Source: https://www.csklegal.com/tck_publications/2009/10/?post_type=tck_publications
Timestamp: 2019-04-21 14:14:41+00:00

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Plaintiffs sometimes allege personal liability against the employees of a commercial business following a slip and fall, or a criminal attack, that occurred on the business premises. Frequently, this maneuver is simply an attempt to defeat diversity jurisdiction and the removal of the matter from state court to federal court.
However, in order to establish personal liability against an employee, a significant burden must be met under Florida law to demonstrate that the employee was either in sufficient control of the property to prevent the incident or was personally responsible for the negligent act giving rise to the injury.
It is well established Florida law that the “duty to protect others from injury resulting form a dangerous condition on premises” belongs to the party which has the “right to control access [to the premises] by third parties.” Bovis v. 7-Eleven, Inc., 505 So. 2d 661 (Fla. 5th DCA 1987). This right to control access to the premises belongs to the possessor of the premises; generally the owner or lessee of the property. Id. Thus, if a corporation is the party which possesses the right to control access to the premises, it is the corporation, not the corporation’s employees, which owes the duty to protect others from dangerous conditions that may be present on the premises.
For example, in Aguila v. Hilton, 878 So. 2d 392 (Fla. 1st DCA 2004), a woman was killed after an intoxicated college student left a hotel party and crashed into the woman’s vehicle. The woman’s estate then sued the hotel for allowing an intoxicated person to leave their hotel. Id. The court held that a duty existed to those who “create” a risk to “either lessen the risk or see that sufficient precautions are taken to protect others from the harm that the risk poses.” Id. at 396; citing McCain v. Florida Power Corporation, 593 So. 2d 500 (Fla. 1992). A duty does not exist unless the defendant both “created” the risk and “had the ability to avoid the risk.” Id.at 396. No duty exists on the part of the defendant to protect a third party from injury simply because the risk may have been foreseeable to the defendant. Id. Therefore, unless the defendant “created” the risk and was in a “position to control the risk” no duty to protect a third party exists. Id.
Moreover, Florida law does not impose a duty on the possessor of commercial property, let alone an employee, to ensure the safety of business invitees. Cassel v. Price, 396 So. 2d 258 (Fla. 1st DCA 1981); Aguila, 878 So. 2d at 395. Florida law imposes two duties upon possessors of property to invitees upon their premises. Cassel, 396 So. 2d at 264. First, a land possessor must use reasonable care in maintaining his premises. Id. Second, the possessor must warn invitees of all hidden perils, which are known, or should be known, to the possessor. Id. Thus, Florida law does not impose a duty upon employees to be the insurers of the safety of business invitees. Imposing such a duty would cause the duty element of negligence to be “stretched totally out of shape.” Aguila, 878 So. 2d at 395. Such a duty would “impose an unreasonable and prohibitively burdensome duty” on possessors of land and their employees. Cassel, 396 So. 2d at 265.
1) The corporation owes a duty of care to the third person, breach of which has caused the damage for which recovery is sought.
The duty is delegated by the principle or employer to the defendant officer.
The defendant officer has breached this duty through personal-as opposed to technical or vicarious-fault.
With regard to personal fault, personal liability cannot be imposed upon the officer simply because of his general administrative responsibility for performance of some function of his employment. He must have a personal duty towards the injured third person, breach of which specifically has caused the person’s damages.
See McElveen v. Peeler, 544 So. 2d 270 (Fla. 1st DCA 1989). Stated differently, most employees do not have the right to control the premises. A corporate officer or employee is not liable for the torts of the company simply because of the person’s position with the company. Vesta Construction and Design, L.L.C v. Lotspeich & Associates, Inc., 974 So. 2d 1176 (Fla. 5th DCA 2008); See also, Orlovsky v. Solid Surf, Inc., 405 So. 2d 1363, 1364 (Fla. 4th DCA 1981).
However, if an employee personally caused the incident, this breach of duty is personal, and the employee can be held individually liable. Orlovsky v. Solid Surf, Inc., supra. In Orlovsky, the owner of a skate park personally rented defective skateboards that caused injury to an invitee. The court held the owner and possessor of the premises personally participated in the tort by personally renting defective equipment. Id. Therefore he was properly a party, individually, to the suit. Indeed, officers or agents of corporations may be individually liable in tort if they commit or participate in a tort, even if their acts are within the course and scope of their employment. White v. Wal-Mart Stores, Inc., 918 So. 2d 357 (Fla. 1st DCA 2006); See also McElveen v. Peeler, supra; White-Wilson Med. Ctr. v. Dayta Consultants, Inc., 486 So. 2d 659, 661 (Fla. 1st DCA 1986).
In order to establish liability of an individual employee, the complaining party must allege and prove that the employee owed a duty to the complaining party, and that the duty was breached through personal (as opposed to technical or vicarious) fault. White, 918 So. 2d at 357; McElveen, 544 So.2d at 272. In White, the court specifically noted that an officer or employee may not be held personally liable “simply because of his general administrative responsibility for performance of some function of his [or her] employment.” He or she must be actively negligent. If a complaint alleges more than mere technical or vicarious fault, such as the employee being directly responsible for carrying out certain responsibilities and that he or she negligently failed to do so, and that resulted in injury to a plaintiff, then such allegations may be legally sufficient to withstand a motion to dismiss for failure to state a cause of action.
In Pritchard, supra, Wal-Mart argued that since the plaintiffs could not establish that the store manager was personally at fault for the plaintiffs’ injuries in any way, he had been fraudulently joined as a defendant in the lawsuit. The court agreed. Indeed, the court noted that there was no evidence to support the plaintiffs’ claim that the manager was actively negligent, and therefore, the store manager was found to have been fraudulently joined, and the case remained in Federal Court.
However, in Allen v. Monsanto Co., 2009 WL 426546 (N.D. Fla. 2009) after a plaintiff filed a motion to remand a cause of action back to state court and the defendant opposed the motion claiming that the individually named plant manager was fraudulently joined, the court ultimately found that under Florida law the plant manager was in sufficient control of the plant and had a duty to lessen the risk of injury to the plaintiff, thus making the manager a proper party. In so holding, the court did recognize “[a] defendant’s right to removal cannot be defeated by a fraudulent joinder of a residential defendant having no real connection to the controversy.” Id. See also Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921). See also Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997).
In conclusion, for those cases where a low level manager or store employees, are named individually, one must look to why the individual is being named. If it is to defeat diversity jurisdiction and possible removal to federal court, the matter still may be removed on the basis that the non-diverse employee has been “fraudulently joined” to the action. Only in those cases where the employee possesses the requisite control over the property, or is alleged to have actively engaged in some conduct that is the cause of the claimant’s harm will the federal courts find that a proper cause of action has been stated against the individual employee, and remand the matter back to state court.
In the past, fact patterns like the one above, if noticed early, were handled with circumspect care. It was not uncommon to see carriers double their per person policy limits, making a single policy limits payment to the injured party to fully and finally settle their claim against the insured, and concomitantly or subsequently making another policy limits payment to the hospital to settle the lien. Various approaches were taken, jointly negotiating with the hospital and seeking approval to settle with the injured party while doubling the limits versus settling with the injured party and then dealing with the hospital. Always, however, these settlements were high risk – wait too long and you may not be able to settle with the injured party or settle with the injured party too soon without obtaining authority from the hospital and the insured could face exposure of the entire hospital lien. The doubling the limits approach has been an easier recommendation, and therefore, decision when the limits of coverage were minimal. However, as the coverage limit went upwards from $25,000 to $100,000, $250,000 to $500,000, the decision became more difficult.
Dealing with hospital liens on personal injury presuit settlements in Florida has never been an easy prospect when the injured claimant is unrepresented.1 Hospital liens were traditionally the most dangerous type of collateral claim because the jurisprudence dealing with liens provided that a hospital, in a lien impairment action, could potentially seek not just the amount of available coverage, but the value of its entire lien. When this exposure is added to the specter of attorney’s fees being potentially recoverable by the hospital pursuing a lien impairment action, the conventional wisdom ranked hospital liens as one of the most prickly considerations in high exposure claims.
Throughout Florida, hospital liens are a creature of special laws and ordinances, rather than a general law which operates uniformly throughout Florida. As a result, the lien laws in Florida vary from county to county, resulting in a non-uniform patchwork of laws. At last count there were twenty-one counties (out of sixty-seven in Florida) with lien ordinances on the books, representing a mix of special laws and those which have yet to reach a determination of special versus general law. A special law relates to, or operates upon, particular persons or things, or purports to operate upon classified persons or things when classification is not permissible or the classification adopted is illegal.2 Whereas, a general law operates universally throughout the state or uniformly upon subjects as they may exist throughout the state.3 A general law can also operate uniformly within permissible classifications by population of counties or otherwise, or can be a law relating to a state function or instrumentality.4 While the legislative purpose behind Florida’s lien laws is recognized, the means used by the local governments to create these liens, i.e., special laws, is arguably unconstitutional.
As part of its defense to the litigation, Mercury Insurance challenged the law which entitled charitable hospitals in Alachua County to a lien for the reasonable cost of hospital care.15 This lien attached to lawsuits, demands, settlements or judgments that arose as a result of the patient’s injuries which necessitated the hospital care.16 Further, any release executed and accepted without the hospital joining in or executing same constituted an impairment of the lien entitling the hospital to an action at law to recover the reasonable cost for the hospital care rendered.17 At the conclusion of a non-jury trial, the trial court found that Mercury Insurance had impaired Shands’ lien and entered a judgment in Shands’ favor after an unsuccessful motion for judgment notwithstanding.18 On appeal, the First District Court of Appeals determined that Chapter 88-539 was a special law which, in the instant case, created a lien based upon a private contract between the plaintiff and Shands.19 The court held that because Article III, Section 11(a)(9) of the Florida Constitution expressly provides that “[t]here shall be no special law or general law of local application pertaining to … creation, enforcement, extension or impairment of liens based on private contracts …”, Chapter 88-539 was specifically prohibited by the Florida Constitution, and as such, could not stand as law.20 If this decision is upheld, it could act to nullify a hospital’s ability to assert a cause of action for the impairment of a perfected lien against a tortfeasor and/or its insurance carrier. However, the holding in Mercury does not necessarily invalidate all lien laws in Florida. It may only invalidate those lien laws which were created by special laws and were based upon a private contract.
The impact of the recent decision in Mercury is not fully known at this time. However, if this decision is upheld, it could have a positive effect on how insurance carriers handle settlements with unrepresented claimants when hospital liens are involved and the claimants are refusing to include the hospital as a co-payee. The hospital lien law which was challenged in Mercury imposed a duty upon insurance carriers to ensure that hospital liens were satisfied when settlement payments were made. By properly executing this duty, carriers were able to avoid a subsequent suit brought by the hospital pursuant to the lien law. However, the Mercury decision has, in essence, shifted the burden to satisfy a perfected hospital lien back to the patient, as the lien, according to the First District Court of Appeals, is a private contract between that individual and the hospital.39 Thus, while a lien filed by a hospital against a patient for medical services rendered is not in itself unconstitutional, the decision in Mercury has limited the ability of a charitable hospital, in Alachua County, to proceed directly against said patient’s interest in a third party liability policy settlement.
Mercury has helped to give some hope for relief to claims professionals working to resolve high exposure claims with unrepresented claimants who have hospital liens. The lasting impact of Mercury, and whether the First District’s holding will withstand further appeals are unknown. Mercury could be overturned on appeal, or could be found by other Florida jurisdictions to be limited to its facts and the ordinance in Alachua County. However, if Mercury is adopted in other districts and represents a trend in the courts, it could signify a paradigm shift, assisting claims professionals and insurance carriers facing the daunting challenge of an expeditious resolution in the face of a significant collateral claim from a hospital lien. As noted above, because the hospital lien ordinances are varied around the State, each should be examined based on their own pronouncements. Furthermore, each claim of lien should be examined in terms of its strict complicity with the respective ordinance for purposes of determining whether the lien has been properly perfected in the first instance. We are always available to discuss or assist with any hospital lien and claim settlement issues.
1 When an injured party is represented by counsel, that attorney has an ethical obligation to resolve any and all liens and subrogated interests applicable to the settlement proceeds. The Florida Bar v. Sweeney, 730 So. 2d 1269 (Fla. 1998). Ignoring liens and subrogated interest claims could result in action by the Florida Bar and/ or criminal sanctions. Id.; See also Durie v. State, 751 So. 2d 685 (Fla. 5th DCA 2000).
2 State ex. rel. Landis v. Harris et. al., 163 So. 237, 240 (Fla. 1935).
3 Id.; See also Lawnwood Medical Center, Inc. v. Randall Seeger, M.D., etc., 990 So.2d 503 (Fla. 2008).
5 Mercury Ins. Co. of Fla. v. Shands Teaching Hosp. & Clinics, Inc., Case No. 1D08-1198, 2009 WL 2151903 (Fla. 1st DCA July 21, 2009).
21 State Farm Mutual Auto. Ins. Co. v. Palm Springs Gen. Hosp., Inc. of Hialeah, 232 So.2d 737 (Fla. 1970).
22 Palm Springs Gen. Hosp., Inc. of Hialeah v. State Farm Mutual Auto. Ins. Co., 218 So.2d 793, 797 (Fla. 3d 1969).
25 State Farm Mutual Auto. Ins. Co., 232 So.2d at 739.
26 Hosp. Bd. of Directors of Lee County v. McCray, 456 So.2d 936 (Fla. 2nd DCA 1984).
31 Mercury Ins. Co. of Fla., 2009 WL 2151903 at 1.
33 Palm Springs Gen. Hosp., Inc., 218 So.2d at 799.
34 Mercury Ins. Co. of Fla., 2009 WL 2151903 at 1.
35 Palm Springs Gen. Hosp., Inc., 218 So.2d at 796.
36 Mercury Ins. Co. of Fla., 2009 WL 2151903 at 1.
37 McCray, 456 So.2d at 939.
38 Mercury Ins. Co. of Fla., 2009 WL 2151903 at 1.
On May 29, 2009, Florida Governor Charlie Crist signed into law House Bill 930. The law was in direct response to the Florida Supreme Court’s ruling in Murray v. Mariner Health, 994 So. 2d 1051 (2008), which held that attorneys were entitled to a “reasonable” attorney’s fee in workers’ compensation cases.1 In Murray, the Supreme Court of Florida determined that the 2003 amendment to Florida Statute Section 440.34, was ambiguous with respect to attorney’s fees paid by the employer/carrier to a claimant’s attorney when prevailing on workers’ compensation claims.2 The 2003 amendment had placed strict caps on attorney’s fees when a claimant’s attorney obtained benefits on behalf of the injured worker. The ruling in Murray, however, left the opportunity for the legislature to respond to the decision because the Supreme Court of Florida simply reinterpreted the 2003 amendment and did not declare the statute unconstitutional. The Florida legislature has redressed the ambiguities of section 440.34 and restored fee caps on attorney’s fees in Florida workers’ compensation cases.
The parties agreed that the petitioner was entitled attorney’s fee from respondents pursuant to section 440.34, but disputed the method by which the award should be calculated.10 At the hearing to determine the amount of fees to be awarded, the petitioner argued entitlement to a “reasonable” fee even though subsection (1) of section 440.34 no longer set forth factors for determining the reasonableness of attorneys’ fees.11 The respondents, conversely, argued that the fee should be calculated based on the strict formula in subsection (1).
In other words, the Supreme Court Florida held that the specific subsection (3) controls over the general subsection (1), thereby allowing for a reasonable attorney fee.21 The Supreme Court of Florida further held that if subsection (3) was controlled by subsection (1), then the reasonable fee requirement contained in subsection (3) would essentially be rendered meaningless and absurd because the application of statutory fee caps would result in inadequate fees in some cases and excessive fees in other cases.22 The Court noted that inadequate and excessive fees are not reasonable fees as defined in subsection (3).23 Thus, the Murray decision avoided the constitutional challenges and interpreted the law to allow for a “reasonable” attorney based on an hourly rate. The ruling led to a return to a fee driven workers’ compensation system which had existed prior to 2003 amendments to section 440.34.
Therefore, a claimant will no longer be entitled to a “reasonable fee,” based on an hourly rate, but rather the strict statutory fee caps as outlined in sections (1) and (7). The law became effective on July 1, 2009 and applies to accident dates on or after July 1, 2009.
Undoubtedly, we can expect that there will be constitutional challenges to section 440.34, as amended in 2009. However, overturning a statute on constitutional grounds can be a daunting challenge due to the fact that “every presumption is to be indulged in favor of the validity of that statute.”35 To date, all constitutional challenges to Section 440.34 have been denied by Florida courts.
Opponents of this statute have argued that the legislature has impermissibly encroached on the powers of the judiciary by placing strict caps on attorney’s fees. However, in Lundy,the court ruled that the legislature may limit the amount of fees that a claimant’s attorney may charge as the state legislature has a legitimate interest in regulating attorney’s fees in workers’ compensation cases.36 Additionally, opponents have argued that the law violates the injured workers’ right to due process and equal protection. However, a challenge based on equal protection will be unlikely successful because an injured worker is not a “suspect class” and thus, the review will be pursuant to a quite deferential rational basis standard. The statute will need only bear a reasonable relationship to a legitimate state interest.37 The burden is on the party challenging the statute to show that there is no conceivable factual predicate which would rationally support the classification under attack.38 A statute subject to the rational basis standard is seldom overturned as having no reasonable relationship to a legitimate state interest.
Critics of the statute have also indicated that the law may violate the claimant’s right to due process by denying access to courts. In order to prevail on a due process challenge, Florida courts have held that an injured worker must be denied the opportunity to be heard in a meaningful, full and fair, and not merely colorable or illusive way.41 To prove this, the claimant will need to demonstrate that the statute has unduly burdened the claimant’s ability to retain counsel in order to secure benefits, or that the statute limits the types of benefits a claimant is authorized to pursue under Section 440.42 The claimant would need to present evidence that, since the time the law was enacted, there has been a substantial increase in pro se injured workers or a substantial decrease in litigated cases. In Lundy, the Court noted that the claimant’s challenge on this theory was unpersuasive as it lacked evidentiary support.43 Therefore, it appears unlikely that a claimant would be successful on this type of constitutional argument unless there was clear evidence that the Section 440.34 somehow impairs a claimant’s opportunity to be heard.
The Florida legislature has responded to the Murraydecision, effectively restoring strict caps on attorney’s fees. Employers can expect that workers’ compensation rates will continue to decrease, which will favor business owners and may, as many argue, disfavor the injured worker. However, future constitutional challenges to Florida Statute section 440.34 remain a near certainty. While all constitutional challenges to the law, to this point, have been turned aside by Florida Courts, many critics of section 440.34 believe that the Supreme Court of Florida will once again be charged with the task of deciding whether the statute is constitutional. Since the Florida legislature has removed the ambiguity in section 440.34, opponents will have no choice but to challenge the statute strictly on constitutional grounds. Thus, the Florida Supreme Court may ultimately be required to make a ruling as to the constitutionality of section 440.34 once and for all.
1 Murray v. Mariner Health, 994 So. 2d 1051 (Fla. 2008).
3 Fla. Stat. § 440.34(1) (2008) (emphasis added).
4 Fla. Stat. § 440.34(3) (2008) (emphasis added).
5 Murray, 994 at 1053.
26 FLOIR Media Release, Florida Insurance Commissioner Recommends Workers’ Compensation Insurance Rate Increase Due to Court Ruling. http://floir.com/pressreleases/viewmediarelease.aspx?id=3088 (last visited July 31, 2009).
31 Insurance Journal, Florida Approves 6.4% Workers’ Compensation Insurance Rate Hike, http://www.insurancejournal.com/news/southeast/2009/02/11/97813.htm (last visited July 31, 2009).
34 National Underwriter Property & Casualty, Fla. Drops Comp Rates After Attorney Fee Cap Restoration, http://www.property-casualty.com/News/2009/6/Pages/Fla-Drops-Comp-Rates-After-Attorney-Fee-Cap- Restoration-.aspx (last visited July 31, 2009).
35 Golden v. McCarty, 337 So. 2d 388, 389 (Fla. 1976).
36 Lundy v. Four Seasons Ocean Grand Palm Beach, 932 So. 2d 506,509(Fla. 1st DCA 2006)(citing Samaha v. State, 389 So. 2d 639, 640 (Fla. 1980)).
38 Florida High School Activities Association, Inc. v. Thomas, 434 So. 2d 306, 308 (Fla. 1983).
39 Khoury v. Carvel Homes S., Inc., 403 So. 2d, 1043, 1046 (Fla. 1st DCA 1981).
40 Lundy, 932 So. 2d at 510.
41 Rucker v. City of Ocala, 684 So. 2d 836, 841 (Fla. 1st DCA).
42 Lundy, 932 So. 2d at 510.
This summer, the Florida Supreme Court approved the addition of Rule 1.201 to the Florida Rules of Civil Procedure, which is certain to change the landscape of litigation for a variety of cases.1 Entitled “Complex Litigation,” Rule 1.201 establishes a framework akin to the Federal Rules of Procedure, with mandatory case management conferences, required disclosures at certain intervals, and a guarantee of a trial within two years in order to promote the efficient and timely disposition of cases, excepting matters concerning family law.2 The following is a synopsis of the Rule and its practical application.
At first blush, it would appear this Rule would only apply to matters such as claims for professional malpractice, commercial litigation or any other type of suit with a complex or intricate fact pattern. However, with the inclusion of cases that present management issues, a relatively simple dispute which involves multiple parties would also fall under the penumbra of this rule, such as is often the case in class action disputes.
Rule 1.201 should also preclude other practices which often frustrate parties leading up to trial, especially the disclosure of new opinions from expert witnesses or treating physicians. Typically, if new opinions were disclosed at the eleventh hour, a party needed to demonstrate prejudice in order to seek recourse.16 However, surprise opinions or disclosure of evidence, in contradiction to the deadlines established by the Court, may be more readily dealt with under Rule 1.201 as the Courts have plenary power to impose a sanction for violation of an Case Management Order.17 Logically, this will also apply to other common discovery disputes which arise. Unfortunately, some parties (either though laziness or in an effort to gain some sort of perceived advantage) may stall in responding to discovery or provide deficient answers. Rather than go through the time consuming process of filing a Motion to Compel, discovery disputes may be brought to the immediate attention of the Court. Fortunately, many of the issues discussed here can easily be ameliorated through a prompt and fair evaluation of the case, immediate identification of defense issues, and aggressively seeking out evidence in harmony with your litigation plan.
1 Mark D. Killian, Court OK’s Complex Litigation Rule, Florida Bar News (June 15, 2009).
2 In Re: Amendments to the Florida Rules of Civil Procedure – Management of Cases Involving Complex Litigation, Case No.: SC08-1141.
3 Fla. R. Civ. P. 1.201(a).
4 Fla. R. Civ. P. 1.201(a).
5 Fla. R. Civ. P. 1.201(a)(1).
6 Fla. R. Civ. P. 1.201(a)(2).
7 Fla. R. Civ. P. 1.201(b).
8 Fla. R. Civ. P. 1.201(b)(1).
10 Fla. R. Civ. P. 1.201(b)(2).
11 Fla. R. Civ. P. 1.201(c).
12 Fla. R. Civ. P. 1.201(b)(3).
13 Fla. R. Civ. P. 1.201(d).
14 Fla. R. Jud. Admin. 2.2250.
15 Fla. R. Civ. P. 1.201(d).
16 See, e.g., Binger v. King Pest Control, 401 So. 2d 1310 (Fla. 1981).
17 See, e.g., Michalak v. Ryder Truck Rental, Inc., 923 So. 2d 1277 (Fla. 4th DCA 2006).
Everyone who has homeowners insurance expects the insurer to pay when the home is damaged by a covered event, such as a hurricane, fire or plumbing leak. The typical homeowner simply wants their home restored to its prior condition and wants the insurer to pay what is rightfully owed. Over the past several years, however, there has been a new type of claim that results in extreme overreaching by the insureds, their public adjusters and their attorneys.
This is the typical case we have defended: Mr. Insured was hanging a picture on the wall. He accidentally dropped his five-pound hammer. When the hammer hit the floor, it chipped or cracked a tile.1 Mr. Insured, through his public adjuster, makes a claim. The claim is not, however, for a chipped or cracked tile. The claim is for $80,000 worth of new tile throughout the entire house.2 Everywhere in the home that the tile runs continuously from room to room is claimed as requiring replacement. The stated reason is that the one damaged tile cannot be replaced because a matching tile cannot be found. The insureds never have left over tile from when the floor was installed and they cannot have a mismatched tile in their floor because they are entitled to matching tile. The argument is that pursuant to Fla. Stat. § 626.9744, the claims settlement statute, an insurer must make reasonable repairs or replacement of matching items in adjoining areas.
In the past, insurers tried to bargain. “We do not need to replace the entire floor because we can harvest a matching tile from a hidden area, such as under the refrigerator.”3 Eventually, however, the cases typically settle.
Like mold claims before them, these “dropped object” claims have fomented ever more claims with bigger and more extensive demands and payouts. At least one insurer refused to give in to such obvious overreaching. That insurer began denying the claims as falling under an exception to coverage. The insurer, after fully investigating the claims, including having an engineer inspect the damage4, denied such claims as “marring” pursuant to the “wear and tear, marring, deterioration” exception to coverage.5 Naturally, the insureds and their public adjusters pushed back.
The resulting lawsuits allege either breach of contract for failure to pay a covered claim or demand appraisal of the claim pursuant to the policy’s appraisal provision.6 Almost invariably, the insurers make the economic decision to settle the cases or agree to appraisal to cut their losses and cut off the attorneys’ fee claims.
Enter Raul Maestri v. Florida Peninsula Insurance Company.7 Florida Peninsula Insurance Company had long been denying these tile damage claims as “marring” but usually ended up settling the claims or participating in appraisal (either voluntarily or involuntarily). No one had yet come up with an argument against such claims until Mr. Maestri’s attorney filed his standard motion for summary judgment on the right to have the claim decided by appraisal. It was then that Florida Peninsula authorized Cole, Scott & Kissane to go on the offensive.
One of the insured’s standard arguments is that in interpreting an insurance policy, the court must look at the words surrounding the term at issue. “Marring” falls between “wear and tear” and “deterioration.” The terms “wear and tear” and “deterioration” imply a long-term and gradual condition, thus, “marring” should be interpreted the same way. In counter to this argument, it is first noted that, while these HO-3 policies are “all risk” policies, “all risk” does not mean “all loss.”8 In addition, the general rule is that a single policy provision should not be read in isolation and out of context but that the contract should be interpreted according to all of the terms set forth in the policy.9 The “wear and tear, marring, deterioration” exception is only one subparagraph of a larger exception to coverage that also includes occurrences that are sudden and unexpected, such as mechanical breakdown and discharge of pollutants. Thus, the entire exception can be read as excepting both gradual and sudden occurrences.
The facts of Ehsan involve more extraordinary damage than the claim of a dropped object chipping a tile during the ordinary and normal use of the insured’s premises over time. Thus, while Ehsan interprets “marring” in a way that seems to go against excluding the chipped tile as marring, Ehsan and the chipped tile case are factually distinguishable.
Back, then, to Mr. Maestri and his claim for $81,000 in insurance benefits due to damage to one floor tile. A hearing was held on Mr. Maestri’s motion for summary judgment on July 29, 2009, in front of Miami-Dade Circuit Court Judge Ronald Friedman. Judge Friedman began by stating that he was “troubled” by such a large claim for such a small amount of damage. After a rather abbreviated argument, Judge Friedman ruled that the insurance policy at issue was not intended to cover the claimed incident.23 Thus, the first win for the insurance industry and the first chink in the insureds’ armor.
It remains to be seen whether any ruling, for or against coverage, will be taken up on appeal. If so, we may finally have our first Florida appellate decision that fairly and favorably interprets this exception to coverage.
1 Other such cases handled by Cole, Scott & Kissane include a dropped “scotch” glass, a dropped serving platter, a dropped fax machine and a wrench dropped after fixing a plumbing leak that resulted in a separate, paid claim.
2 Not only does the damage estimate include tile for almost every room in the home, but it includes repainting every room in which the tile is replaced, sometimes repainting the ceiling and occasionally replacing the kitchen cabinets. One estimate from a public adjuster notes that the kitchen cabinets in the insured property are too old to withstand removal and resetting after installation of the new tile.
3 Although the insureds argue that this could not and would not work, it does not appear that this method of repair ever was actually attempted.
4 Every engineer’s report the author has read contains the same conclusion: The damage is not inconsistent with the date and description of the occurrence. Occasionally, the report will contain an added conclusion that the tile was improperly or poorly installed. This, too, is excluded by the terms of the policy.
6 After arguing in favor of coverage in the appraisal cases, the insured then claims that coverage includes all continuous tile throughout the house. This argument is based on Fla. Stat., §626.9744, the claims settlement statute, which requires an insurer to make reasonable repairs or replacement of matching items in adjoining areas. The insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without that cost, the remaining useful life of the undamaged portion and other factors.
7 Case No. 08-43156 CA 02, Eleventh Judicial Circuit, Miami-Dade County, Florida.
8 Fayad v. Clarendon Nat’l Ins. Co., 899 So. 2d 1082, 1086 (Fla. 2005).
9 Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 166 (Fla. 2003); Fla. Stat., §627.419.
10 The insureds never actually explain what the ambiguity is or cite any law that holds this provision is ambiguous. They seem to rely on the fact that they say the damage is covered and the insurer says it is not for support of the argument that this, then, must be ambiguous.
11 Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005) (citation omitted); Fayad v. Clarendon Nat’l Ins. Co., 899 So. 2d 1082, 1086 (Fla. 2005); Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 712 (Fla. 2003). One must also look to the intent of the parties at the time the contract was made. U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 881 (Fla. 2007).
12 Taurus Holdings, Inc., 913 So. 2d at 532.
13 State Farm Mut. Auto. Ins. Co. v. Mashburn, 2009 15 So. 3d 701, 705 (Fla. 1st DCA 2009).
14 Mashburn, 15 So. 3d at 704.
15 American Heritage Dictionary (on-line ed.).
16 There are two cases that find the entire exception to be unambiguous. See Brodkin v. State Farm Fire & Cas. Co., 217 Cal. App. 3d 210, 218 (Cal. App. 1989); Ehsan v. Ericson Agency, Inc., 2003 WL 21716345, n. 18 (Conn. Super. 2003) (“marring” defined but not found to be ambiguous).
17 Ehsan v. Ericson Agency, Inc., 2003 WL 21716345 (Conn. Super. 2003). Gerawan Farming Partners, Inc. v. Westchester Surplus Lines Ins. Co., 2008 WL 80711 (E.D. Cal. 2008), also involves interpretation of “marring” but in the context of a commercial property policy.
18 Ehsan v. Ericson Agency, Inc., 2003 WL 21716345, n. 18 (Conn. Super. 2003).
19 2008 WL 80711 (E.D. Cal. 2008).
20 The court defined “mar” as a disfiguring mark or blemish and defined a blemish as an imperfection that seriously impairs appearance. Gerawan Farming Partners, Inc. v. Westchester Surplus Lines Ins. Co., 2008 WL 80711, *14 (E.D. Cal. 2008).
21 There is at least one case that states that “marring” can be the result of a sudden occurrence. See Gibson v. Farmers Ins. Co. of Wash., 2007 WL 1180999 (Wash. App. 2007) (discussing “marring” as part of a similar exception to coverage in dicta).
22 U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 881 (Fla. 2007).
23 After much discussion, the parties could not agree on the language of the order. Judge Friedman chose to enter the order proposed by Cole, Scott & Kissane. Currently the insured’s Motion for Rehearing is pending before the court.

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