Articles Posted in Contract Law

While most people file personal injury lawsuits with the goal of presenting their case to a jury, few cases actually proceed to trial. Rather, most cases resolve prior to that time via the submission and acceptance of a proposal for settlement (PFS). While a PFS is a contractual agreement that is binding on the parties, there are exceptions that would allow a proposal to be voided, as demonstrated in a recent Florida car accident case. If you were hurt in a collision, it is in your best interest to meet with a seasoned Florida personal injury attorney to assess what compensation you may be able to recover for your harm.

Facts of the Case

It is reported that the plaintiff was involved in a collision with the defendant, after which he sued the defendant for negligence and his insurance carrier for breach of contract. In an effort to resolve the claims, the plaintiff’s attorney directed his paralegal to send PFS to the plaintiff’s insurer and the defendant, requesting each party’s insurance policy limits. The paralegal erroneously sent a PFS to the defendant’s counsel requesting $10,000 rather than $100,000 to settle the claims. Defendant accepted immediately, after which the plaintiff realized the error and filed a motion to withdraw the proposal. The court denied the motion, finding that the PFS was unequivocal and clear on its face and pursuant to Florida’s PFS law must be enforced. The plaintiff filed a motion for rehearing, arguing he did not consent to the settlement. The court denied the motion, and the plaintiff then appealed the rulings of the trial court.

Florida’s Laws Regarding Settlements

While the plain meaning of Florida’s PFS law and the rules of the procedure both require strict compliance, both the law and the rule interpreting the law only apply when there has been a rejection of a PFS, and the case proceeds to trial and ultimately results in a judgment. Thus, the appellate court found that the trial court erred in stating that because the PFS was clear on its face, it could not be retracted.

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In the recent case of Prepared Insurance Company v. Gal, the plaintiff appealed a lower court’s decision regarding a real estate contract and the liabilities associated with it. The insured was a homeowner who discovered that his kitchen sink leaked water, which caused damage to his custom-made cabinets. The insured filed a claim with the insurance company, which sent an adjuster to assess the damage. The report concluded that the cost to fix the cabinets would be $8,653.47, but this estimate did not include the general contractor’s overhead and profit.

A cabinetry expert also assessed the damage at the request of the insurer. He concluded that it would cost roughly $2,500 to fix the damage or almost $20,000 to replace the cabinets.  This cost estimate did not include the price of an electrician or plumber, who would both be necessary to finish the job. It also omitted the estimated cost for hiring a general contractor.

The insurance company tendered payment for $6,153.47 to the insured, reflecting an $8,653.27 cost less the insured’s deductible. The insured sued, claiming the insurer undervalued the damage because it did not pay for the replacement of the cabinets or the cost of a general contractor. In the meantime, the insured filed another claim for damage to the cabinets caused by a leaking air conditioner unit. The insured had a general contractor inspect the loss. This expert testified that the replacement of the cabinets would cost $107,902.50, due to their unique nature. This estimate failed to apportion the damage between the first leak and the second leak.

In Tower Hill Signature Insurance, ETC v. Speck, et al., a construction company appealed a final judgment entered against it at the conclusion of a jury trial that ordered the defendant to pay over $160,000 in costs to make subsurface repairs and stabilization repairs to the homeowners’ property.

The homeowners’ claim against the insurance policy occurred in January 2010. After the insurance company completed an initial investigation, it denied the claim and rescinded the homeowners’ policy, stating that the home on the property had unrepaired damage in existence at the time the policy was issued. The homeowners then sued the insurance company for breach of contract, and in response the insurer asserted an affirmative defense that the contract was void because the homeowners failed to disclose a material fact–the unrepaired damage.

In 2001, the homeowners had made another claim with a prior insurer regarding sinkhole damage for the same property. The claim stated that the house was a total loss and that they were entitled to their policy limit of $330,000. The insurer retained an engineer, who stated that $166,000 in below ground damages was appropriate. According to the homeowners, an additional $64,000 for above ground repairs was needed. The parties settled the claim for $260,000. Documents indicated that the homeowners only spent $15,000 on repairs to the home and that the rest was used to pay two mortgages on the property.

One of the most important considerations in any lawsuit is the statute of limitations. This law operates to bar certain claims that are not filed within the statutorily defined window. For each type of claim, the state legislature will set a time limit on when it can be filed, usually consisting of a number of years. The statute of limitations runs from the date that the harm occurred or accrued.

However, there are a number of legally recognized doctrines that can affect the statute of limitations. In cases involving personal injury, for example, courts often apply a theory called discovery tolling. Since many individuals are unaware that they have suffered physical injuries related to another party’s malfeasance until a doctor informs them about the injuries, or until the symptoms manifest, it can be hard to know when the wrong has occurred. Under discovery tolling, the statute of limitations does not begin to run until the date that the plaintiff knew or should have known that his or her injuries were the result of another person’s negligence.

In the recent case of Riverwalk at Sunrise Homeowners Association v. Biscayne Painting Corporation, the Florida Fourth District Court of Appeal had the occasion to consider the application of a statute of limitations. In this case, a homeowners association appealed a lower court’s ruling that its negligence claim against defendant Sherwin-Williams was time-barred.

A recent case involving a fatal car accident presented detailed questions regarding the scope of an insurance company’s duties and requirements to its policyholders and other individuals involved in a motor vehicle accident. In Geico General Ins. Co. v. Lepine, the surviving wife of a man killed in a car accident filed a complaint against the driver and his car insurance company, seeking damages on behalf of her husband’s estate and herself. In her complaint, the plaintiff alleged that the defendant’s insurer reneged on a verbal agreement to pay the plaintiff $100,000, which reflected the full amount of the defendant’s policy limits. The plaintiff based these claims on a breach of contract theory.

The insurance company filed a motion to dismiss the portion of the plaintiff’s claims involving the breach of contract claims. The insurer contended that Florida Statutes Section 627.4136 prohibited the plaintiff from directly filing a cause of action against the defendant’s insurance company. This provision, also called the non-joinder statute, prohibits a non-insured individual from filing a direct lawsuit against the insurance company without obtaining a settlement or verdict against the insured party beforehand.

In ruling on the motion, the trial court determined that the insurance company’s agreement satisfied the statute’s requirement for a prior settlement agreement and that the plaintiff’s breach of contract action against the insurance company served as a method to enforce the settlement agreement, and it denied the motion to dismiss.

Recently, the Florida First District Court of Appeal ruled that a commercial real estate tenant has the right to continue its exclusivity provision in each of its lease options. In Amelia Island Restaurant II, Inc. v. Omni Amelia Island, LLC, the plaintiff operated and maintained a restaurant located at the Amelia Island Plantation in Nassau County, Florida. In 2012, the plaintiff and the property owner were unable to agree on the terms of a lease extension. The parties’ original lease agreement contained a provision prohibiting the landlord from allowing another full-service restaurant to operate in the same shopping center. The plaintiff argued that this exclusivity provision would remain in effect during a renewed lease term, while the landlord argued that it would not remain in effect.

The trial court ruled in favor of the landlord, holding that the exclusivity provision in the original lease would not carry over into the renewed lease agreement. In 2007, the Fourth District Court of Appeal decided Winn-Dixie Stores, Inc. v. Dolgencorp, 964 So.2d 261, 268, which held that Florida Statutes Section 543.335 required invalidation of an exclusivity provision in a lease agreement. Florida Statutes Section 542.335 establishes a rebuttable presumption that a covenant restricting competition for a period of six months is reasonable, and that a covenant restricting competition in excess of two years is unreasonable. If the restriction is determined to be overlong, overly broad, or unnecessary by the court, Setion 543.335 grants the court authority to modify the term to protect the affected party’s interests.

On appeal, the Court reversed the lower court’s ruling and found in favor of the plaintiff. In its opinion, the Court of Appeal first analyzed the provisions of the original lease agreement, which gave the plaintiff “an option to renew for a third five-year term in 2013, under certain conditions.” The conditions to renewal required the plaintiff to not be in default on any performance obligations under the lease, and to provide notice of its decision to renew according to the procedures provided in the lease. The Court of Appeal next distinguished the present case from Dolgencorp, finding that “where Dolgencorp involved an indefinite covenant running with the land, the Lease here effectively fixed the duration of the exclusivity provision with the [plaintiff] via the Lease’s initial five-year term and maximum of three potential renewal periods.”

Florida’s Second District Court of Appeal recently handed down an opinion agreeing with other appellate authority in the state that a resident of a nursing home is not bound by an arbitration agreement executed by the resident’s family member at the time of the resident’s admission to the facility. In Sovereign Healthcare of Tampa v. Estate of Yarawsky, 2D13-2083, an elderly nursing home resident had lived at the plaintiff’s facility for 10 months prior to his death. Following his death, the decedent’s estate filed a lawsuit against the nursing home, alleging that the decedent died due to the nursing home’s negligence. Shortly thereafter, the nursing home filed a motion to compel arbitration on the basis that the resident admission forms and financial agreement executed at the time of the decedent’s admission contained an arbitration agreement.

The trial court ruled in favor of the nursing home company, compelling the parties to arbitrate their dispute. The decedent’s estate filed a motion for reconsideration of the order on the basis of the arbitrator that the nursing home selected to preside over the proceeding. While the nursing home’s motion for reconsideration was pending, the Florida Fifth District Court of Appeals entered an opinion in a case involving similar circumstances, Perry ex rel. Perry v. Sovereign Healthcare of Metro W., 100 So. 3d 146 (Fla. 5th DCA 2012).

In Perry, the Fifth District concluded that the arbitration clause was not enforceable against the daughter of an individual who passed away during residency with the nursing home facility. The admission paperwork omitted any references to the resident, and the area where the daughter could have indicated her authority to execute agreements on behalf of the resident was left blank. Additionally, “there was ‘no evidence [that the resident] was incapable of singing the agreement on her own behalf’ and even if the daughter had signed on the mother’s behalf, there was ‘absolutely no evidence that [the daughter] had the authority to bind [the resident] to the arbitration agreement.” The court reasoned that an agreement could not be enforced against an individual who was not a party to the agreement, and who was not bound to its terms by a representative.

A liability release does not need to include language that specifically references “negligence” or “negligent acts” for it to release a defendant from liability arising from its own negligence, the Florida Supreme Court held recently.

The case was a personal injury action filed by a woman injured while on vacation with her family. The family was visiting a resort owned by a nonprofit organization that provided vacations to the families of seriously ill children. On applying for the vacation, the family signed a general release applicable to  all “damages or losses or injuries” sustained while engaging in a number of activities. It also released the defendant from “any and all claims and causes of action of all kinds.” The release never specifically mentioned the defendant’s negligence.

The plaintiff was injured after a pneumatic lift collapsed, and she filed suit against the nonprofit organization and other defendants. The nonprofit defendant moved for summary judgment on the basis of the release. The trial court denied the motion in part because of public policy. The reasoning is that, in order for a party to be released from its own negligence, all those involved should have a clear understanding of the agreement. After a trial, the jury returned a verdict for the plaintiffs and awarded just over $70,000 in damages.

Real estate sale and lease contracts can be extremely complicated, depending on the circumstances of the transaction. When large amounts of money are exchanged, and all the details of a real estate deal are taken into account, it is no surprise that disputes often arise in these situations. It is paramount to have a capable attorney who can draft, review, or negotiate a real estate contact on your behalf.

Even with a written contract, parties will frequently make oral changes or modifications. There are special rules when it comes to real estate contracts, however. In one case, the Florida Supreme Court has ruled that modifications made to a real estate contract weren’t enforceable unless they were made in writing and signed by the parties. Even if there was a verbal promise to the contrary, the parties were only bound to their written agreement.

This issue arose in DK Arena, Inc. v. EB Acquisitions I, LLC, a case involving a contract for the sale of property located in Florida. The parties entered into a contract to buy the property for the amount of $23 million. The real estate contract required a $1 million deposit to be deposited in escrow, and allowed the buyer to have 60 days to inspect the property and conduct due diligence. The contract also contained a provision stating that modifications to the contract were not enforceable unless they were in writing, signed and delivered.

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