VOLUME XVII, NUMBER 7
July, 2005

DISMISSAL FOR FRAUD WAS AN ABUSE OF DISCRETION WHERE ALLEGED MISCONDUCT OCCURRED IN AN UNRELATED CASE

We have applauded Florida trial courts’ more forceful refusal to permit deception by plaintiffs during the course of litigation by imposing sanctions, even dismissal, where the plaintiffs engage in fraudulent conduct. Unfortunately, a recent Third District Court of Appeal opinion implies a retreat from the recent trend. GisleineBertrand v. Anilus Belhomme, 30 FLW D235 (January 19, 2005).

Gisleine Bertrand sued her former husband to recover half of an eight million dollar Florida Lottery prize. The ticket had been purchased a month before the two were married. Bertrand claimed that the winning numbers had been picked jointly and that they together purchased the lottery ticket. However, during the course of the litigation certain inconsistent information was discovered. For example, Bertrand had filed for bankruptcy, but did not disclose the alleged lottery claim as an asset in her filings and at a hearing. In addition, Bertrand offered inconsistent stories in her deposition and responses to interrogatories. Other examples were offered by the defendant in support of his claim that Bertrand was committing fraud upon the court. After two motions to dismiss for fraud on the court, Judge Jennifer D. Bailey agreed that the plaintiff’s conduct warranted dismissal of her claim.

In an opinion by J. Ramirez, the Third District reversed Judge Bailey’s dismissal of the action under an abuse of discretion standard. The opinion notes that the alleged misconduct occurred related directly to the bankruptcy and an unrelated divorce proceeding, rather than the civil suit. Moreover, the court noted that there was no evidence that Bertrand “lied under oath before the trial court.” In short, the various acts of misconduct were not sufficient to prove “a scheme calculated to deceive the trial court on any matter central to the underlying case.” It appears that this opinion sets a standard for dismissal for fraud which requires that the alleged misconduct relate directly to a central issue in the case in which dismissal is sought and may require actual perjury “before the trial court,” rather than mere lies under oath in responses to written discovery or in deposition testimony. Given what appears to be an elevated standard, we perceive a retreat from the recent trend insisting upon honesty and accuracy by plaintiffs who seek the recovery of legal damages.

Anna D. Torres

FLORIDA SUPREME COURT HOLDS TRANSPORTATION COSTS, INCLUDING MILEAGE FOR PERSONAL VEHICLES RECOVERABLE UNDER PIP STATUTE

The Florida Supreme Court recently reviewed the consolidated cases of SandraMalu v. Security National Insurance Company, 848 So. 2d 373 (Fla. 4 th DCA 2003) and Lazaro Padilla v. Liberty Mutual Insurance Company, 870 So. 2d 827 (Fla. 3d DCA 2003), in which the Fourth and Third District Courts of Appeal certified conflict with the decision of the Fifth District Court of Appeal in Hunter v. Allstate Insurance Co., 498 So. 2d 514 (Fla. 5 th DCA 1986). After review, in Case No. SC03-1327 and Case No. SC03-1432 (Fla. March 10, 2005), the Supreme Court quashed the decisions in Malu and Padilla, approving the holding and rationale of the Hunter, ruling the current PIP statute requires reimbursement of transportation costs incurred in connection with medical treatment that is reasonably medically necessary.

The facts in both Malu and Padilla are substantially similar. In both cases, after sustaining injuries in a motor vehicle accident, the petitioners made claim against their automobile insurer for reimbursement for medical travel expenses for use of their personal automobiles to travel to and from their medical providers. Ironically, in both cases, the respective insurance carriers did issue payment to the petitioners, in accordance with the standard predetermined amount the insurer allowed as reimbursement for medical travel expenses. Dissatisfied with the amount of reimbursement, Malu filed a class action complaint in the circuit court for Broward County, alleging she was entitled to be paid more than the 34.5 cents per mile allowed by her insurer. The trial court dismissed with prejudice, finding as a matter of law that the 34.5 cents per mile paid by Security National to its insureds was reasonable. On appeal, the Fourth District found that the trial court erred in dismissing the complaint when it considered facts outside the complaint, but despite this error, affirmed the trial court’s dismissal on the alternate basis that the medical transportation expenses were not compensable under the PIP statute. The Fourth District’s rationale was that the PIP statute did not contain language specifically providing for medical transportation expenses, except by ambulance. In Padilla, the Third District agreed with the Fourth District’s analysis in Malu.

In 1986, in Hunter, the Fifth District, under a previous version of the PIP statute, held that medical transportation expenses were reimbursable. As the trial courts in Florida were bound to follow Hunter until the conflicting district court decision of Malu was decided in 2003, the payment of these expenses was the settled law of Florida for seventeen years.

The Florida Supreme Court, in quashing the Malu and Padilla decisions, agreed with the rationale in Hunter that the language of the PIP statute should be interpreted liberally to effectuate the legislative purpose of providing broad PIP coverage for Florida motorists.

Section 627.736(1)(a), Florida Statutes (2003) states:

Medical Benefits. – Eighty percent of all reasonable expenses for medically necessary medical, surgical, X-ray, dental, and rehabilitative services, including prosthetic devices, and medically necessary ambulance, hospital, and nursing services.

The purpose of the PIP statute is described as follows:

The purpose of §627.730-627.7405 is to provide for medical, surgical, funeral, and disability insurance benefits without regard to fault, and to require motor vehicle insurance securing such benefits, for motor vehicles required to be registered in this state and, with respect to motor vehicle accidents, a limitation on the right to claim damages for pain, suffering, mental anguish, and inconvenience.

The Supreme Court refused to interpret the PIP statute as excluding other types of transportation expenses just because the statute specifically provides for ambulance expenses. In light of the statute’s wording calling for reimbursement of “all reasonable expenses” and its stated purpose is to provide insurance benefits covering a broad range of medically necessary services, the inclusion of “ambulance expenses” should not be read to exclude other reasonable travel expenses incidental to the medically necessary services provided in the statute.

The court also found significant that the compensability of medical transportation expenses under the PIP statute has never been questioned by the Legislature since the Hunter decision in 1986. Although minor changes were made to the statute in 2001, the Legislature did not reject Hunter’s inclusion of medical transportation expenses as a covered expense under the PIP statute. As such, the court assumes legislative approval of the Fifth District’s construction of the statute until the Legislature makes an affirmative change.

The dissenting opinion, by Judge Bell cautions that this decision can lead to attempts by insureds to seek payment for other incidental expenses reasonably incurred to obtain medically necessary services, e.g. child care. We will await to see whether this decision leads to further expansion of covered expenses under the PIP statute.

Robin B. Rothman

WHETHER CONDO OWNER HAD DUTY TO TURN OFF WATER IS A QUESTION OF FACT FOR JURY

Condominium unit owner, Jean Sherry and her downstairs neighbors, the Riginoses’, went out of town for separate extended trips during the same period of time. While they were away, a hose on Sherry’s washing machine burst, flooding her unit and the unit below as well. The Riginoses’ insurer, Regency Insurance Company, paid the Riginoses’ their policy limits, but the Riginoses’ claimed their damages exceeded their first party limits and filed suit against Sherry.

The trial court entered summary judgment in favor of the downstairs neighbors, awarding Regency $31,096.20 and the Riginoses’ $45,155.59. The Fourth District Court of Appeal reversed the entry of summary judgment. Jean Sherry v. Regency Insurance Company, 884 So.2d 175 (Fla.2d DCA 2004).

The Riginoses’ asserted four theories of liability against Sherry: strict liability, negligence for leaving the water on while she was away from home, negligence for failure to properly maintain the washing machine hose and trespass by permitting the water to enter the Riginoses’ condominium unit.

Sherry had resided in the unit for 6 years and owned the washing machine for 13 years. The trial court had concluded that Sherry should be the one to bear responsibility as between the two parties for the loss, because Sherry had control of the washing machine and thus, the hose which burst, and that these matters were within her control, such as maintenance and water shut-off, that may have prevented the incident. Sherry’s allegation that there might have been other reasons as to why the washing machine hose could fail was held by the trial court to be insufficient without proof. However, the Fourth District noted that the trial court had not clearly stated the theory upon which Sherry’s was held liable as a matter of law. Was it negligence, trespass or even “inferred” negligence by application of res ipsa loquitur?

The Fourth District determined that summary judgment was not properly entered. First, the court held that Florida law is clear that strict liability excludes claims arising from water in household pipes. Since it was not clear which theory the trial court based the summary judgment on, to the extent it may have been based on this theory, it was improper.

Secondly, the court found that there was genuine issue of material fact as to whether Sherry was negligent in failing to turn off the water during her extended trip or in failing to maintain the hose as required by the owner’s manual. However, since there was some evidence that Sherry never had the owner’s manuals, the issue of whether or not Sherry had a duty to turn off the water or to perform maintenance as required by the manual directions was a question for the fact finder. As to the cause of action for trespass, the court held that absent a showing of negligence or strict liability, the cause of action for trespass cannot succeed. Finally, as to the trial court’s possible reliance on the application of the doctrine of res ipsa loquitur, the Fourth District held that summary judgment was improper on this theory because the doctrine only creates a rebuttable inference of negligence and is insufficient in itself to support summary judgment.

This is a familiar factual pattern in Florida, where seasonal condo occupancy is common. As evidenced by the Fourth District’s ruling in this case, the liability of the upstairs unit cannot be presumed by the downstairs unit owner, so payment by the upstairs liability carrier should not be automatic; nor is recovery a given for the insurer of the downstairs owner after it makes payment under the first party property policy. Rather, both insurers should seek to investigate the actual source of the water and whether the upstairs owner’s failure to exercise due care actually resulted in the water loss.