General releases, unfortunately, are not absolute.  A recent ruling from the Third District Court of Appeal in Falsetto v. Liss, 44 Fla. L. Weekly D1340d (Fla. 3d DCA 2019) confirms this point, although, candidly, I have mixed feelings regarding this ruling.   

In this case, the Court held that the term “unknown” in a general release is not synonymous with the term “unaccrued;” thus, a release of an unknown claim does not mean a release of an unaccrued claim.  In theory, this makes sense since a future claim should not be barred.  It is one thing if the facts giving rise to the claim occurred AFTER the execution of the release such that the release does not cover circumstances arising from these facts.  It is another if the facts giving rise to the claim occurred BEFORE the execution of the release.  In the latter case, such claims should be included by virtue of the general release which is the reason why the word “unknown” is included, at least in my opinion.  The Court, however, found differently.

In Falsetto, parties entered into a release that included the release of past and present claims, “known and unknown.”  This is common language in a general release. 

A subsequent dispute arose between the parties and one of the parties counter-sued for fraud based on facts that occurred prior to the date in the release. The party, however, claimed it did not learn about the facts surrounding the fraud until the subsequent lawsuit. The Court held that because a fraud claim “accrues” when the last element occurs or “when the plaintiff knew, or through the exercise of due diligence should have known, of the facts constituting the fraud,” there was a factual issue as to when the fraud claim accrued.  Falsetto, supra (internal citation and quotation omitted).   Accordingly, the party asserting the fraud argued that while the facts may have taken place before the date in the general release, it did not know or learn about the fraud until after-the-fact–the fraud did not accrue until the party learned of the fraud.  The other party is now forced to argue that the party “knew or should have known” about the fraud, which in my opinion, results in a watering down effect of a general release. With a general release, the parties are looking for closure through the date of the release. This closure becomes difficult if the word “unknown” is going to be cast aside if a claim, such as fraud, did not accrue until after-the-fact based on a party learning of the fraud, even though the facts predate the release.

The safe play now is to add the phrase “known or unknown and accrued or unaccrued” in the general release to avoid this issue.   But, in fairness, this language also creates problems because a release through a set date should not operate to bar claims that occur after the release and no party should realistically want a release to be broadly construed to release a future claim that did not arise until after the release. 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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A defamation claim can serve as a basis to amend a complaint to add punitive damages.   From prior articles (here or here) you know that asserting a basis for punitive damages is not made as of the date the lawsuit is filed.  Rather, a plaintiff must comply with the statutory, procedural requirements and move to amend to assert punitive damages by proffering evidence that there is “a reasonable showing by evidence in the record…which would provide a reasonable basis for recovery of such damages.”  Fla. Stat. s. 768.72(1).  

There are times a plaintiff wants to attribute an employee’s defamation of character to that employee’s company.  The employer is likely the deep pocket so punitive damage against the employer carries much more weight than suing the employee, individually, for punitive damages.

If a plaintiff wants to add a punitive damages claim against a corporate entity based on an employee’s conduct, a reasonable showing must be made that:

(a) The employer, principal, corporation, or other legal entity actively and knowingly participated in such conduct;

(b) The officers, directors, or managers of the employer, principal, corporation, or other legal entity knowingly condoned, ratified, or consented to such conduct; or

(c) The employer, principal, corporation, or other legal entity engaged in conduct that constituted gross negligence and that contributed to the loss, damages, or injury suffered by the claimant.

Tallahassee Memorial Healthcare, Inc. v. Dukes, 44 Fla. L. Weekly D1306c (Fla 1^stDCA 2019) quoting Fla. Stat. s. 768.72(3).

Therefore, if you want sue a corporate employer –the deep pocket–for the defamation committed by an employee and assert a basis for punitive damages, you will need to proffer evidence establishing a reasonable showing that corporate management “actively and knowingly participated in such conduct [or] knowingly condoned, ratified, or consented to such conduct [or] engaged in conduct that constituted gross negligence that contributed to the loss…suffered by the claimant.” 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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The recovery of attorney’s fees is a creature of contract or statute.  When a party prays for attorney’s fees in a lawsuit, that prayer for relief is based on a contractual basis or a statutory basis to attorney’s fees. 

Sometimes, contracts include one-way prevailing party attorney’s fees.  In other words, the contract may provide that if one party (typically, the drafter of the contract) has to enforce the contract, the other party has to pay that party’s attorney’s fees and costs.  But, what if the other party has to enforce the contract or prevails in the other party’s enforcement action.   Is that attorney’s fees provision reciprocal? The answer is YES based on Florida Statute’s s. 57.105(7) mutuality of obligation requirement.  Section 57.105(7) provides:

If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.

“The purpose of section 57.105(7) is simply to ensure that each party gets what it gives.  However, “[t]he statute is designed to even the playing field, not expand it beyond the terms of the agreement.”  CalAlantic Group, Inc. v. Dau, 44 Fla. L. Weekly D1004b (Fla. 5^thDCA 2019).   “[I]f a claim is within the scope of an attorney’s fees provision, the party defending against that claim is entitled to attorney’s fees pursuant to section 57.105(7) if the party prevails.”  Id. 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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There is an independent spoliation of evidence cause of action against a third-party that accrues when that party “though not a party to the underlying action causing the plaintiff’s injuries or damages, loses, misplaces, or destroys evidence critical to that action.”  Shamrock-Shamrock, Inc. v. Remark, 44 Fla. L. Weekly D1093a (Fla. 5^th DCA 2019).  This claim is a claim against a third-party – a party the plaintiff did not originally sue– and known as a third-party spoliation of evidence claim.  

If a party, such as a defendant, in the underlying action damages, loses, misplaces, or destroys evidence, this is known as first-party spoliation of evidence and does NOT give rise to an independent cause of action.  Shamrock-Shamrock, supra, n.1.   First-party spoliation can be dealt with directly in the underlying action.

A third-party spoliation of evidence cause of action is not easy to prove and is not intended to be easy to prove.

To establish a [third-party] spoliation cause of action, the plaintiff must prove each of the following six elements: (1) existence of a potential civil action, (2) a legal or contractual duty to preserve evidence which is relevant to the potential civil action, (3) destruction of that evidence, (4) significant impairment in the ability to prove the lawsuit, (5) a causal relationship between the evidence destruction and the inability to prove the lawsuit, and (6) damages. 

Shamrock-Shamrock, supra. 

The recent decision in Shamrock-Shamrock dealt with the “duty” element, i.e., did the third-party owe a duty to the plaintiff to preserve evidence.  The duty element is based on the “existence of a contract, statute, or properly served discovery request.”  Shamrock-Shamrock, supra.    

In this case, the plaintiff sued the third-party after the third-party obtained a new computer and destroyed the records on her old computer, although she did not know whether her old computer had relevant records to the underlying action.  In the underlying action, she was served with a deposition notice.  That deposition notice/subpoena was later amended a number of times and she was ultimately noticed for deposition duces tecum or with the requirement to bring documents.    Her computer was destroyed and replaced between the time she was originally noticed for deposition (without the duces tecum requirement) and the time she was noticed for deposition with the duces tecum requirement. 

The plaintiff argued that the third-party had a duty to preserve evidence on her computer based on the foreseeability of the underlying lawsuit and her actual knowledge of the lawsuit.  The appellate court, however, and at least in this case, was not going to extend the duty this far – it was not going to extend a third-party’s duty to preserve evidence based on the foreseeability or knowledge of litigation.  The reason being that such a “broad pronouncement would be tantamount to declaring a general legal duty on any nonparty witness to anticipate the needs of others’ lawsuits.”  Shamrock-Shamrock, supra.  

The outcome of whether a duty existed would presumably have been different if the third-party destroyed her computer AFTER she received a subpoena duces tecum for deposition requiring her to produce documentation at the deposition. In this situation, there would be an argument that the duty of preservation arose once she received the subpoena requiring her to produce the documentation.   The plaintiff would still need to prove the other elements to a third-party spoliation of evidence claim, but it would at least establish a duty existed on behalf of the third-party to preserve evidence.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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