Court Opinion

ID: 4275507
Source: CourtListenerOpinion
Date Created: 2018-05-16 14:06:01.90064+00
Date Added: 2024-06-11T14:33:46.410911
License: Public Domain

FIRST DISTRICT COURT OF APPEAL
                STATE OF FLORIDA
                 _____________________________

                         No. 1D16-5675
                 _____________________________

HIGHWOODS PROPERTIES, INC.,

    Appellant,

    v.

MILLAR ELEVATOR SERVICE
COMPANY and SCHINDLER
ELEVATOR COMPANY,

    Appellees.
                 _____________________________

On appeal from the Circuit Court for Duval County.
Karen Cole, Judge.

                          May 16, 2018

ROBERTS, J.

     Highwoods Properties Incorporated (Highwoods) appeals a
final order denying its motion for final judgment for indemnity
against Schindler Elevator Company (Schindler). For the reasons
discussed herein, we find Highwoods was not precluded from
seeking indemnity in this action, but remand for further litigation
on the merits of the indemnity claims. We affirm the final order
in part, reverse in part, and remand for further proceedings. 1

    1  Our opinion addresses Issues II-VI of Highwoods’s amended
initial brief. Issue I is affirmed without comment.
                      Factual Background

     In 1997, Highwoods entered into an elevator service contract
with Schindler’s predecessor in interest, Millar Elevator Service
Company. 2 Under the terms of the service contract, Schindler was
responsible for maintenance and repair of elevators in a
Jacksonville office building owned by Highwoods, which included
response to elevator entrapments. The service contract also
included a reciprocal indemnity provision.

     In 1999, Janice Beasley was entrapped and injured in an
elevator in the subject office building. She and her husband,
Stephen Beasley, filed suit against Highwoods and Schindler
alleging Highwoods breached a common law duty to use
reasonable care in the inspection and maintenance of the elevator,
and Schindler negligently failed to perform its duty, per the service
contract, to inspect and maintain the elevator. Counsel for
Highwoods asked Schindler to assume the defense of the entire
case per the service contract, but Schindler declined the request.
Highwoods then filed a cross-claim against Schindler for common
law and contractual indemnity that alleged Highwoods was
entirely without fault, that the plaintiffs’ damages were solely and
proximately caused by Schindler, and that any liability on
Highwoods’s part would be “vicarious, constructive, derivative,
and technical in nature.”

     Some years later, the plaintiffs amended the complaint to
include a claim that Highwoods had a non-delegable duty under
chapter 399, Florida Statutes, to ensure the safe operation and
proper maintenance of the elevator. The amended complaint also
alleged Highwoods and Schindler failed to reasonably respond to
the elevator malfunction. Highwoods did not seek to amend its
cross-claim in response to the amended complaint.

    2 The parties do not dispute that Schindler was obligated to
honor the service contract after merging with Millar. The two
companies will be referred to collectively as Schindler for ease of
reference.

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     The case proceeded to a jury trial that was bifurcated into two
phases: liability and damages. On liability, the jury determined
that neither Highwoods nor Schindler was negligent in the
inspection, maintenance, service, or repair of the elevator. The
jury found Highwoods and Schindler were each fifty percent
negligent in their response to the elevator malfunction.
Highwoods later successfully moved for a directed verdict on
liability. The order granting the motion for directed verdict found
no evidence that Highwoods’s active negligence was a legal cause
of the plaintiffs’ injuries, but concluded Highwoods had a non-
delegable duty to the plaintiff regarding the safe operation and
proper maintenance of the elevator in question.

     The case proceeded to a jury trial on phase two for causation
and damages. During the phase two trial, Highwoods and the
plaintiffs reached a secret settlement agreement that Highwoods
characterizes as a “high-low” agreement between $490,000 and
$510,000. 3 Highwoods remained in the trial, but did not appear
on the verdict form. Highwoods’s settlement agreement with the
plaintiffs was not disclosed to the jury and was not disclosed to
Schindler and the trial court until later. While the jury was
deliberating, Schindler and the plaintiffs reached a settlement,
which was disclosed to the court. The jury returned a verdict for
$13,000,000, which was in excess of Schindler’s settlement
amount. The plaintiffs eventually dismissed the action against
both parties.

  Highwoods Granted Summary Judgment on Indemnity

     Highwoods moved for summary judgment against Schindler,
seeking common law and contractual indemnity for its $510,000
payment to the plaintiffs. A new judge entered summary judgment
in favor of Highwoods on both claims. The order found the juries’
determinations that Schindler was negligent and was the legal

    3 Under the terms of the agreement, if the total damages were
less than $490,000, Highwoods would pay $490,000. If the total
damages were between $490,000 and $510,000, Highwoods would
pay the damage amount. If the total damages exceeded $510,000,
Highwoods would pay $510,000.

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cause of the plaintiffs’ injuries coupled with the court’s previous
determination that Highwoods remained vicariously liable to the
plaintiff by operation of its non-delegable duty under section
399.02(5)(b), Florida Statutes, satisfied the requirements for
Highwoods to be indemnified under the clear and unambiguous
indemnity provision of the contract. The order also found no
genuine issue of material fact with regard to common law
indemnity. The order found Highwoods had established it
remained liable to the plaintiff and had remained a party
defendant with exposure based upon its non-delegable duty for
Schindler’s negligence. The order required Schindler to reimburse
Highwoods’s $510,000 payment to the plaintiffs as well as
Highwoods’s attorney’s fees and costs. Schindler unsuccessfully
sought reconsideration of the summary judgment order.

     Highwoods Denied Final Judgment on Indemnity

     Highwoods next moved for entry of a final judgment on
indemnity. A new judge denied the motion for four reasons:
(1) Highwoods’s cross-claim for indemnity was never updated after
the amended complaint and should be deemed abandoned;
(2) Highwoods’s payment to the plaintiffs was made without legal
obligation and was voluntary, which obviated any right to
indemnity from Schindler; (3) Highwoods’s settlement payment to
the plaintiffs was void and could not provide a basis for
indemnification because it was a prohibited Mary Carter
agreement; and (4) even if indemnity was permissible, the
summary judgment order could not stand because Schindler had
no opportunity to argue the voluntary nature of Highwoods’s
settlement, no opportunity to challenge the reasonableness and
necessity of the settlement, and no opportunity to assess the
reasonableness and necessity of Highwoods’s attorney’s fees and
costs. The final order denied the motion for entry of final judgment
on the indemnity claims and vacated the orders on summary
judgment without prejudice to Highwoods’s right to file a separate
indemnity action against Schindler.

     We conclude that the final order on appeal prematurely
decided the issue of voluntariness in point (2), but agree with the
portion of the final order vacating summary judgment for the
reasons discussed in point (4) of the final order. We reverse points

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(1) and (3) of the final order, which means that Highwoods’s cross-
claim for indemnity survives in this action. We remand to allow
Highwoods to pursue a full trial on indemnity in this action.

    The Final Order Erred in Determining Highwoods’s
        Cross-Claim for Indemnity Was Abandoned

     In point (1) of the final order, the trial court determined
Highwoods had abandoned its cross-claim by failing to amend it
after the plaintiffs amended their complaint to inject new issues of
non-delegable duty and negligent response. We disagree and find
that the cross-claim withstood the amendment of the complaint
and should not have been deemed abandoned in this action.
Highwoods was under no obligation to amend its cross-claim in
response to the amended complaint. The cross-claim for indemnity
was not “locked in” by the allegations in the original complaint and
stood over after the complaint was amended.              See Mortg.
Guarantee Ins. Corp. v. Stewart, 427 So. 2d 776, 780 (Fla. 3d DCA
1983) (“[T]he law has always permitted a person to bring an
indemnity claim quite apart from the characterization of his
conduct in the original complaint filed by the injured party.”); Rea
v. Barton Protective Servs., Inc., 660 So. 2d 772, 773 (Fla. 4th DCA
1995) (recognizing the indemnity cross-claim was not bound by the
allegations of the original complaint and its characterization of
conduct).

     Highwoods’s cross-claim asserted claims for common law and
contractual indemnity. The cross-claim also asserted that the
plaintiffs’ damages were solely and proximately caused by
Schindler, that Highwoods was entirely without fault, and that
any liability on Highwoods’s part would be “vicarious, constructive,
derivative, and technical in nature.” This language was also
sufficient to place Schindler on notice of a claim for indemnity
based upon a breach of a non-delegable duty. See Houdaille Indus.,
Inc. v. Edwards, 374 So. 2d 490, 493 (Fla. 1979) (“[Idemnity] shifts
the entire loss from one who, although without active negligence
or fault, has been obligated to pay, because of some vicarious
constructive, derivative, or technical liability, to another who
should bear the costs because it was the latter’s wrongdoing for
which the former is held liable.”); Stewart, 427 So. 2d at 779
(recognizing a defendant, who is not personally liable but has a

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non-delegable duty, may assert a claim for indemnity against an
independent contractor hired to discharge the non-delegable duty).
We reverse the portion of the final order deeming the cross-claim
abandoned in this action. Highwoods’s cross-claim for contractual
and common law indemnity withstood the amended complaint and
remains viable in this action if Highwoods wishes to pursue it on
remand.

    The Final Order Erred in Concluding Highwoods’s
   Settlement was a Prohibited Mary Carter Agreement

     In point (3), the trial court denied indemnification on the
finding Highwoods’s $510,000 payment was a prohibited Mary
Carter agreement that unfairly prejudiced Schindler.         We
disagree.

     A Mary Carter style agreement is one in which a defendant in
a multi-defendant case secretly agrees with the plaintiff to work
together to the detriment of the other defendant. Panama City-
Bay Cty. Airport & Indus. Dist. v. Kellogg Brown & Root Servs.,
Inc., 140 So. 3d 1112, 1116 (Fla. 1st DCA 2014) (citing Dosdourian
v. Carsten, 624 So. 2d 241, 243 (Fla. 1993)). In Frier’s, Inc. v.
Seaboard Coastline Railroad Company, 355 So. 2d 208, 210 (Fla.
1st DCA 1978), this Court recognized the following hallmarks of a
typical Mary Carter agreement:

    (a) secrecy;

    (b) the agreeing defendants remain as party defendants
    in the lawsuit;

    (c) the agreeing defendants’ liability is decreased in direct
    proportion to the nonagreeing defendants’ increase in
    liability;

    (d) the agreeing defendant guarantees the plaintiff a
    certain amount of money if plaintiff does not receive a
    judgment against any of the defendants or if the
    judgment is less than a specified sum.

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    Mary Carter style agreements are not allowed in Florida
because they are antithetical to the trial process, create a charade
of adversity, and prejudice the non-settling defendant.
Dosdourian, 624 So. 2d at 245-46.

     Here, Highwoods’s $510,000 payment was done in secret and
was dependent on the jury’s verdict. However, the payment was
made during the damages phase of the case, well after liability had
already been determined in phase one. Thus, there was no
incentive to decrease Highwoods’s liability or increase Schindler’s
liability because liability had already been determined. The
settlement agreement lacked two key features of a Mary Carter
agreement: Highwoods elected to remain in the case, but was not
required to do so, and Highwoods could not and did not inflict any
harm upon Schindler by remaining in the case. Highwoods had a
legitimate reason to stay in the case based on the previous court
rulings on its non-delegable duty and on summary judgment. The
settlement here does not raise red flags of deceit, collusion, or
fraud that were of concern in Dosdourian. Because the settlement
is not a prohibited Mary Carter agreement, indemnification was
improperly denied for this reason. We reverse the portion of the
final order denying indemnification on the finding that the
settlement was a prohibited Mary Carter agreement.

       The Final Order Erred in Finding Highwoods’s
                 Settlement was Voluntary

     In point (2) of the final order, the trial court held Highwoods
could not seek indemnification from Schindler for its voluntary
$510,000 payment, which was made without any legal obligation
to pay. See Arison v. Cobb Partners, Ltd., 807 So. 2d 101, 106 (Fla.
3d DCA 2012). We reject this conclusion as premature at this
juncture. First, it contradicts the reasoning in point (4) of the final
order in which the trial court found the summary judgment order
was improperly entered where Schindler had no opportunity to
argue the voluntariness of the $510,000 payment. Second, the
previous rulings regarding Highwoods’s non-delegable duty in the
case created enough of an uncertainty to justify Highwoods’s
decision to remain in the case and to protect itself against potential
liability. Camp, Dresser & McKee, Inc. v. Paul N. Howard Co., 853
So. 2d 1073, 1079 (Fla. 5th DCA 2003) (holding a party seeking

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indemnification must establish that the settlement was made
based on its potential liability to the plaintiff, which is required
because the indemnitee cannot be a mere volunteer who settled
without obligation to do so). We reverse point (2) to the extent the
trial court determined the payment was voluntary. The parties
will have the opportunity to re-litigate this issue on remand.

                           Conclusion

     Based on the foregoing, we affirm the portions of the final
order that vacated the summary judgment orders. We reverse the
trial court’s decision to deny the motion for entry of final judgment
of indemnity in this action. Highwoods’s cross-claim remains
viable in this action should Highwoods wish to pursue
indemnification on remand.

KELSEY and M.K. THOMAS, JJ., concur.

                  _____________________________

    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.
               _____________________________

Richard A. Sherman, Sr., and James W. Sherman of Law Offices
of Richard A. Sherman, P.A., Fort Lauderdale; Dennis R. Schutt
and Jeffrey Devonchik of Schutt, Schmidt & Noey, Jacksonville,
for Appellant.

Jay C. Howell of Jay Howell & Associates, Jacksonville; Stuart
Aaron Weinstein, Richard S. Weinstein, and Richard P. Hermann,
II, of Shapiro, Blasi, Wasserman & Hermann, P.A., Boca Raton;
Bradley J. Edwards of Farmer Jaffe Weissing Edwards Fistos &
Lehrman, P.L., Fort Lauderdale; H. Christopher Bartolomucci of
Kirkland & Ellis, Washington, D.C., for Appellees.

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