Source: https://www.csklegal.com/tck_publications/2009/03/?post_type=tck_publications
Timestamp: 2019-04-21 17:14:49+00:00

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Cost claims representatives are aware of the concept of punitive damages and that they are not to be routinely permitted in personal injury cases in addition to the customary recovery of non-economic and economic damages, i.e, compensatory damages. Punitive damages are permitted to punish the person who engages in willful and wanton conduct. Fortunately, punitive damages are rare.
What is the claims representative’s duty toward the insured in evaluating claims where the value of the case is less than the policy limits, but the plaintiff’s attorney rejects a generous settlement offer due to the specter of a punitive damage award? Can the insured file a bad faith case against the insurance company if the verdict for compensatory damages falls within the policy limits, but there is an award for punitive damages?
As noted at the outset, Ging is a 1970 opinion, and there have been no additional significant subsequent opinions on its holding. This is due, in part, upon the fact that punitive damages claims are encountered on an infrequent basis. It could also be due, in part, to good claims handling procedures by claims examiners, as well as vigorous defense tactics by defense attorneys when punitive damages are litigated.
The Ging decision was based on a federal appellate court’s interpretation of Florida law. No Florida state court has dealt with the concept advanced in Ging. However, courts in New York, California, and Colorado have held that the insurer is not liable for punitive damages to its insured when the insured may have acted in bad faith and exposed the insured to a judgment for punitive damages.
Soto v. State Farm,was a New York case that held the same.26 Soto involved a wrongful death case arising from an automobile accident in which the defendant driver was legally blind, not wearing eyeglasses, and intoxicated. The insurance company was given an opportunity to settle the double-death case for the policy limits of $100,000.00. The insurer declined the settlement and defended on the basis of lack of permission and consent to use the vehicle by the driver who was the girlfriend of the insured. The jury awarded $420,000.00 in compensatory damages and $450,000.00 in punitive damages. The insurance company paid the excess verdict for compensatory damages, but declined to pay the punitive damage award. The insureds assigned their rights to proceed against the insurance company to the plaintiff. The plaintiff then sued the insurance company in an attempt to recover payment for the punitive damage award against its insureds. The insurance company filed a motion to dismiss, which was granted at the trial court level and affirmed by the appellate court. The basis for the appellate court’s affirmance was that the public policy of the state prevented reimbursement by an insurance company for punitive conduct.
A similar result was reached in the case of PPG Industries v. Transamerica Ins. Co. where a California court used similar public policy reasons to deny the insured’s recovery against its insurance company for the punitive damage award rendered against it.27 However, three out of seven appellate court justices dissented. Similarly, in the case of Lira v. Shelter Ins. Co., the Colorado Supreme Court reached the same conclusion as PPG and Soto for basically the same reasons.28 However, as in PPG, three out of the seven justices dissented.
What is the significance to the claims examiner faced with a punitive damage case when comparing the holding in Ging with the holding in Lira, PPG, and Soto? In practice, PPG, Soto, and Lira would have the same “persuasive” effect on a Florida state court judge as would Ging; i.e, all cases are from foreign jurisdictions and not binding on a Florida state court judge. Each would serve as persuasive authority to the trial judge and could be adopted or ignored. Given Florida’s long-standing public policy argument as discussed above in Nicholson v. American Fire and Casualty (the burden of punitive damages on the wrongdoer should not be shifted to the wrongdoer’s insurance company) one would expect a Florida judge to be more persuaded by the Lira trilogy than the holding in Ging. Notwithstanding, the holding of Ging might be enough persuasive authority to a Florida judge to deny a motion for summary judgment brought by an insurance company and to allow the matter proceed to a jury trial.
Although punitive damage cases are not commonplace in Florida, the prudent claims examiner should have a working knowledge of Florida Statute Section 768.72, which will not permit a plaintiff to bring a count for punitive damages in the initial complaint. This knowledge would be helpful in pre-suit negotiations where punitive damages are threatened by the plaintiff.
The claims examiner should have a working understanding of the limitation on punitive damages, especially paragraph (a) of Section 768.73. This will permit the claims adjuster to adequately place the insured on notice of its potential exposure to punitive damages as discussed in Ging. Furthermore, the claims examiner should be aware that a motion for statutory remittitur is available should a punitive damage award be entered against the insured.
The claims examiner should be aware that even though there is no requirement that the insurance company reimburse any insured for punitive damages rendered against it at the current time in the state of Florida, there is a duty to defend the same once the punitive damage claim is alleged in an amended complaint. The examiner should be aware that pursuant to the holding in Ging, the defense of the punitive damages should be as vigorous as the defense of the compensatory damages, including the hiring of an economic expert for the insured relative to the bad faith issue, if appropriate.
The claims examiner should also be aware of the other dictates elucidated in Ging. The insured should obviously be notified of the addition of punitive damages in the lawsuit and the fact that there is no insurance coverage available to pay for punitive damages. The insured should be given an assessment of the potential that punitive damages could be awarded against him by a jury. The examiner should be hypervigilant in notifying the insured of any and all settlement offers at all times, but especially when punitive damages are permitted. The insured should be advised that he or she is permitted to contribute his or her own funds to the settlement of punitive damage claim. The insured should be advised by a defense counsel that his or her participation in the punitive damage lawsuit is essential to establish his or her lack of net worth so that a jury would have a basis to adjust its award to one that would not bankrupt him. The insured should be immediately notified of the outcome of the jury trial when it pertains to punitive damages or otherwise. Finally, the claims examiner should conduct settlement negotiations in good faith and be open to paying settlement funds on the higher end of the settlement evaluation when punitive damages are present.
1 Nicholson v. American Fire and Casualty, 177 So. 2d 52 (Fla. 2d DCA 1965).
6 American Hardware Ins. Co. v. Miami Leasing and Rentals, 362 So. 2d 28 (Fla. 3d DCA 1978).
14 Ging v. American Liberty Ins. Co., 423 F.2d 115 (5th Cir. 1970).
26 Soto v. State Farm, 635 N.E. 2d 1222 (N.Y. 1994).
27 PPG Industries v. Transamerica Ins. Co., 975 P. 2d 652 (Cal. 1999).
28 Lira v. Shelter Ins. Co., 913 P. 2d 514 (Colo. 1996).
In 2009, HB 495 was proposed in the legislature of the State of Florida that would repeal the current slip and fall statute, Section 768.0710, Florida Statutes.
Section 2. Section 768.0710, Florida Statutes, is repealed.
Section 3. This act shall take effect July 1, 2009.
The proposed statute shifts the burden of proof in claims of negligence involving transitory foreign objects or substances from the duty to maintain premises of Section 768.0710, Florida Statutes, to the allegedly injured plaintiff, who, pursuant to Section 768.0710, Florida Statutes, must prove that the business establishment had actual or constructive knowledge of the condition and should have taken action to remedy it. The change will make slip and fall actions more difficult to successfully bring.
The impact of MRTA is of vital importance to Homeowners and Community Associations, as it administers and provides the stipulations by which the Association and its members are governed and regulated while seeking to maintain and enforce their Declaration of Covenants, Conditions and Restrictions. The Declaration of Covenants, Conditions and Restrictions provides the legal mechanism by which the Association’s rules and regulations can be enforced,4 as the failure to properly secure their enforceability would be damaging to the Association’s oversight of its members. If an Association’s Declaration of Covenants, Conditions and Restrictions is permitted to expire, residents will no longer be compelled to act in accordance with the Declaration, and organizational and financial ruin could potentially ensue.
In order to address the evident concerns relating to the expiration of an Association’s Declaration of Covenants, Conditions and Restrictions, the Florida Legislature enacted Florida Statute Section 712.05, which aimed to provide a means for parcel owners to preserve any established covenant or restriction. Due to the fact that the original version of Florida Statute Section 712.05 did not permit an Association to independently act in the preservation of its Declaration of Covenants, Conditions and Restrictions, several amendments to the statute were passed in order to expand an Association’s authority to do so.
[a]ny person claiming an interest in land or a homeowners’ association desiring to preserve any covenant or restriction may preserve and protect the same from extinguishment by the operation of this act by filing for record… a notice, in writing.
Section 712.05(c) specifically outlines the requirements for such notice as it pertains to Homeowners’ Associations. As such, a notice filed by a Homeowners’ Association must be “approved by at least two-thirds of the members of the board of directors…at a meeting for which a notice” was provided at least seven (7) days prior to the meeting.
At the time of the 2003 amendment, this incarnation of Section 712.05 provided the clearest route for an Association to preserve its Declaration of Covenants, Conditions and Restrictions by removing sole preservation authority from individual parcel owners and providing the Association’s Board of Directors such capability under a specified voting formula. Although the 2003 amendment allowed the Association’s Board of Directors to participate in the preservation of yet-expired Declaration of Covenants, Conditions and Restrictions, another unresolved set of circumstances remained: How would the Association proceed in the revival of already-expired Declarations?
In conjunction with the revival process described herein, Florida Statute Section 720.404 outlines the specific requirements by which eligibility for such revival is permitted. These requirements set forth strict guidelines as to the substance of the Declaration of Covenants, Conditions and Restrictions, as well as the particular parcels that may seek revival. More specifically, Florida Statute Section 720.405 establishes that “[t]he proposal to revive a declaration… shall be initiated by an organizing committee consisting of not less than three parcel owners located in the community…” Pursuant to Florida Statute Section 720.406(1), “[n]o later than 60 days after the date the proposed revived declaration and other governing documents are approved by the affected parcel owners, the organizing committee or its designee must submit the… materials to the Department of Community Affairs” for their review and determination.
Although Florida Statutes, Chapter 720 displays much progress in the protection against the extinguishment and lapse of an Association’s Declaration of Covenants, Conditions and Restrictions, further advancements are still necessary. As was the case with the evolution of Florida Statute Section 712.205, the scope of Section 720.403 and the revival of Declarations must be expanded to provide for an Association’s Board of Directors direct involvement in the revival process.
It is essential for Homeowners’ or Community Associations to be able to maintain the enforceability of its Declaration of Covenants, Conditions and Restrictions, or to have the ability to revive a Declaration that may have unintentionally expired. The Declaration permits an Association to impose fees, file liens, collect assessments, and implement other financial standards, which contribute to the economic security and well-being of the Association. If a Declaration is permitted to expire and the parcel owners hold the authority to revive the Declaration, the Association may be subject to parcel owners who do not want to live under such constraints and limitations.
As such, additional safeguards should be implemented in order to allow the Association further means to protect its established Declaration of Covenants, Conditions and Restrictions, especially in these times of economic uncertainty. It is understood that such overtures are currently being made in the Florida Legislature, but the situation remains unsettled. It is apparent that Homeowners and Community Associations must presently take it upon themselves to properly oversee the status of their Declaration of Covenants, Conditions, and Restrictions.
1 Berger v. Riverwind Parking, LLP, App., 842 So. 2d 918 (Fla. 5th DCA 2003).
2 H & F Land, Inc. v. Panama City-Bay County Airport and Industrial District, 736 So. 2d 1167 (Fla. 1999).
3 Sawyer v. Modrall, 286 So.2d 610 (Fla. 4th DCA 1973), cert. denied, 297 So. 2d 562 (Fla. 1974).
4 Hunt Ridge at Tall Pines, Inc. v. Hall, 766 So.2d 399 (Fla. 2d DCA 2000).
It is well-established that in order to trigger coverage under an insurance policy, “the accident or injury must occur during the time period of coverage; or stated otherwise, no liability exists if the accident or injury occurs outside the time period of coverage of a liability policy.”1 Nonetheless, the appropriate trigger of coverage in construction defect cases remains unresolved and a hotly contested issue in Florida.
The curious use of the word, “manifests” has led many, including some of the courts cited below, to hold that Florida is a manifestation state.
In conclusion, no Florida appellate court has recently addressed the issue as to which trigger of coverage theory applies in Florida. However, a federal court interpreting Florida law has determined that manifestation is the trigger of coverage where the damage is continuous, as in construction defect cases. Furthermore, at least one circuit court judge in Miami-Dade County has held that manifestation is the trigger of coverage.27 This decision is currently on appeal at the Third District Court of Appeal. Until this case is resolved, and the trigger of coverage issue is specifically addressed, the trigger of coverage issue in Florida remains unsettled.
1 New Amsterdam Casualty Co. v. Addison, 169 So. 2d 877, 886 (Fla. 2d DCA 1964).
7 Travelers Ins. Co. v. C. J. Gayfer’s & Co., Inc, 366 So. 2d 1199 (Fla. 1st DCA 1979).
12 American Motorists Ins. Co. v. Southern Sec. Life Ins. Co, 80 F.Supp.2d 280 (M.D. Ala. 2000).
14 Auto Owners Ins. Co. v. Travelers Cas. & Surety Co., 227 F.Supp. 2d 1248, 1266 (M.D.Fla.2002).
15 Essex Builders Group, Inc. v. Amerisure Ins. Co., 485 F.Supp. 2d 1302, 1309 (M.D. Fla. 2006).
16 Trizec Properties, Inc. v. Biltmore Const. Co., 767 F.2d 810, 813 (11th Cir. 1985).
27 Master Plaster, Inc. v. Scottsdale Insurance et al., Case No. 08-26260 CA 40.
In conclusion, when analyzing whether a franchisor can be liable for the actions of a franchisee, one must look beyond the franchising agreement to the specific facts of the case to determine whether an actual or apparent agency relationship exists between the franchisor and the franchisee. If such an agency relationship is found to exist, a franchisor could be liable for the actions of a franchisee.
1 Fla. Stat. § 817.416; see also Font v. Stanley Steemer International, Inc., 849 So. 2d 1214, 1216 (Fla. 5th DCA 2003).
2 Mobil Oil Corporation v. Bransford, 648 So. 2d 119, 120 (Fla. 1995).
3 Font, 849 So. 2d at 1216 (citation omitted).
4 Parker v. Domino’s Pizza, 629 So. 2d 1026, 1027 (Fla. 4th DCA 1993); Mobil Oil Corporation, 648 So. 2d at 121; see also Caranna v. City of Clearwater, 466 So. 2d 259, 264 (Fla. 2d DCA 1985).
5 See Mobil Oil Corporation, 648 So. 2d at 120-21; and Font, 849 So. 2d at 1215-16.
6 Font, 849 So. 2d at 1216 (citations omitted).
7 Parker, 629 So. 2d at 1027.
8 See Font, 849 So. 2d at 1217; see also Parker, 629 So. 2d at 1028.
9 Font, 849 So. 2d at 1218-19.
10 Parker, 629 So. 2d at 1029.
12 Font, 849 So. 2d at 1219.
13 Id.; Sapp v. City of Tallahassee, 348 So. 2d 363, 367 (Fla. 1st DCA 1977) (citation omitted).
14 Mobil Oil Corporation, 648 So. 2d at 121 (citations omitted).
15 Orlando Executive Park, Inc. v. P.D.R., 402 So. 2d 442, 449 (Fla. 5th DCA 1981) (citation omitted).
16 See Mobil Oil Corporation, 648 So. 2d at 121.
17 Mobil Oil Corporation, 648 So. 2d at 120-21; see also Orlando Executive Park, Inc., 402 So. 2d at 449-51.
18 Mobil Oil Corporation, 648 So. 2d at 120-21.
20 Orlando Executive Park, Inc., 402 So. 2d at 450.
21 Id. at 450 (citations omitted).
22 See Orlando Executive Park, Inc., 402 So. 2d at 451; see also Caranna, 466 So. 2d at 264.
23 See Orlando Executive Park, Inc., 402 So. 2d at 451.
24 See Caranna, 466 So. 2d at 264).

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