VOLUME XV, NUMBER 2
February, 2003

TORT REFORM UPDATE

The First District Court of Appeal has overruled Judge Nikki A. Clark’s ruling holding Chapter 99-225, the “Tort Reform Act,” unconstitutional for violating the single subject requirement of Florida’s Constitution. Interestingly, the First District’s opinion does not address any of the substantive aspects of the Tort Reform Act’s provisions. Like Judge Clark’s ruling, the First District has chosen to reverse the trial court on essentially a “technicality.” The First District did not directly rule upon the correctness of the lower court’s ruling that the Act violates the single subject rule. Rather, the First District elected to reverse Judge Clark’s ruling on the basis that the lower court did not have jurisdiction to hear the suit under the Declaratory Judgment Act. Having ruled that the lower court was without jurisdiction, the First District declined to address the “single subject” issue.

The First District’s reasoning on the jurisdictional issue was as follows: The Declaratory Judgment Act requires that there be a bona fide, actual, present practical need for the declaration, present controversy, or the existence of a person who has, or reasonably may have an actual, adverse interest in the subject matter of the litigation. The suit challenging the Tort Reform Act – brought by a set of plaintiffs, including the Florida Consumer Action Network – was “totally devoid of any allegation of a present controversy, and failed to name a person who had any actual adverse interest in the subject matter of the litigation.” Moreover, according to the First District, the lower court misapplied the “ripening seeds of controversy” doctrine, which would have allowed the suit if there was some showing of “a real threat of immediate injury.” The plaintiffs’ claims were non-specific and hypothetical, did not identify how a particular provision of the Act would particularly harm them and did no more than question the constitutionality of the Act. The First District recognized that the plaintiffs “apparently only want the laws struck because they oppose their substantive content.”

In light of the above, the First District reversed Judge Clark’s summary judgment granting declaratory relief in favor of the plaintiffs. However, the First District also opened the door for consideration of the issue by the Florida Supreme Court by certifying the following question to be of great public importance:

Whether the requirement that there be a justiciable issue between adverse parties in a declaratory judgment suit is less stringent in a challenge pursuant to Article III, Section 6, of the Florida Constitution, because the single subject analysis is purely a matter of law requiring consideration only of the four corners of the session law rather than a factual dispute, and would thus permit a complaint brought by parties who will in the future be affected by operation of the law?

We will keep you posted on any action by the Supreme Court on this issue.

Anna D. Torres

EXPERT EVIDENCE: MAKE SURE YOUR EXPERT OUTLINES EVERYTHING DONE TO ESTABLISH HIS OR HER CONCLUSION

Parties are quick to attach affidavits from experts in order to support or defeat a motion for summary judgment. All too often, the affidavit is simply a short recitation of conclusions without establishing how the purported expert reached his or her conclusion. Occasionally, the affidavit fails to even attach a rÈsumÈ from the expert to establish his or her credentials.

In a products liability action, the Eleventh Circuit Federal Appeals Court recently rejected an expert’s Affidavit because it did not establish how the expert reached his conclusion. McCorvey v. Baxter Healthcare Corp., 298 F.3d 1253 (11th Cir. 2002). This decision was based on the landmark 1993 United States Supreme Court case of Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993), which held that Federal Rule of Evidence 702 requires trial judges to scrutinize expert evidence to make sure it meets a certain basic level of reliability. In general, experts must show that their testimony is based upon sufficient facts or data, that it is the product of reliable scientific principles and methods, and that the expert has applied the principles and methods reliably to the facts of the case. In order to determine whether the expert has appropriately complied with Rule 702, the Daubert court determines that the following factors, while not exclusive, should be considered: (1) whether the expert’s theory can be and has been tested by other experts; (2) whether the theory has been subject to peer review in publications; (3) the known or potential error rate of the particular method; (4) whether the technique is generally accepted in the scientific community. The Daubert standard applies only in federal courts. Florida state courts still use the Frye standard which simply looks at whether the technique is “generally accepted” within the scientific community.

McCorvey concerned a products liability lawsuit where a medical catheter exploded inside of the injured plaintiff. In exploding, the catheter largely destroyed itself, thus rendering the exact reasons for its failure indeterminable. The plaintiff sought a ruling that where a product “malfunctions during normal operation” there is a legal inference that the product was defective. Cassisi v. Maytag Co., 396 So.2d 1140 (Fla. 1st DCA 1981). The plaintiff’s engineering expert’s affidavit was put forward in support of this inference.

In excluding the expert’s affidavit, the appellate court found that since the affidavit did not meet the Daubert test, it was unreliable and hence inadmissible. The appellate court specifically rejected the plaintiff’s argument that those issues should be brought out on cross-examination at trial, instead of in the affidavit.

Fortunately (from the plaintiff’s point of view), the plaintiff had also put forth two other experts whose testimony was sufficient under Daubert. Had the plaintiff relied solely on his first expert, he would have lost his entire case, not because his expert was necessarily wrong, but simply because his expert had either not done the appropriate testing, or had not outlined it sufficiently in his affidavit. The moral of this story is that in attempting to submit an expert’s testimony into evidence, it is important that the sworn documents accurately outline both the expert’s qualifications, as well as the proper basis for the expert’s conclusions. To do otherwise risks losing the expert’s testimony.

This is a somewhat complex and specialized area of law. Should our clients have any questions on the use of experts and how we select them, please call our offices.

Mark A. Greenberg

CONTRUCTION CONTRACTS: SEVERABILITY OF DUTY TO DEFEND AND DUTY TO INDEMNIFY

In Barton-Malow Co. v. Grunau Co., et al., 27 FLW D2484 (Nov. 15, 2002), the Second District Court of Appeal held that under the language of Barton-Malow’s agreement with its subcontractors, the duty to pay defense costs and attorneys’ fees was not severable from the duty to indemnify for damages.

The pertinent provision of the agreement required each subcontractor to “protect, defend, indemnify and save harmless … Barton-Malow Company … from and against all losses, claims, demands, payments, damages, suits, actions, attorney’s fees, recoveries and judgments of every nature and description brought or recovered against … Barton-Malow Company.”

Shortly after Barton-Malow completed construction of a new courthouse in Bartow, numerous courthouse employees sued the architect, engineers, and Barton-Malow alleging the courthouse was a “sick building.” They sought damages for numerous health problems allegedly caused by the negligent design and construction of that building. Barton-Malow brought a third-party action against its subcontractors for both common law and contractual indemnity, and Barton-Malow ultimately settled the courthouse employees’ claims and its claims against all but six of its subcontractors.

During the litigation between Barton-Malow and its subcontractors, the subcontractors filed a motion for summary judgment arguing that the indemnity provision was void and unenforceable under §725.06 of the Florida Statutes. Under that statute, certain indemnity provisions between a general contractor and a subcontractor are void unless they contain a monetary limit on the subcontractor’s liability or unless the general contractor gives specific consideration for the indemnity provision. The trial court granted that motion in part, holding that the indemnity provision was unenforceable insofar as it required the subcontractors to indemnify Barton-Malow for damages it paid to the courthouse employees, but the “duty to defend” portion of the indemnity provision was severable from the remainder of the provision. The parties proceeded to a nonjury trial to determine the amount of defense costs and attorneys’ fees, and the trial court awarded Barton-Malow a portion of its defense costs and fees.

On appeal Barton-Malow argued it was entitled to recover all of its defense costs and attorneys’ fees because the duty to defend was severable from the duty to indemnify. However, Barton-Malow did not challenge the trial court’s ruling that the indemnity provision was void and unenforceable under §725.06 of the Florida Statutes. The subcontractors cross-appealed arguing that Barton-Malow should not have recovered any of its costs and fees; since the duty to defend is part and parcel of the duty to indemnify and the duty to defend arises out of the unenforceable duty to indemnify provision, Barton-Malow could not enforce one portion of an otherwise unenforceable provision.

The Second District agreed with the subcontractors finding that the structure of the indemnity provision did not support Barton-Malow’s argument or the trial court’s ruling. The appellate court distinguished cases, cited by Barton-Malow in support of its position, where the duty to defend was set forth in a separate sentence from the duty to indemnify. As to the contract at issue, since the indemnity provision was invalid, no other contractual provision provided a duty to defend, and the duty to defend was not severable from the duty to indemnify, the subcontractors had no contractual obligation to indemnify Barton-Malow for its defense costs and attorneys’ fees.

The appellate court noted that insurance contracts commonly include provisions requiring the insurer to both defend and pay damages and that those provisions are generally severable. However, it emphasized that the applicable insurance principle does not necessarily follow in a non-insurance context particularly when the main purpose of the non-insurance contract is not indemnification. This opinion suggests that the structure of the indemnity provision in a non-insurance contract must clearly support the severability of the indemnitor’s duty to defend from the indemnitor’s duty to indemnify, especially in the absence of any potential for indemnification. This opinion is unlikely to support an insured’s potential argument that the duty to defend and indemnify should not be severable in the insurance context either, given the distinction the appellate court draws between insurance contracts and the agreement at issue.

Jason H. Okleshen