Florida Supreme Court Closes Loophole in Condominium Act

This week, the Florida Supreme Court issued an opinion in the case of North Carillon, LLC vs. CRC 603, LLC, et al.  (Case No. SC12-75).  The case involved interpretation a provision of the Florida’s Condominium Act (Chapter 718, Florida Statutes).    The specific provision at issue, section 718.202, Florida Statutes (2006), establishes two types of escrow deposits, and imposes escrow requirements upon the developer.  The ultimate question for the court was whether developers are permitted to maintain the two different types of escrow deposits in a single escrow account.

The court’s interpretation of this seemingly innocuous statutory provision promised significant legal and business ramifications—so much so that it elicited an amicus curiae appearance by the Real Property, Probate, and Trust Law Section of the Florida Bar.  The reason:  if a developer fails to comply with the statutory escrow requirements set forth in section 718.202, a buyer can unilaterally void the contract and receive a refund of all monies paid, plus interest.  Moreover, the developer can be held liable for criminal penalties for willfully failing to comply with the escrow requirements.

The Third District Court of Appeal had previously found in favor of the condominium buyers, holding that a retroactive 2010 amendment to section 718.202, which purported to authorize a single account for both categories of escrow deposits, was invalid because it substantive changed the 2006 version of the statute, and thus, unconstitutionally impaired vested contractual rights.  CRC 603, LLC v. North Carillon, LLC, 77 So. 3d 655 (Fla. 3d DCA 2011).  The Florida Supreme Court disagreed with the Third District’s invalidation of the 2010 amendment because, in its view, the law had not substantively changed.

Accepting that the 2006 version of section 718.202 at issue below was susceptible to multiple constructions, the court first resorted to statutory history for guidance.  Finding none, the court applied the statutory rule of “lenity,” established in section 775.021, Florida Statutes, which provides that statutes defining criminal offenses and susceptible to differing constructions should be construed most favorably to the accused.  Because section 718.202 provides that a developer’s willful failure to comply with the escrow requirements is “a felony of the third degree,” the rule of lenity was applied, and the statutory construction was resolved in favor of the developer.  The court rejected the argument that lenity only applies in criminal cases, and effectively ratified the 2010 amendment to section 718.202, allowing escrow deposits required under section 712.202(1) and (2), Florida Statutes, to be maintained in a single escrow account.  This ruling successfully and definitively closes a loophole in the Condominium Act that allowed buyers to bail out of a condominium purchase and receive a return of all escrow monies solely on a discrete technicality.

What Does an Appellate Lawyer Do?

Most people understand the primary function of an appellate attorney:  to research and write appellate briefs and present oral arguments to the appellate panel.  However, many people, including lawyers, are not aware of the many other ways an appellate attorney can “add value” to a litigation team.  An appellate attorney can be an invaluable trial team member from the outset of a case.  An experienced appellate practitioner often has significant litigation experience at the trial level, and is well equipped to assist in sophisticated legal analysis, strategy, and issue identification.  Appellate attorneys are also proficient writers and can assist in drafting bench briefs for the trial court.  

Because trials can be hectic and unpredictible, trial lawyers are primarily focused on presenting their case themes for the judge or jury.  In a complex trial, it is advisable to have an dedicated appellate practitioner on the trial team observing the proceedings objectively, and ensuring that all potential points of error have been properly preserved in the event an appeal is taken.  Additionally, having an appellate attorney involved from the commencement of the trial can signficantly reduce the costs of preparing an appeal. 

If you need assistance in any of the following areas, please contact jennifer.dixon@lowndes-law.com or (407) 843-4600:

  • Commercial litigation appeals
  • Family law appeals
  • Eminent domain/condemnation appeals
  • Administrative appeals
  • Original proceedings
  • Amicus briefs
  • Trial support
  • Appellate mediation

 

Delayed Discovery Doctrine Held Not to Apply to Negligence Actions Involving Child Sexual Abuse

BrainIn an opinion filed on September 4, 2013, the Third District Court of Appeal held that the delayed discovery doctrine does not apply to extend the statute of limitations in a negligence action arising out of allegations of child sexual abuse.  The delayed discovery doctrine generally provides that a cause of action does not accrue until the plaintiff either knows or reasonably should know of the tortious act giving rise to the cause of action.  The date a cause of action accrues is important because it is from the date of accrual that the statute of limitations is calculated.

The delayed discovery doctrine was first applied in a childhood sexual abuse case by the Florida Supreme Court in Hearndon v. Graham, 767 So. 2d 1179 (Fla. 2000), which held that the delayed discovery doctrine applied to the accrual of an intentional tort action brought by a sexual abuse victim against the perpetrator.  The victim had alleged traumatic amnesia made her unable to recall the events for more than a decade.  In Hearndon, the Florida Supreme Court acknowledged that, in 1992, the Florida legislature had effectively adopted the delayed discovery doctrine with respect to intentional tort actions concerning child sexual abuse.  However, the Heardon case pre-dated the enactment of that legislation.  In adopting the delayed discovery doctrine in that case, the court effectively found a way to apply the new legislation to the older case.

Fast forward 13 years to the case of Cisko v. Diocese of Steubenville, Case No. 09-35639, 38 Fla. L. Weekly D1902a (September 4, 2013), in which Appellants/Plaintiffs had sued the Diocese for negligence relating to physical and sexual abuse alleged to have been suffered between 1966 and 1967 at the hands of two priest under the Diocese’s supervision.  The Plaintiffs claimed traumatic amnesia had rendered them unable to recall the events of abuse until May 2005.  The Diocese prevailed at summary judgment based upon the expiration of the four-year statute of limitations on negligence actions.  Citing Hearndon v. Graham, Appellants contended that the delayed discovery doctrine deferred the accrual of the cause of action.  The Third District found, however, that the Hearndon holding is limited, not only to cases of traumatic amnesia, but to intentional tort causes of action.

While the Third District’s holding is consistent with the current § 95.11(7), Florida Statutes, which extends the statute of limitations for intentional tort cases based on abuse, and cases which have refused to expand the statute’s application to negligence cases, it does raise an interesting policy consideration.  If the State of Florida is committed to redressing child sexual abuse regardless of when it may be discovered, should it matter whether the defendant is the perpetrator or someone who enabled the perpetrator, or what the specific cause of action against the defendant may be?

NJ Appeals Court Says Non-Driving Texters Can Be Liable for Accidents

15862_wpm_lowresIn a brow-raising opinon issued by the Superior Court of New Jersey Appellate Division this week, the court determined that a non-driving sender of text messages can potentially be liable for damages if an accident is caused by a distracted text recipient.  See Kubert v. Best, No. A-1128-12T4, (N.J. Super. Ct. App. Div., August 27, 2013).  In the case, the plaintiffs were injured when a texting teen crossed the median and collided with the plaintiffs’ motorcycle.  The trial court dismissed a claim against the person with whom the teen was texting, a 17 year-old “remote texter,” reasoning that that the remote sender did not have legal duty to avoid sending a text message to a person who is driving.  The appellate court disagreed with the trial court and concluded, under a common law negligence theory, that “a person sending text messages has a duty not to text someone who is driving if the texter knows, or has special reason to know, the recipient will view the text while driving.”  

The appeals court acknowledged that “one should not be held liable for sending a wireless transmission simply because some recipient might use his cell phone unlawfully and become distracted while driving. Whether by text, email, Twitter, or other means, the mere sending of a wireless transmission that unidentified drivers may receive and view is not enough to impose liability.”  Further, the court said, “We also conclude that liability is not established by showing only that the sender directed the message to a specific identified recipient, even if the sender knew the recipient was then driving.”  Rather, the court said, “Additional proofs are necessary to establish the sender’s liability, namely, that the sender also knew or had special reason to know that the driver would read the message while driving and would thus be distracted from attending to the road and the operation of the vehicle.” 

Interestingly, New Jersey’s texting ban makes it unlawful to read or send a text message while driving, so in order to impose liability, the sender would have to know or have reason to know that the recipient is not only driving, but that the driver will break the law and read the message while driving and become distracted.  To that end, the court acknowledged, “The sender should be able to assume that the recipient will read a text message only when it is safe and legal to do so, that is, when not operating a vehicle. However, if the sender knows that the recipient is both driving and will read the text immediately, then the sender has taken a foreseeable risk in sending a text at that time.”

The result reached in this case illustrates the difficulty in applying its holding.  Despite finding that a remote texter may potentially be liable, the court found that, in this case, the plaintiffs did not present sufficient evidence of the remote texter’s knowledge.  Because the remote sender had only sent one text while the recipeint was driving, and the contents of the messages were not entered into evidence, there was no proof that the sender knew her message was distracting the recipient from driving. 

In practice, this holding is certain to present interesting proof challenges for plaintiffs in the state with respect to whether someone “has special reason to know” that a driver will be prone to distraction.  The ultimate takeaway from this case is that, if you are texting a person in New Jersey that you know or learn is driving, and that person immediately responds, stop the communication immediately.  Good practice regardless of potential liability.

The full text of the opinion can be found here.

SCOTUS’s DOMA Decision Illustrates Complexities of Appellate Practice

Image This post was contributed by Hallie Fisher, a third-year law student Duke University School of Law and Summer Associate at LDDK&R.

Last month the Supreme Court issued what can only be deemed a landmark ruling, United States v. Windsor, No. 12-307, 2003 WL 3196928 (U.S., June 26, 2013), which held that Section 3 of the Defense of Marriage Act, commonly referred to as “DOMA,” was unconstitutional.  DOMA was enacted in 1996 to ensure, among other things, that states which restricted marriage to opposite-sex couples would not be required to recognize same-sex marriages lawfully performed in other states.  While much of DOMA remains in effect, the Windsor case resulted in the striking of DOMA’s Section 3, which purported to define marriage only as the union between one man and one woman, and prohibited the federal government from recognizing same-sex marriage for purposes of federal law, as unconstitutional.

The definition of marriage adopted by Section 3 was significant because the federal government confers thousands of benefits upon married couples, including: special treatment under the Tax Code, employment and pension benefits, and even support relating to medical privacy and hospital visitation, to name a few.  DOMA effectively denied lawfully-married same-sex couples these benefits.

As with many pivotal cases on civil and social issues (i.e., Roe v. Wade, Loving v. Virginia, and their progeny), what many articles gloss over is just how these cases get before the U.S. Supreme Court.  The Windsor decision started with one person: Edie Windsor, a widow who had legally married her wife, Thea Spyer, in Canada in 2007. Windsor’s and Spyer’s marriage had been recognized as valid under the principle of comity by the state of New York, where the couple was domiciled.  After Spyer passed away in 2009, Windsor was required to pay over $300,000 in estate tax on her late wife’s estate. A widow from an opposite-sex marriage would not have been required to pay this estate tax because under federal law “any interest in property which passes or has passed from the decedent to his surviving spouse” is excluded from taxation.   26 U.S.C. § 2056(a).

Windsor filed suit against the United States in the U.S. District Court for the Southern District of New York. Windsor prevailed on the merits in the District Court, and the IRS was ordered to refund the tax paid with interest. The decision was appealed to the Second Circuit United States Court of Appeals, which affirmed the District Court’s ruling, holding that Section 3 of DOMA violated the equal protection rights granted by the Fifth Amendment.  Before the appeal was heard by the Second Circuit, the Solicitor General of the United States petitioned the Supreme Court for certiorari, which was ultimately granted, and both parties delivered oral arguments in late March of 2013.

The progression of the Windsor case depicts many of the standard aspects of appellate procedure.  However, one unique aspect of the Windsor case is that the federal government did not defend DOMA’s constitutionality. Generally the Department of Justice is tasked with representing the federal government in matters relating to statutes enacted by Congress, such as DOMA.  Here, though, the Department of Justice, at the insistence of President Obama, refused to defend the Act’s constitutionality.  At the same time, the Internal Revenue Service, an executive agency, was enforcing the provisions of DOMA.  As a result of the government’s refusal to defend DOMA, the Bipartisan Legal Advisory Group (BLAG), subsidized by fundraising efforts of the Republicans of the House of Representatives adopted the defense of DOMA, hired counsel to defend DOMA’s constitutionality, and was granted leave to intervene in the case.

BLAG’s defense of DOMA highlights one of the more challenging aspects of appellate practice.  In cases argued before the Supreme Court, and in appeals at all levels, there are often complex or technical legal questions at issue that may ultimately influence whether the case is affirmed or reversed. For instance, although the main issue in Windsor was DOMA’s constitutionality, another significant issue was whether BLAG even had standing to file an appeal.   It is often the job of appellate counsel to help their clients understand that appeals are not always centered around the main issue at trial, and there can be complex issues raised in an appellate proceeding that may subvert a jury verdict or judge’s ruling even though common sense may dictate another result.

Having an attorney who will be able to understand and argue the facts and complexities of a case competently may not be the only concern, though. During the appellate stages of high stakes cases, especially those involving constitutional and social issues, it is common to have interest groups weighing in on both sides of the issue. In Windsor, literally hundreds of amicus briefs were filed on both sides of the issue, with companies like Google, Starbucks, and Aetna supporting Windsor’s case, and many religious organizations supporting BLAG and the constitutionality of DOMA.  In such high stakes cases, it is important to have appellate counsel who will be able to reconcile the client’s individual needs with the public policy considerations of the outcome of the case.  One should never lose sight of the fact that bringing a case before the Supreme Court, which has the potential to change laws that affect individuals throughout the nation, primarily affects the individual parties to the case.

While Windsor was celebrated as a victory, the victory is small in that the decision left open many important issues, such as adoption rights for gay couples, employer treatment of gay couples under federal laws like ERISA, and even protections in the criminal arena. If individuals are affected by the questions Windsor left open, it is important they contact competent counsel positioned to take on such issues. This is especially important since such cases will not only affect the individual petitioners, but could have important precedential value for others who are similarly situated.

The High Cost of Inexperience

This week, the Fifth District Court of Appeal issued an order imposing sanctions against an Orlando law firm for what the court determined were “negligent violations of rules of procedure” with respect to the law firm’s prosecution of an appeal.  Hagood v. Wells Fargo N.A., Case No. 5D12-2015 (Fla. 5th DCA June 28, 2013).  According to the Court, the attorneys demonstrated  “a lack of understanding of substantive law and rules of procedure” and “multiple acts of professional negligence that began in the trial court and continued through the oral argument.”  

The negligent acts included the filing of a frivolous “initial brief [that] was based entirely on a false assertion of fact,” and appeared to have stemmed from the fact that an inexperienced “part-time” lawyer for the firm was tasked with drafting the appellate brief despite having no access to the record.  Relying only upon the trial attorney’s notes to draft the initial brief, and without even reviewing the underlying motions, the brief was drafted and filed without revision by the supervising attorney.  The court admonished that “each attorney of record is responsible for the content of the entire document when his or her name appears on the document.”  

Ultimately, the sanction assessed was a $1,000.00 fine, but the costs to the appellant and attorneys’ reputations can’t be measured.   Professional negligence aside, this case demonstrates the reality of trial practice and the challenges that many trial lawyers face when they endeavor to handle their own appeals, rather than outsourcing to an experienced appellate attorney.  Because of the often frenetic pace of trail practice, trial lawyers may not have the time, man power, or inclination to focus on the complexities of appellate practice.  In lieu of delegating the task to an inexperienced junior lawyer with the goal of keeping the work “in house,” trial attorneys should reflect on the Hargood order, and give due consideration to consulting an experienced appellate practitioner.

Florida Supreme Court Delimits Economic Loss Rule

In a surprising opinion issued today, the Florida Supreme Court has held that the economic loss rule, which for decades has barred tort claims for damages arising out of a contractual relationship, applies only in the products liability context.  Justice Canady’s dissent called this decision a “dramatic unsettling of Florida law.”  However, business litigation practitioners who have struggled with the application of this doctrine when attempting to assert or defend breach of fiduciary and negligence claims against a party in contractual privity will likely welcome the Court’s rescission from the long line of cases that made the doctrine almost as easy to evade as to apply and the certainty that this decision brings.  The Court’s opinion can be viewed at: http://www.floridasupremecourt.org/decisions/2013/sc10-1022.pdf.

Preservation of Error: Prejudicial or Argumenative Closing Arguments

ImageThe Second District Court of Appeal, last week, issued an opinion that reversed a trial court’s order granting new trial, Carnival Corporation v. Jimenez, 38 Fla. L. Weekly D455a, Case No. 2D11-5482 (2d DCA February 27, 2013).  The order was predicated on the trial judge’s finding that “comments made [by defense] counsel during closing arguments are perceived to have been prejudicial and highly inflammatory in nature because of their cumulative effect and their accusatory undertones.”  Id.

Jimenez was a personal injury case in which a large part of the defense strategy was to discredit the plaintiff’s expert/treating physician, because he had treated the plaintiff under a letter of protection.  According to the order on appeal, defense counsel “argued in closing . . . that plaintiff’s counsel . . . had collaborated or conspired with [the doctor] to conjure a non-injury into this lawsuit.”  While the trial court recognized that it had allowed evidence of the letter of protection, the introduction of such evidence “is to enable defense counsel to suggest that the doctor may have a financial bias, or stake in the outcome of the case.  Not for the impermissible purpose of allowing Defendant’s attorney to suggest a ‘neighborly’ conspiracy between the doctor and Plaintiff’s attorney.”  In sum, the trial court determined that the defense went so far in putting forth the conspiracy theory that the jury could not fairly assess the issues of causation and damages.

While the general rule is that improper comments made during closing argument may provide a basis for granting a new trial (see Mercury Ins. Co. of Fla. v. Moreta, 957 So. 2d 1242, 1250 (Fla. 2d DCA 2007)), the issue must be properly preserved by contemporaneous objection and a motion for mistrial.  Engle v. Liggett Grp., Inc., 945 So. 2d 1246, 1271 (Fla. 2006).  If the error has not been properly preserved, a new trial is only warranted when the improper behavior amounts to fundamental error.  Companioni v. City of Tampa, 51 So. 3d 452, 456 (Fla. 2010).

The Jimenez court, noted that the plaintiff’s counsel only made two objections relative to the defense counsel’s references to the letter of protection.  Both were sustained, but there was no motion for mistrial.  The court, relying upon the 4-part test articulated in Murphy v. International Robotic Systems, Inc., 766 So. 2d 1010, 1027-31 (Fla. 2000) determined that while the plaintiff established the first prong of Murphy–that the challenged conduct was improper–she did not establish the remaining three prongs:  that the challenged conduct was harmful, that the challenged conduct was incurable, and that public interest in our system of justice requires a new trial.

Because the application of the Murphy factors did not show that the challenged conduct was so highly prejudicial that it denied the plaintiff her right to a fair trial, the order granting new trial was reversed, and the final judgment was ordered to be reinstated.

Practice tip:  when objecting to prejudicial or argumentative closing arguments: 1) object contemporaneously, 2) request a curative instruction (if appropriate), and 3) move for a mistrial, or be bound by the heightened standard for new trials articulated in Murphy.

Fifth District Changes Procedure for Obtaining Extension of Time

CalendarBeginning March 1, 2013, a party seeking an extension of time to file an intial, answer, or reply brief and who has obtained the agreement of opposing counsel may file a “notice of extension of time” in lieu of a motion requesting an extension. Such a notice will be accepted for up to 90 days for an intial or answer brief and 60 days for a reply brief. Only the party seeking the extension need sign the notice, and no order will issue upon the Court’s receipt. Any extension beyond 90 days for initial or answer briefs or 60 days for reply briefs must be by motion.  For additional details, including the approved form of the notice, see the Court’s administrative order at http://5dca.org/Clerk/Administrative%20Orders/AO5D13-02_RE_Agree_Ext_of_Time_for_Filing_Briefs.pdf

Starbucks’ Tip Pooling Practices Found to Violate Massachusetts Law

ImageWhile this blog is largely devoted to Florida appellate cases, as an unabashed coffee junkie, I found the recent decision of the First District Court of Appeal to be particularly compelling, and ripe for mention in this blog.  On November 9, 2012, the United States First Circuit Court of Appeals affirmed the Massachusetts district court’s summary judgment granting the plaintiffs, comprised of a number of former Starbucks baristas, class status and found that Starbucks’ policy of pooling and sharing tips among shift supervisors and baristas violated Massachusetts’ Tips Act, Mass Gen. Laws ch. 149, s. 152A.  After discovery was conducted on damages, the district court entered judgment in favor of the plaintiff class in the aggregate amount of $14.1 million.

At the crux of the appeal was whether Starbucks’ shift supervisors are “wait staff employees” under the Act since the Act states that wait staff employees are not required to share tips with anyone who is not a wait staff employee.  The Tips Act defines “wait staff employee” as persons who serve beverages or prepared food to patrons, or who clear patrons’ tables, and who work in a place where prepared food or beverages are served.  The definition also contains the requirement that the employee have “no managerial responsibility.”

The plaintiffs contended that the baristas were wait staff employees, but that shift supervisors were not, and therefore, shift supervisors should not have shared in tips with the baristas. Because the first two prongs of the statutory definition unquestionably applied to both classes of employees, the question for the court became whether the shift supervisors had “managerial responsibility,” as contemplated by the Tips Act.

Starbucks contended that the shift supervisors, who report to store managers and assistant managers, had supervisory duties over the baristas, but no managerial responsibility.  The plaintiffs asserted that the job descriptions of shirt supervisors included managerial tasks, and that, under the Tips Act, any level of managerial responsibility, no matter how slight, was sufficient to exclude the shift supervisors from the definition of “wait staff employee.”  It didn’t help Starbucks that, in 2004, upon the adoption of the current version of the Tips Act, the Massachusetts Attorney General issued an advisory opinion conspicuously stating that “shift supervisors . . . do not qualify as wait staff employees.”  Advisory 2004/3, An Advisory from the Attorney General’s Fair Labor and Business Practices Division on an Act Protecting the Wages and Tips of Certain Employees.

Starbucks endeavored to raise numerous creative arguments, which the First Circuit rejected “out of hand.” Ultimately, the First Circuit agreed with the plaintiffs’ construction, and affirmed the district court’s judgment against Starbucks.

While Starbucks is the loser of this fight to the tune of $14 million, at the end of the day, the ultimate losers will likely be the very same hourly service employees who brought this suit in the first place.  This case is likely to signal the demise of the “community tip jar,” which customers undoubtedly understand will be shared by those behind the counter regardless of their level of supervisory responsibility.  Whether the Tips Act intentionally or unintentionally impacts the community tip scheme, because of this suit, a significant income supplement for these hourly workers will likely dry up as lawyers for establishments throughout Massachusetts (including Dunkin’ Donuts, which outnumbers Starbucks 10 to 1 in Massachusetts) advise their clients that the risk of the community tip jar is not worth the reward.  Certainly, the workers behind the counter serving their coffee would disagree.