VOLUME XXI, NUMBER 2
February, 2009

FROM THE CORNER OFFICE

Powers, McNalis, Torres & Teebagy would like to thank all of our supporters in this year's Susan G. Komen Breast Cancer Foundation Race for the Cure in West Palm Beach.  On January 31, 2009, our 25 team members ran and walked to help raise funds in the fight against breast cancer. Thank you for your generous contributions! Check out our participants photo on our Community Events Calendar

Anna D. Torres will be a panelist on the “Gotcha! Top 10 Insurance Settlement Traps” program at the American Bar Association’s Section of Litigation Insurance Coverage Committee, on March 4-7, 2009 in Tucson, Arizona. The program highlights coverage settlement negotiations and drafting of effective releases following settlement of claims.

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PARENTAL RELEASE OF MINOR’S CLAIMS – UPDATE

In our January, 2009, issue, we reported on the Florida Supreme Court’s decision in Fields v. Kirton, 997 So.2d 349 (Fla. 2008) in which the court held that a parent’s pre-injury release on behalf of a minor child is unenforceable against the minor or the minor’s estate arising from injuries resulting from participation in a commercial activity. In apparent direct response to the Supreme Court’s decision, the Florida Senate is considering a bill sponsored by Florida Senator Steve Oelrich. SB 886 would amend Florida Statutes section 744.301 to authorize a parent or legal guardian to waive and release, in advance, any claim or cause of action that would accrue to any of their minor children to the same extent that the adult may do so on his/her own behalf. We will keep our eye on this Bill as it makes it way through the Legislature and advise you of its progress.

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INSURED ENTITLED TO ATTORNEYS FEES ALTHOUGH INSURER PAID APPARISAL AWARD WITHIN 60 DAYS AND BEFORE ENTRY OF JUDGMENT

In Goff v. State Farm Florida Insurance, 33 Fla. L. Weekly D2833 (Fla. 2d DCA 2008), the Second District Court of Appeal held that Florida Statute 627.428 authorizes an award of attorney’s fees when an insurer pays policy proceeds after the insured has filed suit against the insurer, but before judgment has been rendered, finding that the payment of the claim constitutes the functional equivalent of a confession of judgment or verdict in favor of the insured. The Court also held that it was proper for State Farm to withhold a portion of overhead and profit as depreciation when determining actual cash value.

In Goff, Carol and Chad Goff (“Goffs”) filed a claim under their replacement cost insurance policy with State Farm after their house suffered hurricane damage in late 2004. The policy provided that State Farm policy would pay actual cash value at the time of loss and pay additional amounts after repairs or replacement was completed. State Farm paid the Goffs $4,522.81 for the actual cash value of the damage, after deductible. After request by the Goffs for reinspection, State Farm denied any further claim. The Goffs hired a public adjuster who estimated the loss at $66,708. State Farm paid the Goffs an additional $3,108.76, amounting to roughly eleven percent (11%) of the Goff’s claimed loss.

The Goffs sued for breach of contract and for a judgment declaring that State Farm must pay contractor overhead and profit as part of the immediate actual cash value payment upon loss. State Farm asked the trial court to compel appraisal which was granted. Within 60 days and before any judgment was entered, State Farm paid the resulting appraisal award of $43,059.83 minus $7,238.80 withheld depreciation, of which $1,060.58 was designated as depreciation of overhead and profit. Both parties moved for summary judgment. State Farm argued that the claim had been resolved through the contractual appraisal process and that the insured was therefore not entitled to attorneys’ fees. The trial court ruled in favor of State Farm. In so ruling, the court held that the Goffs were not entitled to attorney’s fees under Florida Statute 627.428.

On appeal, the Second District Court of Appeal reversed summary judgment in favor State Farm, finding that State Farm requested appraisal only after the insured had filed suit. Thus, it was the suit which “forced” State Farm to demand appraisal and to pay significant additional amounts. Moreover, although there was no “rendition of a judgment or decree” in favor of the insured, an actual order or decree of judgment by the court is not an absolute prerequisite to an insured’s entitlement to attorney’s fees under 627.428. The Court held that the insured is entitled to attorney’s fees under the statute where after the insured brings suit, the insurer voluntarily pays the insured for the loss before judgment can be rendered. Therefore, the “payment of the claim constitutes the functional equivalent of a confession of judgment or verdict in favor of the insured, thereby entitling the insured to attorney’s fees.”

The Court did affirm the summary judgment in favor State Farm on the issue of the depreciation holdback, finding that it was proper to withhold a portion of overhead and profit as depreciation.

Matthew I. Bernstein

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Property Owner Who Relinquishes Control Of Property To An Independent Party Has No Duty To Secure That Property

In Aircraft Logistics, Inc. v. H.E. Sutton Forwarding Company, LLC, 34 FLWD 192 (2009), the Third District Court of Appeal held that where a property owner relinquished control of property to an independent entity, the property owner cannot be said to have duty to secure that property.

Aircraft owned a single engine Piper Saratoga plane based at Miami Executive Airport in Opa Locka, Florida. H.E. Sutton owned a portable cattle loading ramp. The airport agreed to house the ramp for Sutton because of the existing business relationship between the airport and Sutton. On the date giving rise to the loss the weather forecast was for showers. However, at some point, a sudden thunderstorm erupted causing micro-bursts of wind at over 60 miles per hour. The wind gusts lifted the ramp into Aircraft’s plane (which was tied down) and the plane was a total loss.

Aircraft initially sued H.E. Sutton for negligence asserting that H.E. Sutton failed to properly secure the ramp resulting in the damages to Aircraft’s plane. H.E. Sutton asserted that the ramp was in the airport’s sole care, custody or control at the time of the incident. Aircraft then amended its complaint to include the airport as a defendant and asserted that the ramp was in the airport’s control. Aircraft settled with the airport. H.E. Sutton stated in their answers to interrogatories that there were means of securing the ramp under normal conditions, but there was no way to secure the ramp under the conditions on the date of the incident. H.E. Sutton then filed a summary judgment motion that Aircraft had not established that Sutton owed it any duty, and also asserted that the damages were the result of an act of God. It was undisputed that the ramp was in airport’s exclusive care, custody and control and was used by the airport to load and unload horses from the planes. The trial court granted H.E. Sutton’s motion and concluded that H.E. Sutton owed Aircraft no duty. Aircraft appealed to the Third District Court of Appeals.

The Third District agreed that, as a matter of law, H.E. Sutton owed Aircraft no duty under the facts of this case, relying on McCain v. Florida Power Co., 593 S.L. 2d 500, 503 (Fla. 1992) the seminole case on the analysis of foreseeability in determining the existence of legal duty as an element of negligence.McCain explained that “[t]he duty element of negligence focuses on whether the Defendant’s conduct forseeably created a broader ‘zone of risk’ that possesses a general threat of harm to others”. Id. at 502. McCain implies that “the defendant must be in the position to control the risk.” Aguilav. Hilton, Inc., 878 So.2d 392 ( Fla. 1 st DCA 2004).

The Third District found that nothing in the record, in which the material facts were undisputed, demonstrated that H.E. Sutton was in a position to control the risk or that the conduct created a broader zone of risk toward Aircraft’s property. Additionally, nothing was advanced to refute H.E. Sutton’s assertion that under the conditions that day the ramp could not have been secured so as to avoid damage. According to the Third District found that there is simply no basis in the law for imposing a duty to secure property on the owner of the property in the absence of some anticipated need.

 Alka R. Sharma

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FLORIDA SUPREME COURT AFFIRMS THE DISMISSAL OF DEFENDANT TORTFEASOR OVER OBJECTION OF UNINSURED MOTORIST CARRIER AND CLARIFIES FLORIDA STATUTE §627.727(6)(b)

In Metropolitan Casualty Insurance Company v. Tepper, 2009 WL 217978, the Florida Supreme Court recently resolved a conflict among districts regarding the interpretation of Florida Statute section 627.727(6)(b) in terms of when an underinsured motorist (UIM) insurer is entitled to bring a subrogation claim and when the statute of limitations to bring such an action begins to run. Of significance, the Court affirmed the trial court and appellate court’s dismissal of the defendant tortfeasor and held that the UIM insurer must await final resolution of the UIM claim before proceeding with its subrogation claim against the defendant tortfeasor.

Florida Statute section 627.727(6)(a) enables an injured party to a motor vehicle accident to accept a settlement from an underinsured tortfeasor while still keeping his claim for underinsured motorist benefits from his UIM insurer intact.

However, section 627.727(6)(b) allows the UIM insurer for the injured party to reject the settlement from the underinsured tortfeasor by tendering the amount of the offer to the injured party and thereby preserving its subrogation rights against the underinsured tortfeasor, which it can pursue “upon final resolution of the underinsured motorist claim.”

In Metropolitan Casualty Insurance Company v. Tepper, 969 So. 2d 403 ( Fla. 5th DCA 2007), Lucas, the defendant tortfeasor (“Lucas”) hit the plaintiff bicyclist with his car resulting in personal injuries. The plaintiff filed suit against Lucas and Metropolitan Casualty Insurance Company (“Metropolitan”), the plaintiff’s underinsured motorists insurance carrier. Lucas’ liability insurer tendered its $25,000.00 policy limits to the plaintiff as full settlement of his claim against the defendant. Metropolitan refused to grant the plaintiff permission to accept that settlement offer, and instead paid him the $25,000.00 in order to preserve its subrogation rights against the defendant. Subsequently, Lucas filed a motion to dismiss the plaintiff’s negligence claim, and the plaintiff elected not to oppose the motion. The trial court granted the defendant tortfeasor’s motion to dismiss, despite Metropolitan’s opposition. The appellate court affirmed by holding that a UIM’s subrogation claim against a defendant tortfeasor does not arise until final resolution of the UIM claim.

The Florida Supreme Court agreed with the appellate court’s reasoning and affirmed, which in essence approved of the possible use of a motion to dismiss as a tool to dismiss the defendant tortfeasor from the underlying action despite opposition from the UIM carrier, and ruled that the statute mandates that the UIM carrier must await final resolution of the UIM claim before initiating a subrogation claim against the defendant tortfeasor. The Court further ruled that the statute of limitations to bring a subrogation action does not begin to run until final resolution of the UIM claim

It must be emphasized that in Metropolitan, the plaintiff did not oppose the motion to dismiss the defendant, which led both courts to construe the Plaintiff’s non-opposition as abandonment of his claim against the defendant. A different result may occur if the plaintiff opposes the dismissal of the defendant tortfeasor.

Angie M. Swenka