VOLUME XVI, NUMBER 1
January, 2004

HAPPY NEW YEAR

FROM THE CORNER OFFICE

On behalf of our entire staff at Powers, McNalis, Torres & Teebagy, we thank you for allowing us to serve your legal needs during the year 2003

Because of the short amount of working days during the holiday season, we will not have a December 2003 issue.

For your reference, we are providing you with an article index for the year 2003.

If you have not received a particular newsletter or you are interested in a specific article you may visit our Internet home page (www.powersmcnalis.com).

As always, if you have any questions regarding any issue, please call any one of our attorneys.

2003 ARTICLE INDEX

• INSURANCE DISCLOSURE IN COMPLIANCE WITH FLORIDA STATUTE IS ESSENTIAL TERM IN AN OFFER FOR SETTLEMENT
• KEEPING SECRETS: FINANCIAL PRACTICES THAT MAY CONSTITUTE ECONOMIC FRAUD DO NOT CONSTITUTE A “PUBLIC HAZARD” SUBJECT TO DISCLOSURE PURSUANT TO FLORIDA’S SUNSHINE IN LITIGATION ACT

• TORT REFORM UPDATE
• EXPERT EVIDENCE: MAKE SURE YOUR EXPERT OUTLINES EVERYTHING DONE TO ESTABLISH HIS OR HER CONCLUSIONS
• CONSTRUCTION CONTRACTS: SEVERABILITY OF DUTY TO DEFEND AND DUTY TO INDEMNIFY

• COLLAPSE: DRY ROT EXCLUSION DOES NOT APPLY
• 3RD DCA UPHOLDS STATE FARM’S “EARTH MOVEMENT EXCLUSION”
• FLORIDA LAW APPLIES TO ACTIONS FOR BAD FAITH FAILURES TO SETTLE WHERE COLLISION AND TORT SUIT OCCURRED IN FLORIDA

• A ROSE BY ANY OTHER NAME... DETERMINING THE NAMED INSURED AFTER A CORPORATION IS SOLD AND RENAMED
• “KEEP IT SIMPLE”
• FLORIDA SUPREME COURT RULES THAT LIABILITY INSURANCE POLICY APPLYING TO “BODILY INJURY BY ACCIDENT” DOES NOT PROVIDE COVERAGE NEGLIGENT SPOLIATION OF EVIDENCE

• THE FLORIDA SUPREME COURT GRAPPLES WITH THE DESIGN DEFECT EXCLUSION AND SUE AND LABOR CLAUSES
• PLAINTIFFS’ PROPOSAL FOR SETTLEMENT MUST SPECIFY AMOUNT ALLOCATED TO EACH PLAINTIFF
• SUPREME COURT BROADENS APPEARANCE OF DECEPTIVE AND UNFAIR TRADE PRACTICES ACT

• U.S. SUPREME COURT: $145 MILLION PUNITIVE DAMAGES AWARD AGAINST STATE FARM VIOLATES CONSTITUTIONAL DUE PROCESS
• LIMITATIONS ON THE ADMISSIBILITY OF EXPERT TESTIMONY
• WHETHER THE INSURED MATERIALLY BREACHED THE POLICY BY FAILING TO COOPERATE IS A JURY ISSUE WHERE THE INSURED COOPERATES TO SOME DEGREE

• PERSONAL RELOCATION COSTS MAY BE RECOVERABLE EXPENSES
• HMO CONTRACTUAL DISCOUNT CONSTITUTES A PAYMENT AS A COLLATERAL SOURCE BENEFIT TO BE SETOFF AGAINST DAMAGES AWARD
• CLAIM FILES CONTINUE TO BE PROTECTED

• INSURER CAN BE ESTOPPED TO DENY COVERAGE IF IT NEGLIGENTLY INVESTIGATES CLAIM PRIOR TO SUIT BEING FILED
• PHYSICAL SIDE EFFECTS FROM MEDICATION NOT FOUND TO CONSTITUTE “IMPACT” SUFFICIENT TO SUPPORT CLAIM FOR NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS
• CONTINENT ECONOMIC INTEREST INSUFFICIENT FOR INTERVENTION

• HOMEOWNER’S LIABILITY: INTENTIONAL ACTS UPDATE
• A VAGUE OFFER OF JUDGMENT WILL PRECLUDE FEES AFTER A SUCCESSFUL TRIAL
• MINOR CHILD NOT BOUND BY PARENTS RELEASE AND AGREEMENT TO ARBITRATE ON HIS BEHALF
• HOMEOWNER’S POLICY JOINT OBLIGATIONS CLAUSE BARS COVERAGE FOR NEGLIGENT SUPERVISION CLAIM AGAINST PARENTS WHERE COMPLAINT ALLEGES MINOR SON INTENTIONALLY SHOT CLAIMANT

• LIQUOR LIABILITY EXCLUSION BARS COVERAGE IN CLAIM THAT BAR WAS NEGLIGENT IN ALLOWING DRUNK MINOR TO LEAVE PREMISES
• BLASTING ACTIVITIES EXCLUDED BY EARTH MOVEMENT EXCLUSION IN “ALL RISK” HOMEOWNERS POLICY
• LIVING ARRANGEMENTS CONTROL WHETHER SOMEONE IS A “RESIDENT RELATIVE” FLA. R. CIV. P. 1.061(a) AND KINNEY ANALYSIS PREREQUISITE TO FORUM NON CONVENIENS RULING

• NO ISSUE

FLORIDA SUPREME COURT HOLDS THAT SEPARATE SHOOTINGS ON THE SAME NIGHT BY SAME PERSON CONSTITUTE SEPARATE OCCURRENCES

In Koikos v. Travelers Insurance Company , 849 So.2d 263 (Fla. 2003), the Florida Supreme Court held that in the absence of clear language to the contrary, when the insured is being sued for negligent failure to provide security, an “occurrence” is defined by the immediate injury-producing act and not by the underlying tortious omission.

In this case, the insured, George Koikos, owned a restaurant rented to the Florida A&M University Chapter of Alpha Kappa Psi Fraternity for a graduation party. During the party, a fight broke out, and a man fired a handgun in two separate rounds. Each victim was each hit by a single bullet. The two shooting victims each sued the insured for negligent failure to provide security. The insured in turn brought a declaratory action in state court against Travelers Insurance Company, which removed the case to the United States District Court for the Northern District of Florida. In the declaratory judgment proceedings, the parties filed cross-motions for summary judgment asking the federal district court to decide whether the underlying shooting incident constituted one occurrence subject to a limit of $500,000, or two separate occurrences, for which Travelers would be liable for $500,000 per occurrence. The federal district court ruled that as a matter of law the underlying shooting incident constituted one occurrence. The insured appealed the court’s ruling to the Eleventh Circuit, who in turn certified the unanswered question of state law to the Florida Supreme Court. The certified question as rephrased by the Florida Supreme Court is: “When the insured is sued based on negligent failure to provide adequate security arising from separate shootings of multiple victims, are the multiple occurrences under the terms of an insurance policy that defines occurrence as ‘an accident,’ including continuous or repeated exposure to substantially the same general harmful conditions?”

The policy defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” However, the term “accident” was not itself defined in the policy. The Florida Supreme Court held that the lack of a definition of an operative term in a policy does not necessarily render the term ambiguous and in need of interpretation by the courts. However, where the policy language is subject to differing interpretations, the term should be construed liberally in favor of the insured and strictly against the insurer. Koikos asserted that under the policy there were two occurrences because there were two shootings resulting in separate injuries to the two victims. On the other hand, Travelers argued, relying on the “continuous or repeated exposure” clause, that the occurrence was Koikos’s negligence and, therefore, was but a single occurrence--the failure to provide security on the night in question. The court concluded that the inclusion of the “continuous or repeated exposure” language in the policy does not restrict the definition of “occurrence” but rather expands it by including ongoing and slowly developing injuries. Furthermore, the court stated that when an insurer fails to define a term in a policy, the insurer cannot take the position that there should be a narrow, restrictive interpretation of the coverage provided.

The court addressed the issue of whether Florida has embraced the “cause theory” and whether in using the “cause theory,” the focus should be on the insured’s negligence or the shooter’s separate gun shots. Absent explicit policy language, the court stated that most jurisdictions apply the “cause theory,” which looks to the independent immediate acts that gave rise to the injuries and the insured's liability, rather than the “effect theory,” which looks to the number of injured plaintiffs. The court concluded, consistent with the “cause theory,” that in the absence of clear language to the contrary, when the insured is being sued for negligent failure to provide security, “occurrence” is defined by the immediate injury-producing act and not by the underlying tortious omission, thus each shooting constitutes a separate occurrence.

The Florida Supreme Court stated that if Travelers intended for the multiple shootings to constitute one occurrence, it could have drafted clear policy language to accomplish that result. The court discussed and compared the recent case of SR International Business Insurance Co. v. World Trade Center Properties LLC , 222 F. Supp. 2d 385 (S.D.N.Y. 2002), wherein the policy specifically defined an occurrence as “all losses or damages that are attributable directly or indirectly to one cause or to one series of similar causes.” In SR International , the federal district court held that under the terms of the insurance policy, the two planes hitting the World Trade Center on September 11, 2001, within sixteen minutes of each other, were one occurrence. According to the district court, the language of the policy in SR International allows the ordinary businessman to have no doubt that when two hijacked planes hit the Twin Towers, that the total destruction resulted from “one series of similar causes.”

Contrary to SR International , the Florida Supreme Court concluded that there was no unambiguous language in the Travelers’ policy that would have put Koikos on notice that a “series of similar causes” would be considered one occurrence. The policy’s definition of occurrence as applied to the facts of this case is susceptible to more than one reasonable interpretation. “Occurrence” can reasonably be stated to refer to the entire shooting spree or to each separate shot that resulted in a separate injury to a separate victim. Accordingly, in this case, the Florida Supreme Court construed the term “occurrence” in favor of the insured. The court, under the “cause theory,” focused on the independent immediate acts that gave rise to the injuries and Koiko’s liability. As such, the court found that each shooting constitutes a separate occurrence subject to the “Each Occurrence Limit” of $500,000 and the “General Aggregate Limit” of $1,000,000.

Jamila V. Alexander