The use of escrow agreements and escrow agents is common.   They are used in relationship to purchase-sale or real estate contracts.  They are also used in relationship to certain settlement agreements.  The escrow agent may be a third-party, such as a title company or financial institution, or it may be a law firm representing a party in the transaction or case. 

An escrow agent owes a fiduciary duty to the parties to the escrow transaction or agreement.  Carter Development of Massachusetts, LLC v. Howard, 44 Fla. L. Weekly D2833a (Fla. 1^st DCA 2019).  “Any limitation on the use of money placed in an escrow pursuant to an agreement is governed solely by the terms of that agreement.”  Id. 

While an escrow agent owes a fiduciary duty to a party to the escrow agreement, how escrowed monies will be disbursed are governed by that agreement. 

In Carter Development of Massachusetts, parties entered into an agreement associated with the investment in a real estate project.  An investor was depositing $650,000 into the developer’s law firm’s trust account where the money was held by the law firm pursuant to the terms of an escrow agreement between the developer and the law firm.   Subsequently, the developer and law firm entered into an escrow agreement governing the disbursement of the escrowed proceeds.

The investment or project failed and the investor wanted money back arguing that the money should not have been disbursed to the developer.  However the money, or most of it, was gone as the law firm disbursed the money pursuant to the escrow agreement with the developer.  The investor sued the law firm for, among other claims, breach of fiduciary duty by the escrow agent.  However, the investor was NOT a party to the escrow agreement.  This meant that the law firm, as the escrow agent, owed no duty to the investor – there was no fiduciary duty owed to the investor.

The moral is that if the investor wanted control as to the disbursement of the escrowed proceeds, it should have made itself a party to the escrow agreement and negotiated those terms. The investor’s current deal did not give the investor that right as it was not a party to the escrow agreement between the law firm and the developer.

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A plaintiff may serve a proposal for settlement (a/k/a offer of judgment) to create a mechanism to recover attorney’s fees as the prevailing party.  When it comes to proposals for settlement served by the plaintiff on the defendant, Florida Statute s. 768.79 provides:

(b) If a plaintiff serves an offer which is not accepted by the defendant, and if the judgment obtained by the plaintiff is at least 25 percent more than the amount of the offer, the plaintiff shall be awarded reasonable costs, including investigative expenses, and attorney’s fees, calculated in accordance with the guidelines promulgated by the Supreme Court, incurred from the date the offer was served.

For purposes of the determination required by paragraph (a), the term “judgment obtained” means the amount of the net judgment entered, plus any postoffer collateral source payments received or due as of the date of the judgment, plus any postoffer settlement amounts by which the verdict was reduced. For purposes of the determination required by paragraph (b), the term “judgment obtained” means the amount of the net judgment entered, plus any postoffer settlement amounts by which the verdict was reduced.

Of interest is the underlined language talking about adding back “post offer settlement amounts” to the calculation.

For example, say the plaintiff sues multiple defendants.  It serves a proposal for settlement on a defendant and the defendant does not accept the proposal.  During the case, the plaintiff settles with the other defendant and proceeds to trial against the defendant that refused to accept the proposal.   The plaintiff’s net judgment would be reduced by the amount of the settlement BUT when it comes to determine whether the plaintiff should be entitled to its fees against the defendant it proceeded to trial against, this postoffer settlement is added back to the net judgment to see if plaintiff’s judgment is at least 25 percent more than the offer.

This was the situation in Wilcox v. Neville, 2019 WL 5584878 (Fla. 1^st DCA 2019).  In this car accident case, a plaintiff sued two defendants.  During the case, the plaintiff served a proposal for settlement on each defendant.  One of the defendants  accepted the proposal against him for $60,400.  The other defendant did not accept the plaintiff’s proposal and the case moved to trial.  At trial, the jury returned a verdict for $126,592.33.  The trial judge reduced this amount by the $60,400 settlement with the co-defendant and insurance benefits, to come up with a net judgment amount of $58,856.73.  The issue, for purposes of determining whether the plaintiff should be entitled to attorney’s fees pursuant to its proposal, was whether the $60,400 should be added back to the net judgment of $58,856.73 for purposes of the attorney’s fees calculation.   The appellate court held the trial court was required to add this back:

Thus, the clear and unambiguous language of section 768.79(6) requires the judgment obtained to include the amount of any settlement by a co-defendant after the date of service of the offer on the defendant by which the verdict was reduced.  Here, it is undisputed that [plaintiff] reached a $60,400 settlement with [co-defendant] after serving her offer on [other defendant] and the verdict was reduced by that amount.  Accordingly, the trial court was required to add the $60,400 settlement amount to the net judgment in calculating the judgment obtained and determining [plaintiff’s] entitlement to fees. 

Wilcox, 2019 WL at *4.

Hence, when it comes to the attorney’s fees calculation for purposes of proposal for settlements, keep in mind that postoffer settlements will be added back into the calculation, even if the verdict or judgment is reduced by virtue of this settlement.

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A settlement agreement is governed under the tenets of contract law – there needs to be a meeting of the minds for there to be a settlement.  Ideally, you want this meeting of the minds to be memorialized in writing in a settlement agreement.  However, what if it is not memorialized in a written settlement agreement?

As is true of contracts generally, a settlement agreement is formed “only when one party makes an offer and another party accepts it.”  An acceptance sufficient to create an enforceable agreement “must be (1) absolute and unconditional; (2) identical with the terms of the offer; and (3) in the mode, at the place, and within the time expressly or impliedly stated within the offer.”  This ensures that there is a “meeting of the minds” between the parties on all essential terms. “[W]here it appears that the parties are continuing to negotiate as to essential terms of an agreement, there can be no meeting of the minds.”

Basner v. Bergdoll, 44 Fla.L.Weekly D2593a (Fla. 1^st DCA 2019) (internal citations omitted).

By way of example, in Basner, an automobile accident occurred. The accident was caused by a vehicle driven by the child of the owners.  The owners’ insurer sent a check to the plaintiffs and a release that required the plaintiffs to release the owners and their child.  The plaintiffs marked up the release because they did not want to release the owners’ child and signed the release, but held onto, and did not cash, the check.  The plaintiffs did not hear back from the insurer and ultimately returned the check and sued the owners and their child. 

The owners moved for summary judgment contenting there was a settlement agreement and they had been released.   The trial court agreed and enforced the release as to the owners.  The appellate court, however, reversed because there was NO meeting of the minds. The plaintiffs marked up the release and, thus, did not agree to the terms the insurer proposed in issuing the check, which was a release of the owners and the owners’ child.  Instead, the plaintiff’s made a counteroffer in marking up the release in agreeing to release only the owners.  When the plaintiffs did not hear back from the owners’ insurer, they returned the check ultimately terminating their counteroffer.  Hence, there was NO meeting of the minds.

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There is a doctrine known as the “relation back” doctrine that refers to amended complaints and the statute of limitations.  Assume an original complaint was filed within the applicable statute of limitations.  Assume after the statute of limitations expired, an amended complaint is asserted with new claims.  Do the new claims in the amended complaint RELATE BACK to the original complaint so that the new claims are deemed filed within the statute of limitations? 

The recent opinion in Mitchell v. Applebee’s Services, Inc., 44 Fla. L. Weekly D2443a (Fla. 1^st DCA 2019) explains Florida’s liberal policy in answering this question:

Whether an amended complaint relates back to the filing of the original complaint for statute of limitations purposes is a question of law subject to de novo review. Caduceus Props., LLC v. Graney, 137 So. 3d 987, 991 (Fla. 2014). As the Florida Supreme Court explained in Caduceus:

Generally, Florida has a judicial policy of freely permitting amendments to the pleadings so that cases may be resolved on the merits, as long as the amendments do not prejudice or disadvantage the opposing party. . . .

Permitting relation back in this context is also consistent with Florida case law holding that [Florida Rule of Civil Procedure] 1.190(c) is to be liberally construed and applied.

Id. at 991-92.

In other words, as long as the initial complaint gives the defendant fair notice of the general factual scenario or factual underpinning of the claim, amendments stating new legal theories can relate back . . . even where the legal theory of recovery has changed or where the original and amended claims require the assertion of different elements.

Mitchell, supra.

“The key inquiry to determine whether an amendment relates back or is barred by the statute of limitations is whether the party in question had notice of the litigation during the limitations period under the original pleadings and the amendment merely adjusts the status of an existing party, or the amendment actually introduces a new defendant.” Id. quoting HSBC Bank USA, Nat’l Ass’n v. Karzen, 157 So.3d 1089, 1091-92 (Fla. 1st DCA 2015).

When it comes to amended complaints filed after the expiration of the statute of limitations, it is one thing if you are amending a complaint to assert a claim against a new party.  It is another if you are amending a complaint to add claims against existing defendants based on the same transactions and occurrences as the original complaint.

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Does an uneven floor level, in of itself, support a premise liability claim?  No!  Uneven floor levels are not so uncommon. 

The case of Contardi v. Fun Town, LLC, dealt with this issue in the context of an uneven floor at a skating rink – the difference between the skating rink floor and building’s subfloor.  A person was injured when exiting the skating rink to the building’s subfloor and, consequently, filed a premise liability lawsuit.   The owner of the skating rink was granted summary judgment and the summary judgment was affirmed on appeal finding that a premise liability claim did not exist as a matter of law.  The appellate court affirmed the summary judgment with an informative discussion as to premise liability claims, particularly in the context of uneven floors:

An owner/occupier of land owes an invitee two duties: (1) to use ordinary care in keeping the premises in a reasonably safe condition; and (2) to give timely warning of latent or concealed perils that are known or should be known by the owner or occupier but that are not known to the invitee or that by the exercise of due care, could not have been known by the invitee.  However, there is no duty to warn an invitee of an obvious danger. This duty does not change from a residential to a commercial context. 

Uneven floor levels in public places, by themselves, do not constitute latent, hidden, and dangerous conditions.  Dim lighting does not transform an otherwise-obvious change in floor elevation into a latent danger.  According to her own deposition testimony, [the plaintiff] had earlier that visit successfully exited the skating rink onto the floor under the same lighting conditions that were present when she fell. Because the uneven floor levels, even in dim lighting, constituted an open and obvious danger, Fun Town [owner of skating rink] had no duty to warn B.C. of the difference in the levels between the rink and the rest of the building floor.

Lastly, while an obvious danger may discharge a landowner’s duty to warn, Fun Town still had a separate duty to maintain the premises in a reasonably safe condition. [The plaintiff] did not allege, argue, or present evidence in opposition to Fun Town’s summary judgment motion that the condition of the lip or step where B.C. fell was improperly maintained, in disrepair, or negligently designed. Accordingly, we conclude that the trial court properly entered summary judgment in favor of Fun Town.

Contardi, supra (internal citations omitted).

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A restrictive covenant that runs with the land places restrictions on the use of real property.  As a result, “restrictive covenants must be strictly construed in favor of the free and unrestricted use of real property” and, with respect to any ambiguity in the covenant, “must be construed against the party seeking to enforce it.”   Beach Towing Services, Inc. v. Sunset Land Associates, LLC, 44 Fla.L.Weekly D2195a (Fla. 3d DCA 2019).  These are important things to remember when enforcing or challenging a restrictive covenant.

For instance, in Beach Towing Services, the plaintiff purchased property that was subject to a restrictive covenant of land.  The restrictive covenant provided that the property “will not be used as a parking lot, storage yard facility or for a garage or tow truck company.”

The plaintiff wanted to build a parking garage on the property.  The defendant contended that a parking garage was restricted by the restrictive covenant.  The plaintiff filed a lawsuit for a declaratory judgment claiming ambiguities with the restrictive covenant, specifically with the word “garage.”  The parties did not dispute that the term “parking lot” referred to a surface parking lot as opposed to a parking garage.  The plaintiff was looking for a declaration from the court that the restrictive covenant did not restrict its use to build a parking garage on the property.  The appellate court, affirming the trial court, agreed.

Given the intent and meaning of ALL of the words in the restrictive covenant, the plaintiff could not use the property to conduct the business of activities of a garage company or tow truck company.  Beach Towing Services, supra (“The question thus becomes how to construe the words ‘for a garage or tow truck company,’ since the parties agree that the only dispute in this case is whether the word ‘garage’ as used in the Covenant prohibits Plaintiff from construction of a parking garage on the Property. Applying the series-qualifier, the Court must read the term ‘company’ as modifying both the term ‘garage,’ as well as the term, ‘tow truck,’ and the Covenant must therefore be read to mean that the Property cannot be used for either a ‘garage company’ or a ‘tow truck company.’  Indeed, there is no determiner before the words ‘tow truck’ that would indicate that the term ‘company’ modifies only ‘tow truck’ and not ‘garage’ (i.e., the Covenant does not say ‘for use as a garage or a tow truck company’).  Moreover, when reading the Covenant’s prohibition on a “garage company” in context, as the Court must do, ‘garage company’ is clearly associated with ‘tow truck company.’”) (internal citations omitted).  But, here, the plaintiff was not looking to engage in the business activities of a garage company or tow truck company.  Thus, nothing restricted the use of the property as a parking garage.

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It is permissible for non-Florida persons/entities to agree to arbitration in Florida.  Such arbitration agreement will be enforceable and Florida courts can enforce the arbitration agreement even if the underlying transaction is conducted outside of Florida.

Section 682.18(1) of Florida’s Arbitration Code provides in material part:

The making of an agreement or provision for arbitration subject to this law and providing for arbitration in this state shall, made within or outside this state, confer jurisdiction on the court to enforce the agreement or provision under this law, to enter judgment on an award duly rendered in an arbitration thereunder and to vacate, modify or correct an award rendered thereunder for such cause in the manner provided in this law.

This was at-issue in the opinion, Ancla International, S.A. v. Tribeca Asset Management, Inc., 44 Fla. L. Weekly D2189a (Fla. 3d DCA 2019), involving two non-Florida entities dealing with an out-of-country transaction.  Here, a Columbian company (owned by a Florida resident) entered into an agreement with a Panamanian company.  The underlying transaction was to occur in Columbia.  

The agreement contained the following arbitration provision:

SEVENTH. APPLICABLE LAW. This agreement will be governed by the laws of the State of Florida of the United States of America (USA), a jurisdiction accepted by the parties irrespective of the fact that the principal activity of the beer project will be conducted in Colombia. The parties agree that, in the event that differences arise between them as a result of or in relation to the present Agreement, they will attempt to resolve their differences via direct negotiation. For this purpose, the parties will have a period of thirty (30) business days, counting from the date on which either of the parties presents a request in this regard. This term may be extended by mutual agreement for additional thirty-day periods. If a solution is not reached within these stipulated periods, the differences will be submitted to an Arbitration Board, whose ruling with carry the force of law.

Although this provision is perhaps not a model of clarity relative to arbitration, the issue was whether the trial court had personal jurisdiction over the defendant to compel the parties to arbitration.   The parties agreed that personal jurisdiction stemmed from s. 682.18(1) of Florida’s Arbitration Act.  The Third District Court of Appeal held that the trial court had personal jurisdiction over the defendant “[b]ecause the parties accepted the power of Florida courts to enforce the Agreement.”   Ancla International, supra.   Hence, a Florida court could enforce the parties’ agreement to compel the parties to arbitration even though they are non-Florida entities dealing with a non-Florida transaction.

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Many contracts have dispute resolution provisions.  If not, they should.  It is important that dispute resolution provisions are reviewed and complied with PRIOR TO the initiation of a dispute.  Failure to comply could result in you being “S*** Out of Luck” with your claim, as exemplified in the recent opinion in Guan v. Ellingsworth Residential Community Association, Inc., 44 Fla. L. Weekly D2155a (Fla. 5^thDCA 2019). 

This case involved a dispute between a homeowner and her homeowner’s association.  There was a Declaration of Covenants recorded in the public records.  The Declaration, no different than any Declaration, created a contract between a homeowner and homeowner’s association.  The Declaration also contained a dispute resolution provision that required: (a) the parties to first negotiate, in person, a resolution to their dispute; (b) submit the dispute to mediation within 30 days if the negotiation reaches an impasse; and (c) submit the dispute to binding arbitration with the American Arbitration Association within 30 days if the mediation reaches an impasse or else the dispute is waived.

The homeowner’s association wanted to enforce a restrictive covenant against the homeowner.  Negotiation and mediation failed.  The association then initiated a lawsuit, not an arbitration, against the homeowner.   The association failed to comply with its own dispute resolution provision by filing the lawsuit instead of submitting the dispute to arbitration within 30 days. 

The appellate court held that the association waived its claims against the homeowner “when it failed to submit the dispute to arbitration within thirty days after termination of mediation.”  Guan, supra.   Oops!

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If you are a condominium unit owner, you might find this to be of interest.   If you are not a condominium unit owner, you likely will not. 

In a recent case, an issue was whether a particular provision of the Florida Condominium Act provided a private cause of action between unit owners.  Stated differently, the issue was whether one owner could sue another owner for a statutory violation.  The appellate court held it did not: “Nothing in the language of this [particular] statute or in the statutory structure indicates that a private cause of action between unit owners was contemplated by the legislature in enacting this statute.”    Universal Property & Casualty Ins. Co. v. Loftus, 2019 WL 3676433, *3 (Fla. 4^thDCA 2019).

The point is that if a unit owner is being sued by another unit owner for a violation of specific provision in Florida’s Condominium Act, they may be doing so purely to create a private statutory cause of action that does not otherwise exist in order to support statutory attorney’s fees.  However, this does not make it right.  Sure, there may be a basis in ordinary negligence, but there is a difference between a unit owner suing another unit owner in negligence versus a statutory violation in a private cause of action under the statute that may give rise to attorney’s fees. Potentially, this is a big difference.

If you are a condominium unit owner sued by another unit owner in a private statutory cause of action under Florida’s Condominium Act, make sure you consult with counsel.  Do not concede that a unit owner can sue you in a statutory private cause of action if no such right exists.

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In a recent property insurance dispute, Chavez v. Tower Hill Insurance Company, 44 Fla. L. Weekly D2019b (Fla. 3d DCA 2019), an insured previously sued his property insurer and lost.  The insured then filed a new suit against his property insurer for the same damages.  The trial court, affirmed by the appellate court, held that res judicata applied to bar the insured’s new lawsuit against the insurer.  The insured tried to argue that res judicata should not apply because the new lawsuit was predicated on a supplemental claim, as there is law that res judicata does not apply if the new lawsuit concerns a supplemental claim.

An issue on appeal concerned what actually constitutes a supplemental property insurance claim.  The appellate court stated: “We agree with the learned trial court that a supplemental claim means an additional claim made after an insured has actually undertaken or commenced repairs arising out of damages for a covered loss and after the insurer has tendered initial payment based upon its determination of actual cash value.”  Chavez, supra.

Thus, for there to be a supplemental claim, the insured has to actually undertake repairs.

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