Suarez on his election to chief judge-elect!  Coincidentally, the two opinions below were both authored by him.

INADVERTENT DISCLOSURE OF PRIVILEGED DOCUMENTS

Constr. Sys. of Am. v. Travelers Cas. & Sur. Co. of Am., 2013 Fla. App. LEXIS 12329 (Fla.  3d DCA August 7, 2013) involved a petition for certiorari in a seven-year-old suit where counsel inadvertently received privileged documents. A motion to compel return of the documents and a motion to disqualify the law firm were referred to a special magistrate.

The special magistrate issued a report and recommendation finding the documents constituted fact work product. However, he concluded the privilege had been waived and recommended denial of both motions. The trial court rejected the recommendation and granted the motions, concluding that no waiver had occurred and the possibility counsel had gained an unfair informational advantage from the disclosure required disqualification.

The opinion reviews the five-factor analysis established in prior cases: (1) The reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosures; and (5) whether the overriding interests of justice would be served by relieving a party of its error.

Upon reviewing the magistrate’s report and the trial court’s order on the motion to compel, the trial court did not exceed its authority by accepting the facts as found by the magistrate but correctly determining the magistrate misconceived the legal effect of the evidence. Therefore, order compelling return of the documents was left unscathed, but the order disqualifying counsel was quashed because the trial court made extensive findings and credibility determinations based on testimony presented to the magistrate. “This was error. Upon determining the privilege was not waived, the trial court should have remanded the matter to the magistrate for further findings.”

http://www.3dca.flcourts.org/Opinions/3D12-3397.pdf

WRIT OF ATTACHMENT

G.E. v. Chuly Int'l, 2013 Fla. App. LEXIS 12334 (Fla.  3d DCA August 7, 2013) reversed an order denying GE’s motion for pre-judgment writ of attachment against Chuly’s property.  GE had sued Millennium and a guarantor, but while the action was pending, the guarantor gave a $1.74 million loan to Chuly, a company owned by the guarantor’s then girlfriend.  This loan was subsequently forgiven.  When GE discovered this, it filed a verified motion for a prejudgment writ of attachment against Chuly for the amount of the Chuly loan and was willing to post a bond in excess of the amount it sought from Chuly. After an evidentiary hearing, the circuit court summarily denied GE's motion for prejudgment writ of attachment or garnishment.

In an action for relief against an allegedly fraudulent transfer sought pursuant to Chapter 726, Florida Statutes, a creditor may seek an attachment against the transferred asset. § 726.108(1)(b), Fla. Stat. (2013). Because the determination of actual fraudulent intent can be difficult, courts look to certain “badges of fraud” to determine whether the transfer was made with the intent to defraud creditors. Those “badges of fraud” are set forth in section 726.105, Florida Statutes (2013).

“At the hearing on GE’s motion for garnishment or attachment, GE presented competent, substantial evidence to support issuance of the writ. GE was not required at that time to prove by a preponderance of the evidence that the loan forgiveness was, actually, a fraudulent transfer.  GE merely had to raise a rebuttable presumption of fraudulent intent by asserting the existence of certain badges of fraud, thereby creating a prima facie case for fraudulent transfer to be determined later in the litigation between the parties. GE's complaint clearly alleges several of these badges of fraud, and adequately stated a cause of action for fraudulent transfer.”

The record revealed that the transfer was made to an insider without adequate consideration; the transfer was concealed and it was made shortly before or shortly after a substantial debt was incurred. Chuly did not present sufficient evidence to rebut the initial presumption of fraudulent transfer. Further, GE asserted it would provide a bond in the amount of $3,200,000.00, more than twice the amount of the debt sought against Chuly. See § 76.12, Fla. Stat. (2013).

http://www.3dca.flcourts.org/Opinions/3D13-0803.pdf

New Name - New Focus

NEW NAME

I have renamed the blog because I will be including cases from federal circuit courts and the U.S. Supreme Court, in addition to opinions out of the Florida appellate courts.  Coverage will also extend to ADR cases, such as the following:

MEDIATION / CONFIDENTIALITY

Benes v. A.B. Data, Ltd., 2013 U.S. App. LEXIS 15270 (7th Cir. Wis. July 26, 2013)

Are mediations really confidential?

The facts as set forth in the opinion are that Benes was an employee who sued his employer after only for four months on the job, alleging sex discrimination.  At the EEOC-arranged mediation, the parties caucused after an initial joint session and, upon receiving the settlement proposal, Benes stormed into the room occupied by his employer’s representatives and said loudly: “You can take your proposal and shove it up your ass and fire me and I'll see you in court.” Benes stalked out, and, within an hour, the employer “accepted Benes’s counterproposal: it fired him.”  Benes then proceeded with an anti-retaliation claim and abandoned his sex discrimination claim.  The district court granted summary judgment in favor of the employer, holding that because the employee was fired for misconduct during the mediation, not for making or supporting a charge of discrimination, he had no claim for retaliation.

The Seventh Circuit affirmed, stating:  “Mediation would be less useful, and serious claims of discrimination therefore would be harder to vindicate, if people could with impunity ignore the structure established by the mediator. Allowing a sanction against a person who by misconduct wrecks a mediation will promote the goals of [42 U.S.C.] §2000e-3(a). Benes has not cited any case holding that misconduct during a mediation must be ignored. Many cases show that misconduct during litigation may be the basis of sanctions (by the court, if not by another litigant).  We cannot see why misconduct during mediation should be consequence free. Judges do not supervise mediation, which makes it all the more important that transgressions be dealt with in some other fashion.” (citations omitted).   

       

This case should give pause to those of us that tell the litigants that everything is confidential.  See Ellen E. Deason, “Predictable Mediation Confidentiality in the U.S. Federal System,” 17 Ohio St. J. on Disp. Resol. 239 (2002).

ARBITRATION

Lagstein v. Certain Underwriters at Lloyd's of London, 2013 U.S. App. LEXIS 16114 (9^th Cir. Aug. 5, 2013) is the latest in the protracted battle between Dr. Lagstein, a nuclear cardiologist, who made a claim in 2001 on a disability insurance policy against Lloyd's of London.  “Lloyd’s pussyfooted for years only to eventually deny the claim, so Dr. Lagstein sued in the United States District Court for the District of Nevada. Lloyd's moved to arbitrate pursuant to the policy, and the District Court granted the motion.

Illustrating the maxim ‘be careful what you wish for,’ the arbitration was wildly successful for Dr. Lagstein, resulting in a total damages award of over $6 million against Lloyd's, including $4 million in punitive damages. Lloyd's, unhappy with the result of the arbitration it had demanded, successfully moved in the District Court to vacate the award. Dr. Lagstein appealed, and this court reversed and remanded with instructions to confirm the award. The District Court then confirmed the award but denied Dr. Lagstein’s request for interest and attorneys’ fees.”

The court now reversed the ruling on interest and attorneys’ fees, confirming the power of the arbitrators to award pre-award interest on contract damages, the power of the court to award post-award prejudgment interest on the total award, including non-contract damages and caps it off by awarding post-judgment interest on the total judgment, including pre-judgment interest to the date of the judgment confirming the award.

EMPLOYMENT

Dejesus v. Hf Mgmt. Servs., 2013 U.S. App. LEXIS 16105 (2d Cir. August 5, 2013) affirmed the dismissal of a suit filed by an employee based on allegations by a plaintiff that she was a wage-earning employee of defendant for three years and that she worked more than forty hours per week during “some or all weeks” of her employment and, in violation of the FLSA, was not paid at a rate of at least 1.5 times her regular wage for each hour in excess of forty hours, was insufficient.  Plaintiff relied on the FLSA's provision in 29 U.S.C. § 207(a)(1).  In affirming, the court reasoned that the complaint must contain sufficient factual matter to state a claim, citing to Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).  More specifically, in Lundy v. Catholic Health System of Long Island, 711 F.3d 106 (2d Cir. 2013), the court had concluded that “to state a plausible FLSA overtime claim, a plaintiff must sufficiently allege 40 hours of work in a given workweek as well as some uncompensated time in excess of the 40 hours.” Lundy, 711 F.3d at 114. 

Dejesus provided less factual specificity than did the plaintiff in Lundy. “She did not estimate her hours in any or all weeks or provide any other factual context or content. Indeed, her complaint was devoid of any numbers to consider beyond those plucked from the statute… Whatever the precise level of specificity that was required of the complaint, Dejesus at least was required to do more than repeat the language of the statute.”

Not Summer Reruns

CLASS ACTION CERTIFICATION REVERSED BY THE THIRD –So what’s new?

Alderwoods Group v. Garcia, 2013 Fla. App. LEXIS 12002 (Fla.  3d DCA July 31, 2013) reversed a class action certification of:  “All persons with burial plots or family members at Graceland Memorial Park South who were buried before 1994, that are unable to readily locate family members due to inadequate recordkeeping and identifying markers.”  The Third District again conducted a merits analysis to reverse the class certification order, instead of explaining how the trial court abused its discretion.  The court first ruled that the procedure to be employed for determining class membership would provide the Representative Plaintiffs with the ultimate injunctive relief they were seeking. 

Second, because there had been a prior administrative procedure, res judicata prevented relitigation of resulted in defendant having to correct its faulty record keeping and ensure that every gravesite was properly marked and accounted for.   “Res judicata bars the Representative Plaintiffs from seeking a permanent mandatory injunction that would redress the same issues litigated in the administrative action.”

The remaining claims were also not deemed amenable to class treatment because they required highly individualized proof.

http://www.3dca.flcourts.org/Opinions/3D11-1497.pdf

ATTORNEY’S FEES

State Farm Fla. Ins. Co. v. Laughlin-Alfonso, 2013 Fla. App. LEXIS 12010 (Fla.  3d DCA July 31, 2013) reversed the denial of attorney’s fees based on the trial judge’s determination that the proposal for settlement—a nominal amount—was not made in good faith.  Even though it was an abuse of discretion standard, the court stated that the terms of the policy required the insured to assist State Farm in its investigation of the claim and the insured did not respond to any of State Farm’s requests and failed to submit a Sworn Proof of Loss.  The insured also failed to respond to State Farm’s discovery requests. Additionally, she failed to submit any credible evidence to support her supplemental claim, other than the public adjuster's report.  The court then concluded that State Farm had a reasonable basis to believe that its exposure was nominal and did not act in bad faith when it made the settlement offer. 

But why was the trial court’s contrary conclusion an abuse of discretion?

http://www.3dca.flcourts.org/Opinions/3D12-0675.pdf

ATTORNEY’S FEES

HSBC Bank United States v. Williams, 2013 Fla. App. LEXIS 12007 (Fla.  3d DCA July 31, 2013) affirmed the award of $74,429 in costs and attorney’s fees against the bank given the bank’s history in the case of disobeying court orders.

http://www.3dca.flcourts.org/Opinions/3D12-1784.pdf

ATTORNEY’S FEES / ARBITRATION

Carvajal v. Banc of Am. Inv. Serv., 2013 Fla. App. LEXIS 12009 (Fla.  3d DCA July 3, 2013) explained that the Florida Arbitration Code confers on parties a statutory right to have a court determine entitlement to attorney’s fees.  [Note that the Revised Florida Arbitration Code changes that.]  “In finding that the parties agreed to submit the issue of attorney’s fees to the arbitrator, the trial court relied on Carvajal’s request for attorney’s fees in his initial arbitration statement of claim. However, requests for attorney’s fees in arbitration pleadings are not sufficient evidence of an express waiver.”

http://www.3dca.flcourts.org/Opinions/3D12-2283.pdf

Publix Supermarkets v. Santos, --- So. 3d --- (Fla.  3d DCA July 31, 2013) quashed an order that granted discovery regarding falls at all stores throughout the state for the last three years, reasoning that although overbreadth is generally insufficient to warrant certiorari review, it is appropriate where the discovery grants “carte blanche” to irrelevant discovery.

http://www.3dca.flcourts.org/Opinions/3D12-3053.pdf

DEFAULT JUDGMENTS

Peterson v. Lake Surprise II Condo. Assoc., 2013 Fla. App. LEXIS 12021 (Fla.  3d DCA July 31, 2013) reversed an order granting a Fla. R. Civ. P. 1.540(b)(1) motion for relief from the default judgment, which was based upon the mortgagee’s conscious and deliberate - but sadly mistaken - decision, made contrary to advice of counsel, that it was not necessary to answer the complaint. A conscious decision not to comply with the requirements of the law cannot be "excusable neglect" under the rule or any other equivalent requirement.

http://www.3dca.flcourts.org/Opinions/3D13-0352.pdf

SETTLEMENTS / FAIR LABOR STANDARDS ACT (FLSA)

Nall v. Mal-Motels, Inc., 2013 U.S. App. LEXIS 15378 (11th Cir. Fla. July 29, 2013) reversed an order approving and enforcing a settlement agreement because it was neither (1) reached under the supervision of the Secretary of Labor, nor (2) was the district court presented with a proposed settlement which the court scrutinized for fairness.  The circuit opinion explained that Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) applied equally to a current employee as to a former employee.  Lynn's Food recognized Congress' concern that "there are often great inequalities in bargaining power between employers and employees." Id. at 1352. The most cause for concern exists when the plaintiff employee is still working for the defendant employer.  But the court concluded that the rule of Lynn's Food should also apply to settlements between former employees and employers.

The agreement here was not made under the supervision of the Secretary of Labor, so it is valid only if the district court entered a "stipulated judgment" approving it. Lynn's Food, 679 F.2d at 1352-54. The court did enter a judgment approving the settlement, but it was not a stipulated one.  “[I]t takes two (or more) to stipulate, and a judgment to which one side objects is not a stipulated one.”  Here, plaintiff’s attorney objected to approval, contending that the terms were not fair and reasonable.

http://www.ca11.uscourts.gov/opinions/ops/201213528.pdf

ARBITRATIONS

LJL 33rd St. Assocs. v. Pitcairn Props., 2013 U.S. App. LEXIS 15625 (2d. Cir. July 31, 2013) reversed a district judge who vacated an arbitrator’s determination based on his conclusion that the arbitrator committed misconduct in violation of the Federal Arbitration Act, 9 U.S.C. § 10(a)(3), in excluding certain hearsay evidence offered by Pitcairn. That statute provides that a reviewing court may vacate an arbitration award “where the arbitrators were guilty of misconduct in . . . refusing to hear evidence pertinent and material to the controversy.”

The district court recognized that the excluded valuations were all hearsay. It noted, however, that in arbitration proceedings there is no need to comply with strict evidentiary rules.  “While it is indisputably correct that arbitrators are not bound by the rules of evidence and may consider hearsay, it does not follow that arbitrators are prohibited from excluding hearsay evidence, especially when (a) the evidence could be presented without reliance on hearsay and (b) its hearsay nature is unfairly prejudicial to the adversary. As to Pitcairn’s four exhibits, both conditions applied. So far as appears, there was no good reason for Pitcairn to rely on hearsay. It could have presented this evidence, unencumbered by the hearsay objection, merely by calling the makers of the exhibits — thus providing LJL with the opportunity to cross-examine these witnesses in an effort to undermine the probative value of the exhibits.”

http://www.ca2.uscourts.gov/decisions/

Similarly, in Doral Financial v. García-Vélez, the losing party sought before the First Circuit to vacate the resulting arbitration award in the latter matter for “misconduct in refusing to hear evidence pertinent and material to the controversy” under §10(a)(3) of the Federal Arbitration Act.  The First Circuit Court of Appeals rejected that challenge based on the argument that the arbitration tribunal engaged in misconduct by denying the issuance of pre-hearing and hearing subpoenas.  

"Every failure of an arbitrator to hear relevant evidence does not constitute misconduct requiring vacatur of an arbitrator's award. …  Vacatur is appropriate only when the exclusion of relevant evidence so affects the rights of a party that it may be said that he was deprived of a fair hearing."