There’s been considerable teeth gnashing about a 2013 Florida law allowing politicians to hold their assets in blind trusts, and withhold from public disclosure specification of the assets held in those trusts. But the debate is only theoretical at this point, according to Florida’s First District Court of Appeal. For that reason, in its opinion issued today in Apthorp v. Detzner, the 1st DCA punted on the merits of a challenge to the constitutionality of the blind trust provisions.

Apthorp was an aide to former Governor Rubin Askew, who pushed the passage of the Sunshine Amendment, the first successful ballot initiative in Florida, which is now Article II, section 8 of the Florida Constitution. Among other things, the Sunshine Amendment requires full disclosure by public office-holders of their financial interests, to avoid conflicts of interest in their decision-making. With financial holdings public, if a politician voted in a way that benefitted his/her financial interests, that fact would be known to the public and subject to public scrutiny.  

In 2013, the Florida legislature passed section 112.31425, Florida Statutes, which allows public officials to hold their assets in “qualified blind trusts,” for ostensibly the same purpose — to avoid conflicts of interest. A statewide grand jury convened in 2010 had recommended the use of blind trusts for that purpose.

A public office-holder uses a blind trust by placing his/her money with a manager who has full power to buy and sell assets. In theory, then, the public office-holder would not know whether a decision affects his/her financial interests because he/she doesn’t know the identity of the companies in which the assets of the trust are currently invested.

According to the legislature, “if a public officer creates a trust and does not control the interests held by the trust, his or her official actions will not be influenced or appear to be influenced by private considerations.” Correspondingly, the legislature permitted public office-holders to publicly disclose only the total value of the assets held in a blind trust, and not the individual investments of the blind trust.

Apthorp apparently did not see the blind trust provisions as a positive development. He saw the blind trust reporting provisions as a way for public office-holders to essentially hold on to the assets and avoid public disclosure. Soon after the new provisions were enacted, Apthorp sought to block candidates from taking advantage of them by filing a Petition for Writ of Mandamus to the Supreme Court of Florida.

When the Supreme Court ruled that the case should be heard in circuit court, Apthorp sought a declaratory judgment from the circuit court that the blind trust provisions violated the Sunshine Amendment. The trial court ruled that they do not.

Apthorp challenged that ruling on appeal. But the 1st DCA didn’t reach the constitutional issue. Instead, the 1st DCA vacated the trial court’s declaratory judgment after finding that the trial court lacked jurisdiction to entertain the case at all because there was no justiciable controversy.

A bedrock principle of the court system is that courts are constitutionally empowered only to decide actual disputes between the parties. With few exceptions, courts don’t have jurisdiction to issue “advisory opinions,” i.e., to say how they would rule if a certain set of circumstances were presented to them. The plaintiff must assert an actual controversy: that the defendant violated (or is currently violating) the law, that the plaintiff has been injured by the alleged violation, and must seek redress for the alleged injury.

Suits for declaratory judgment are somewhat of an anomoly because they seek a declaration about a future action — before anyone has been harmed — rather than relief for an injury caused by a past or present harm. For example, in a common type of suit for declaratory judgment, an insurer seeks a declaration that its contract doesn’t require it to cover certain damages. That contrasts with the more traditional paradigm suit, in which, for example, an insured might sue the insurer after it had refused to cover damages, claiming the insurer had breached the contract in doing so.

But there are limits to courts’ ability to hear declaratory judgment suits as well, the 1st DCA explained. Under the Florida Supreme Court’s decision in Martinez v. Scanlan, 582 So. 2d 1167 (Fla. 1991), there must still be an actual controversy, “a bona fide, actual, present practical need for the declaration…” (Applying this principle to the insurer’s declaratory judgment suit, there’s a need for a declaration because there’s a present dispute between the insurer and insured over whether the insurer is required to pay for the damages. But if, for example, an insurer sought a declaration that a certain provision in its contract doesn’t require it to ever cover a certain type of damages, without reference to specific damages incurred by a specific insured, under Martinez, there would appear to be no actual present need for a declaratory judgment.)     

The 1st DCA held that there was no actual present need for a declaration regarding the constitutionality of the blind trust provisions because no candidate or public office-holder had yet sought to take advantage of those provisions. “Not only has no public officer ever used the type of ‘qualified blind trust’ authorized by the statute Apthorp is challenging, but his brief concedes that he knows of no constitutional officer or candidate who incorporated a blind trust in the most recent financial statements.” Until that happened, there would be no justiciable question for the court to decide, only a theoretical issue that might arise in the future.

Because it found the courts lacked jurisdiction to decide the issue, the 1st DCA vacated the trial court’s judgment as improperly entered, leaving the constitutional question open for challenge in a later case. In a special concurrence, Judge Thomas emphasized that the opinion should not be read to take a position on the constitutional issue, and hinted that he saw potential constitutional problems. But that issue will need to await a case in which the concerns are not merely theoretical.   

4th DCA.jpgThe judges of Florida’s Fourth District Court of Appeal can apply the same sharp analysis to solve financial quandaries as they use to parse complex legal issues. That’s what attendees of yesterday’s meeting of the Appellate Practice Section of the Broward County Bar Association learned. 

The 4th DCA–which hears appeals from Broward, Palm Beach, Martin, St. Lucie, Indian River, and Okeechobee Counties–is planning to relocate from its current location on Palm Beach Lakes Boulevard in West Palm Beach to a new building to be constructed between Clematis Street and Datura Street, east of Tamarind Avenue in West Palm Beach. The move is anticipated to take place in early 2018.

At yesterday’s meeting, Chief Judge Dorian Damoorgian, Chief Judge-elect Cory Ciklin, and Judge Jonathan Gerber explained how the relocation plan came to be.

Although the 4th DCA courthouse is old, and designed for a different era, the move is not simply to upgrade to more modern facilities. Rather, it was triggered by an extreme mold infestation that required the courthouse to be closed last year.

While the immediate problem was eventually remediated, it brought to light serious structural issues with the building that made future problems inevitable. Engineers concluded that the building would need to be torn down and rebuilt — an extremely costly proposition, which would be made even more expensive by the need to lease space for court operations while the demolition and construction took place.

The court knew the legislature would not be eager to allocate the funds necessary for such an expensive project. With state budgets tight, and the legislature still weary from the controversy that resulted from the 1st DCA’s construction of a new building a few years ago, it would be necessary for the court to find a less expensive plan for a safe courthouse.

Thus was born the relocation plan. With Palm Beach Lakes Boulevard now a bustling business and retail area, the current courthouse location has become prime real estate, which would allow the property to be sold for several million dollars, the proceeds of which could be applied to construction of a new building.

But wouldn’t the gains of selling the old property be offset by the cost of acquiring new property? As it turns out, no. There was already state-owned property in West Palm Beach where a building could be built across from the West Palm Beach Tri-Rail station, adjacent to the Palm Beach County Health Department and the Department of Children & Family Services.

That space is currently used as a parking lot for the Health Department and DCF. So the new construction will include a parking garage to be used by those agencies as well as the court. During construction, parking will be available in lots located on the south side of Datura Street.  

With the blessing of the Florida Supreme Court, the 4th DCA presented its proposed plan to the Florida legislature. And despite the legislature’s hesistance to use scarce state funds for construction of an appellate courthouse, the court received initial funding of $7.1 million for the project, with the remaining construction funds to be requested in the next legislative session. It seems even the legislature appreciates the 4th DCA’s ability to solve financial problems.          

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

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It turns out the Florida Senate may not be as cool as observers thought to House Speaker Dean Cannon’s proposed ballot amendment to restructure the Florida Supreme Court.  This week Senator Ellyn Bogdanoff sponsored a Senate companion to one aspect of the House bill, Senate confirmation of Justices, Brandon Larrabee of the News Service of Florida reports:

It marked the first clear sign that Cannon’s most sweeping judicial reform – to split the Supreme Court it into two divisions, one handling criminal cases and the other tackling civil matters – could be seriously considered by the Senate this year.

“I think you’re getting towards the end of session, and this is when everything starts to gel and you decide what you want to focus on and what you don’t want to focus on,” said Sen. Ellyn Bogdanoff (R-Fort Lauderdale).

Bogdanoff sponsored the confirmation bill and asked a fellow senator to offer the wider package in the Senate Rules Committee as a courtesy amendment, which is scheduled to be considered by the panel today.

Bogdanoff said the new measure would largely match up with the House bill, though there are some differences relating to the confirmation process.

The House proposal would allow a Senate committee to take up nominees, while Bogdanoff’s plan would call for the upper chamber to vote on the nomination within 90 days of the governor naming an appointment, even if that required a special session.

The difference in this plan from the House’s proposed confirmation process — confirmation by vote of the entire Senate versus confirmation by a Senate committee vote — seems fairly minor, and I’d expect the House and Senate to be able to resolve such trivial variations.  But this is just the beginning of the process in the Senate and we’ll have to wait and see just how the rest of the details play out.

Is the Florida Supreme Court about to become a two-headed monster?  Not yet, but that possibility became more realistic this morning.  

John Kennedy of the Post on Politics blog of the Palm Beach Post reports that the Judiciary Committee of the Florida House approved Speaker Dean Cannon’s bill to send to the voters a proposed Constitutional amendment that would implement some major changes for the Florida Supreme Court.  The most controversial aspect of those changes is a proposal to have separate sets of Justices decided criminal and civil cases. 

As Dara Kam of the Post reported yesterday, the current plan calls for slightly more modest changes.  Rather than creating a separate highest court for criminal appeals (a la Texas), the current plan would expand the Supreme Court to ten justices, but they would be divided into a separate criminal and civil divisions, with 5 justices assigned to each. 

The Florida Bar has come out strongly in opposition the idea of dividing responsibility for hearing criminal and civil cases.  Per Kennedy’s post, it is, at best, lukewarm to Speaker Cannon’s latest idea:

We request to continue the dialogue,” said Mayanne Downs, president of the Florida Bar.

Lloyd Dunkelberger of the Sarasota Herald-Tribune‘s blog Capitol Comments has more on the revised version of the proposed amendment.  Here are some of the more interesting aspects of the revised plan and my thoughts on them:

  • It backs off the idea of eliminating judicial nominating committees.  That’s a good move, in my view, as JNCs play a big role in making sure the candidates are well qualified and not chosen solely for their partisan views or campaign contributions.
  • The revised plan, like the earlier version, would require state Senate confirmation for Supreme Court Justice nominees.  I’m not sure how I feel about this one.  In theory at least, it can be beneficial to allow a wider group of representatives to vet nominees, rather than giving the governor unfettered, unilateral power.  On the other hand, the judicial confirmation process in U.S. Senate has become a partisan circus that has no obvious value, other than giving partisans a forum for practicing their one-liners.  Who’s to say the process wouldn’t play out the same way in the Florida Senate? 
  • The Legislature would be given access to the records of the Judicial Qualifications Commission so it could impeach judges with meritorious complaints against them.  This one is dangerous.  The current judicial oversight system works well — better than in any other state I’m aware of — in disciplining those few judges that are genuine bad apples.  Giving the Legislature additional power to discipline seems to be aimed only at giving it a tool to get rid of judges whose decisions they don’t like — and to intimidate the ones that remain to do its bidding.
  • The plan would provide additional funding to the court system.  Funding was probably added to the revised proposal as a sweetener for the Florida Bar and other opponents, and it would certainly be welcomed by the court system.  As John Kennedy and Susan Spencer-Wendel of the Post reported earlier this week, the money is needed to avert a potential crisis for Palm Beach County courts, among others.

Something tells me, however, that the Bar and the courts — both of which will continue to have some influence on the Legislative process, and will certainly mount vocal campaigns if the proposal is ever put to the voters — will be unwilling to swallow so much pain for a funding stopgap.  Nor does it appear, according to Kennedy’s post, that the state Senate is quite ready to go along.    

Thumbnail image for Thumbnail image for FL Supreme Court Image_from_istockphoto_paid.jpgIf the Florida Supreme Court is bothered by its unpopularity in the Florida Legislature, its decision in Cohn v. Grand Condominium Ass’n, No. SC10-430, released last Thursday, doesn’t show it.  In a case of particular relevance to Condominium Association lawyers, the Court had no trouble finding the Legislature’s 2007 amendment to Florida Statutes Section 718.404(2), which made certain Condominium Board Membership requirements apply retroactively, to be unconstitutional.

Brief Fact Summary of Cohn:

The Grand is a mixed-use condominium that was first organized in 1986.  It has 1210 units, more than 2/3 of which are residential, but under the Grand’s condominium declaration, residential unit owners can hold a maximum of 3 out of 7 board seats (2 of 7 seats are allocated to commercial unit owners, 2 to retail unit owners, and a 5th seat is elected at-large).  In 1986, that arrangement was kosher.

In 1995, the Florida legislature decided that such arrangements weren’t fair to residential unit owners, and passed section 718.404(2), mandating that residential unit owners must be given a majority of board seats if they own a majority of the units in a mixed-use condo.  But that only applied to condominiums organized after the date of section 718.404(2)’s passage.  In 2007, the legislature amended that section, in attempt to give it retroactive effect on condominiums that were already in existence.    

Analysis of the Court’s Decision

Condominium associations occupy a unique area of Florida law.  The peculiaraties of condominium law account for what is perhaps most notable about the Cohn decision.  In most cases, declaring a statute unconstitutional is a big deal, and a step that courts try to avoid.  But the Court in Cohn had so little trouble reaching that result that it addressed the issue in a short per curium opinion.

The reason may be that Cohn is, in a sense, no more than a new application of long-established principles of Florida condominium law.  The Court has long held that condominium declarations are treated as establishing a set contractual relationship that sets terms not only for the first purchasers, but for all subsequent owners. 

It has also made clear over and again that the precise terms of the declaration, and the law in effect at the time that the declaration was made, rather than the current state of the law, forever govern that relationship, unless the declaration includes language indicating the intent to incorporate statutory amendments.  And if that language is absent, the Florida Constitution renders the legislature utterly powerless to “impair” the contractual rights of any party by changing anything about the relationship of condominium unit owners. 

Condominium unit owners are in a unique relationship, the Court has explained, and the nature of that relationship requires that the bargain unit owners entered into from the start be preserved, in all its details, whether or not the law changes over time. 

From that perspective it is not so hard to understand why the Court so matter-of-factly concluded that Section 718.404(2)’s board representation rules could not be applied to a condominium, like the Grand, which is governed by a declaration that predates the enactment of those rules. 

But it is interesting to compare this result — affirming that the Court will preserve condominiums’ status quo setup in order not to deprive owners of what they paid for — with the Court’s 2003 decision in Woodside Village Condominium Ass’n v. Jahren, 806 So.2d 452 (Fla. 2002).  In Woodside, the Court held that a condominium association, by amending the declaration, could deprive other unit owners — investors who had relied on the declaration’s provision allowing owners to rent out their units and purchased units for that express purpose —  of their ability to rent out their units.  Reading these decisions together, it seems that for condominium unit owners, what the legislature can’t take away, your neighbors can!  

But looking a bit deeper at the Court’s reasoning in both cases, the ultimate deciding factor in each was the language of the condominium declarations at issue.  In Woodside, the declaration broadly allowed amendments so long as the right procedures were followed.  By contrast, in Cohn, the declaration did not specifically incorporate changes in the law into the Declaration. 

The lesson from both cases then is the same:  before you purchase a condominium, make sure you read every last word of the fine print!  And if you are drafting a Declaration for a client, be careful about how you indicate what (if any) statutory changes, and to what potential amendments to the declaration, should be part of the arrangement.