Florida Tort Reform Law: A Short Summary of Some of Its Consequences and Effects

On March 24, 2023, Florida’s Governor signed into law HB 837, transforming Florida tort law. With two important exceptions, the law applies to new lawsuits filed after March 24, 2023.

Salient Points of Select[1] Sections of the Law

·         Medical Bills. The law limits the introduction of evidence for medical damages at trial. The law limits evidence of paid medical bills and future medical care to the amount paid or needed for services regardless of the source of the payment:

o   Effects

• Defense experts on the appropriateness of the amount of medical bills required.

• Plaintiff-oriented doctors will rethink their medical treatment and billing approach.  

• Lower medical expenses should reduce non-economic damages awards and nuclear verdicts and increase settlements.

• More reasonable life care plans. 

• Reduced abuse of letters of protection.

·         Letters of Protection. If a Plaintiff receives medical services subject to a letter of protection, the plaintiff must disclose: a copy of the letter of protection; all billing for medical expenses, itemized and coded; whether the provider sold the accounts receivable to a third party, the name and dollar amount paid by the third party; whether the plaintiff had health insurance at the time of treatment and the identity of the health care coverage provider; and whether the claimant was referred for treatment under a letter of protection and, if so, the identity of the person who made the referral.

o   Effect

• Brings letters of protection out in the open. Before, the law stated that there was an attorney-client privilege in communications related to an attorney’s referral of a client for treatment. Juries will now hear about letters of protection, what they mean, the financial relationship they create and the doctor's financial interest in the case's outcome.  

Comparative Negligence. The law changes Florida's comparative negligence system from a pure comparative negligence system to a modified one, so that a plaintiff who is more at fault for their injuries than the defendant may not generally recover damages from the defendant.

o   Effect

• Avoids outsized awards against nominally negligent defendants.  In matters where the plaintiff was significantly at fault, plaintiffs will argue for more considerable damages so that defendants with low negligence pay an outsized portion of damages. However, defendants can now have a defense verdict if plaintiff found 51% at fault. 

Bad Faith. The law modifies bad faith law to allow an insurer to avoid third-party bad faith liability if the insurer tenders the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of the claim.

o   Effects 

• Ends “set-up” claims. Before this law, the system incentivized plaintiffs to devise situations that led to a bad faith claim to obtain larger settlements.   

• Reduce bad faith claims.  Allowing insurers enough time to evaluate a claim will result in more comprehensive claims handling and fewer bad faith claims.    

[1] For more information on Florida tort reform law, please feel free to reach out to me at mov@miamimaritimelaw.co or 305.377.3700.

The 4th DCA Reaffirms That A Contract Cannot Waive Strict Liability Claims

In Harrell v. BMS Partners, LLC, No. 4D22-121, 2022 Fla. App. LEXIS 7439 (4th DCA Nov. 2, 2022), the Florida’s Fourth District Court of Appeals has held that an exculpatory clause purporting to absolve a retailer of liability from strict liability in tort for injuries causes by defects in products it places on the market violates public policy.

The facts are as follows: Charles Randolph Harrel (the Plaintiff) purchased a Suzuki brand motorcycle from BMS Partners, LLC (the Defendant). The signed sales contract contained the following exculpatory language:

“releasing BMS from any liability or responsibility for personal injury, or death or damages to property… of which any damages caused by his ownership or by the negligence of BMS…taking motorcycle means expressly assuming risk of Danger that may be associated with the operation of the motorcycle on the streets… Indemnify and hold Harmless BDS from any and such claims or causes of action by whomever and whenever presented… I am aware that this is a release of liability and a contract between myself and BMS…”

Shortly, after receiving the motorcycle, the Plaintiff was involved in an accident and sustained serious bodily injuries. Plaintiff proceed to sue for negligent assembly, servicing, setting up, repair and/or inspecting the motorcycle, but more importantly, the Plaintiff sued Defendant as a seller in the stream of commerce under strict products liability and negligent produce liability arising out of manufacturing, design, defect and failure to warn of those defects. The Plaintiff included three strict product liability counts, as well as three negligent product liability counts but failed to add Suzuki as a defendant.

Breaking down the exculpatory clause. the court noted that while the Plaintiff agreed to release the Defendant for any liability or responsibility in any way for personal injury or death in the first sentence, the second sentence contained language limiting the scope of the release to claims which may be due or in part to have been caused by the negligence or gross negligence of D. Therefore, the count found that the parties agreed the exculpatory clause would only release liabilities sounding in negligence.

The court analyzed the current state of the law that as a matter of public policy, rather than contractual understanding, a duty should be placed on the manufacturers to warrant the safety of their products. The court found that it logically follows that an exculpatory clause purporting to absolve a retailer of  liability from strict liability in tort for injuries causes by defects in products it places on the market violates public policy as a result.

The court rejected the Defendant’s assertion that the Plaintiff could still sue Suzuki ( the manufacturer) and this would therefore not violate public policy. The court found that as a retailer, the Defendant is within the motorcycle’s distributive chain and thus cannot insulate itself from strict liability in tort merely because the Plaintiff has other potential remedies available.

While this case is not “earth shattering”, it does reiterate the burdens retailers have in defending against strict liability claims for products they do not manufacture. We are beginning to see distribution contracts where the manufacturer is attempting to hold retailers solely responsible for defending these claims. We have successfully negotiated distribution contracts that remove these terms of the contract, as well as more fairly distribute the risk between those in the manufacturing/production/distribution/retail chain.

If you are interested in receiving a copy of this opinion or have questions regarding this opinion, please feel free to reach out to us at blog@miamimaritimelaw.co.

Himalaya Clause Found Ambiguous in Florida State Court--What Now?

In the case of Aquachile, Inc. v. Williams, 2021 Fla. App. LEXIS 15944 (Fla. 4th DCA Dec. 22, 2021), a passenger of a Royal Caribbean cruise line fell extremely ill after being served contaminated fish while aboard the ship. The passenger claims that the fish originated from AquaChile, although the fish was sold to at least one other company prior to it being sold to Royal Caribbean. The passenger filed her complaint in Broward County Circuit Court against AquaChile, and two other companies in the supply chain, for strict liability, negligence, violations of the Florida Food Safety Act, breach of implied warranty, and breach of express warranty. Prior to the cruise, Royal Caribbean provided the passenger with a “guest ticket booklet” which contained the contract between the cruise and the passengers. On the cover of the booklet, and in bold print at the top of the first page of the contract, was an “important notice” advising the passengers to carefully read the contract, directing attention specifically to section 3 and section 9 through 11. In Section 9(a), printed in all-capital letters, the forum clause stated that “any dispute between the passenger and the carrier must be litigated in Miami-Dade County.” However, the Himalaya clause at issue, was contained in section 2(a), the definitions section of the contract. In non-bold, regular-case letters,  the first two sentences of section 2(b) define "carrier" to include the vessel, the operator, and related entities and individuals.[1] Then, the third sentence, the Himalaya clause, stated in relevant part that: “[t]he exclusions or limitations of liability of Carrier set forth in the provisions of this Ticket Contract, as well as all rights, defenses or immunities set forth herein, shall also apply to and be for the benefit of agents, independent contractors, concessionaires and suppliers of Carrier . . . .”

[1] "Himalaya clause"—purports to extend the forum selection clause, among other rights and defenses, to parties other than the carrier.

AquaChile filed a motion to dismiss the passenger’s claim on two grounds. First, AquaChile argued that Broward County Circuit Court was an improper venue pursuant to the forum selection clause contained in the guest ticket booklet provided to the passenger by Royal Caribbean. Second, AquaChile argued that it was entitled to enforce the forum selection clause, pursuant to the Himalaya clause, as a "supplier" of Royal Caribbean.

The Circuit Court denied AquaChile’s motion to dismiss and held that the Himalaya clause did not apply to AquaChile as an indirect supplier to Royal Caribbean, and was not engaged in the sort of maritime activity that would be expected to be covered under the contract. Furthermore, the circuit court held that the Himalaya clause was not reasonably communicated to the plaintiff due to its physical characteristics and ambiguous language.

The question to the District Court for consideration was whether the Himalaya clause in the plaintiff’s cruise ticket contract applies in her suit against a non-party to the contract. The District Court found that it did not. First, the appellate court found that the interpretation of the Himalaya clause was ambiguous and could not be construed to extend the rights and defenses of Royal Caribbean to AquaChile. AquaChile sold the contaminated fish to at least one company before reaching Royal Caribbean. Thus, Royal Caribbean had an indirect, tangential relationship with AquaChile, such that AquaChile cannot be considered a supplier of Royal Caribbean pursuant to the contract. Moreover, AquaChile’s non-maritime business of farming and selling fish to several on-land purchasers was not deemed a maritime activity just because “some of its fish ended up being sold to Royal Caribbean at the end of the supply chain.”  In sum, the interpretation of the Himalaya clause was ambiguous as applied to AquaChile and can be construed against them.

 Second, the appellate court found that the Himalaya clause was not reasonably communicated to the plaintiff based on its physical characteristics, and the plaintiff’s inability to become meaningfully informed of the clause and reject its terms.  Not only was section 2(a) not included in the “important notice,” or anywhere else in the contract to capture the plaintiff’s attention, it was written in non-bold, regular-case letters. Therefore, section 2(a) could not have suggested to the plaintiff or any reader that it contained a clause extending the rights and defenses of Royal Caribbean to unrelated parties where the Himalaya clause was buried in fine print in the definitions section of the contract.

This case is very important where carriers and their servants are involved, as now, a Florida state court has refused to extend the clause to a party that was clearly a provisions provider to the carrier. The reasoning that the provider was tangentially related should be of no import in the cruising context, as that same provider would be entitled to assert a maritime lien if it had not been paid by that same carrier. It is the second holding, that the clause was not reasonable communicated to the passenger is more troubling, as there is no binding precedent requiring Himalaya clauses to be bolded and conspicuous. This holding will require all carriers to rethink their Himalaya clauses to ensure they are “conspicuous enough” for a consumer.

If you are interested in receiving a copy of this decision and wish to contact me to discuss it further, please feel free to do so by calling 305.377.3700 or reaching out to me at blog@miamimaritimelaw.co.
 

Force Majeure Ruling in Miami Should Change How Contracts Are Written

In what is reported in the Daily Business Review to be the first ruling of its kind in Miami-Dade County, a popular retail store on Lincoln Road in Miami Beach is required to pay rent despite hardships caused by the COVID-19 pandemic. Guess? Retail Inc., the clothing store, alleged that the COVID-19 pandemic left it unable to pay its rent. The retailer refused to pay after it had to close its operations around March of last year — something Guess said was done to protect the health and safety of customers and employees, and comply with government safety guidelines. The Denison Corporation, a Miami Beach-based family business, sued in May for $291,162 in rent and other expenses owed over three months. But Guess turned around and countersued Denison. The retailer sought a refund on some payments it had made since March 17 and said it should get a break going forward, according to the suit.

The lease states that the term force majeure encompasses, “acts of God, labor disputes (whether lawful or not), material or labor shortages, restrictions by any governmental authority, civil riots, floods, or other cause beyond the control of the party asserting the existence of force majeure.” It also said, “Notwithstanding anything to the contrary in this lease, tenant shall not be excused from payment of base rent, operating costs, or any other sum due under this lease by reason of force majeure.”

Miami-Dade Circuit Court Judge Peter Lopez shot down Guess’ countersuit, saying the lease is clear that rent still has to be paid during force majeure events, including government-imposed closures for the pandemic. A force majeure clause is common in leases and can sometimes allow a party to not fulfill their contract when there is a circumstance beyond their control or an “act of God.”

At the time this decision was entered, it was reported to be a case of the first impression. It is likely to be relied upon by other jurists as litigation regarding force majeure provisions move through the Miami-Dade court system. The ruling is a clear win for landlords who still need that income to pay their taxes (no rebate there), expenses and to continue operations. It is hoped that parties facing these issues will attempt to work together to avoid these sorts of lawsuits, since the pandemic has caused hardships for everyone. In the meantime, lawsuits such as these will change the way all contracts are written in the future to make sure that pandemics are specifically named as an example of a force majeure incident and where the risk of such a situation should fall.

If you are interested in receiving Judge Lopez’ decision or wish to discuss the issue of force majeure further, please feel free to reach out to me at blog@miamimaritimelaw.co or 305.377.3700.