In a decision which could find its way to the U.S. Supreme Court, the Second District held that, as an exception to an exception to a general rule (yes, you read that correctly), disputes over insurance policies involving parties in differing countries (like Lloyd's of London policies) can be arbitrated. This solves a "problem" many insurance and arbitration scholars may not have realized even existed...

Judge Padovano leads the way through the international thicket in Lloyds Underwriters and Osprey Underwriting Agency, Ltd. v. Rebecca Netterstrom, The M/V or T/B Jefferson and Mar-K Towing, Inc. (Barfield and Webster concurred).

In this case, an employee died in a marine accident and his wife sued the employer (Mar-K) who filed an insurance claim which was denied. Mar-K ultimately filed suit and the insurance company filed a Motion to Compel Arbitration. The trial court denied arbitration, finding ambiguity in the contract language and that state law prohibits the arbitration of insurance claims.

The appellate court held that, if an ambiguity existed, it was a matter of conflicting clauses which the court could interpret if they could be reconciled. Here, clause #1 was the arbitration clause and clause #2 was the "service of suit clause." That latter allowed Lloyds to be sued in the U.S. (presumably in order to enforce arbitration). Of note, as addressed elsewhere, suing Lloyds of London can be a trick name-game. In this case, the 2nd DCA reconciled the two by finding that the two clauses were in harmony assuming that Lloyds would be sued to pay an adverse arbitration award. Hence, no ambiguity.

Next, comes the interesting part. The FAA favors arbitration. The Act generally takes precedence over state laws on arbitration, including states which prohibit (like Alabama) or limit (like Florida, sometimes...!) arbitration. So that's the general rule.

But there is an exception. A state law regulating insurance can preempt federal law according to the McCarran-Ferguson Act, 15 USC 1012. This is known by the catchy-law school phrase, "reverse preemption." Thus, the Second DCA concluded, if the insurance contract was between a Florida resident and an insurance company in the US, the M-F Act would apply as an exception and state law would bar arbitration.

But there is an exception to the exception. The New York Convention on the Recognition of and Enforcement of Foreign Arbitral Awards, which is incorporated into the FAA, holds that this does not apply to international agreements. Relying upon federal precedent out of Georgia, the Panel held that the M-F Act applies only to arbitration agreements within the U.S. and that it has no effect on international arbitration agreements.

The Second District tackled an interesting issue recently when a settlement release was intended to be narrowly drawn but, due to mutual mistake, it actually released all parties. The plaintiffs sought to reform the release but summary judgment was denied. The appellate court affirmed. The court provided some interesting insight on reforming contracts when there is both pre-printed "boilerplate" sections as well as customized sections.

The release at issue involved parties to an auto accident and it released not only the named parties but "all other persons, firms, and corporations.." Later, the plaintiff tried to sue third parties, who claimed that they had been released. The plaintiff then tried to reform the contract under a theory of mutual mistake.

The Panel in Enterprise Leasing Company v. John and Judy Demartino et al. (Villanti, Silberman, and Dakan) held that the plaintiff provided record evidence of their mistake but had not proven that the released parties acknowledged the mutual mistake -- hence the reversal of the summary judgment on reformation.

More interestingly, the Panel noted that Florida law did not rule on contract interpretation as a matter of law when the contract included boilerplate and custom language. Instead, when a release has both written and pre-printed provisions concerning who is to be released, that question is one of fact, not law. Relying on prior case law, boilerplate language did not necessarily reflect the intent of the parties. When there are "two types of release language -- some written and some pre-printed -- within a single form, a latent ambiguity exists..."

The First District came down hard on a plaintiff and her trial and appellate lawyers, setting forth the grounds why sanctions against the party and lawyers was warranted.

In Melissa Long v. AvMed, Inc., the First DCA (Hawkes, Lewis and Thomas) found that the plaintiff rushed filing a claim in hopes that they could collect attorney's fees under their statutory claim. The court went on the claim that the plaintiff concealed facts and that the trial and appellate counsel knew or should have known that the claim was invalid (the Panel specifically singled out appellate counsel for sanctionable conduct of not presenting the facts accurately and in a forthright manner).

The defendant had filed a 57.105 motion and it was granted at the trial level and upheld on appeal. The Panel held that the test for 57.105 was whether a party or counsel knew or should have known, at the time a claim or defense was presented, that it is not grounded in fact or warranted by existing law. The court further concluded that the moving party does NOT need to prove a complete absence of a justiciable issue -- only that the claim was "insufficiently supported."

One of the more painful legal cliches is the constant reference at mediation to one side mediating (or not mediating) "in good faith." Although that expression was deemed meaningless back in 1995, it still lingers in the lexicon of mediation participants.

This issue arises from a recent experience where I represented a party who went to mediation, listened to the mediator's orientation, agreed to opposing counsel's agreement to omit presentations, and terminated mediation after receiving the initial offer. The entire experience lasted 2.5 hours. To my shock, the mediator *filed* with the court a report which detailed, blow-by-blow, how long he spent with one side (not the other parties) and who terminated mediation. The suggestion was that one party -- after 2.5 hours? -- did not mediate in good faith.

NO MEDIATING IN GOOD FAITH REQUIREMENT

MEAC Opinion 95-009 specifically states that parties are only required to listen to the mediator’s orientation (95-009A). Even if a party refuses to participate in the presentation phase, it cannot be reported to the court (95-009B). The Opinion specifically states, “There is no penalty for failure to reach an agreement at mediation and the mediator may not suggest otherwise” (95-009D). Rule 95-009E goes on to confirm there is no requirement for parties to mediate in “good faith.” MEAC Opinion 00-003 provides further guidance that a party’s reason for cancellation or postponement of mediation should not be “explained.”

Next, as to the "full" report of the mediator to the court, here's the rule: Florida Rule of Civil Procedure 1.730(a) states, “If the parties do not reach an agreement as to any matter as a result of mediation, the mediator shall report the lack of an agreement to the court without comment or recommendation.”

Thereafter, the statute: Under Florida Statute 44.401 et seq., Mediation Confidentiality and Privilege Act, there is no basis for a mediator report to advise the court of anything other than settlement, impasse or non-attendance. F.S. 44.404 and .405. A mediation participant is barred from betraying – much less publishing – “mediation communications” such as who terminated mediation (a non-verbal communication).

If you choose to make an issue out of striking the Report, watch to make sure, under section 44.405(4)(a), that your client has not waived any confidences nor committed any of the prohibited acts. Under section 44.405(2), a mediation participant is prohibited from testifying about mediation communications. Finally, if a dispute arises, make sure your communications are limited and protected by section 44.405(6).

Finally, the Florida Rules for Certified & Court-Appointed Mediators: Under Rule 10.300, the mediator is responsible to encourage a party’s right to self-determination; to act with impartiality; and to maintain confidences. Rule 10.360 (Confidentiality) is likewise important.

Practice tip: also look at the order referring the matter to mediation and any local rules.

Our starting place with Proposals for Settlement has been that the courts review them warily. A trend exists that most challenged Proposals for Settlements which go up on appeal are NOT enforced. But, more recently, we suggested there may be a counter-trend, where the intermediate appellate courts seemed to have realized that they put drafting-lawyers up to a near impossible challenge to create a bullet-proof proposal for settlement.

The 4th District makes the issue easier, or harder, depending upon how you look at it, by issuing the deceptively short one-page opinion in Gloria Alioto-Alexander v. Toll Brothers (Bros.) Inc. and John Barr (Damoorgian, May, Tutter).

Plaintiff sued defendant company for alleged negligent driving of its defendant employee. Plaintiff loses case. Defendant company had served a $5,000 Proposal for Settlement, on its behalf only, which "provided that the offer was conditioned upon the dismissal of the entire action, including the claims against Barr."

Was this a joint proposal which failed to apportion the amounts attributable to both defendants? Or a Proposal on behalf of a single defendant with a broad non-monetary condition.

Without much fanfare, the Panel held this was not a joint proposal since the defendant company alone was offering the money. The dismissal of the entire suit, including claims against co-defendant, were "simply a condition."

For a prior discussion of how Proposals were served (and often failed) in these vicarious liability situations, see Building a Better Proposal for Settlement. This post provides a broad supplement to this area of the law after the article was published.

Here's some comparable cases not mentioned in this Opinion:

1. Barbara Elaine Esters v. Barbara Russell (2d DCA 2006): Plaintiff serves proposal to two defendants, one of whom was vicariously liable for other. Court suggests that serving only one defendant and revealing the intention to dismiss entire case may be valid.

2. D.A.B. Constructors v. Oliver (5th 2005): Panel of the 5th DCA appears to reluctantly find a joint proposal of settlement, where one defendant was only vicariously liable, to be invalid and notes Justice Pariente previously suggested a rule change was in order.

3. Sparklin v. Southern Industrial (5th DCA 2007): Proposal to multiple defendants is invalid since the attached release created ambiguities.

Thanks to Alison Emery at Shutt, Schmidt, Burnett & Noey for the case information.

Hospital consent forms get signed every day however our ancedotal legal experience suggests that they are not routinely accepted by the courts. In fact, there is some room to suggest that defense lawyers have gotten the message and rarely press them through the use of summary judgment. This new opinion certainly does not encourage attempting summary judgment through use of a surgical consent form.

Enter the case of Harlan S. Ginsberg v. Northwest Medical Center, Inc., Dr. Jason Perelman, Dr. Mitchell Weinstein, and Uro-Medix, Inc. In this case, the plaintiff-patient sued two urologists, their medical group, and the hospital for alleged medical negligence during the surgical removal of his kidney. From the Opinion, we learn the plaintiff signed a consent form while "he was in pain, did not have his glasses, and had taken pain medication, rendering him unable to understand the form." The form conclusively stated that the hospital was not liable for the independent contractor physicians.

The issue of hospital vicarious liability for doctors has been a hot issue in Florida (note this post about the 5th DCA decision in Pope v. Winter Park Healthcare which has garnered over 1,000 hits). Why? Many doctors have minimal to no insurance whereas hospitals have insurance and/or are self-insured.

Here, the hospital filed summary judgment for itself, claiming that it was not liable for the independent contractors. The hospital presented the consent form as evidence. The trial court agreed and summary judgment was granted.

The Fourth District, however, disagreed (Stevenson, Hazouri, and Levine), breathing life back into the case while putting the viability of informed consent forms on life support. The Panel acknowledged that the consent form *said* all of the right things: "I acknowledge and agree that the surgeon and physician associates are independent contractors and are not employees or agents of Northwest Medical Center and that [hospital] does not control the manner or methods by which such procedures are performed."

The Panel then set out the elements for apparent agency and the circumstances surrounding the signing of the form (e.g., in pain, no glasses). Next, the Panel resorted to the summary judgment rule that there may be a "possibility" of a material issue of fact. Thereupon, the court concluded that the form, at a summary judgment stage, did not conclusively refute the allegations that the hospital held the two doctors out as possessing authority to act for the hospital -- curiously, we're not given any hint as to what the plaintiff claimed the doctors did to hold themselves out as agents for the hospital. Thus, the way it is written, it appears that if there is some element of procedural unconscionability surrounding the circumstances when an informed consent form was signed, it is not appropriate to enter summary judgment until all the evidence is in. At least under these circumstances, which are not specified. The court distinguished a case which supported the use of a consent form, since it was a directed verdict after all evidence was admitted -- not a summary judgment prior to trial.

What further confuses matters is that the court invited the hospital to "lay the proper predicate for the business records exception" (unexplained in the Opinion) and for the parties to submit additional record evidence. That said, given the lack of clarity in this opinion, plaintiffs seeking to avoid the use of informed consent forms for summary judgment are likely going to make the argument.

It seemed that forum selection clauses were not in vogue in 2008, after getting a fair amount of attention in 2007.

The Fifth District revived our interest in mandatory or permissive forum selection clauses, by examining an AT&T contract in Travel Express Investments, Inc. v. AT&T Corp. (Sawaya, Orfinger, and Lawson). Previously, we believed the needless sounding language like "to the exclusion of all other venues" was necessary to create a mandatory forum -- this case suggests otherwise, indicating that vaguely exclusive language may be enough.

The contract at issue appears to be an AT & T Master Agreement, which, judging from our Google search, may apply to land and cell phone lines. The standard language is in paragraph 13.6 and states, "The parties consent to the exclusive jurisdiction of the courts located in New York City, USA."

The court found that (1) "the" was an exclusive term, meaning one and only one and (2) the phrase "the exclusive jurisdiction" meant just that -- there was one place alone where suit could be filed.

Notably, the court found that the word "consent" did not make it permissive. Note, back in the forum selection clause heyday of 2007, the same court said in Sonus-USA, Inc. v. Thomas W. Lyons d/b/a Gulf Atlantic, etc. that "shall" was the magic word for exclusive/mandatory clauses...

Given that the federal standard to find waiver of arbitration is much looser than the Florida standard, this case from the Fifth Circuit is worth noting since, indeed, the plaintiff waived arbitration.

In Geraldine Nicholas as Administratrix of Estate of James Nicholas v. KBR, Inc.; M W Kellogg Co.; Kellogg Brown & Root; Halliburton, the plaintiff was the wife of an employee who developed mesothelioma from asbestos exposure. In 1998, the husband-employee had signed a severance agreement; after his death, the wife claimed that the defendants failed to pay life insurance benefits. There are likely issues keen to ERISA and asbestos lawyers in this matter but none are addressed squarely in this arbitration-related opinion (other than footnote 4).

Here's the procedural history: plaintiff filed suit, opposed removal, amended her complaint, participated in joint discovery / case management plan, responded to discovery, sat for her deposition, noticed non-parties for deposition, and generally participated in discovery for ten months without mentioning arbitration.

During this discovery, she testified at her deposition that she had discussed with "someone" at the defendants about her husband had signed an arbitration agreement. That appears to be a critical piece of evidence supporting waiver.

According to the decision, the defendants developed and argued that the plaintiff knew of the arbitration clause and proceeded with litigation despite such knowledge. The plaintiff claimed that she did not have a copy of the severance agreement however the court noted "that Nicholas nowhere sought to contravene KBR's claim that she waived arbitration." The court held the evidence of her deposition did not support a claim of ignorance. There was also more than a hint that the plaintiff's belated effort to seek summary judgment was prompted by the apparent concern that summary judgment might be granted.

The 5th Circuit did provide this nice overview of waiver of arbitration under federal law: (1) did the party substantially invoke the judicial process and (2) was the other side prejudiced. This has also been phrased as whether one side invokes the judicial process to the detriment of the other party. The judicial process is invoked where a claimant pursues litigation and then reverses course, trying to arbitrate (especially under the spectre of summary judgment). In short, filing suit shows a disinclination to arbitrate. Exceptions to the rule are lawsuits to address a "threshold declaration" (whether a valid agreement to arbitrate exists) or "injunctive relief pending arbitration."

As a practical matter, it appears from state and federal cases that waiver is especially likely when the litigation papers wholly ignore the arbitration clause. If a party believes it needs to file some sort of suit but also pursue arbitration, the papers filed in court likely should indicate the desire to preserve arbitration (and state the reason why it is not waiver).

Lawyers need to be counsel their clients carefully after a motion to compel arbitration is granted. Depending upon the statutory claims, the failure to proceed with arbitration may lead the defendant to be deemed the prevailing party, entitled to attorney's fees.

The Fourth District recently addressed this issue in L. Scott Frazier et al. v. Andre Dreyfoos, the Salem Law Group, P.A. et al. (Ciklin, Gross & Warner).

In that case, a group of buyers thought they were purchasing land and bungalows in Costa Rica. Apparently the land was owned by the government. When they filed suit in Palm Beach County, the trial court compelled them to arbitration. The sales contract required arbitration before the Costa Rican-American Chamber of Commerce, located in Costa Rica. The buyers opted to drop the issue due to cost to pursue.

But the sellers didn't let up. Since the buyers had sued under Chapter 517, Florida Statutes, there was a prevailing party attorney fee provision. Relying upon a prior case, the Panel held that the seller was the prevailing party when the case was dismissed, regardless of the fact that the merits were not reached/claim was abandoned.