VOLUME XV, NUMBER 10
October, 2003

FROM THE CORNER OFFICE

We are proud to welcome our newest associate, Jamila V. Alexander to the firm. Jamila is a graduate of Florida Agricultural and Mechanical University and University of Miami School of Law and a member of The Florida Bar.

HOMEOWNER’S LIABILITY: INTENTIONAL ACTS UPDATE

The Florida Supreme Court has granted review and set oral argument for January 6, 2004, on Cabezas v. Florida Farm Bureau Cas. Ins. Co., et al. , 27 FLW D2186 (Fla. 3rd DCA October 9, 2002), in which the Third District Court of Appeal affirmed summary judgment entered in favor of Florida Farm Bureau on the basis of the intentional acts exclusion of a homeowner’s policy. (Reported in Briefly Speaking December, 2002.)

The Third District rejected the insured’s argument that the intentional acts exclusion did not apply because the insured did not intend to injure claimant, noting that a punch to the head by an insured is an act expected or intended to cause bodily injury, despite an artfully crafted complaint.

Anna D. Torres

A VAGUE OFFER OF JUDGMENT WILL PRECLUDE FEES AFTER A SUCCESSFUL TRIAL

The question presented to the Fifth District Court of Appeal in Shannon Nichols v. State Farm Mutual, 28 FLW D1404 (Fla. 5th DCA 2003) is whether or not an insurer can recover attorneys fees under Florida Rule of Civil Procedure, 1.442 and Florida Statute 768.79. The answer to that question is “yes,” as long as the proposal is properly drafted. That proposal for settlement cannot be vague in its terms. The offer of judgment statute, 768.79, allows for attorneys fees as long as the proposal is properly drafted.

This case involved a PIP claim where the insurer denied a claim due to the fact that the insured unreasonably refused to submit to an independent medical examination. The policy of insurance specifically stated that the IME is a condition precedent to recovery of any PIP benefits. Prior to trial, the insurer filed a proposal for settlement in the amount of $250.00. Among the conditions of the proposal, it did state as a requirement that the insured “execute a general release in favor of State Farm, which will be expressly limited to all claims, causes of action, etc., that have accrued through the date of the insured’s acceptance of this proposal.”

The insured did not accept the proposal and the case moved to trial in the county court. The jury's verdict was in favor of State Farm. Therefore, the insurer moved, pursuant to section 768.79(1), Florida Statutes for the court to award State Farm its fees and costs on the grounds that an offer of judgment applies to any civil action for damages filed in the court of this state [Florida]. The insured contended that section 768.79, Florida Statutes did not apply to PIP cases, or alternatively, that the proposal for settlement was defective. The trial court rejected the insured's arguments.

The Fifth District held that while an insurer may recover attorney’s fees pursuant to a properly served proposal for settlement, State Farm’s proposal to Nichols was not valid and reversed the lower court’s judgment. The proposal was defective in form and content as it did not state with particularity any relevant conditions, and the proposal by State Farm did not specifically list with particularity all nonmonetary terms of the proposal.

A proposal for settlement, pursuant to Florida Rule of Civil Procedure, Rule 1.442, must state: (1) A proposal shall be in writing and shall identify the applicable Florida law under which it is being made; (2) A proposal shall: (A) name the party or parties making the proposal and the party or parties to whom the proposal is being made; (B) identify the claim or claims the proposal is attempting to resolve; © state with particularity any relevant conditions; (D) state the total amount of the proposal and state with particularity all nonmonetary terms of the proposal. ...

The “general release” required by the State Farm proposal could arguably have included release of the insured's UM claim. The trial court took testimony on the issue and accepted State Farm’s testimony that State Farm would not have required that the release include the UM claim. According to the Fifth District, the trial court’s approach emphasized the ambiguity inherent in the proposal’s language.

Florida Rules require that the terms of a proposal for settlement be stated with specificity and particularity such that no further “judicial labor” be required. The proposal should not need further explanation or judicial interpretation. In this case, the proposal failed to meet the “particularity” requirement.

Because it deemed the question one of great public importance, the Fifth District certified to the Florida Supreme Court the very question it answered in this opinion, i.e., “May an insurer recover attorney’s fees under Rule 1.442, Florida Rules of Civil Procedure, and section 768.79, Florida Statutes, in an action by its insured to recover under a personal injury protection policy?”

Charles E. Benson

MINOR CHILD NOT BOUND BY PARENTS RELEASE AND AGREEMENT TO ARBITRATE ON HIS BEHALF

The litigation of The Estate of Mark Garrity Shea v. Global Travel Marketing, Inc., d/b/a The Africa Adventure Company and d/b/a International Adventures, Ltd., 28 FLW D 2004 (Fla. 4th DCA 2003) arose from the death of an eleven year-old boy. Mark Garrity was killed on safari with his mother when he was mauled by wild animals. Prior to participating in the safari, Mark’s mother signed a contract releasing The Africa Adventure Company (“Africa Adventure”) from all liability arising from the safari. The contract mandated that the parties would settle all disputes through binding arbitration in Fort Lauderdale, Florida. By signing the contract, Mark’s mother agreed to arbitrate her future claims, as well as claims on Mark’s behalf.

Mark’s parents were divorced at the time of his death. Mark’s father, Mark Shea, Sr., sued Africa Adventure for wrongful death as Mark’s personal representative. Mark’s father alleged that Africa Adventure had a duty to use reasonable care in the operation of the safari and that its failure to do so resulted in his son’s death. The trial court found that Mark’s estate and his father were bound by the arbitration agreement signed by Mark’s mother, and Mark’s father was therefore prohibited from suing Africa Adventure.

On appeal, the issue presented to the Fourth District Court of Appeal was whether a parent could bind a child to an agreement to arbitrate. The court concluded that a parent could not bind a child to an arbitration agreement as it relates to commercial travel. In determining whether parties have entered into an agreement to arbitrate, Florida courts apply principles of contract law. However, the question of whether parents can contract on behalf of their children is determined on public policy grounds. To protect the rights of children, public policy dictates that parents cannot waive their children’s basic rights. Such public policy has been codified by case law and statutes. For example, statutory law prohibits a parent from binding a minor child to a settlement of more than $15,000.00 without court approval. In addition, a parent may neither waive their child’s right to file a compulsory counterclaim, nor assert or waive their child’s privileged communications with a psychotherapist without court approval. Most importantly, the Fourth District has recognized that a minor is not bound by his or her own pre-injury contractual waiver.

Circumstances in which a waiver would be supported by a recognized public policy include waivers in cases of obtaining medical care or insurance or for participation in community or school supported activities. These categories do not include commercial travel services. For these reasons, the Fourth District concluded that Mark’s estate was not bound by the arbitration agreement. The court also determined that because Mark’s father did not sign the contract, he was not bound to arbitration.

Renee Jenkins

HOMEOWNER’S POLICY JOINT OBLIGATIONS CLAUSE BARS COVERAGE FOR NEGLIGENT SUPERVISION CLAIM AGAINST PARENTS WHERE COMPLAINT ALLEGES MINOR SON INTENTIONALLY SHOT CLAIMANT

In Hrynkiw v. Allstate Floridian Ins. Co., 28 FLW D1146, (5th DCA May 9, 2003), the Fifth District Court of Appeal affirmed a final judgment rendered in favor of an insurance company holding that the company had no duty to defend or indemnify its insured homeowners in a personal injury suit for damages arising from an incident in which the plaintiff was shot by the insured’s minor son with their gun. Coverage was found to be excluded based upon the intentional or criminal acts exclusion and the joint obligations clause of the homeowner’s policy. The specific allegations in the underlying plaintiff’s complaint were that the insured’s son had “willfully and intentionally committed a battery” and “intended to cause harmful or offensive contact...” Plaintiff further alleged entitlement to recovery based upon the insured’s negligent supervision of their son and their failure to properly store the gun, which they owned.

The homeowner’s policy at issue provided an intentional act exclusion which clearly stated that the policy does not insure against damages that an insured intentionally inflicts or that are “reasonably” expected to result from an insured’s intentional or criminal act. The policy also contained a joint obligations clause, under which all of the insureds covered under the policy were made responsible for the acts of another insured.

Allstate Floridian provided a defense subject to a reservation of rights to deny coverage, and then filed a declaratory judgment action naming the insureds and the plaintiff as defendants. Allstate Floridian subsequently moved for a judgment on the pleadings. The trial court granted Allstate’s motion, finding that coverage was excluded based upon the policy’s intentional or criminal act exclusion and the joint obligations clause. The underlying plaintiff brought the instant appeal.

The plaintiff conceded that the intentional act exclusion barred coverage for the count based upon the allegations that the insured’s son shot him. Thus, the sole issue addressed on appeal was whether the application of the joint obligations clause to the intentional or criminal act exclusion exempted coverage for the negligent acts of the parents. Noting that Florida courts have not had occasion to consider such application, the court turned to decisions of other jurisdictions which have observed that joint obligation clauses have been “consistently construed to mean that an insured’s intentional act bars a claim against another insured for negligent supervision.”

The Fifth District agreed with the rationale of these decisions that the underlying cause of the injury, i.e. the intentional act for which all the insureds are equally responsible determines coverage. This being the case, “the injured person should not be allowed to circumvent the intentional act exclusion by filing a claim for negligence based upon the same underlying intentional act that actually caused the injury.”

The Fifth District further found that the rationale of other jurisdictions comported with Florida law as set forth by the Florida Supreme Court in Landis v. Allstate Ins.Co., 546 So.2d 1051(Fla. 1989). In this case, the insureds were sued for gross negligence and intentional harm stemming from their acts of sexual abuse against children in their day care. The court held that coverage was excluded by the intentional act exclusion of the insureds’ policy, even thought the “gist” of the action filed against them was negligence.

The court concluded, based on the allegations of the underlying complaint and the two clauses analyzed above, that coverage was excluded for the claims presented by the plaintiff based on the intentional acts of the insured's son and the alleged negligent acts of the insured parents.

Allison S. Moore