CLOSE X
RSS Feed LinkedIn Twitter Facebook
Search:
FMG Law Blog Line

Archive for the ‘Business Litigation’ Category

Insurance Disclosures Under § 627.4137 and its “Teeth”

Posted on: April 3rd, 2017

teeth[1]By: Jeremy W. Rogers

For those insurance defense attorneys and insurance carriers handling liability cases or claims in Florida, unless you have not been paying attention for the past 35 years, you are aware of Fla. Stat. § 627.4137 and its requirements. This statute gives claimants access to information about a defendant’s liability insurance. This usually occurs at or near the outset of plaintiff’s engagement of his or her attorney because, as is always the case, insurance coverage is a major factor (or, in reality, THE factor) in how a plaintiff pursues the case and negotiations toward settlement. The statute requires a liability insurer to produce a copy of the policy and to disclose the following information, under oath, within 30 days of a claimant’s request: a) the name of the insurer; b) the name of each insured; c) the limits of liability coverage; d) a statement of any policy or coverage defense which such insurer reasonably believes is available to such insurer at the time of filing such statement; and (e) a copy of the policy.

While we know the requirements, a question often arises about what are the consequences of failing to comply. The statute has no provision for a private right of action. See Lucente v. State Farm Mut. Auto. Ins. Co., 591 So.2d 1126, 1127-28 (4th DCA 1992)(stating there is no implicit third party right of action against an insurer for failure to comply); Brannan v. Geico Indemnity Co., 569 Fed.Appx. 724, 728 (11th Cir. 2014)(indicating there is no first-party private cause of action). Without a private right of action, where are the “teeth” in the statute?  Most or all of the decisions on the issue appear to fall within two categories:

  1. Invalidating settlements
  2. Invalidating or striking of defenses or pleadings

In the first category, the courts reason that the purpose of disclosure is to guide the parties in their handling of the case and negotiations. The failure to disclose, or to supplement as new information is obtained, means that the plaintiff is proceeding with false or incomplete information. Thus, the statutory disclosure requirement is an essential term of the settlement. The end result is that motions to enforce settlement are denied or defenses based on a pre-suit settlement are not tenable. There was no settlement because there was not meeting of the minds. See, e.g., Cheveire v. Geisser, 783 So. 2d 1115 (Fla. 4th DCA 2001); Schlosser v. Perez, 832 So. 2d 179 (Fla. 2d DCA 2002).

The second category of cases are usually those where the carrier is sued and assert various policy defenses. The court will invalidate or strike a policy defense as a sanction for failure to comply with § 627.4137. In United Auto. Ins. Co. v. Rousseau, 682 So. 2d 1229 (Fla. 4th DCA 1996), because the carrier failed to comply with § 627.4137, the court affirmed a denial of the carrier’s motion for directed verdict that was based upon the failure of plaintiff to comply with certain policy conditions. In Figueroa v. U.S. Security Ins. Co., 664 So. 2d 1130 (Fla. 3d DCA 1995), the court reversed summary judgment in favor of the carrier for the same reason.

The most disturbing decision is a case where a defendant’s pleadings were stricken entirely and the case went forward on damages only. In Oceanside 932 Condominium Assoc., Inc. v. Landsouth Construction, LLC, Case No. 16-2009-CA-007958, plaintiff made a pre-suit insurance disclosure request under the statute. The defendant responded, but not completely. Shortly before trial, Plaintiff’s counsel discovered additional policies which provided coverage. As a result, upon plaintiff’s motion, the Court struck the defendant’s pleadings, entered a default judgment as to liability, and allowed a trial on damages which resulted in an excess verdict. While this is a trial court decision and not binding, it illustrates that there is real jeopardy in the most egregious failures to comply.

So, to answer the question of whether there are “teeth” in § 627.4137, the answer is certainly a yes. It is important, therefore, that when faced with a disclosure request, one complies with the requirements set forth in the statute.

For any questions, please contact Jeremy Rogers at [email protected].

Georgia’s 8 Year Statute of Limitations for Tort Victims of Unidentified Criminals

Posted on: March 17th, 2017

Image result for generic timelinesBy: Jason Kamp

The longevity of certain crime-related tort claims seemingly increased four-fold.

Georgia tort claims are typically extinguished by the statute of limitations after two years, unless the limitations period is tolled.  One source of tolling is O.C.G.A. § 9-3-99.  It tolls the limitations period for tort claims brought by victims of crime for up to six years.  The Court of Appeals of Georgia revisited the statute’s function in Harrison v. McAfee et al., 338 Ga. App. 393 (2016).  In trying to fix one part of the statute, it appears the court inadvertently broke another.

The July 2016 Harrison case is most noteworthy for its holding, which broadened the tolling statute’s application to tort claims against parties who did not commit the crime in question.  The court held that a bar patron shot during an armed robbery could now toll the statute of limitations even for his claims against the bar.  While the holding’s impact was dramatic and wide reaching, so too is the implication of an overlooked fact of the case—the shooter had not been identified, arrested, or prosecuted.

Under the facts of Harrison, the existence of an actual criminal prosecution is no longer a necessary element for tolling under O.C.G.A. § 9-3-99.  With the limiting language “until the prosecution of such crime or act has become final” plainly written in the statute, it is hard to imagine this is what the textualist Harrison court intended to do. Now, claims arising out of unprosecuted crimes last longer than prosecuted ones.  Either way, the de facto result is that victims of unidentified criminals now have eight years to bring tort claims against non-criminal defendants.  Six years from the tolling statute, plus the regular two.   Allowing non-criminal defendants to get dragged into personal injury lawsuits 8 years after the fact is burdensome enough where there is an identified, prosecuted criminal to apportion fault.  Allowing it where the criminal was never identified is even worse.

For more information, contact Jason Kamp at [email protected].

Eleventh Circuit Applies Spokeo’s Stringent Article III Standing Requirements

Posted on: October 27th, 2016

pencil

 

 

 

By: Robyn Flegal

Earlier this year, the Supreme Court clarified the pleading requirements to establish standing in federal lawsuits arising out of alleged statutory violations. A detailed explanation of the Supreme Court’s Spokeo[1] opinion can be found on the FMGBlogLine. As we observed, “the specific line drawing as to what a plaintiff must allege to establish standing ultimately will be determined by the lower courts.” Recently, the Eleventh Circuit sharpened its pencil on this issue.

In Nicknaw v. CitiMortgage, Inc.,[2] the Eleventh Circuit considered whether Nicknaw had standing to bring suit in federal court. Nicknaw alleged that CitiMortgage violated a New York statute when it failed to timely record a certificate of discharge proving he satisfied his mortgage. Relying upon the Spokeo decision, the Eleventh Circuit dismissed Nicknaw’s appeal for lack of jurisdiction because he failed to allege a sufficient “injury in fact.” The Court explained that an injury in fact, which can include intangible harm, requires “an invasion of a legally protected interest that is concrete, particularized, and actual or imminent.”

Applying this standard, the Eleventh Circuit held that the intangible harm caused by CitiMortgate’s recording delay was insufficient to establish standing because Nicknaw failed to allege (1) that he lost money because of CitiMortgage’s failure to timely record, or (2) that he or anyone else was even aware that the certificate of discharge was not recorded during the relevant time. Furthermore, no material risk of harm existed, as Nicknaw filed his suit two years after CitiMortgage recorded the certificate. The Court noted that while Nicknaw failed to allege a concrete and particularized injury as required under Article III, his failure “does not mean that New York law does not create a right that, when violated, could form the basis of a cause of action in a court of New York.”

In conclusion, plaintiffs alleging a technical statutory violation now face a heightened standard to establish standing in federal court. Plaintiffs pursuing claims based upon violations of state statutes may be more inclined to pursue their claims in the state court system to avoid these stringent standing requirements of Article III.

[1] Spokeo v. Robins, 136 S. Ct. 1540 (2016).

[2] Nicknaw v. CitiMortgage, Inc., No. 2:15-CV-14125-JEM,  — F.3d — (October 5, 2016).

CFPB’s Unilateral Power Structure Held Unconstitutional

Posted on: October 24th, 2016

freelancer-financesBy: Kristian N. Smith

After more than five years of heavy regulation and enforcement targeting financial institutions and the automotive industry, the Consumer Financial Protection Bureau (CFPB) faces a new hurdle. Last week, the D.C. Circuit Court of Appeals ruled that the structure of the CFPB is unconstitutional.

The court emphasized the lack of oversight over the CFPB’s judgments and the “unilateral power” given to the agency’s director, explaining that, other than the President, the Director is the “single most powerful official in the entire United States Government, at least when measured in terms of unilateral power.”

The CFPB — created in the wake of the financial crisis by the Dodd-Frank Act as a consumer watchdog — has the ability to “administer, enforce, and otherwise implement federal consumer financial laws, which includes the power to make rules, issue orders, and issue guidance.”

Although the Director is appointed by the President and confirmed by the Senate, neither the Director nor the CFPB are subject to direct oversight from any of the branches of government, and the Director can only be removed for cause.

The D.C. Circuit’s ruling changes this structure.  Now, the CFPB will be given presidential oversight, with the sitting president able to supervise, fire, and direct the head of the CFPB.

Many groups who have been against the CFPB’s existence since its creation welcome this ruling, including those in the financial industry.  Other groups, including those involved with financial reform and consumer banking, have denounced the ruling, calling it a loss for consumers, the very group the CFPB was created to protect.

To date, the CFPB has realized more than $11.7 billion in “relief,” meaning penalties and other items such as forgiven debt balances, passing the benefits on to more than 27 million consumers. The ruling could, however, weaken the CFPB’s effectiveness and its ability to pursue certain cases and retroactively apply new rules.

The ruling could also have wider-reaching implications.  For example, other agencies whose structures are similar to the CFPB’s — including the Office of the Comptroller of the Currency and the Federal Housing Finance Agency — could face similar changes to their power and authority.

The D.C Circuit’s decision will not likely go unchallenged.  A CFPB spokeswoman said that the agency is “considering options for seeking further review of the Court’s decision.” In addition, we will likely see litigation over whether the CFPB’s past rulings, which, according to the D.C. Circuit, took place under an unconstitutional structure, will remain binding.

District Court Dismisses Suit for Failure to Meet the Pleadings Requirements Under the U.S. Telephone Consumer Protection Act

Posted on: October 3rd, 2016

Headset on a laptop computer keyboardBy: A. Ali Sabzevari

A federal judge recently dismissed a class action lawsuit accusing CrossCountry Mortgage, Inc. of contacting consumers nationwide with unsolicited calls, finding that plaintiffs did not clearly show the mortgage lender made the calls in dispute. Filed in May, the lawsuit alleged that CrossCountry contracted with Direct Source to conduct a telemarketing campaign to promote CrossCountry’s mortgages. The lawsuit alleged the defendants’ “overzealous marketing” included repeated, auto-dialed or “robo” calls to consumers’ cellphones without their consent.  The Judge dismissed claims that CrossCountry violated the U.S. Telephone Consumer Protection Act, 47 U.S.C.§ 227 et seq. (“TCPA”).

Passed in 1991 to limit nuisance phone calls, the TCPA bars automatically dialed calls to cell phones without permission.  Companies are not generally liable under the TCPA for calls made on their behalf by third-party telemarketers, but they can be liable if the telemarketer acted as their agent. Under FCC rules, a telemarketer may be an agent if it received a script from the company to use on calls or proprietary information about the company’s products or customers.

To state claim under 42 U.S.C. § 227(b), a complaint must allege that a defendant (1) made any call, (2) using any automatic telephone dialing system, (3) to any telephone number assigned to a pager service or cellular telephone service, (4) absent the prior express consent of the recipient.  To state a claim under § 227(c), moreover, a plaintiff must allege (1) receipt of more than one telephone call within any 12-month period (2) by or on behalf of the same entity (3) in violation of the regulations promulgated by the FCC.

The district court found that plaintiffs failed to allege that CrossCountry physically made or initiated the disputed calls or that Direct Source was acting as CrossCountry’s agent when it made calls.  Attorneys should be cognizant of the federal pleading requirements, especially in cases involving the TCPA, where a failure to plead with specificity could result in a quick dismissal of the lawsuit.

The case is Seri v. CrossCountry Mortgage, Inc. et al., U.S. District Court, Northern District of Ohio, Case No. 16-cv-01214-DAP (Sept. 28, 2016).