Source: https://www.floridaappellatereview.com/tag/11th-circuit/
Timestamp: 2019-04-22 14:38:32+00:00

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With the collapse of multiple large scale Ponzi schemes in recent years, Federal courts in Florida and elsewhere have been wrestling with so-called “clawback” suits. The way Ponzi schemes work is that the schemers induce investors to give them money that is supposed to be invested, usually with high returns promised.
The 11th Circuit is back in full swing releasing opinions after a brief hiatus during the holiday season. Among the decisions handed down last week was Storcher v. Guarantee Trust Life Insurance Company, a decision on insurance coverage under a home health care policy.
Tobacco Litigation Headed Back to Supreme Court?
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.
On behalf of XYZ Company, we request your legal services and possible representation on a Debt Recovery matter involving XYZ Company and a client in your jurisdiction.
Do let us know if you are currently accepting new clients. We look forward to a prompt response from you. Thank you very much.
I’ll admit that the first time I received such an email years ago, I entertained the idea, for a brief moment at least, that maybe, just maybe, it was legitimate inquiry. But then my inner skeptic took over, and I went right to snopes.com or some similar site to see if scams of this type were going around. They were, of course. I deleted the email and went back to the grind.
Now I just delete them as soon as they come in. As I’m sure you do. And as I thought every lawyer did.
But it seems that some lawyer or employee at a now-defunct central Florida law firm didn’t listen to his or her inner skeptic when he/she received one of those emails back in 2007. Giving that person the benefit of the doubt, let’s assume these scams weren’t so well publicized back then.
In any event, an inquiry came from Hong Kong asking the law firm to set up a U.S. subsidiary of a supposed Hong Kong parent company. The “client” subsequently sent a cashier’s check to the law firm for a bit more than $197,000. The lawyer deposited it in the firm’s lawyer’s trust (IOTA) account. Before the check cleared, the client told the law firm to wire $180,000+ to other foreign entities.
The law firm proceeded to follow the client’s directions. And because the law firm had enough funds from other clients in its IOTA account, the bank covered the wire transfers even though the original check hadn’t cleared. The “client’s” check, of course, never did clear.
The insurer denied coverage. The law firm filed a declaratory judgment action in the Middle District of Florida. Judge Virginia M. Hernandez Covington granted summary judgment to the insurer.
In Nardella Chong, P.A. v. Medmarc Casualty Insurance Co., No. 10-12237, decided May 27, 2011, the Eleventh Circuit reversed.
1.	Did the law firm’s acts and omissions occur in the course of performing “Professional Services”?
2.	Did the money the law firm owed its other clients (i.e., the funds lost in the scam that it had to repay into its trust account) amount to “damages” as defined by the policy?
The Court’s reasoning, and my analysis, is below.

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