VOLUME XVI, NUMBER 5
May, 2004

FLORIDA’S IMPACT RULE DOES NOT PRECLUDE RECOVERY OF DAMAGES FOR EMOTIONAL DISTRESS FOR NEGLIGENT INTERFERENCE WITH PARENTAL RIGHTS CLAIM

In Jeffrey W. Welker v. Southern Baptist Hospital of Florida, Inc., 29 FLW D171 (Fla. 1st DCA January 8, 2004), the plaintiff father sought review of an order which dismissed his three-count complaint naming the hospital as defendant. The plaintiff and his former wife had two minor children. Pursuant to the judgment dissolving their marriage, the father had custody of the children. During the summer of 1999, the children visited their mother. At that time, their mother sought mental health services for the children which were provided by the hospital. In doing so, a licensed mental health counselor, employed by the hospital, wrote a letter stating that the children suffered from a mental health disorder as the result of their father’s misconduct, including child abuse. The letter was subsequently used by their mother to obtain an injunction against their father which denied him legal custody, visitation with, and access to the children. The injunction remained until the father was able to dissolve it and obtain a court order requiring the return of his children pursuant to the marriage dissolution judgment. In addition to seeking damages for emotional distress, the father sought to recover the attorney’s fees and court costs he was required to expend to effectuate the return of his children.

The father filed a three-count complaint against the hospital. Count I alleged that the hospital’s employee violated a statutory duty by failing to report known or suspected child abused to the Department of Children and Family Services (DCFS). The father contended that had the employee made the required report, DCFS would have conducted an investigation that would have prevented him from losing his parental rights for one year. Count II sought damages for the same injuries, claiming that the employee’s letter contained false and defamatory statements about him. Count III sought damages pursuant to a negligence theory. The trial court dismissed all three counts.

On appeal, the dismissal of Counts I and II were upheld. The court found that the statute which requires the reporting of known or suspected child abuse does not create a cause of action for violation of its terms.

The dismissal of Count III, however, was reversed on appeal. The hospital argued that it was properly dismissed, contending that Count III was an action for medical malpractice, and that the father failed to comply with statutory presuit screening requirements for medical malpractice actions. Florida Statute § 766.106 provides that in order to establish a medical malpractice action a plaintiff must demonstrate that death or injury resulted from the negligence of a health care provider as defined by the statute. The First District Court of Appeal held that Count III was not a medical malpractice claim, as the hospital’s employee, a mental health counselor, did not fall within the statutory definition of “health care provider.” A claim premised upon the negligence of the hospital’s employee is not necessarily a claim for medical malpractice, and therefore not subject to the prescreening requirements for a medical malpractice action. Furthermore, the First District found that Count III was not a claim for medical malpractice because it did not arise out of the rendering or failure to render medical services to the father.

The hospital further argued that the “impact rule” precluded recovery, as the father was unable to claim that he sustained any physical injury as a result of an impact. The “impact rule” provides that before a plaintiff can recover damages for emotional distress caused by someone’s negligence, the emotional distress suffered must flow from a physical injury sustained in an impact.

The First District held that while the “impact rule” traditionally prevents recovery for emotional damages unaccompanied by physical injury, there are exceptions. The Supreme Court of Florida has recognized in cases in which the foreseeability and gravity of the emotional injury involved, and the lack of countervailing policy concerns, have outweighed the policy rationale for the “impact rule.” Thus an exception is appropriate in cases where the likelihood of emotional injury is significant; the issue of causation is relatively straightforward; and it is unlikely that an exception to the rule will result in a flood of fictitious or speculative claims. To this effect, the court has held that the impact rule did not apply to torts for which damages often are predominantly emotional, such as defamation or invasion of privacy. Given these policy considerations, the First District recognized the emotional injury a person is likely to suffer when he or she is deprived of custody of his or her children and all other parental rights for a substantial period must be at least equal to that typically suffered by the victim of an invasion of privacy or defamation.

For these reasons, the court held that the impact rule did not bar the father’s claim for damages resulting from mental anguish and emotional distress.

Renee Jenkins

U.S. DISTRICT COURT CLARIFIES DEFINITION OF “COLLAPSE” AND “HIDDEN”

Judge James Moody, U.S. District Court, Middle District of Florida, Tampa Division, denied Plaintiff Sandalwood’s Motion for Partial Summary Judgment in a case argued by Powers, McNalis, Torres & Teebagy. The Sandalwood Condominium Association at Wildwood, Inc. vs. Allstate Ins. Co., et al., 17 FLW Fed. D123 (December 2, 2003).

The Sandalwood Condominium Association at Wildwood, Inc. (“Sandalwood”) made a claim with Allstate Insurance Company (“Allstate”) claiming collapse to thirteen two-story buildings located in Wildwood, Florida. According to the proof of loss, all of the Sandalwood buildings “collapsed” as a result of hidden termite or hidden decay damage. Allstate conducted an investigation which included analysis by a structural engineer to assess the property and a review of Sandalwood’s records. After the investigation, Allstate denied the collapse claim on the grounds that the damage did not rise to the level of “collapse” and even in areas of severe termite or decay damage, the damage was not “hidden” to Sandalwood as required by the policy. Sandalwood filed a breach of contract and declaratory action suit and subsequently petitioned the court for a summary judgment on its collapse claim.

During the course of litigation, it was apparent that the parties had a differing interpretation of the definitions for “collapse” and “hidden” which were not terms defined by the policy. Judge Moody denied Sandalwood’s motion for summary judgment as there were factual issues in dispute, and in its ruling clarified the meanings of “collapse” and “hidden.” In his ruling, Judge Moody disagreed with Allstate’s assertion that the definition of “collapse” not only includes “material and substantial impairment of a building structure,” but also requires that the collapse be “imminent.” Allstate relied upon the Second District Court of Appeal opinion in Auto Owners Ins. Co. v. Allen, interpreting a similar insurance policyand the California opinion in Doheny West Homeowner’s Assoc. v. American Guaranty and Liability Ins. Co., 60 Cal.App. 4th 400 (Cal. 1997) in which the court noted that any damage could result in a collapse if the initial damage is neglected for a long time and thus, to find otherwise would turn the policy of insurance into a maintenance contract.

Judge Moody, in the Sandalwood case, determined that the structure need not be in “imminent” danger of collapse, but the damage to it must “substantially impair the structural integrity” of the building. That is, the damage must alter the basic stability or structure of the building in order to constitute a “collapse.” The court in its finding did not rule out that “imminent” may be considered a factor in determining whether or not a collapse occurred.

With regard to the definition of “hidden,” Judge Moody agreed with Allstate’s contention that hidden does not mean strictly “not visible” as Sandalwood argued, but rather is defined as a lack of actual or constructive notice. In his holding, Judge Moody held that in order to recover under the policy, Sandalwood must demonstrate that the damage to the structural integrity of the complex was not visible and that Sandalwood neither knew nor should have known of the structural damage with sufficient time to allow for repairs before it reached the stage of “collapse.” Further, the court noted that the insured must take reasonable steps to correct damage before it undermines the structural integrity of the building.

In conclusion, the court determined that a jury must determine the nature, extent, and cause of the damage found in the various buildings of the complex; when the damage occurred; what caused the damage; whether the damage in each building rises to the level of a “collapse;” when the collapse, if any, occurred; whether the collapse damage, if any, was caused by “hidden decay” or “hidden insect damage;” when Sandalwood first became aware of the damage to the building; and whether Sandalwood took reasonable steps to correct the problem once it learned of the damage.

Steven C. Teebagy

UNFAIR CLAIM PRACTICES ARE TREATED LIKE BAD FAITH CLAIMS

In Hartford Insurance Co., etc. v. Mainstream Construction Group, Inc., 29 FLW D363 (5th DCA February 6, 2004) the Fifth District Court of Appeal granted a Petition for Certiorari by Hartford Insurance Company (“Hartford”) seeking reversal of the trial court’s denial of a motion to dismiss claims for unfair claim settlement practices. Mainstream Construction Group, Inc. (“Mainstream”) was insured for a renovation project under a builders risk insurance policy issued by Hartford. During the coverage period of the policy, a fire occurred at the site where Mainstream was performing renovations causing extensive damage to the exterior of the building and Mainstream’s renovations. After Mainstream filed the claim, Hartford took the position that the policy only covered damages to the interior improvements of the project not the exterior of existing building. Mainstream disagreed with Hartford’s position and filed its suit seeking declaratory relief, damages for breach of contract and asserting claims for bad faith dealings and for unfair claims settlement practices against Hartford. Hartford filed a motion to dismiss, which the district court granted as to the bad faith claims but denied with respect to the claim for unfair claim settlement practices. Hartford petitioned the Fifth District for certiorari relief on the failure to dismiss the claim for unfair claim settlement practices.

The issue on review was whether an insured may bring a claim for unfair claim settlement practices prior to a determination of coverage. The Fifth District held that unfair claim settlement practices, like bad faith claims, can only be brought after coverage and the contractual issues between the insured and insurer are resolved. In reaching this decision, the Fifth District found that unfair claim settlement practices are similar to bad faith claims in that if there is no coverage, then the insured would suffer no damages resulting from an insurer’s unfair settlement practices. Further, introducing evidence at trial of an unfair settlement practices claim could taint the jury’s view of the coverage issues. And finally, the Fifth District re-affirmed the principle that the insured would not be able to discover an insurer’s claim file or documents relating to the insurer’s business practice policy or claims practices until after coverage issues have been determined.

Jacqueline A. Grady

QUESTION CERTIFIED: IS PARENT’S AGREEMENT TO ARBITRATE BINDING ON MINOR CHILD?

In our October, 2003, issue we reported on the Fourth District Court of Appeal’s opinion in an issue of first impression in Florida: Whether a parent may release a commercial travel company from liability for injuries to a minor child and bind the child to arbitration of any disputes to the company. The Estate of Mark Garrity Shea v. Global Travel Marketing, Inc., d/b/a The Africa Adventure Co. and d/b/a/ International Adventures, Ltd., 28 FLW D 2004 (Fla. 4th DCA 2003). The issue has now been certified to the Florida Supreme Court as one of great public importance as follows: Whether a parent’s agreement in a commercial travel contract to binding arbitration on behalf of a minor child with respect to prospective tort claims arising in the course of such travel is enforceable as to the minor. The Fourth District’s substituted opinion can be found at 28 FLW D2004.

In its substituted opinion, the Fourth District did not change its ruling. As a matter of public policy, a parent does not have authority to bind a minor child to arbitration or waive the litigation rights of the minor. Thus, neither the agreement to arbitrate nor the release of liability executed by the mother barred a wrongful death claim by the minor’s father (who was divorced from the mother who signed the release).

Anna D. Torres