The Florida Supreme Court has acted quickly in response to the Florida Legislature’s June 2011 amendments to Florida’s Probate Code, which include some major departures from existing law.  Because the Code amendments also became effective as soon as the Governor signed them — even applying retroactively to pending cases — the Court immediately adopted a fast-track proposal by the Probate Rules Committee.

Florida lawyers that represent clients in probate cases would be wise to become familiar with the amended Rules.  To that end, here’s a cheat sheet of the Code amendments and corresponding Probate Rule changes (as well as changes to the Rules that weren’t prompted by legislative action).

Statutory Changes: Reformation.

The Code amendments allow two new types of petitions to reform a will.

The first and most drastic change, codified at Florida Statutes Section 732.615, allows for reformation of a will even if its language is unambiguous, where a petitioner proves through clear and convincing evidence that a provision was premised on a mistake of fact or law and is contrary to the intent of the testator.  Check out Craig Dreyer‘s post on Clark Skatoff‘s Florida Probate, Trust & Estate Blog for a more detailed explanation of this amendment.

The second, codified at Florida Statutes Section 732.616, allows for modification of the terms of a will “to achieve the testator’s tax objectives” so long as doing so “is not contrary to the testator’s probable intent.”    

Corresponding Rule Changes:  Adversary Proceeding Rules apply to reformation cases and cases involving pretermitted shares, but not to fee awards.

Rule 5.025 was amended to make all actions for reformation Adversary Proceedings to which Rule 5.025, and the Florida Rules of Civil Procedure, apply.  Although there were no corresponding statutory changes, this Rule was also amended to require that actions regarding pretermitted shares will now be treated as Adversary Proceedings. 

Rule 5.025(d)(2) was also amended to clarify that in all adversary proceedings, fee and cost awards are governed by the Probate Rules and decisions, not the Rules of Civil Procedure. 

Statutory Changes:  The Fiduciary Exception to the Attorney Client Privilege No Longer Applies.

In Florida, as elsewhere, the fiduciary exception to the attorney-client privilege had allowed beneficiaries of wills and trusts to obtain documents in discovery that reflected legal advice given to their fiduciaries.  That is because any legal advice that a fiduciary obtains has traditionally been considered to have been obtained for the benefit of the persons for whom the person was acting as a fiduciary (e.g., the beneficiaries of a trust when a trustee obtained legal advice regarding administration of the trust.)

But the legislature overruled that common law exception in the newly created Florida Statutes Section 90.5021, which makes communications between an attorney and a fiduciary “privileged and protected from disclosure under s. 90.502 to the same extent as if the client were not acting as a fiduciary.”  At the same time, the legislature amended Florida Statutes Section 733.212(2)(b) to require that Notices of Adminstration include a statement informing beneficiaries that “that the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the personal representative and any attorney employed by the personal representative.”

[Side note: Is it just me, or does giving this notice seem like a waste of ink?  If the beneficiary has a lawyer, the lawyer should already know that the fiduciary exception has been abolished (especially if he/she reads this blog!) and if the beneficiary does not have a lawyer, how likely is he/she to even know that the fiduciary exception ever existed, much less to understand the implication of its abolishment?]

Corresponding Rule Change:

The only change resulting from these amendments to the Probate Code is a minor change to Rule 5.240, which implements the Notice of Administration requirements of Section 733.212.  Rule 5.240(b)(2) was amended so that, consistent with the amendment to Section 733.212(2)(b), it now requires that Notices of Administration include a statement about the fiduciary’s communications with counsel being privileged.

 

That should cover it.  Note that the Rules amendments may be further revised based on comments submitted to the Court, which were not solicited prior to the changes becoming effective due to their fast track nature, but are being accepted until November 28, 2011.  However, because the statutory amendments aren’t going away, the corresponding Rules changes aren’t likely to be revised much either. 

Statutory changes of this magnitude, especially when made applicable to pending cases, usually result in more than a little confusion and much litigation over issues the legislature never even anticipated.  We can look forward to some interesting probate litigation and a good deal of uncertainty, at least until the appellate courts sort out these amendments.    

It’s been almost 5 years since the Florida Supreme Court issued its grand compromise decision in Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006).  As contemplated by that decision, many individual suits have been filed by Engle class members.  Some have been tried to a verdict or have been dismissed, and are now on appeal.  Can it be long before the Florida Supreme Court is compelled to step in to definitively resolve the next round of Engle issues?  

The District Courts of Appeal have recently been grappling with the thorny issues resulting from the Court’s decision to decertify the class, but allow class members to take advantage of 8 findings made by the Engle jury by way of res judicata

The 1st DCA gave an early interpretation of how to apply Engle in R.J. Reynolds Tobacco Co. v. Martin, decided in December 2010, in upholding a $28.3 million judgment in favor of a deceased smoker’s widow.  The Florida Supreme Court denied review in Martin in July. (RJR v Martin_07-19-2011_Order_Denying Review.pdf). 

Although the 11th Circuit had earlier offered its own thoughts on Engle, Martin stood as the only state appellate court decision on this score.  That changed on September 21, 2011, when the 4th DCA weighed in on Engle in R.J. Reynolds Tobacco Co. v. Brown, expressing some (but in my view, not much) disagreement with the 1st DCA’s application of it.  The tobacco industry defendants, which can’t be too happy with Engle or its aftermath, are no doubt chomping at the bit to use any disagreement among the DCAs to convince the Supreme Court to take up the case. 

Although it’s dangerous to try to read tea leaves, the differences between Martin and Brown, understood in context, don’t seem to me to be the type of conflict that would ordinarily win review, particularly while the issues are still percolating in the other Districts.  On the other hand, the defendants may take a bit more hope from Chief Judge May’s stinging concurrence in Brown, which questioned whether Engle can be applied as written without violating due process, an implication that could give the justices more of an impetus to address these issues sooner rather than later. 

And the Supreme Court will undoubtedly be asked to take up some of the other issues percolating in the Engle progeny cases, such as the Constitutionality of the statute passed after the State’s settlement with the Tobacco industry, which reduces the bonds that industry defendants must post for appeals.  In addition, although the 3rd DCA has yet to take up the core issue addressed in Martin and Brown, last week in Rey v. Phillip Morris, Inc., it interpreted Engle (and applied traditional conspiracy principles) to hold that any class member can sue Lorillard, Liggett, and Vector Group for their role in the conspiracy to conceal information, even though the class member didn’t smoke those companies’ cigarettes, and can take advantage of the Engle findings.  The Supreme Court will no doubt be asked to review that decision as well.      

So I have no doubt that the court will wade back into this controversy sooner or later.  The question is which one.

More details below.

Continue Reading Tobacco Litigation Headed Back to Supreme Court?

The Florida Supreme Court returned from its summer hiatus last week with its first regular release of opinions since July 8, and sent this message: when the grandkids come to visit, don’t let them drive your car! 

Among the new opinions released on Thursday, August 25, 2011 was State Farm Mutual Automobile Insurance Co. v. Menendez, which resolved a split between the 3rd and 4th DCAs on the application of so-called “Household Exclusion” clauses in auto insurance policies when an accident occurs while an insured vehicle is being driven by someone who does not live with the policyholder, and a passenger who lives with the driver (but not the policyholder) is injured.

In Menendez, Grandma was the named insured under a State Farm policy and the vehicle’s owner. Granddaughter and her Mom and Dad (who lived with her, not with Grandma) went for a ride in Grandma’s car. Grandma let Granddaughter drive. Granddaughter got into an accident. Everyone was injured.

The question was: Was State Farm on the hook to indemnify their injuries? Under the Household Exclusion in the policy, State Farm was off the hook for coverage of injuries suffered by “any insured or any member of an insured’s family residing in the insured’s household.” The effect of the household exclusion is straightforward in the common scenario, where a named insured (Grandma) is driving, and a family member who lives with her (e.g., Grandpa) is injured. The Household Exclusion operates to exclude coverage for Grandpa’s injuries.

But the situation in Menendez was trickier, because Grandma’s policy also indemnified her for accidents that might occur while her car was being driven by someone who borrowed it. And to that end, the policy defined the term “insured” as including “any other person while using such a car” with the named insured’s consent.

The good news for Grandma is that when Granddaughter was driving Grandma’s car, she was considered to be an “insured” under the policy, so State Farm, not Grandma, would be on the hook for claims by injured third parties. The bad news for Grandma is that since Granddaughter is an “insured,” her injuries aren’t covered under Grandma’s policy.

The question was whether the Household Exclusion also precludes coverage of injuries to family members who don’t live with the named insured but do live the authorized borrower of the car who is deemed to be an “insured” under the policy.  In other words, were the injuries suffered by Granddaughter’s Mom and Dad, who lived with her, but not Grandma, excluded from coverage by the Household Exclusion? 

The Supreme Court unanimously held that they were.  Like most appellate decisions in insurance coverage disputes, the discussion began and ended with interpreting a single phrase, in this case the Household Exclusion’s wording that it excluded injuries to ““any member of an insured’s family residing in the insured’s household.” 

The court had little trouble concluding that this phrase “unambiguously excludes coverage for any bodily injury claims asserted by members of a permissive-driver insured‟s family residing in the household of the permissive-driver insured.”  That conclusion followed naturally from the policy’s definition of the term “insured” as including permissive drivers such as Granddaughter as well as the named insureds.  “Named insured” was a separately defined term under the policy, so the clause would have used that term if only the members of the named insured’s household were to be excluded.   

Although Grandma’s side (as well as the trial court and the 3rd DCA) thought it significant that the phrase referred to family members of “an insured” but used the term “the insured” when referring to who those family members must live with to be excluded, the Supreme Court found that distinction unimportant.  The policy used the phraseology of “an insured” and “the insured” interchangeably, it said, so there was no reason to think that using “the insured” in this phrase signified that only members of the named insured’s household were excluded. 

Given this unanimity and what seems like a pretty straightforward construction of the policy terms, you might ask why the 3rd DCA (and trial court) didn’t reach the same result.  My hunch — and it’s only a hunch — is that it may have had something to do with the commonly understood notion of what household exclusions are supposed to do.  

That is to say those exclusions have historically been understood to be directed at excluding claims by immediate family members against the policy owner (e.g., my daughter sues me for injuries she suffered in an accident we got into while I drove her to school), which due to both parties being part of the same economic unit, is a lot like suing yourself and carries the potential for fraudulent and/or collusive claims. 

But suppose I lend you my car, which I know has faulty brakes.  When the brakes inevitably fail, you get into an accident.  After taking your daughter home from the hospital, you sue me for negligently causing the injuries your daughter suffered in the accident.  Now it seems a lot less intuitive that your claims should be excluded from coverage.  In that scenario, the fraud/collusion rationale doesn’t apply, and it makes a lot less sense to exclude coverage of your daughter’s injuries simply because she lives with you.  There’s also the anomaly that resulted in Menendez case that if Grandma had driven rather than riding shotgun, Mom and Dad’s injuries would have been covered, because Granddaughter wouldn’t have been an “insured,” and they didn’t live with Grandma.     

It’s hard to know whether those types of considerations played any role in the courts below, but they obviously didn’t sway any of the Supreme Court justices. Instead, Menendez joins a long list of decisions showing that when it comes to interpreting insurance policies, about the only thing the Court cares about is the literal meaning of the words and phrases used in the policy. Whether or not that may lead to counterintuitive results.

But if Grandma had simply driven instead of letting Granddaughter do it, everyone’s injuries would have been covered, except of course for Grandma’s injuries.  So the other lesson here for grandparents is not to let your grandchildren drive when they come to visit.  Or make sure they don’t get into accidents.

Arbitration is thought to be a way to resolve disputes more quickly and without the burdens of litigation and appeals in court proceedings. More than 10 years ago, assisted living facilities and nursing homes in Florida began including arbitration agreements among the admissions documents new residents are required to sign. But judging from the seemingly endless litigation over their enforceability, these arbitration agreements have done anything but streamline litigation against such facilities.

Early versions of their agreements not only sought to prevent litigation through the court system, but also to preclude residents from taking advantage of some of the remedies available under the Florida Nursing Home Residents Rights Act, Florida Statutes § 400.01 et seq., and the Florida Assisted Living Facilities Act, Florida Statutes § 429.01 et seq., by including punitive damages waivers and caps on non-economic damages. But appellate courts have generally found such waivers unenforceable – particularly with regard to punitive damages. E.g., Romano v. Manor Care, Inc., 861 So. 2d 59 (Fla. 4th DCA 2004); Alterra Healthcare Corp. v. Estate of Linton, 953 So. 2d 574 (Fla. 1st DCA 2007).

Nonetheless, senior facilities apparently continue to believe arbitration offers advantages to them over litigating in the court system, and they continue to require residents to sign arbitration agreements. Perhaps for the same reasons, lawyers for injured residents continue to believe that proceeding in arbitration disadvantages their clients, and continue to challenge enforcement.

A decision by the Florida Supreme Court in one of those challenges, Laizure v. Avante at Leesburg, No. 10-2132, which is expected soon, could have potentially major ramifications.  The main issue in Laizure is whether a resident’s agreement to arbitrate claims is binding on his/her estate when the estate brings a wrongful death claim against the facility.

In October 2010, the 5th DCA ruled that an estate’s  wrongful death claim is derivative of care given to and injuries suffered by the resident, so the resident’s agreement to arbitrate is binding on his/her estate.  But the court certified the issue to the Florida Supreme Court as a question of Great Public Importance, and the Supreme Court agreed to hear the case.  The petitioners also argue that the arbitration agreement is unconscionable.

In the meantime, Florida’ District Courts of Appeal continue to confront challenges to arbitration agreements on other bases.  Three decisions in such cases were handed down last week, with mixed results.

Successful Challenges to Signatory Authority

Both the Second and Fourth District Courts of Appeal ruled in favor of plaintiffs who challenged the ability of the signer to bind other parties.

In Estate of Irons v. Arcadia Healthcare, L.C., No. 2D10-5712 (Fla. 2d DCA Aug. 5, 2011), the 2nd DCA refused to enforce an arbitration agreement because a nursing home resident’s daughter, who signed the arbitration agreement on her behalf, lacked authorization to enter into the agreement. The court concluded that the power of attorney (PoA) through which the resident appointed her daughter as her “healthcare surrogate” did not authorize her daughter to bind her to an arbitration agreement.

Although the PoA authorized her daughter “to make all health care decisions” for the resident, the resident remained “liable for signing admission or treatment papers for my health care, as I alone shall be responsible for such costs.” The 2nd DCA noted that courts must strictly construe the language of a PoA, and that a person’s attorney-in-fact can’t bind him/her to an arbitration agreement unless the PoA confers that power on the appointed person.

The PoA, the court explained, granted powers that related exclusively to healthcare decisions, not managing the resident’s property or legal claims. “We can say that the POA authorized Mrs. Springer to make health care decisions for her mother. The language of the POA, however, supports no conclusion that Mrs. Irons intended to authorize her daughter to act for her in matters related to her property rights or potential litigation with health care providers.” As such, she lacked the ability to sign the arbitration agreement on her mother’s behalf.

The Fourth District in LePisto v. Senior Lifestyle Newport L.P., No. 4D10-16 (Fla. 4th DCA Aug. 3, 2011) also refused to enforce an arbitration agreement based on a relative’s inability to represent the resident’s interests in signing the agreement. But in LePisto, the defect stemmed from the structure of the agreement rather than from limitations in a PoA.

In that case, in the admissions agreement (to which the arbitration agreement was an addendum), the resident’s wife “agree[d] to act as the ‘Financially Responsible Party’ and/or…the ‘Resident’s Representative.’” But she signed the arbitration agreement in the space designated for the “Financially Responsible Party” only, not the space designated for the “Resident’s Representative.”

Thus, the 4th DCA concluded, she agreed to arbitration only on her own behalf in her capacity as the “Financially Responsible Party.” Because she didn’t sign in her capacity as her husband’s representative, he wasn’t bound by the arbitration agreement. As such, the assisted living facility could not compel him to arbitrate claims relating to injuries he suffered while a resident.

An Attempt to Void for Unconscionability Falls Short

In FL–Carrollwood Care, LLC v. Gordon, No. 2D10–5751 (Fla. 2d DCA Aug. 5, 2011), however, the 2nd DCA found an arbitration agreement was not unconscionable, and enforced it over the objection of the estate of a former resident. The court rejected the contention that the arbitration agreement’s silence as to punitive damages meant that it precluded such damages, so it wasn’t unconscionable on that basis.

Although the agreement limited noneconomic damages to $250,000 and limited the resident’s ability to obtain discovery, the court questioned whether those limitations alone could render the agreement unconscionable. It noted however, that they did not preclude enforcement of the agreement, because an arbitrator could sever those portions of the agreement if it deemed them unconscionable.

Implications?

What do these decisions mean for Laizure?  Probably very little.  Prior to Carrollwood, I didn’t think the petitioners’ unconscionability argument was likely to prevail, especially after the U.S. Supreme Court’s Concepcion decision (which I’ve covered previously) gave state courts good reasons to hesitate before declaring arbitration agreements to be unconscionable.  The 2nd DCA’s decision is in line with that thinking.

Perhaps the other two decisions might give hope to the petitioners, in expressing judicial hesitance to allow a representative to bind others to an arbitration agreement.  But the question in Laizure is more about the nature of a wrongful death cause of action than anything.   And just how the Florida Supreme Court will understand that cause of action remains to be seen.

However the Court rules, though, I expect that senior living facilities will continue to require residents to sign arbitration agreements, and that residents (and their families) will continue to contest those agreements enforceability.

Losing at trial hurts. Getting hit with the bill for your adversary’s attorney’s fees makes it hurt ever-so-much more. That’s why fee-shifting under Florida Statutes Section 768.79 — available to parties that make a proposal for settlement under Rule 1.442 — can be such a powerful tool. It’s probably also why lawyers who refuse an offer for settlement – and get burned – fight so hard to avoid the consequences.

Many courts, including the Florida Supreme Court, aren’t too keen on this kind of fee-shifting either. Although common in many foreign legal systems, fee-shifting is an exception to the so-called “American Rule” that each party generally bears its own fees. That – and the fact that Rule 1.442 and Section 768.79 can be used to play “gotcha” – explains the judicial resistance.

Thus, Rule 1.442 in its current form contains very precise requirements for what must be included in a settlement proposal. Under longstanding precedent, specificity is required as to each of the required elements, and any ambiguity can nullify fee-shifting.

Proposals to settle the claims or liabilities of multiple parties, known as “joint proposals”, have proven particularly troublesome. Subsections (c)(3) and (c)(4) of Rule 1.442 specify how the Rule applies to such proposals:

3) A proposal may be made by or to any party or parties and by or to any combination of parties properly identified in the proposal. A joint proposal shall state the amount and terms attributable to each party.

(4) Notwithstanding subdivision (c)(3), when a party is alleged to be solely vicariously, constructively, derivatively, or technically liable, whether by operation of law or by contract, a joint proposal made by or served on such a party need not state the apportionment or contribution as to that party. Acceptance by any party shall be without prejudice to rights of contribution or indemnity.

Do Florida Supreme Court Decisions Make Joint Proposals Impossible?

The Florida Supreme Court has addressed these subsections in a series of cases since the current form of the Rule was adopted in 1996. It has concluded that a settlement offer made by or to multiple parties must always specify the amount attributable to each party, so that each party can individually decide whether to accept or reject the offer.

In a 2005 case, Lamb v. Matetzschk, 906 So. 2d 1037, the Court held that even in vicarious liability cases (to which subsection (c)(4) applies), a plaintiff’s offer to multiple defendants must still specify the amount attributable to each defendant. Then last year, in Attorneys’ Title Insurance Fund, Inc. v. Gorka, 36 So. 3d 646 (Fla. 2010), the Court held that a joint proposal from a defendant to multiple plaintiffs must allow each plaintiff to individually decide whether to settle.  So a proposal can’t condition the settlement of one plaintiff’s claims on the other’s agreement to settle as well.

In the wake of these cases, the 1st DCA recently wondered aloud [in Schantz v. Sekine, 60 So. 3d 444 (Fla. 1st DCA 2011)] whether a joint proposal to multiple plaintiffs can ever satisfy Rule 1.442. Agreeing with Justice Polston’s suggestion in his Gorka dissent, the Court lamented that the decision’s practical effect was to excise joint proposals from Rule 1.442 entirely.

Can A Proposal Release Claims Against Multiple Parties Without Being a Joint Proposal?

But pending word from the Florida Supreme Court (which is likely within the next year), there’s at least one context in which claims against multiple parties can be released in a single settlement proposal.  Relying on 2009 decisions of the 3rd and 4th DCAs, the Fifth District recently held in Andrews v. Frey, No. 5D10-2068 (released on July 29, 2011), that if one defendant is only alleged to be vicariously liable for the acts of a primary defendant, a settlement proposal by the primary defendant can provide for the release of the vicarious defendant as well.

Of course the 5th DCA didn’t characterize the proposal as a “joint proposal.”  Indeed, the court framed the dispositive issue as whether in that particular context, the proposal made by a single defendant, but requiring the release of a second defendant, is a “joint proposal” under Rule 1.442. The 5th DCA found that it was not, so the offering party was entitled to collect attorney’s fees after the trial resulted in a verdict of less than the amount offered in the settlement proposal. But since it wasn’t a “joint proposal,” the vicariously liable party, who would also have been released under the proposal, was not entitled to attorney’s fees.

Will the Supreme Court Embrace Individual Proposals That Release Multiple Parties?

Despite the holding in Andrews, fee-shifting based on these multi-party release, individually offered, settlement proposals may not survive for very long.  Andrews itself may end up in the Florida Supreme Court, as the 5th DCA certified  the question of whether a proposal made by one party that requires a release of claims against multiple parties is in fact a “joint proposal” under Rule 1.442(c)(3).

And the same question is included among three certified to the Florida Supreme Court by the 11th Circuit in Auto-Owners Insurance Co. v. Southeast Floating Docks, Inc., 632 F.3d 1195 (11th Cir. 2011), which the Court has set for oral argument on October 4, 2011. With 3 certified questions at issue, it’s possible that the Court may not reach the question that the 5th DCA was concerned with.  It’s also possible that the Court will reframe the certified questions.

And, of course, it’s possible that the Court will answer the question, but will be fine with imposing attorney’s fees on parties that refuse an individual proposal that requires a release of multiple parties. I wouldn’t count on it, though.

Long before foreclosure lawsuits flooded Florida court dockets, chief judges here and throughout the country were fretting over how to deal with the even more daunting “asbestos-litigation crisis” [Amchem Products, Inc. v. Windsor, 521 U.S. 591, 597 (1997)]  That ongoing and seemingly endless litigation has been flooding the courts since the 1960s and in the words of Justice Souter, “defies customary judicial administration.” Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).

Other mass torts (a/k/a toxic torts) have come and gone, but asbestos litigation – the first of the species – lives on. As long as it does, so will legislative and judicial efforts to control, limit, or end asbestos litigation.

Joining several other states, the Florida Legislature passed legislation aimed at curbing asbestos litigation in 2005. Asbestos plaintiff lawyers, who had lobbied hard against the legislation’s passage, challenged it in court almost immediately.

On Friday, July 8, 2011, the Florida Supreme issued its long awaited decision in several of those challenges, American Optical Corporation v. Spiewak, Nos. 08-1616, 08-1640, 08-1617, & 08-1639.  The Court declared the law to be unconstitutional as applied to anyone whose claims had “accrued,” but had not gone to trial, prior to July 1, 2005.

The decision allows a group of plaintiffs to sue who could not have sued under the legislation.  The question is how large that group might be.  According to Adolfo Pesquera’s article in the DBR, some are suggesting that this decision will “open the floodgates.” But I have serious doubts about that.

As I read the decision, it won’t affect anyone who wasn’t diagnosed before the asbestos reform law went into effect on July 1, 2005. According to the Court, if you were diagnosed before that date, it was unconstitutional for the legislation to deprive you of your right to sue, because your claim had already accrued. 

But when your claim accrued, the statute of limitations started running on your claims. The statute of limitations is 4 years. It’s been almost 6 years since July 1, 2005. So if you didn’t haven’t filed suit already, it would seem to be too late now to do so.

So I’m not sure that any new suits can be filed.  And if other plaintiffs did file suit, their cases would presumably have been dismissed long ago under the auspices of the reform law.  Unless they were stayed pending the Court’s decision in American Optical, it would too late to revive most of them now.

A more detailed analysis of the backdrop of the case and the court’s analysis follows.

 

Continue Reading Florida Supreme Court Restricts Reach of Asbestos Litigation Reform Law

Real electronic filing may finally make its way to Florida courts in the not-too-distant future.  But before that happens, the Florida Supreme Court wants to make sure that there isn’t too much private information in court filings for the public to access.

On June 30, 2011, the Court adopted sweeping new rules about what information can and can’t be put in the court file.  Florida litigators who want to avoid the sanctions that can be imposed for violating the new rules shouldn’t wait too long to become familiar with them — they are going into effect on October 1, 2011.

For the time being, the privacy rules don’t affect criminal cases, for the most part, but they affect all civil cases.  And the reprieve in criminal cases isn’t likely to last very long.

Here is a breakdown of the Rule changes you need to know:

Florida Rule of Judicial Administration 2.425

Rule of Judicial Administration 2.425, which was added by the Court’s June 30, 2011 Amendments, contains the overarching principles. So if you learn that Rule (and remember to apply it in whatever context you find yourself) you’ll be most of the way there. But one caution: Rule 2.425 only states a default rule — it gives way to conflicting Rules, statutes, and orders.

This chart spells out the types of information that are subject to Rule 2.425:

Restricted Info:     Can include in a filing?           Exceptions:

Child’s Name           Initials only                        Orders re: time-sharing, parental
                                                                   responsibility, or child support. 
                                                                   Any document re: child’s ownership of real property.
Birthdates               Year only                           Any party’s full birthdate in writ of attachment
                                                                   or notice to payor. Child’s full birthdate when
                                                                   necessary for jurisdiction.
Social Sec. #s              No                               General exceptions
Bank Account #s           No                               General exceptions
Credit/Debit Card #       No                               General exceptions
Charge Account #          No                               General exceptions
Drivers License #          Last 4 digits only            General exceptions
Passport #                   Last 4 digits only            General exceptions
Taxpayer ID #              Last 4 digits only            General exceptions
Employee ID #             Last 4 digits only            General exceptions
Phone #                      Last 4 digits only            General exceptions
Insurance Policy #         Last 4 digits only            General exceptions
Loan #                        Last 4 digits only            General exceptions
Patient/health care #      Last 4 digits only            General exceptions
Customer Accont #        Last 4 digits only            General exceptions
Email address               Truncated                      General exceptions
User name                   Truncated                      General exceptions
Password                     Truncated                      General exceptions
PIN #s                        Truncated                      General exceptions
Other sensitive info:      Truncated as per court order

General Exceptions:

  • Statute, Rule or Order authorizes the inclusion of the information in a filing
  • Account number is necessary to identify property at issue in a case.
  • Information that is “relevant and material to an issue before the court.” [!!! This looks to me like an exception that you could drive a truck through.  It’ll be interesting to see how courts interpret it.]
  • Records in an administrative, agency, appellate, or review proceeding.
  • Information used by the clerk or the court for file and case management purposes.
  • Criminal cases are temporarily exempt.
  • Traffic court cases are temporarily exempt.
  • Small claims cases are temporarily exempt.

A Few Other Notes:

What effect does Rule 2.425 have on parties’ ability to obtain a protective order?  According to the Rule itself, none.  But I’d be surprised if judges’ opinions on what information should be kept private were not influenced by the views of the Supreme Court as expressed in Rule 2.425.

The Rule also claims that it “does not affect the application of constitutional provisions, statutes, or rules of court regarding confidential information or access to public information.”  I’m not sure how that could be so, but again, we’ll see how courts interpret that subsection.

The Court is also amending quite a few other Rules to accomodate Rule 2.425.  Changes are being made to the Rules of Civil Procedure, particularly with regard to filing discovery documents, the Family Law Rules of Procedure, the Rules of Appellate Procedure, Probate Rules, and to a lesser extent, Criminal Procedure and Small Claims Rules, as well as several forms.

The amendments to those rules and forms are listed below. 

Continue Reading A Primer on the New Privacy Rules for Florida Court Filings

It must be a trial lawyer’s worst nightmare. You’re in the middle of the trial you spent months preparing for. Your opening went well. Your witnesses are doing great. You can see that your client’s case is resonating with the jury. Your clients are looking hopeful. Opposing counsel isn’t.

You’re about to rest your case-in-chief. You ask the court for a recess so you can make sure opposing counsel has agreed to necessary stipulations, and that you’ve covered all of your bases. Opposing counsel moves for a directed verdict.

You’re suing a state hospital, and opposing counsel refers the court to Florida Statutes Section 768.28, the state’s limited waiver of sovereign immunity. You go through the statute in your mind. Subsection (6) – did I give written notice to the defendant and the DFS within 3 years of the time the claim accrued? Yes. Did I wait 6 months before filing the complaint? Yes.

Then you come to Subsection (7). Did I serve the complaint on the defendant? Yes, of course. Did I serve a copy of the complaint on the DFS? Uh-oh.

You call your office to arrange to get a copy of the complaint served on the DFS immediately. But is it too late? You feel your stomach tighten. You see visions of your clients’ files being flushed down the toilet. You can almost hear the judge granting a directed verdict. You wonder how much the defendant’s bill of costs will be. You imagine yourself telling your clients that you’ve lost. You hope they won’t cry. You hope they won’t sue you.

Okay, breathe. If you’ve gotten this far, you might just be able to keep going.

Yes, that’s right. In a case then known as Acanda v. Public Health Trust of Miami-Dade County, a Miami-Dade County Circuit Judge reserved judgment, then denied, a motion for directed verdict, even though the DFS wasn’t served until mid-trial. The jury found for the plaintiff. The 3rd DCA affirmed.

And in Public Health Trust of Miami-Dade County v. Acanda, No. SC10-302 (released June 23, 2011), the Florida Supreme Court (per Justice LaBarga) upheld the jury’s verdict. Why?

The Analysis:

The Supreme Court’s reasoning was threefold.

First, the Court agreed with the 5th DCA’s conclusion in Turner v. Gallagher, 640 So.2d 120, 122 (Fla. 5th DCA 1994), that unlike pre-suit notice under Subsection 768.28(6), service under Subsection (7) is not a “condition precedent” to bringing suit, and it doesn’t require that service be made at a particular time. So the plaintiff satisfied Subsection (7) when she served the DFS mid-trial, whether or not she did so before resting her case-in-chief.

Second, the Court held lack of service on the DFS under Subsection (7) is an affirmative defense, rather than an element on which the plaintiff bears the burden of proof. It reasoned that even the notice requirements of Subsection (6), which are conditions precedent to suit, aren’t “elements of the cause of action.” So the Subsection (7) service requirements, which aren’t conditions precedent, surely can’t be elements of the cause of action. As such, a directed verdict can’t be granted based on a failure to prove service on the DFS in the case-in-chief.

Third, the Court took issue with how the defendant attempted to allege noncompliance with Subsection (7) within the affirmance defense of failure to state a cause of action. To properly raise the issue, “such noncompliance must be pled with specificity and particularity.”

Rather than covertly stating the defense as “a ‘gotcha’ tactic,” the Court explained, it should be spelled out, and raised by pre-trial motion. The Court roundly condemned what it saw as the defendant’s “practice of trial by surprise,” in failing to allege this affirmative defense in sufficient detail as to put the plaintiff on notice that it related to service under Subsection (7).

Some Observations:

  1. The Court’s concern with vague pleading of affirmative defenses makes sense.  But how far does it go?  It’s fairly common for defendants to plead defenses generally.  Was the Court rejecting that practice generally in favor pleading defenses “with specificity and particularity”?
  2. It’s unclear what compelled the second part of the Court’s reasoning.  Extrapolating from Subsection (6), the Court concludes that service on the DFS isn’t an element of the cause of action, so the plaintiff can’t bear the burden of proof on it.  But in Levine v. Dade-County Schoolboard, 442 So.2d 210 (Fla. 1983) the Court held that the plaintiff does bear the burden of proof as to compliance with Subsection (6) even though it’s explicitly not an element of the cause of action.  And while lack of service in general is a defense, Florida Rule of Civil Procedure 1.140, the plaintiff still bears the burden of proving service.  See Re-employment Servs., Ltd. v. National Loan Acquisitions Co., 969 So. 2d 467 (5th DCA 2007).  Why not deal with service under Subsection (7) in the same manner?      

Florida’s Third District Court of Appeals had harsh words for a foreclosing bank’s counsel in Jade Winds Association v. Citibank, N.A., No. 3D11-275, released on Wednesday, May 4, 2011.

The 3rd DCA not only reversed an order that had cancelled a foreclosure sale at the bank’s request, but called out the bank’s counsel for making “misleading” statements to the trial court, reminding the trial court that it was “free to impose appropriate sanctions” against the bank and/or its counsel on remand.

Basic Facts:

As the case’s name indicates, Jade Winds involved a three-party dispute between a homeowner/borrower, a mortgagor bank, and a condominium association, with the latter two both filing claims for alleged defaulted payments from the homeowner. The condo association obtained a default judgment and took title to the property, then asked for, and received, summary judgment granting the bank’s claim to the property and a date for a foreclosure sale.

On the day the foreclosure sale was to occur, the bank filed an emergency motion to cancel it, supposedly to consider a loan modification for the homeowner. The problem was that the borrower’s mortgage loan couldn’t possibly be modified because the condo association had taken title from the borrower more than a year earlier. To make matters worse, the bank didn’t serve notice of its motion to cancel the sale on the condo association, the actual title holder of the property.

The Holding:

The 3rd DCA was not pleased. Per Jeffrey Kuntz of The Florida Legal Blog

The motion to cancel the January 2011 sale was considered, ex parte, and granted due to “affidavit review.” The Third District stated:

In the instant case, without rehashing the facts set forth in this opinion, it is clear that Citibank failed to properly serve Jade Winds’ counsel with the Second Motion to Cancel and failed to notify counsel of the hearing. We recognize that the Second Motion to Cancel was filed on an “emergency” basis, but note that Citibank apparently made no attempt to notify Jade Winds’ counsel of the motion by either delivery, facsimile, email, or phone call, although Jade Winds’ counsel actively participated in this litigation. Further, based on Judge Langer’s previous order imposing sanctions against Citibank, Citibank knew that its actions were inappropriate. As Judge Langer simply found, Citibank’s “conduct was in direct violation of [Jade Winds’] due process rights” and the Order Canceling Sale was “void for lack of notice.”

The Court then referred Citibank’s counsel to the applicable Miami-Dade administrative order (10-E), In re Amendments to the Florida Rules of Civil Procedure, 44 So. 3d 555, 557-58 (Fla. 2010), and reversed the order canceling the foreclosure sale with instructions to consider whether sanctions should be imposed.

Robyn A. Friedman has additional coverage of the decision in the Daily Business Review (subscription required).  Suffice it to say, the 3rd DCA made it clear that trial courts should not cancel foreclosure sales without giving all interested parties a fair opportunity to appear and be heard, and without an evidentiary record backing up counsel’s assertions.  

Part of a Trend in Florida District Courts?

While interesting in itself, Jade Wind becomes all the more significant when considering recent decisions of the 4th DCA.  Indeed, there appears to be something of a trend emerging in the District Courts of Appeal — they are now cracking down on some of the informal practices/skirting of the rules of procedure (depending on which side you’re on) that aren’t generally tolerated in other litigation, but until now had been frequently overlooked in foreclosure cases.

The 3rd DCA’s strong disapproval of the lack of notice and evidentiary void in Jade Wind dovetails with the 4th DCA’s expression of distaste for similar practices in Arsali v. Deutsche Bank National Trust Company, No. 4D10-3830, just a month earlier.

In Arsali, the trial court granted a motion to cancel the sale retroactively rather than on the day of the sale. Like the trial court in Trade Winds, the trial court overlooked a bank’s failure to put on evidence in support of its motion – and the lack of notice to interested parties.

The bank in Arsali actually filed a motion to cancel the foreclosure sale 2 weeks in advance, but it was never ruled on. Still, the bank didn’t show up for the sale.

The property, which the bank had appraised for $185,000+ (the bank’s judgment against the mortgagee was for $350,000+), was sold to a third party for just $16,100. Needless to say, the bank was not pleased, and filed an emergency motion to rescind the sale.

It submitted no affidavits or other evidence in support. And it didn’t serve the motion on the third party buyer, and didn’t serve the buyer with notice of the UMC hearing it set for the motion. The trial court heard motion and cancelled the sale.

The 4th DCA strongly disagreed with that course of action. Despite using a standard of review allowing reversal “only when the trial court has grossly abused its discretion,” the 4th DCA reversed, “conclud[ing] that the trial court abused its discretion in summarily granting the motion without holding an evidentiary hearing.”

 The 4th DCA’s opinion doesn’t mention sanctions. But its judgment itself amounted to something of a sanction. By reversing the order vacating the sale, the court allowed the purchase to stand – for just 11% of what the bank hoped to recover through foreclosure.

The Florida Supreme Court is About to Join the Fray

Then there’s the 4th DCA’s decision, En Banc, to certify to the Florida Supreme Court a “question of great public importance” (for jurisdiction-conferring purposes under Rule 9.030 of the Florida Rules of Appellate Procedure) in Pino v. Bank of New York Mellon.

The certified issue in that case is whether a bank that voluntarily dismissed a foreclosure case to avoid being sanctioned for alleged fraud in documenting its right to foreclose can be prohibited from pursuing foreclosure by filing a second case. As is common with certified questions of great public importance, the Florida Supreme Court recently accepted jurisdiction over Pino.  So more changes may be on the way.

 

Here’s a quick update to my earlier posts on Florida House Speaker Dean Cannon’s proposal to split the Florida Supreme Court into a two-headed monster.  

The Florida House voted to send the proposed Constitutional Amendment to voters last Friday, April 15, 2011. 

But the proposal pending in the Florida Senate to require Senate Confirmation of Supreme Court nominees, which was thought to be the Senate’s opening salvo in taking up the broader Supreme Court restructuring plan, has been taken off the table.

Matt Dixon of PolitiJax blog has details.