INSURANCE: COVERAGE: FAILURE TO COOPERATE: THE TRIAL COURT ERRED BY INSTRUCTING THE JURY THAT THE INSURER WAS ENTITLED TO PREVAIL ON THE ISSUE OF COVERAGE, BASED ON THE INSURED’S REPEATED FAILURE TO SUBMIT TO AN EXAMINATION UNDER OATH, IF THE INSURED’S FAILURE TO COMPLY WITH POST LOSS CONDITIONS ACTUALLY PREJUDICED THE INSURER: THE JURY SHOULD HAVE BEEN INSTRUCTED THAT THE INSURED’S FAILURE TO COMPLY MUST BE MATERIAL, AND THE INSURER’S PREJUDICE MUST BE SUBSTANTIAL

Barthelemy v. Safeco Insurance Company of Illinois, ___ So. 3d ___, 43 Fla. L. Weekly D2379 (Fla. 4th DCA October 24, 2018)
 

Other drivers were injured in a motor vehicle accident with the insured.  The insurer refused to defend or indemnify the insured because he failed to comply with three requests to submit to an examination under oath.  After judgments were entered against the insured, he filed an action for declaratory judgment to establish that he was entitled to indemnification up to the policy limits.  The insurer defended based upon the insured’s failure to cooperate with its investigation. The trial court instructed the jury that the insurer was entitled to prevail if it was actually prejudiced by the insured failure to comply with post loss conditions.  The jury returned a verdict for the insurer, and the trial court entered judgment based on the verdict. The Fourth District Court of Appeal reversed because the trial court’s instruction to the jury was incorrect. The insurer was required to establish that it was substantially prejudiced by the insured’s material failure to comply with post loss conditions.  Although this standard was articulated more recently in Bankers Insurance Company v. Macias, 475 So. 2d 1216 (Fla. 1985), the “rule traces its origin to American Fire & Casualty Insurance Company v. Vliet, 4 So. 2d 862, 863 (Fla. 1941) . . . .”  The court rejected the insurer’s contention that the rule was changed by State Farm Mutual Automobile Insurance Company v. Curran, 135 So. 3d 1071 (Fla. 2014).  Curran dealt with the necessity of establishing prejudice rather than the degree of prejudice that must be established.  The Curran court’s sporadic references to actual prejudice were mere dicta, and the court cited to Macias with approval.

DISCOVERY: SANCTIONS: THE TRIAL COURT ERRED BY STRIKING THE DEFENDANT’S PLEADINGS AS A SANCTION WITHOUT PROVIDING THE DEFENDANT WITH THE OPPORTUNITY TO PRESENT REBUTTAL EVIDENCE

Garcia-Mathies Interiors, Inc. v. Pere, ___ So. 3d ___, 43 Fla. L. Weekly D2400 (Fla. 3d DCA October 24, 2018)
 

The plaintiffs became disillusioned when the defendant failed to design and decorate their new home on time and inflated its bills.  The plaintiffs sued for fraud in the inducement, fraud, unjust enrichment, accounting, civil theft, and breach of contract and asked the defendant to produce its accounting spreadsheets in native format.  The plaintiffs filed two motions to compel because of their belief that the spreadsheets had not been produced in native format and that they had been altered. The trial court conducted an evidentiary hearing.  On the first day, the plaintiffs’ accountant testified. On the second day, the defendant completed its cross examination of the plaintiffs’ accountant. On the third day, before the defendant was given the opportunity to “put on its case,” the trial court concluded that the defendant had engaged in nefarious activity and decided to grant the plaintiffs’ motion for sanctions.  When defense counsel asked to put evidence on the record, the trial court replied that he could have “access to the record” but left the courtroom before the defendant made its proffer. The trial court granted the plaintiffs’ motion for sanctions, struck the defendant’s pleadings, and entered default judgment against the defendant. The Third District Court of Appeal reversed based on the trial court’s violation of the defendant’s right to procedural due process of law.  “A party must be afforded an opportunity to be heard before a trial court strikes the party’s pleadings as a sanction for a discovery violation. ‘This opportunity to be heard must include the opportunity to present evidence of extenuating and/or mitigating circumstances, which might explain the failure to comply with the court’s discovery order or the opposing party’s discovery request.’” The right to be heard does not necessarily encompass an evidentiary hearing. But, although “the trial court has discretion in how it gives the sanctioned party an opportunity to be heard, the opportunity must be given, Here, the trial court chose to have an evidentiary hearing,” but it deprived the defendant of the opportunity to present explanatory or mitigating evidence.

PIP: CLASS ACTIONS: THE TRIAL COURT ERRED BY CERTIFYING A CLASS ACTION BY MEDICARE ADVANTAGE ORGANIZATIONS (MAOs) AGAINST A PIP INSURER THAT FAILED TO REIMBURSE THE MAOs FOR MEDICAL EXPENSES THE INSURER HAD THE PRIMARY OBLIGATION TO PAY BECAUSE INDIVIDUAL ISSUES PREDOMINATED OVER COMMON ISSUES

IDS Property Casualty Insurance Company v. MSPA Claims 1, LLC, ___ So. 3d ___, 43 Fla. L. Weekly D2403 (Fla. 3d DCA October 24, 2018)
 

The trial court certified a class action by the assignee of a defunct Medicare Advantage Organization (MAO) against a PIP insurer that failed to reimburse the MAO for medical expenses the insurer had the primary obligation to pay.  The Third District Court of Appeal reversed because individual issues predominated over common issues. “Plainly, this is one of those cases where merely proving entitlement to reimbursement from [the insurer] for payments made by [the MAO] on behalf of [the enrollee] in no way proves the cases of the other class members.”  “[P]ayment under Florida no-fault law proceeds on a factually intensive bill-by-bill and case-by-case basis.” And the assignee lacked standing because the plaintiff’s amended complaint was filed after the assignment was approved. “[S]tanding must exist at the inception of the case.”

NEW TRIAL: THE DEFENDANT IN A NEGLIGENCE CASE WAS NOT ENTITLED TO A NEW TRIAL BECAUSE THE PLAINTIFF ELICITED THAT THE DEFENSE EXPERT WAS PAID $2 MILLION PER YEAR FROM DEFENDANTS OR BECAUSE THE DEFENDANT MADE AN UNEXPECTED AND UNSOLICITED STATEMENT IN FRONT OF THE JURY ABOUT HER INSURANCE

Priest v. Velisek, ___ So. 3d ___, 43 Fla. L. Weekly D2409 (Fla. 5th DCA October 26, 2018)
 

The appellate court in a negligence case reversed an order granting the defendant’s motion for new trial.  (1) The trial court ruled, based on Fla. R. Civ. P. 1.280, that it erred by allowing the plaintiff to elicit that the defense expert was paid $2 million per year from defendants.  Rule 1.280 applies to discovery, rather than the admissibility of evidence, and did not support the trial court’s ruling. (2) “[The defendant’s] own unexpected and unsolicited statement in front of the jury regarding her insurance did not justify a new trial.  “[A]ny error was expressly waived by [defense] counsel.”

RULES CHANGES: FLORIDA RULES OF JUDICIAL ADMINISTRATION: FLORIDA RULES OF CIVIL PROCEDURE; FLORIDA RULES OF APPELLATE PROCEDURE

On January 1, 2019, changes will go into effect to the Florida Rules of Judicial Administration, the Florida Rules of Civil Procedure, and the Florida Rules of Appellate Procedure.  For the purpose of calculating the time to respond, service by email will be treated the same as hand delivery: a party will no longer receive an extra five days to respond to documents that have been served by email.  The added five days will be limited to service by traditional mail. Many appellate deadlines have been increased by five days as a result of this change. The Uniform Citation System in the appellate rules has been modified.  Many other changes have been made to the appellate rules.

ADDITIONAL CASE SUMMARIES ARE AVAILABLE AT

www.jskpa.com/kashilawletter/