There’s no denying that public opinion on the dangerousness of cannabis has changed dramatically in recent years. Florida has not taken the steps that some states have taken to legalize cannabis for medical purposes, let alone for general use. But there’s evidence of a change in public opinion in Florida as well.

Florida has legalized “Charlotte’s Web,” a low-THC version of cannabis, for use by patients with certain serious medical conditions. And although a 2014 ballot initiative to legalize marijuana for medical use failed to reach the 60% threshold necessary for enactment, it did garner the majority of the vote (with more than 57% in favor), reflecting that Floridians’ attitudes are changing along with the rest of the country.

Is this changing public opinion impacting judicial decision-making? The February 20, 2015 decision of Florida’s Fifth District Court of Appeal in Agresta v. City of Maitland, gives a hint that that it may be. At issue in Agresta was whether forfeiture of a house used to cultivate cannabis violated the Excessive Fines Clause of the Eighth Amendment to the U.S. Constitution.

Under the Florida Contraband Forfeiture Act, property used in the commission of a crime can be seized. But the 8th Amendment to the U.S. Constitution limits seizure of property, in that it prohibits “excessive fines.”

Joseph Farley (now deceased; the appellant, Agresta, was the representative of Farley’s estate) was convicted of cultivating cannabis in a house he owned in in Maitland and of stealing electricity in doing so, as well as of misdemeanor possession of cannabis. After the convictions, the City of Maitland filed suit to seize his house, which was within 1,000 feet of a school. The trial court ordered the house forfeited to the city.

On appeal, Agresta argued that seizing the house was unconstitutionally excessive and disproportionate to Farley’s crimes. A majority of the 5th DCA panel agreed.

The key issue in the case was the extent of harm caused by Farley’s crimes. To the majority, the main factor was that he had pleaded guilty to crimes for which the maximum monetary punishment was an $11,000 fine. Farley’s house, on the other hand, was valued at between $238,000 and $295,000. 

In the majority’s view, there was no basis to punish Farley with a forfeiture of property that was worth much more than the maximum fine he could have faced. Society’s valuation of the harmfulness of the crimes was critical, and “consideration of the fines approved by the legislature indicates the monetary value society places on the harmful conduct.” 

So it was improper to impose on Farley a forfeiture of property with a much greater value than the maximum fine. In what may (or may not) be a reflection of changing societal views on the harmfulness of marijuana, the majority stated that there was “no evidence that Farley caused harm beyond his commission of the offenses underlying his convictions.” (It’s impossible to know whether the judges in the majority would have reached a different conclusion if Farley had been convicted of using the house to manufacture some other type of illegal drug.)   

a consideration of the fines
approved by the legislature indicates the monetary value society places on the harmful
conduct.

One need look no further than Judge Berger’s dissenting opinion in Agresta to see a much harsher view of the harmfulness of Farley’s conduct, and a resulting contrasting conclusion. Part of Judge Berger’s disagreement with the majority was over whether to consider not only the crimes for which Farley was convicted (by way of a plea deal), but also the crimes with which he was originally charged.

But part her disagreement with the majority appears to have been based on her view of the harmfulness of Farley’s crime of cultivating cannabis:

In determining the harm caused by the defendant, we cannot ignore the public safety concerns posed by trafficking in drugs….While the actual harm Farley caused may not be able to be quantified, the potential harm caused by the magnitude of his enterprise is certainly great and cannot be discounted….Farley was a drug grower, cultivator, and dealer who used the property forfeited solely for the purpose of continuing his criminal enterprise.

Accordingly, Judge Berger did not feel seizure of the house to be grossly disproportionate to the crime, despite the disparity between the value of the house and the maximum fine Farley could have faced for the crimes of which he was convicted.

Cultivation and possession of cannabis, (except for Charlotte’s Web in very limited circumstances), of course, remains illegal under Florida law as well as under federal law. Judges will undoubtedly continue to faithfully apply the law as written, even when it’s unpopular to do so. But there are times when public opinion can impact legal analysis (such as in determining the monetary value society places on the harmfulness of a crime, as in Agresta), so if public opinion continues to change regarding cannabis, it will be no surprise to see effects on appellate courts’ jurisprudence. 

Issuing its opinion in DMT vs. TMH, a closely watched case that drew national attention, the Supreme Court of Florida today declared that a woman has constitutionally protected rights to raise a child created by artificial insemination using her ovum, with the fertilized ovum carried and the child born by her then-committed partner, and initially raised by the woman and her former partner. Justice Pariente wrote the opinion for the Court, with Justice Polston writing a dissenting opinion in which two other justices joined.

The facts are these. DMT and TMH were in a committed lesbian relationship for about 11 years. They decided to have a child by in vitro fertilization, using TMH’s ova fertilized by donated sperm, with the fertilized ova implanted in DMT. DMT gave birth to the child and DMT and TMH raised the child together as equal parents, initially in the home they shared. DMT and TMH, who could not marry in Florida, split up about 17 months after the child was born. They initially continued to co-parent the child after the split, agreeing that the child would divide time between their homes. But things turned nasty, and DMT ran away with the child and denied TMH any contact with the child.

TMH finally found DMT in Australia. She sued DMT to establish her right to co-parent the child. The problem for TMH was that section 742.14, Florida Statutes, which deals with surrogacy, extinguishes the parental rights of egg and sperm donors to  children created from their donated genetic material. The trial court found that section 742.14 was controlling, and ruled in favor of DMT, despite stating that DMT’s actions were morally reprehensible and against the interests of the child.

The Fifth District Court of Appeal (in Daytona Beach, which hears appeals from portions of central and northern Florida) reversed the trial court, holding that section 742.14 did not apply, finding TMH was not a “donor” under the statute because she did not intend to give her ova away (i.e. to “donate” it), but rather always intended to raise any child that resulted from her egg, even though she wouldn’t be carrying and giving birth to the child. 

The majority of the Florida Supreme Court rejected that interpretation. It held that section 742.14 did apply, because whether someone is considered a “donor” under the statute doesn’t depend on what her intentions were, but rather only on whether she gave genetic material. That conclusion was compelled by statutory language as well as practical considerations. If intentions matter, then any sperm or egg donor could say that he/she didn’t really intend to give up the child, and thus avoid the effect of the statute, which aims to prevent drawn out custody battles over children created from donated eggs and/or sperm.

But the the majority agreed with the 5th DCA’s result, based on a more monumental, and potentially farther reaching, basis. They found that the statute was unconstitutional as applied to the circumstances in DMT, in that TMH not only contributed genetic material, but also took on the responsibility for raising the child after it was born. Thus, her situation was analogous to an unmarried father of a child, which courts have held has inchoate parental rights that become constitutionally protected if the father takes on the responsibilities of raising the child.

Denying parental rights to an individual in TMH’s circumstances, the majority held, violates the Due Process, Privacy, and Equal Protection clauses of the Florida Constitution, as well as the Due Process and Equal Protection clauses of the United States Constitution.

Not surprisingly, the United States Supreme Court’s decision in United States v. Windsor, 133 S. Ct. 2675 (2013), in which the Court declared Title II of the Defense of Marriage Act to be unconstitutional by denying Equal Protection to gay married couples, figured prominently in the Florida Supreme Court’s constitutional analysis in DMT.

But the Court also based its decision on the Florida Constitution (in addition to the United States Constitution), and was careful to point out that its finding that the Florida Constitution was violated was “separate” from its finding that the United States Constitution was violated. In doing so, the Court likely insulated its decision from further review by the United Supreme Court. The Florida Supreme Court has the last word in interpreting the provisions of the Florida Constitution, and the United States Supreme Court generally does not involve itself in cases in which there is an independent state law basis for the decision, even if federal issues are also decided.

The Court further insulated its decision from review by the United States Supreme Court by grounding its decision on the Privacy clause in the Florida Constitution, which has been held to provide broader protection of privacy rights, including parental rights, than is provided by the United States Constitution. (Unlike the Florida Constitution, the U.S. Constitution does not have an explicit privacy clause, although privacy is addressed in the context of searches and seizures, and has been held to be implied by the Due Process clause.) So the Florida Supreme Court’s interpretation of the United States Constitution (as well as of the Florida Constitution) as protecting the parental rights of women in TMH’s position is likely to stand.  

The Florida Supreme Court justices and District Court of Appeal judges who were up for retention votes this year had a great day yesterday. Congratulations go out to all of the retained justices and appellate judges:

Florida Supreme Court:

Justice R. Fred Lewis

Justice Barbara J. Pariente

Justice Peggy A. Quince

Despite facing organized opposition that was unprecedented in the history of retention elections in Florida, all three justices were retained by sizeable margins. As I wrote in my previous post, I view this as a victory for Florida’s non-partisan and generally non-political, merit-based system of selecting and retaining Supreme Court justices and appellate judges. A ballot initiative to give the state senate more power over appointments to the Supreme Court, via proposed Amendment Number 5, also failed.

From what I’ve heard, there were considerably fewer undervotes (ballots on which voters marked preferences in other races but left the merit retention questions blank) than in previous retention elections. So perhaps the contested retention elections had a subsidiary benefit — helping voters become more aware of, and educated about, our Supreme Court justices. Credit for that goes to the many attorneys, laypersons, and legal organizations who worked to educate voters about the retention elections.  

First District Court of Appeal:

Judge Simone Marstiller

Judge Stephanie W. Ray

Judge Ronald V. Swanson

Judge Bradford L. Thomas

Second District Court of Appeal:

Judge Anthony K. Black

Judge Darryl C. Casanueva

Judge Charles A. Davis, Jr.

Judge Edward C. LaRose

Third District Court of Appeal:

Judge Angel A. Cortinas

Judge Kevin Emas

Judge Ivan F. Fernandez

Judge Leslie B. Rothenberg

Judge Richard J. Suarez

Fourth District Court of Appeal:

Judge Burton C. Conner

Judge Carole Y. Taylor

Almost a quarter of DCA judges statewide were on the ballot, including 4 of the 1st DCA’s 15 judges, 4 of the 2nd DCA’s 14 judges, 5 of the 3rd DCA’s 10 judges, 2 of the 4th DCA’s 12 judges, and none of the 5th DCA’s 10 judges. All were easily retained.

Yes votes for retaining each of the 2nd DCA, 3rd DCA, and 4th DCA judges exceeded 72%. The 1st DCA judges were also retained by comfortable margins, although they received slightly less support, with yes vote percentages ranging from a little less than 62% to a little more than 66%. I’m not aware of there being organized opposition to retention of any of the DCA judges, or what accounts for the slightly lower numbers across the board in the 1st DCA retention elections.

Congratulations to all. I look forward to practicing before you in the coming years.

No doubt family law disputes can result in some of the most acrimonious litigation. If France v. France, No. 5D11-1477, a decision handed down by Florida’s 5th DCA last week, is any indication, they can also result in highly complex issues of jurisdiction and conflicts of law among states.

Generally, if you’re injured while in Florida, due to negligent, reckless, or intentional conduct of someone else in Florida, Florida courts have jurisdiction, and Florida law applies. It becomes more complicated when the person who causes your injury is not in Florida at the time they do whatever it is that causes your injury. And what happens if that person is not only in another state at the time of the event that causes your injury, but he/she is in a state where it is perfectly legal and proper to engage in the conduct, even though it is unlawful in Florida?

The issue in France is even more complicated than that. The case involves Florida’s Security of Communications Act, § 934.03, Florida Statutes, which makes it illegal to record a telephone conversation without the consent of the other parties to the call. Under federal law, and in the majority of states, including North Carolina, it is not unlawful to record a telephone conversation in which you’re a participant, because only one party’s consent is necessary, so your consent counts.

But in a minority of states, including Florida, it is unlawful to record a telephone conversation unless every participant in the call consents. In France, the former husband sued his former wife for recording phone calls without his consent. He was in Florida during the calls. She was in North Carolina. The words she recorded were spoken in Florida, but recorded in North Carolina. His rights were unlawfully violated in Florida, but she acted lawfully according to North Carolina law.

Can he sue her in Florida? Maybe. The Fifth District said it felt constrained to find that the answer is yes, but the judges weren’t happy about it.

The court framed the issue as one of jurisdiction rather than of conflicts of law. Two showings are required before a Florida court can assert jurisdiction over a non-Floridian alleged to have injured a Florida resident through a negligent, reckless or intentional act or failure to act. The first requirement is to satisfy Florida’s long arm statue, which can be met if the person committed “a tortious act within” Florida. The second is to satisfy the constitutional requirement of having “minimum contacts” with the state, i.e., that the person acted in such a way that they could “reasonably have anticipated being haled into court” in Florida.   

The trial court in France dismissed the complaint based on its conclusion that the former wife had not committed a tortious act within Florida. To analyze that issue on appeal, the Fifth District looked to two decisions dealing with this issue from the 2nd DCA. In the first, Koch v. Kimball, 710 So. 2d 5 (Fla. 2d DCA 1998), the Second District said an insurance company employee who was in Georgia when she recorded a call with her supervisor, who was in Florida at the time, could be sued in Florida. Even though the tape recorder was in Georgia during the call, the court based its holding on case law saying words are captured where they are spoken, not where they are heard. So even though the employee was in Georgia, she committed a tortious act in Florida by recording words spoken in Florida.

In the second decision, Kountze v. Kountze, 996 So. 2d 246 (Fla. 2d DCA 2008), the 2nd DCA, sitting en banc, overruled Koch, and held that Florida courts did not have jurisdiction over a person who was in Nebraska while recording a phone call with his cousin, who was in Florida. That decision was based on concerns about the constitutionality of Florida asserting its police powers over persons in other states.

But 5 years before Koch was overruled by the 2nd DCA, in Acquadro v. Bergeron, a 2003 decision, the Florida Supreme Court said it approved of the holding in Koch in the course of holding that Florida’s long arm statute was satisfied where an out-of-state defendant made telephone calls into Florida in which she allegedly defamed the plaintiff.

In a footnote in Acquadro, the Florida Supreme Court said it “approve[d] the Second District’s decision in Koch because like [Wendt v. Horowitz, 822 So. 2d 1252, 1257 (Fla. 2002)] the decision held that a telephonic communication into Florida can constitute a tortious act.”

Based on that statement of approval, the Fifth District felt that it was bound to follow Koch, and find that the former wife’s conduct brought her within Florida’s long arm statute. But the judges made clear that if writing on a clean slate, they probably would have reached a different conclusion. The court certified conflict with Kountze, making it more likely that the Florida Supreme Court might take its own look at the issue.

The 5th DCA said the analysis in Wendt seems to support the opposite result in France, because in Wendt the Supreme Court said in order for a telephonic communication into Florida to confer jurisdiction, “the cause of action must arise from the communications,” and the cause of action in France arose from “the act of recording communications, not the communications themselves.” Maybe, but that seems like a strained reading of Wendt to me.

Wendt also cited Koch with seeming (though not explicit) approval, as an example of one of two lines of cases — the line of cases it ultimately agreed with. And the holding in Wendt is two-fold. First, a defendant doesn’t have to be in Florida to commit a tortious act in Florida.

Second, the defendant in that case was found to have committed a tortious act in Florida by negligently preparing documents while he was in Michigan based on the fact that he intended to, and did, send them to Florida. One could just as easily argue that the tortious act in that case didn’t arise from the communications themselves but from the negligent preparation of them (with the intent to send them to Florida), which occurred in Michigan, just as the 5th DCA intimated that the tort didn’t arise from the communications but from recording them.

It seems to me that the statement in Wendt about the tort arising from the communications was intended to address situations such as the following: An out-of-state defendant has business dealings with a Florida resident, and at a meeting in Texas, the defendant is alleged to have fraudulently induced the plaintiff to purchase property in Texas. After the contract is signed, the defendant participates in phone calls with the plaintiff while the plaintiff is in Florida, but the alleged fraud occurred before those calls took place. In that situation, the mere fact that the defendant called the plaintiff in Florida doesn’t give Florida courts jurisdiction over the defendant, because the tort was committed in Texas. 

And I think a different distinction can be made. What’s interesting is that while approving Koch in Acquadro, the court said it was doing so because the 2nd DCA had “held that a telephonic communication into Florida can constitute a tortious act.” On the other hand, the Supreme Court doesn’t seem to have adopted the underlying premise of Koch.

Recall that the logic of Koch was that interception of the call actually occurred in Florida because it’s where the words are spoken that matters, not where they’re heard. By contrast, in Acquadro and Wendt, the place where the words were heard is what mattered.

So it might be that although the Supreme Court agreed with the general principle in Koch that one can commit a tort in Florida over the phone, it might reach a different result if confronted with a situation squarely raising the issue of where a call is recorded.

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.

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?      

Building on its May 4, 2011 decision in MRI Associates of America, LLC v. State Farm Fire & Casualty Company, No. 4D10-2807, which I covered in this recent post, Florida’s Fourth District Court of Appeal issued a second major PIP decision on May 18, 2011, Kingsway Amigo Insurance Company v. Ocean Health, Inc., No. 4D10-4887.

As noted in my entry on that case, in MRI, the court interpreted medical providers’ obligations when submitting claims for reimbursement under PIP, holding that their claim forms must state not the amount they usually charge for the treatment at issue, but the exact amount the insurer’s policy requires it to pay.

In Kingsway, the 4th DCA dealt with the other side of the coin:  insurers’ payment obligations.  The decision addresses when a PIP insurer can take advantage of Florida Statutes Section 627.736(5)(a)2, which was added in the 2007 amendments to the PIP statute. Subsection (5)(a)2 allows PIP insurers to “limit reimbursement to 80 percent of” the amount Medicare Part B will pay for the treatment, of if not covered by Medicare Part B, the reimbursable amount for the treatment under workers’ compensation.

The crux of the 4th DCA’s holding was that an insurer cannot limit its reimbursement amounts as provided by the 2007 amendments unless the language of the patient’s auto insurance policy explicitly states that the insurer will do so. If not, the insurer must continue to reimburse medical providers for treatments at “reasonable” rates as defined under Subsection (5)(a)1.

The result was that Kingsway, the insurer, had to reimburse Ocean Health, the provider based on “reasonable” rates, not Medicare Part B rates. The court reasoned that because Kingway’s policy said only that it would reimburse at reasonable rates, the insurer, in effect, had promised to provide benefits at a higher level than the minimum required by statute.

Importing the 5th DCA’s reasoning in State Farm Florida Insurance Co. v. Nichols, 21 So.3d 904 (Fla. 5th DCA 2009), which involved homeowner’s policies, the 4th DCA held that when an insurance statute allows insurers to choose alternative methodologies for reimbursement, an insurer can only take advantage of the methodologies its policy allows.

Who Won?

On the surface, PIP medical providers might see Kingsway as a welcome decision in their favor after the unfavorable result in MRI. But on closer inspection, it’s less clear that the decision benefits providers.

In the last paragraph of the decision, the court draws on the holding in MRI as support for its conclusion in Kingsway. If providers must submit claims for the exact amount the insurer is required to pay them (per the holding in MRI) the 4th DCA reasoned, then they must be able to look at their patients’ insurance policies and determine the methodology the insurer will use to pay them.

So Kingsway reinforces that medical providers will now have to consult each of their PIP patients’ policies in order to submit a claim for each treatment. MRI left open the possibility that a provider could avoid that burden by submitting all PIP claims at Medicare Part B rates (or where not covered by Medicare Part B, at workers’ compensation rates). But Kingsway appears to put the kibosh on that idea.

From the perspective of Kingsway and other PIP insurers, the immediate result is, of course, a loss.  PIP insurers will have to reimburse some medical providers based on “reasonable” rates, which, presumably, will generally be higher than Medicare Part B and/or workers’ compensation reimbursement rates they’d prefer to use.

But I expect that the impact of this decision will be short-lived. Any Florida Auto Insurer that has not yet changed its policy forms to explicitly incorporate the power to limit reimbursement based on the 2007 amendments is now on notice to do so.  I’m sure they will make those changes in short order.

So it won’t be long until all medical providers can safely assume that all PIP insurers will pay them based on Medicare Part B and/or workers’ compensation rates, and return to submitting claims without consulting the payment terms of their patients’ PIP policies.  And all PIP insurers will be able to rest assured in reimbursing providers at those lower rates.