BARAGONA, et al. v. KUWAIT GULF LINK TRANSPORT COMPANY, et al. Case No. 09-12770. U.S. Circuit Court for the 11th Circuit. January 21, 2010.
The Plaintiffs were the personal representative and family members (the case was filed under Georgia law, not Florida’s wrongful death statute) of Lieutenant-Colonel Dominic R. Baragona who died in a traffic accident while serving with the U.S. Army in Iraq. The accident involved a truck operated by the Defendant KGL, a Kuwaiti company. Plaintiffs filed the action in the U.S. District Court for the Northern District of Georgia and served KGL by international courier and through the Kuwaiti Ministry of Justice. KGL refused service, but retained counsel in the United States to monitor the proceedings. It did not make an appearance. The Plaintiffs filed a motion for a default judgment and the District Court scheduled a hearing on personal jurisdiction during which it found that the Plaintiffs had established a prima facie case that the court had personal jurisdiction and awarded Plaintiffs a default judgment of $4,907,048.
KGL then appeared and filed a motion to set aside the judgment. After a hearing, the District Court decided that KGL lacked sufficient minimum contacts with Georgia to subject it to personal jurisdiction and granted the motion to vacate the default judgment.
The Plaintiff argued that KGL had waived the defense of lack of personal jurisdiction in two ways. First, Plaintffs cited cases in which a defendant’s willful ignorance of district court proceedings waived a later challenge to personal jurisdiction. However, the 11th Circuit distinguished these cases on the basis that the decisions turned on improper service of process. The Court stated that personal jurisdiction requires both service process AND amenability to jurisdiction. The Court held that a defendant who ignores improper service might waive one component of personal jurisdiction, but that they do not thereby waive the personal jurisdiction defense if the constitutional test of minimum contacts is not met. The Court agreed with the District Court’s assessment that there were not sufficient minimum contacts between KGL and the State of Georgia to support jurisdiction With regard to KGL’s ignorance of the District Court proceedings, the Court stated that a defendant is free to ignore judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding, particularly where the court must determine whether the constitutional requirements of minimum contacts are satisfied (citations omitted).
In its second waiver argument, the Plaintiffs argued that KGL waived its personal jurisdiction defense by entering into contracts with the United States government that contain Section 52-228-8 of the Federal Acquisition Regulation which requires contractors to maintain liability insurance “to indemnify and hold harmless the Government against” third-party personal injury and property loss claims. The 11th Circuit held that this section does not change the constitutional analysis that the court must consider before exercising personal jurisdiction and affirmed the District Court’s decision finding no basis for personal jurisdiction over KGL.
FRASER, et al. v. J&B Tours, et al. Case Nos. 08-10680 & 08-11417. U.S. Circuit Court for the 11th Circuit. January 21, 2010.
The Plaintiffs in the U.S. District Court action were the personal representatives of the estate of Charles Fraser, and several of Mr. Fraser’s his family members who were injured while on vacation in the Turks and Caicos Islands. The Plaintiffs were aboard the Sundance, a tour boat operated by Defendant J&B Tours, when there was an explosion on board allegedly caused by a spark in the hull that ignited fumes that had collected around the fuel tank. Defendant, J&B Tours was organized in Turks and Caicos Islands and its primary business was to provide boat charters and water sports services to foreign tourists. Plaintiffs filed suit against all the defendants, some of whom were based in Florida, in the Southern District of Florida based on common law tort claims and under the federal Death on the High Seas Act (DOHSA), 46 U.S.C. §§ 30301-08. Upon motion of J&B Tours, the Trial Court dismissed the Plaintiffs’ claims against J&B Tours for lack of personal jurisdiction.
While J&B Tours is owned and operated by two full-time Turks and Caicos residents and has its only offices there, Plaintiffs presented evidence of many contacts the company had with the United States and with Florida. Some of the contacts included:
Advertising in U.S. publications, including the Miami Herald
Appearing on an American television show
Participating in promotional tours in the U.S.
Allowing itself to be listed in travel guides and directories sold in the U.S.
Using U.S. entities to provide services such as web design
Using Florida companies to provide liability insurance and employee training
Maintaining business and referral relationships with U.S. hotels and car rental companies
Purchasing five boats for its business (including the Sundance) in Florida. The Sundance was purchased from co-defendant Jerry Smith, a Florida resident.
One of the owners of J&B Tours is a U.S. Citizen
The Plaintiffs asserted four legal grounds for personal jurisdiction over J&B Tours, all of which were rejected by the Court:
- General Jurisdition Under Florida’s Long Arm Statute.
Section 48.193(2) of Florida’s long-arm statute provides: “A defendant who is engaged in substantial and not isolated activity within this state, whether such activity is wholly interstate, intrastate, or otherwise, is subject to the jurisdiction of the courts of this state, whether or not the claim arises from that activity.”
With regard to general jurisdiction, the Court held that the “minimum contacts” standard required that the forum state have “continuous and systematic” contacts to support the exercise of general jurisdiction and that J&B Tours’ contacts with Florida were insufficient.
- Specific Jurisdiction Under Florida’s Long Arm Statute
Florida Statutes Section 48.193(1)(a), the specific-jurisdiction provision of Florida’s long-arm statute provides that a party “submits himself or herself . . . to the jurisdiction of the courts of this state for any cause of action arising from” the defendant’s activities “[o]perating, conducting, engaging in, or carrying on a business or business venture in this state.” The Court concluded that J&B Tours’ business activities in Florida boiled down to purchases, visits, and advertising that did not meet the requirements of the statute. The Court further held that the plaintiff bore the burden of proving personal jurisdiction and since they failed to allege that any of J&B Tours’ solicitation activities in Florida influenced their own decision to charter the Sundance, it could not be concluded that their claims “arose from” those activities.
- General Jurisdiction Under FRCP 4(k)(2).
Federal Rule of Civil Procedure 4(k)(2), is the so called “national long-arm statute”. According to the Court, where a defendant is not subject to the jurisdiction of the courts of gen eral jurisdiction of any one particular state, Rule 4(k)(2) permits a court to aggregate a foreign defendant’s nationwide contacts to allow for service of process under two conditions:
(1) plaintiff’s claims “arise under federal law;” and,
(2) the exercise of jurisdiction is “consistent with the Constitution and laws of the United States.”
Noting that the Plaintiffs’ DOHSA and maritime tort claims arose under federal law, the Court stated that it must therefore only determine whether the exercise of jurisdiction over J&B Tours would be consistent with the Due Process clause of the Fifth Amendment. The Court stated that, as was the case under the Florida Long Arm Statute, a district court’s exercise of general personal jurisdiction under Rule 4(k)(2) requires a showing of continuous and systematic contacts. After reviewing the handful of additional contacts J&B Tours had with U.S. jurisdictions other than Florida, the Court held that activities were no more continuous and systematic than the company’s activities in Florida. The Court concluded that “[w]hen a defendant’s contacts with the United States are confined to intermittent purchases, limited self-promotion, and a few narrow relationships with American businesses, the exercise of nationwide general jurisdiction over that defendant would “offend traditional notions of fair play and substantial justice” (citations omitted).
2. Specific Jurisdiction Under Rule FRCP 4(k)(2)
In response to the Plaintiffs’ claims that the Court had specific jurisdiction under FRCP 4(k)(2), the Court stated that the due process prerequisites to the exercise of specific jurisdiction over a defendant are less restrictive than the requirements for general jurisdiction and that the minimum contacts test for specific jurisdiction has three elements. “First, the defendant must have contacts related to or giving rise to the plaintiff’s cause of action. Second, the defendant must, through those contacts, have purposefully availed itself of forum benefits. Third, the defendant’s contacts with the forum must be such that it could reasonably anticipate being haled into court there.” (Citations omitted)
The court stated that its inquiry “must focus on the direct causal relationship among ‘the defendant, the forum, and the litigation.’ ” and concluded that the Plaintiffs had not established the necessary relationship between their claims and J&B Tour’s contacts with the United States.
SINNI v. SCOTTSDALE INSURANCE COMPANY, Case No. 6:08-cv-1787-Orl-31KRS. U.S. District Court, Middle District of Florida, Orlando Division. December 18, 2009.
Torts. Insurance Coverage. Coblentz Agreements.
In the underlying case, the Plaintiff sued her employer, Absolutely Massage, Inc. and its manager on negligence and premises liability theories after she fell on a mulch walkway on the Defendant’s property. At some point, the Plaintiff settled her claims against the defendants and entered into a “Coblentz Agreement”. The agreement provided that the defendants would agree to entry of judgment for $300,000, however, instead of attempting to execute on the judgment, the Defendants would assign their rights in their commercial general liability (CGL) policy to Plaintiff so that she could enforce the judgment against the defendants’ insurance carrier, Scottsdale Insurance Co. The state court entered a consent judgment and the Plaintiff filed an amended complaint to enforce the judgment against Scottsdale. Scottsdale removed the case to the U.S. District Court.
The court held that a party seeking to recover under a Coblentz agreement must prove: (1) coverage; (2) a wrongful refusal to defend; and (3) that the settlement was objectively reasonable and made in good faith (citations omitted).
By way of background, following her slip and fall accident, the Plaintiff below filed a workers’ compensation claim and began receiving payments from Absolutely Massage, Inc.’s workers’ compensation carrier. In all, the Plaintiff received nearly $50,000 in benefits, including periodic payments, payments to medical providers for all her medical expenses and a lump sum settlement. Seven months later, Plaintiff’s counsel sent a letter and General Liability Notice of Occurrence/Claim” to Scottsdale. After Scottsdale’s investigation revealed that Plaintiff was Absolutely Massage, Inc.’s employee, that she was acting within the scope and course of her employment at the time of her slip-and-fall, and that she had been receiving workers’ compensation benefits, Scottsdale sent a letter to Absolutely Massage in which it declined coverage and refused to defend or indemnify based on the workers’ compensation and employer’s liability exclusions in the policy.
Duty to Defend
Plaintiff filed suit in May, 2007. In February, 2008 counsel for Absolutely Massage, Inc., Mr. Alfred Truesdell, sent Scottsdale a letter demanding that it defend Absolutely Massage, Inc. and informing Scottsdale that his client was contemplating entering into a Coblentz agreement. Correspondence went back and forth in which Scottsdale indicated that it was investigating and Absolute Massage issued an ultimatum stating that if Scottsdale didn’t assume the defense by a date certain, Absolute Massage would enter into a Coblentz agreement with the Plaintiff. Scottsdale did not respond by the stated deadline and Absolute Massage, its manager and the Plaintiff entered into the Coblentz agreement. Scottsdale never explicitly refused to provide a defense or deny coverage, but it also did not provide a defense.
According to the Court, Scottsdale appeared to concede that the allegations in the complaint potentially brought the suit within coverage. However, Scottsdale contended that it should be relieved of its duty to defend based on the Plaintiff’s allegedly deliberate failure to mention receipt of workers’ compensation benefits and employment status. Scottsdale also argued that the insureds’ breached of their duty to promptly forward a copy of the underlying complaint to Scottsdale by waiting until nine months after they were served and just two and half-months before signing the Coblentz agreement. The Court agreed with Scottsdale it should be relieved of its duty to defend because it was “manifestly obvious that the actual facts put Plaintiff’s claims outside the scope of coverage”. The Court further held that the omission of an uncontroverted fact in the complaint that would have justified Scottsdale’s denial of a defense, significantly impaired Scottsdale’s right to assess Plaintiff’s claims and exercise control over the litigation before the parties entered into the Coblentz agreement.
Duty to Indemnify
The Court held that the standard workers’ compensation and employer’s liability exclusions in CGL policies such as Scottsdale’s precluded coverage for the Plaintiff’s injuries because it is well-established that workers’ compensation is the sole and exclusive remedy available to a worker injured in a manner that falls within the Florida’s workers’ compensation statute.
The Plaintiff argued that 1. by failing to defend its insureds, Scottsdale waived all of its affirmative defenses, including the defense of workers’ compensation immunity; 2. the workers’ compensation exclusion in Scottsdale’s policy doesn’t apply because the consent judgment is not “an obligation under a workers’ compensation law; and 3. the employer’s liability exclusion does not apply. Plaintiff’s arguments were based on Wright v. Hartford Underwriters Ins. Co., 823 So. 2d 241 (Fla. 4th DCA 2002) where the Fourth District Court held that because the insurer refused to defend its insured, it was bound by the settlement waiving the defense of workers’ com pensation immunity and could not assert that defense against the plaintiff’s claim under the consent judgment.
The District Court stated that while the holding in Wright was that an insurer cannot avoid its duty to indemnify by raising an affirmative defense that its insured failed to raise or could have raised in the underlying action, an insurer faced with a Coblentz action has the right to litigate its contractual duty to indemnify on the actual facts of the underlying litigation just as it would in an action against its insured. The Court reasoned that when considering the effect of a Coblentz agreement where the insurer has breached its duty to defend, it is important to recognize the different relationships involved. On the one hand is the relationship in tort between the underlying plaintiff and the insured defendant. On the other hand, the insured’s claim for indemnification of the tort obligation is governed by contract.
Dividing the issues in this way, the Court held that while the insurer can’t avoid its contractual liability by raising affirmative defenses that might have been available to its insured in the tort case, when the insured or Coblentz plaintiff sues the insurer in contract for indemnification, policy exclusions may be raised as defenses, because those issues were neither litigated nor waived in the tort action. The Court clarified that this would be true “even if these policy defenses mirror defenses (e.g., workers’ compensation immunity) that could have been raised to defend the tort claim itself” because one defense is contractual and the other sounds in tort.
As if it was not enough to deny relief to the Plaintiff under the forgoing analysis, the Court went on to make more law that has the potential to be detrimental to an even wider array of future injured plaintiffs. Although it was not necessary to resolve the issue in the current case, the Court went on to say that, even if the workers’ compensation exclusion did not apply, the employer’s liability exclusion in Scottsdale’s CGL policy would still preclude coverage for Plaintiff’s claims because the purpose of workers’ compensation exclusions is to exclude coverage of “those employees protected by the workers’ compensation law, but the language of [the employer’s liability exclusion]. . . exclude[s] liability for injury to employees generally. Although the two may overlap to a certain degree, they are not to be read together to exclude only those employees protected by workers’ compensation.” As it particularly related this Plaintiff, the Court held that, but-for her employment and her employer’s directive to use a particular egress and parking lot, her injuries would not have occurred. Therefore, regardless of whether her injuries amounted to an obligation under Florida’s workers’ compensation statute, the employer’s liability exclusion in Scottsdale’s CGL policy would preclude coverage.
This case is a good example of the principle that “bad facts make bad law”. Clearly, the Court believed that the Plaintiff had been less than forthcoming, that she was attempting to collect twice for the same injury and that justice would not be served by allowing that to happen.
RODRIGUEZ, et al. v. BUILDERS FIRSTSOURCE – FLORIDA, LLC, et al. Case No. 4D09-1716. 4th DCA. January 27, 2010.
This decision is based on an appeal of a non-final order compelling the Plaintiff’s in the underlying action to submit their claim to arbitration. The Plaintiffs below bought a house from one of the Defendants. Mold problems developed in the house and Plaintiffs sued the Defendants in tort for injuries they claim resulted from exposure to the mold. The purchase agreement for the home contained an arbitration clause, however, the Plaintiffs argued that, since they were suing on common law tort principles rather than on the purchase agreement, the arbitration clause in the contract should not apply to the case. The 4th DCA disagreed with the Plaintiffs and held that the language in the contract required that the arbitration clause be enforced..
According to the Court, “[t]here are three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” (citation omitted). The Plaintiffs disputed the second element, whether an arbitrable issue existed and the Court stated that “[t]he determination of whether a particular claim must be submitted to arbitration necessarily depends on the existence of some nexus between the dispute and the contract containing the arbitration clause.”
The Plaintiffs cited cases holding that personal injury claims were not subject to arbitration clauses in home purchase contracts, however, the Court found that those cases were not on point with this case because they involved different contract language from the language in Mr. and Mrs. Rodiguez’ contract. According to the Court, earlier cases that did not require arbitration involved arbitration clauses that were more general in nature, or even suggested by their terms that they related to claims for construction defects. On the other hand, the purchase contract signed by Mr. and Mrs. Rodruguez included a long and comprehensive arbitration clause that specifically mentioned personal injury claims. Based on that, the Court upheld the trial court’s decision to enforce the arbitration clause stating that “[t]he fact that one of the parties to a contract made a hard bargain will not alone avoid a contract.” (citation omitted).
MARTINEZ CHIROPRACTIC CENTER, INC. vs. UNITED AUTOMOBILE INSURANCE COMPANY. Case No. 09-002440 COCE 55. 17th Judicial Circuit in and for Broward County. October 23, 2009.
Insurance. PIP. Mandatory Mediation.
The Plaintiff sued United Automobile Ins. Co., for unpaid PIP benefits. United asserted two affirmative defenses. The Defendant’s 1st affirmative defense alleged that Defendant made payments pursuant to Florida Statute 627.736 and its own policy of insurance. Defendant’s second affirmative defense alleges that “Plaintiff failed to meet all conditions precedent prior to filing the lawsuit in that Plaintiff failed to comply with F.S. 627.745” specifically, Plaintiff’s failure to engage in pre-suit mediation.
Section 627.745(1)(a), Florida Statute (2007), which applies to claims for personal injury and first party property damage claims. says:
“In any claim filed with an insurer for personal injury in an amount of $10,000 or less or any claim for property damage in any amount, arising out of the ownership, operation, use, or maintenance of a motor vehicle, either party may demand mediation of the claim prior to the institution of litigation.”
The 17th Judicial Circuit stated that this section was unambiguous and that it applies to claims for personal injury and claims for property damage, but it does not apply to an action for personal injury protection benefits. (citations omitted).
Citing Select Medical Clinic, Inc. a/a/o Yolette Jean v. United Automobile Insurance Company, the Court held that claims for no-fault benefits are not subject to the pre-suit mediation provisions of Florida Statute 627.745. Select Medical Clinic, Inc. a/a/o Yolette Jean v. United Automobile Ins. Co., 15 Fla. L. Weekly Supp. 1107b (Fla. 11th Cir. Ct. Sept. 2, 2008). The Court construed the absence of any reference to no-fault or first party claims for medical expenses and wage loss in Fla. Stat. 627.745 as the legislature’s intent to exclude PIP claims from said statute. Id.
The Court granted the Plaintiff’s motion to strike the Defendant’s first affirmative defense (that Defendant made payment under F.S. 627.736), but gave the Defendant 10 days leave to amend its answer. The Court granted Plaintiff’s motion to strike the Defendant’s second affirmative defense (that the Plaintiff failed to engage in pre-suit mediation) without leave to amend.