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Monthly Archives: July 2013

17JUL 2013

Florida law provides a conduit to obtain prevailing party fees where there is no other statutory or contractual basis to seek them.  This tool is generally referred to and recognized as an “Offer of Judgment” and/or “Proposal for Settlement”, as codified in Florida Statute §768.79 and Florida Rule of Civil Procedure 1.442(c)(3).  Both Plaintiffs and Defendants utilize these provisions to secure fee awards, the result of which can often exceed the underlying value of the case.

Given the implications in obtaining a fee award, Florida Courts have required extreme strict adherence to the black letter of §768.79 and Rule 1.442(c)(3).  Recently, on April 17, 2013, the Second District Court of Appeal followed the long standing premise that every “t” must be  crossed when seeking to enforce fee awards. Specifically, in Cobb v. Durando[1], the appellate Court overturned the lower court’s order granting prevailing party fees to two plaintiffs that failed to apportion their respective offers of judgment as required by Rule 1.442; the rule requires that a demand made by multiple parties serving a joint proposal “….shall state the amount and terms attributable to each party.” [2] A discussion of the case and the Court’s rationale is as follows:

Plaintiffs, a husband and wife, brought suit against their roofing contractor for breach of contract relating to work performed on a home they owned as tenants by the entirety.  During the course of the lawsuit, Plaintiffs jointly and timely served an offer of judgment on the contractor, and the contractor timely rejected same.  Upon prevailing on their underlying claim, Plaintiffs sought fees pursuant to their offer of judgment, and the trial court entered an order granting the requested relief.

The contractor appealed on the basis that the dual Plaintiffs, husband and wife, failed to apportion the offer of judgment in violation of the requirements codified in Rule 1.442(c)(3).  Plaintiffs defended the appeal in claiming that their mutual claim arose of out their ownership of their home that they held as tenants by the entirety, and hence, the offer was not required to be apportioned.

The Second District Court of Appeals agreed with the contractor and reversed the award.  The Court’s reasoning in reversing the order was two-fold: First, the Court disagreed that Plaintiffs’ claim directly arose out of the ownership of their home.  Conversely, the claim was for breach of contract, and accordingly, the fact that they owned the home as tenants by the entirety was not a relevant consideration.  Second, even if the claim did directly arise out of the ownership of the home, the Court applied strict construction to the interpretation of Rule 1.442: “…the rule requiring apportionment of proposals for settlement made by multiple plaintiffs does not recognize an exception for joint proposals made by tenants by the entireties.”[3]

The above decision represents a long standing trend of strict adherence to the fine letter of the law governing offers of judgments and/or proposals for settlement.  When defending an award, it is important to dissect every aspect of the offer that was served to determine whether any oversight can give rise to striking the claim.  On the other hand, perhaps the more important lesson is to ensure stringent compliance with the rules when situated as the party seeking to enforce the award.  In sum, although successfully opposing a fee award may be a victory, having your own award overturned can be costly.

[1] Cobb v. Durando, 111 So.2d 277 (Fla. 2nd DCA 2013)

[2] See Rule 1.442(c)(3), Fla.R.Civ.P: “(3) A proposal may be made by or to any party or parties and by or to any combination of parties properly identified in the proposal. A joint proposal shall state the amount and terms attributable to each party.”

[3] See Cobb, Id. at 278; citing Feldkamp v. Long Bay Partners, LLC., No.2:09-cv-253-FtM-29SPC, 2012 WL 3941773, at *2 (M.D.Fla. Sept. 10, 2012(affirming that a husband and wife should not necessarily be considered a single party when interpreting the rules governing offers of judgment).

07JUL 2013

As we have previously written about here, the Florida Supreme Court has recently narrowed the scope of the economic loss rule in Tiara Condo. Ass’n, Inc. v. Marsh & McLennan Companies, Inc., 110 So. 3d 399, 407 (Fla. 2013).    In summary, the Court receded from prior rulings to the extent that they have applied the economic loss rule to cases other than products liability.  Note, however, that the Supreme Court did not recede from the reasoning in the seminal case of Casa Clara Condominium Association v. Charlie Toppino And Sons, Inc., 620 So.2d 1244 (Fla. 1993), where the Court made a determination a constructed home is a single product, as opposed to a group of disparate components.  It remains to be seen how courts apply the economic loss rule post-Tiara in construction defect actions.

After the ruling in Tiara, there was a concern that the door is now open to negligence or other tort claims in construction defect actions.  This concern was highlighted by the dissenting opinion in Tiara wherein Chief Justice Polston stated, “the majority greatly expands the use of tort law at a cost to Florida’s contract law. Now, there are tort claims and remedies available to contracting parties in addition to the contractual remedies which, because of the economic loss rule, were previously the only remedies available.”

However, another interpretation of the ruling in Tiara was expressed in the concurring opinion of Justice Pariente who noted that independent of the economic loss rule, “[b]asic common law principles … restrict the remedies available to parties who have specifically negotiated for those remedies,” and Tiara “does nothing to alter these common law concepts.”  The dismissal of a tort claim remains appropriate under basic contractual principles, which prohibit a party to a contract from seeking to obtain a better bargain by turning an alleged breach of contract into a tort “when the parties have negotiated remedies for nonperformance pursuant to a contract.”  Id.  (quoting 891 So. 2d at 542).  To bring a valid tort claim to recover for economic losses, a plaintiff must still demonstrate that all of the required elements for the cause of action are satisfied, including that the tort is independent of any breach of contract claim.  For instance, under Florida law, a claim of intentional interference with a business relationship is not independent from an alleged breach of contract. Rosa v. Fla. Coast Bank, 484 So. 2d 57, 58 (Fla. Dist. Ct. App. 1986).

The Southern District of Florida recently analyzed whether a plaintiff can proceed with fraud claims based on a contractual relationship between two parties after the ruling in Tiara. In Altenel, Inc. v. Millennium Partners, L.L.C., 2013 WL 2363233 (S.D. Fla. 2013), the court ruled that two theories supported dismissal of the fraud claims. It stated “[f]irst and most obvious is that allowing Plaintiffs to proceed with fraud claims contradicted by a subsequent agreement is to invite contracting parties to make agreements … and then avoid them simply by taking the stand and swearing that they relied on some other statement.”  (quotation omitted).  The court also recognized that “the existence of contrary [contractual] provisions makes reliance on the fraudulent misrepresentations unreasonable as a matter of law.”

 Thus, despite the initial concern over the ruling in Tiara, courts may be leaning towards Justice Pariente’s concurring opinion and allowing the economic loss rule to serve as a valid defense against tort claims between contracting parties when they are duplicative of contractual remedies including the Economic Loss Rule.  These rulings also emphasize the importance of clearly limiting the parties’ remedies in a dispute or claim to those remedies set forth initially in the contract. Given the significance of the ruling in Tiara, it will be a very interesting line of case law to follow to determine its true impact on construction litigation.