VOLUME XXI, NUMBER 9
September, 2009

4 TH DISTRICT APPROVES PROPOSAL FOR SETTLEMENT FROM EMPLOYER CONDITIONED ON DISMISSAL OF BOTH EMPLOYER AND EMPLOYEE

The case of Alioto-Alexander v. Toll Bros., Inc., 34 Fla. L. Weekly Fed. D1383, (Fla. 4 th DCA 2009), arose from a lawsuit in which the Plaintiff, Gloria Alioto-Alexander sued both John Barr, Toll Brothers’ employee, and Toll Brothers itself under a theory of vicarious liability. Toll Brothers served the Plaintiff with a $5,000 proposal for settlement during the litigation, but it conditioned the offer upon the dismissal of the entire action against both Toll Brothers and Barr. The Plaintiff did not accept the proposal for settlement. Ultimately, Toll Brothers and Barr prevailed against the Plaintiff in the litigation. When the Plaintiff was ordered to pay Toll Brothers attorney’s fees, she appealed.

The Florida Supreme Court has held that, pursuant to Florida Rule of Civil Procedure 1.442, the rule governing proposals for settlements, an offer made by multiple offerors must be properly apportioned between each offeror in order to support an attorney’s fee award—even where one party’s alleged liability is solely vicarious. Therefore, Plaintiff argued on appeal that the $5,000 offer for settlement from Toll Brothers was a joint proposal from Toll Brothers and Barr since Toll Brothers conditioned the offer on her dismissal of the lawsuit against both Toll Brothers and Barr. Plaintiff further argued that the proposal could not support an attorney’s fee award since the offer did not apportion the $5,000 between Toll Brothers and Barr.

The Fourth District Court of Appeal affirmed the attorney’s fee award in favor of Toll Brothers after concluding that the proposal for settlement was made solely by Toll Brothers. The court explained that Toll Brothers simply made it a condition of the proposal for settlement that the Plaintiff dismiss the entire suit against both Toll Brothers and Barr. The court emphasized that Toll Brothers’ decision to include this condition in the proposal for settlement did not “transform the proposal for settlement into one made by multiple offers.”

Nicole G. Odrobina

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LLOYD'S ARBITRATION PROVISION IS HELD ENFORCEABLE AND NOT IN CONFLICT WITH SERVICE OF SUIT PROVISION

The First District Court of Appeal recently held that arbitration provisions in international insurance agreements are controlled by federal laws requiring the enforcement of such a provision and not state laws regulating the business of insurance. The Court also held that the arbitration provision in question did not conflict with a service of suit provision contained within the same insurance agreement.

In Lloyds Underwriters v. Netterstrom, et al., 34 Fla. L. Weekly D1437 ( Fla. 1st DCA 2009), a widow filed a wrongful death suit against the owner of the tugboat on which her husband was working at the time of his death. The tugboat owner was insured by Lloyds of London (“Lloyds”) through its underwriting agent, Osprey Underwriting (“Osprey”). Coverage for the loss was denied on the basis of the insured’s failure to comply with certain policy conditions. The insured then filed suit against Lloyds and Osprey. Lloyds and Osprey then moved to compel arbitration pursuant to the terms of the policy. Based upon its conclusion that the arbitration clause conflicted with the service of suit clause and that Florida law prohibiting the arbitration of coverage disputes controlled over the Federal Arbitration Act, the trial court held that the arbitration provision was unenforceable and denied the motion. The First District Court of Appeals reversed on both grounds and held the arbitration provision was enforceable.

In determining if there was any conflict between the arbitration provision and the service of suit provision, the First District found that the arbitration provision simply set forth the parties’ agreement to resolve their coverage dispute by arbitration and the service of suit clause simply provided a method for the insured to obtain a judgment against the insurer in the United States once a dispute was resolved in favor of the insured. Accordingly, the First District found no conflict between these two provisions. Moreover, the arbitration provision specifically stated that if it was in conflict with any other provision in the contract, then the arbitration provision would control. As such, the arbitration provision would have been enforceable even if it was in conflict with the service of suit provision.

With respect to whether Florida law or the Federal Arbitration Act controlled the outcome in this case, the Court held that in cases involving international insurance contracts, state laws regulating the business of insurance do not take precedence over federal laws that require the enforcement of an agreement to arbitrate. Arbitration agreements between residents of different countries are governed by The New York Convention on the Recognition of and Enforcement of Foreign Arbitral Awards (“Convention”) as long as both countries are signatories to the Convention. The Convention is incorporated into the Federal Arbitration Act and if it applies, the Federal Arbitration Act will preempt state laws regulating insurance. An agreement to arbitrate is covered by the Convention if (1) it is in writing; (2) it provides for arbitration in the territory of a signatory to the Convention; (3) the agreement arises out of a commercial legal relationship; and (4) a party to the agreement is not an American citizen. The Court found all these elements to be present and held that the arbitration provision was enforceable.

 Karen J. Jerome Smith

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WHERE PLAINTIFF INTENTIONALLY MISLEADS THE COURT, DISMISSAL IS APPROPRIATE SANCTION

Florida ’s Third District Court of Appeal has recently held that dismissal is an appropriate sanction where a plaintiff’s omissions and false statements were intentional and designed to interfere with the administration of justice.

In Williams v. Miami-Dade County Public Health Trust, 34 Fla. L. Weekly D1819 (Fla. 3d DCA 2009), the trial court found that a medical malpractice plaintiff intentionally failed to disclose numerous prior medical problems, numerous prior car accidents and an application for disability benefits which preceded the injury she complained of. Furthermore, the trial court found that she intentionally lied to her treating physicians and that her failures to disclose were not attributable to memory loss (which she had blamed on the injury alleged in the complaint).

The trial court dismissed her case for committing a fraud on the court and the appellate court upheld the dismissal. While recognizing that dismissal for committing a fraud on the court is an extreme sanction and should only be applied where the fraud is “well-supported” by the evidence, the Third District Court of Appeal held that the evidence in the trial court amply supported the claim of fraud and that the plaintiff’s actions and omissions were intentional and “designed to interfere with the administration of justice.”

Erik Bell

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 THIRD DISTRICT PREVENTS TRIAL COURTS FROM PREMATURELY ORDERING PRODUCTION OF DOCUMENTS RELATING TO INSURERS’ BUSINESS PRACTICES

 In the case of Phoenix Ins. Co. v. Trans World Forwarding, Inc., 34 Fla. L. Weekly D1929, (Fla. 3d DCA 2009), Phoenix Insurance Company petitioned for a writ of certiorari to quash a trial court order that required blanket production of documents, including documents relating to the insurer’s business practices. The Third District Court of Appeal granted the petition and quashed the discovery order on the basis that the ordered production of documents violated the essential requirements of the law. In so holding, the Court cited Employees Ins. Co. v. Rodriguez, 960 So. 2d 794 (Fla. 3d DCA 2007) and explained that discovery relating to an insurer’s business practices and alleged statutory bad faith is premature unless a court has already determined the insurer’s liability and the extent of damages owed to the insured under the first-person insurance policy. The Third District Court of Appeal then remanded so that the trial court could enter a new order allowing some discovery and prohibiting other discovery in accordance with the opinion.

Nicole G. Odrobina

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Florida Administrative Code Amendments Relating to Property Insurance Mediation

An amendment to 69J-166.031, Florida Administrative Code (“Mediation of Residential Property Insurance Claims”) became effective on September 24, 2009. This Rule implements Section 627.7015 F.S., with regard to an insurer’s obligation to notify an insured of the statutory right to mediation under certain circumstances. In addition, Rule 69J-166.002, Florida Administrative Code (“Mediation of Commercial Residential Property Insurance Claims”) was enacted on August 30, 2009. Both Rules contain similar requirements with which insurers must comply.

The amendment to Rule 69J-166.031, extends its applicability to all residential property claims for property located in the State of Florida, whereas Rule 69J-166.002 applies to all claims involving commercial residential property. Both Rules require that insurers must notify their insureds of their right to participate in Florida’s mediation program within five days of the time a first-party claim, that falls within the scope of Section 627.7015 F.S., is filed. The Rules also provide the specific language that must be contained in the notice, as well the font size that must be used in the notice.

Robert C. James