Thursday, August 16, 2012

Making Sense of Non-Delegable Duty

There are a number of legal doctrines under Florida Law that, when fully analyzed, don't make a whole lot of sense. The economic loss rule (which will be discussed in a subsequent post) is especially nonsensical. However, the concept of non-delegable duty is no slouch either.

Applied correctly, the concept makes sense. There are certain duties that are so important (e.g., keeping people safe around explosives, protecting people in positions of special trust/vulnerability), that their proper performance can not be delegated to a third party or independent contractor. The general concept is that you can delegate the performance of the duty, but you may not delegate away the liability for negligent performance of that duty. So even if a hospital can legally hire nurses that are independent contractors, it can't legally escape liability for a nurse's negligent performance of his or her job.

The practical effect of the non-delegable duty doctrine is to override/abrogate Florida's pure comparative negligence statute. If your contractor negligently breaches your non-delegable duty, you are essentially jointly and severally liable for that negligence. This is important when you are hiring contractors who are undercapitalized and/or uninsured, because it ensures that an injured party will be able to recover from someone for their injuries.

However, in practice, things get very confusing when you have two or more solvent/insured defendants in a case. For example, a landowner and a large security company. How do you apportion fault in that context? Does the non-delegable nature of the landowner's duty somehow require them to exercise a higher standard of care? Florida courts have not answered this question.

Ideally, where you had a solvent co-defendant, non-delegable duty would not be an issue. The jury can just apportion fault to the parties for their respective wrongdoing. Where the contractor/co-defendant is insolvent, or of questionable solvency, the ideal way to handle this doctrine, in my opinion, would be to have the parties stipulate prior to trial that the party with the non-delegable duty will essentially be jointly/severally liable for the damages of its contractor, with a subsequent right to recover in contribution. This would allow the jury to apportion fault without getting confused, which would determine the amount of contribution the party with the non-delegable duty could seek from its contractor. Unfortunately, contribution has been abolished in Florida (all we have left is common law indemnification, which requires a showing of no fault whatsoever). Again, there are really no rulings that clearly lay out this sane set of rules. Moreover, this issue is not so common that there is some unspoken rational way of handling things. Instead, you get a lot of uncertainty. For example, in West Boca Medical Center, Inc. v. Marzigliano 965 So. 2d 240 (Fla. 3rd DCA 2007), discussed below, the jury was given an instruction on non-delegable duty, and it totally messed up their apportionment of fault. That means that the jury's verdict would be useless in a subsequent action for contribution. That's a waste of judicial resources.

Moreover, it isn't entirely clear when a non-delegable duty is imposed (i.e., the scope of the doctrine). Common carriers and hospitals are subject to it. So are people who do ultrahazardous activities. But there is also a line of cases which strongly suggest that just about all property owners are subject to a non-delegable duty of care as well. I don't think this is bad policy, I just think the law needs to be clearer.

Having laid out my own personal thoughts on the matter, I now present you with an overview of the law, with a focus on premises liability.

 U.S. Security Services Corporation v. Ramada Inn, Inc. 665 So. 2d 268 (Fla. 3rd DCA 1996).
In this negligent security case, the court found Ramada to be liable for the negligence of its independent contractor based on its non-delegable duty to invitees. One could argue that this holding is limited to innkeepers/hotels.

The Court held:
(1) Ramada had a non-delegable duty to the plaintiff, as Ramada’s business invitee, to provide the plaintiff with reasonably safe premises, including reasonable protection against third party criminal attacks; and (2) Ramada could contract, as it did with USS, an independent contractor, to provide the required security for its guests, but it was nonetheless vicariously responsible for any negligence of USS in providing such services based on the non-delegable duty theory. [...]

It therefore follows that Ramada and USS are jointly and severally liable for USS’s 35% negligence, and that Ramada is individually liable for its own 50% negligence, as reflect in the original judgment entered by the trial court based on the Jury’s verdict.

On rehearing, the 3rd DCA elaborated upon its holding:
The central flaw in Ramada’s reasoning is that its duty to provide its business invitees with reasonably safe business premises, including reasonable protection against third party criminal attacks, is a non-delegable duty which it cannot contract out of by hiring an independent contractor.

Much of the court’s supporting authority specifically mentioned the duty of hotels/innkeepers (traditionally viewed as common carriers), but its holding was stated in general terms.

Armiger v. Associated Outdoor Clubs, Inc. 48 So. 3d 864 (Fla. 2nd DCA 2010)
In this case, the plaintiff slipped and fell on a puddle of liquid at a race track, where the race track owner had hired an independent contractor to clean the premises. After overturning the trial court’s denial of the plaintiff’s motion to amend his complaint, the Second DCA held that the owner had a non-delegable duty to maintain its premises in a reasonably safe condition:

[W]hen a business owner is subject to a nondelegable duty, the potential responsibility of an independent contractor is not relevant to the business owner’s liability [to the injured party].


The statute [Fla. Stat. §768.0710] imposes a duty of reasonable care on persons in possession or control of business premises to maintain the premises in a reasonably safe condition for the safety of business invitees on the premises. This statutory duty of care is nondelegable ... It follows that Association could not avoid liability for the breach of its statutory duty by contracting the maintenance and cleaning function at the track to others.

Note that the court’s imposition of a duty was based on Fla. Stat. §768.0710 (“transitory foreign objects or substances”) which has since been repealed. However, if the injury in your case occurred before the original statute was repealed,  Fla. Stat. §768.0755 should not be applied retroactively.

Additionally, the replacement statute (Fla. Stat. § 768.0755) states that “This section does not affect any common-law duty of care owed by a person or entity in possession or control of a business premises.” Nothing in the replacement statute affected the owner’s duty of care to maintain its premises – it merely changed the Plaintiff’s burden of proof.

West Boca Medical Center, Inc. v. Marzigliano 965 So. 2d 240 (Fla. 3rd DCA 2007).
In this case, a non-employee nurse slipped and fell while entering a hospital room. She sued the hospital as well as the (bankrupt) independent contractor that provided housekeeping services. The Third DCA upheld the jury’s (somewhat confusing) verdict, and affirmed the trial court’s determination that the hospital’s duty to maintain the floor was non-delegable:

The hospital first argues that it could only be liable vicariously and only for the wrongdoing of Signature [contractor] as the active tortfeasor. The jury found both the Hospital and Signature to be Negligent...However, because Signature’s duties had been determined by the trial court to be non-delegable, the jury was given an instruction on the point. The jury was instructed that, “as a matter of law” the Hospital was responsible for any negligence regarding the maintenance of the floor involved in the accident. The jury’s verdict finding “0%” comparative negligence on the part of Signature is entirely consistent with the instruction - the jury apparently understood that any responsibility on the part of Signature was to be ascribed to the Hospital.

One may argue that this holding is limited to medical centers, as they are traditionally subject to a non-delegable duty to provide medical care and treatment, but the plaintiff in this case was non-employee nurse rather than a patient. This would, presumably, make the plaintiff a business invitee. 

As you can see, the jury instructions issued by the trial court led the jury to fully apportion fault to the party with the non-delegable duty. This would likely not have occurred in the absence of this instruction. This is a bad outcome. It allows the contractor to escape all liability for negligence, which is bad policy. Requiring negligent parties to pay for their negligence deters them from being negligent in the first place. The point of non-delegable duty is to ensure that a Plaintiff can recover, where the contractor is insolvent. As a litigator, this is a pitfall you should seek to avoid at all costs.  (Unless you represent the contractor, I suppose).

Mortgage Guarantee Insurance Corp. v. Stewart 427 So. 2d 776 (Fla. 3rd DCA 1983).
This case results from a wrongful death of a child invitee, where the landowner defendant was held liable for the death based on the negligence of an independent contractor. The Third DCA, implicitly recognizing that the landowner owed a non-delegable duty to the invitee, held that the landowner could seek indemnification from the negligent contractor after the fact:

Moreover, it has been established that a defendant who has been held liable, without personal fault, to a business invitee for a breach of a nondelegable duty to maintain his premises in reasonably safe condition may recover [common law] indemnity against his negligent independent contractor hired to discharge the nondelegable duty.


First, it is urged that the plaintiff MGIC was at fault in this case, thereby barring indemnity, because it had no authority to hire an independent contractor [defendant Stewart] to perform its admitted nondelegable duty to maintain the subject premises in a reasonably safe condition. It is said that only the plaintiff MGIC through its employees could perform this duty and its failure to do so constitutes fault in itself. This position is ill-conceived as the law has always permitted a person to hire an employee or an independent contractor to perform a non-delegable duty owed by that person to third parties; the law only precludes such person from escaping, by that devise, vicarious responsibility for the proper performance of that nondelegable duty.

Smith v. Mayes 851 So. 2d 785 (1st DCA 2003).
In this case, the defendant homeowner was sued for the allegedly negligent acts of his independent contractor broker. The court recognized that the Defendant had a non-delegable duty to use reasonable care in maintaining the property and to give the purchaser warning of any concealed perils, but held that no breach of that duty had occurred under the facts in this case.

We agree that [the homeowner] did have a non-delegable duty to use reasonable care in maintaining his premises in a reasonably safe condition, and to give invitees warning of any latent and concealed perils on the premises. Nevertheless, appellants did not present any evidence that the premises were unsafe. The purported negligence lay in [the Broker’s] act of opening the garage door to the home only partially, contrary to Dotty Smith’s expectation that the door was fully raised, which caused her to hit her head on the door.

In other words, the Court held that the defendant owed a non-delegable duty to invitees, but that no negligent breach of this duty occurred.

Food Lion, LLC v Monument/Julington Assoc. Ltd. Partnership 939 So. 2d 1106 (Fla. 1st DCA 2006).
In this rather confusing opinion arising out of a sidewalk slip and fall, the First DCA overturned the lower court’s granting of summary judgment in favor of the shopping center owner against the injured plaintiff. Food Lion (the tenant and second defendant) argued that the summary judgment was improper because the shopping center owner had a non-delegable duty to keep the premises safe. The First DCA apparently agreed, issuing the following holding:

Accordingly, we reach Food Lion’s contention that summary judgment should be reversed because the shopping center owner’s nondelegable duties to [plaintiff] did not, on the facts developed below, rule out liability on the part of the owner for her injuries. A landowner owes a business invitee a duty not only to react to hazards of which it has notice but also to inspect to ensure conditions are safe, or at the least, that hazards (unless open and obvious) are discovered and warned against. [...]

Whether a landlord’s duty to maintain the premises has been breached is ordinarily a question for the jury to decide... We reverse and remand for a trial at which evidence of notice or lack of notice can be adduced together with all the evidence on the plaintiff’s claims.

Although the language is muddled, Food Lion argued that the summary judgment should be overturned because the landlord had a non-delegable duty, and the First DCA did overturn the summary judgment on those grounds.


I basically started this post with my conclusion. If you have a Plaintiff claiming non-delegable duty, and there is a co-defendant involved, I strongly suggest that you have a pow-wow pre-trial so that your apportionment of fault doesn't get all messed up like it did in Marzigliano.

Wednesday, August 15, 2012

Insurance: When does a material misrepresentation justify denial of coverage?

When does an insured's material misrepresentation justify denial of insurance coverage?

Fla. Stat. § 627.409(1) establishes the standards for voiding coverage under an insurance policy for misrepresentation. It provides:

(1) Any statement or description made by or on behalf of an insured or annuitant in an application for an insurance policy or annuity contract, or in negotiations for a policy or contract, is a representation and is not a warranty. A misrepresentation, omission, concealment of fact, or incorrect statement may prevent recovery under the contract or policy only if any of the following apply:

   (a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.

   (b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.

Thus, in order for an insurer to properly void an insurance contract for misrepresentation, the insurer must prove that the misrepresentation was either “(1) fraudulent; (2) material to the risk; or (3) the insurer in good faith either would have not issued the policy of would have done so only on different terms had the insurer known the true facts.” Continental Assurance Co. v. Carroll, 485 So. 2d 406, 409 (Fla. 1986).  Note also that the misrepresentations need not be knowingly made in order to void the policy. Id. at 408 (citations omitted).

Florida courts have found a material misrepresentation, voiding coverage, where: (1) the insured fails to list a member of the household[1]; (2) the insured fails to list an additional driver[2]; (3) the insured fails to disclose prior losses or cancellation of coverage by a prior insurer[3]; (4) the insured misrepresents military status[4]; (5) the insured misrepresents marital status[5]; (6) the insured misrepresents the automobile’s location[6]; (7) the insured misrepresents whether the automobile had been modified.[7] 

Note that in each of the aforementioned cases, the party seeking to void coverage was required to prove that had the omitted/misrepresented information been known, either (1) the insurer would not have provided coverage; or (2) the insurer would have charged a higher premium for coverage. See e.g., Mercury Ins. Co. v. Markham, 36 So. 2d 730 (Fla. 1st DCA 2010); United Automobile Ins. Co. v. Salgado, 22 So. 3d 594, 597 n. 1 (Fla. 3d DCA 2009). Courts generally examine the insurer’s underwriting standards/policies and look to deposition testimony of the insurer’s adjuster for evidence of whether coverage would have been denied/more expensive. See e.g. Salgado, 22 So. 3d at 597 n.1 (finding that policy would have had a higher premium based on deposition testimony of insurer’s underwriting supervisor and PIP litigation adjuster); Markham, 36 So. 3d at 731 (finding that policy would not have been issued based on express direction to insurance broker in application).

[1] United Automobile Ins. Co. v. Salgado, 22 So. 3d 594 (Fla. 3d DCA 2009).
[2] Progressive American Ins. Co. v. Papasodero, 587 So. 2d 500 (Fla. 2d DCA 1991).
[3] GRG Transport, Inc., v. Certain Underwriters at Lloyd’s London, 896 So. 2d 922 (Fla. 3d DCA 2005).
[4] United Svcs Automobile Assoc v. Clark, 757 So. 2d 554 (Fla. 4th DCA 2000).
[5] Gov’t Employees Ins. Co. v. Decheona, 610 So. 2d 480 (Fla. 3d DCA 1992).
[6] Penaranda v. Progressive American Ins. Co., 747 So. 2d 954 (Fla. 2d DCA 1999); Bleasdell v. Underwriters Guarantee Ins. Co., 707 So. 2d 411 (Fla. 1st DCA 1998).
[7] Mercury Ins. Co. v. Markham, 36 So. 3d 730 (Fla. 1st DCA 2010).

 Nicholas Mermiges, Esq. is a senior associate at the law firm of Hightower, Stratton, Wilhelm in Miami, FL. For a consultation, call (786) 364-8314. 

Tuesday, August 14, 2012

Personal Jurisdiction in a Breach of Contract Action

Personal Jurisdiction in a Breach of Contract Action

          The personal jurisdiction issue has been heavily litigated in Florida courts. Accordingly, there is a boatload of precedent out there regarding whether or not the court may impose jurisdiction in accordance with (1) the Florida Long Arm statute (Fla. Stat. §48.193) and (2) the Due Process clause of the 14th Amendment. What follows is a brief summary of the procedure for challenging personal jurisdiction, and a list of factors that the Court weighs in its analysis relating to same.
Procedure for Challenging Personal Jurisdiction
          So long as Plaintiff has pled prima facie facts supporting the exercise of personal jurisdiction, a Defendant who moves to dismiss the case is required to provide a sworn affidavit setting out facts in support of said motion.[1] This affidavit generally relates to business contacts with the foreign state (or lack thereof). The burden of pleading then shifts to the Plaintiff, who then must provide its own affidavit in support of the exercise of personal jurisdiction.[2] If the Plaintiff’s and Defendant’s affidavit can be “reconciled,” (i.e., if they do not conflict with respect to the underlying facts) the Court may make a ruling based upon same. However, if the affidavits conflict (i.e., there are disputed issues of material fact relating to personal jurisdiction), the Court should allow the parties to conduct limited discovery, prior to holding an evidentiary hearing on the issue.[3] Determinations as to personal jurisdiction are reviewed de novo. Note that any attempt to affirmatively litigate the case beyond the personal jurisdiction issue will result in waiver of Defendant’s personal jurisdiction objections.[4]

[1] See e.g., Venetian Salami Co. v. Parthenais, 554 So. 2d 499, 502-503 (Fla. 1989); World Metals, Inc. v. Townley Foundry and Machine Co., 585 So. 2d 1185 (Fla. 5th DCA 1991).
[2] Venetian Salami Co. v. Parthenais, 554 So. 2d 499, 502-503 (Fla. 1989).
[3] Id.
[4] Fla. Stat § 48.193 (3).

Factors in Court's Analysis
       This so-called "two step" personal jurisdiction analysis actually relies upon one large set of non-dispositive factors, which generally weigh the Defendant's business contacts with the forum state. These factors include:
(1) whether officers of the Defendant corporation traveled to the state of Florida in furtherance of their business activities[2];
(2) whether sales demonstrations were made in Florida[3];
(3) whether the agreement itself was executed in Florida[4];
(4) whether the contract between the parties encompassed delivery of the goods to Florida[5];
(5) whether the Defendant physically brought the goods to Florida in order to sell them[6];
(6) whether the Defendant possesses and maintains a license to do business in Florida[7];
(7) whether the Defendant serves clients in Florida[8];
(8) the amount of revenue obtained as a result of Defendant’s sales in Florida[9];
(9) the number of years the Defendant has been selling its product in Florida[10];
(10) the number of calls made to Florida for the purpose of making sales[11];
(11) whether the Defendant advertised in Florida[12];
(12) whether the Defendant has a physical presence in Florida (e.g., offices, PO Box, telephone, employees, bank account, or property)[13]

 Note that in the context of internet sales cases, an additional set of factors is employed in the court's analysis.

[1] Future Tech. Today, Inc. v. OSF Healthcare Sys., 218 F. 3d 1247, 1249 (11th Cir. 2000).
[2] World Metals, Inc. v. Townley Foundry and Machine Co., 585 So. 2d 1185 (Fla. 5th DCA 1991)
[3] Plantation-Pioneer Industries Corp v. Omega Insurance Co., 689 So. 2d 1293 (Fla. 4th DCA 1997)
[4] Atlantis Marina & Yacht Club, Inc. v. R&R Holdings, Inc., 766 So. 2d 1163 (Fla. 3d DCA 2000)
[5] World Metals, Inc. 585 So. 2d 1185; see also Homeway Furniture Co. of Mount Airy, Inc. v. Nance, 822 So. 2d 533, 536 (Fla. 2d DCA 2002) (holding that there was no personal jurisdiction where furniture company arranged to have a third party carrier ship goods to Florida).
[6] Atlantis Marina & Yacht Club, Inc., 766 So. 2d 1163.
[7] Pathman v. Grey Flannel Auctions, Inc., 714 F. Supp 2d 1318, 1324 (S.D. Fla. 2010)
[8] Id. 
[9] Id.; see also Homeway Furniture Co. of Mount Airy, Inc., 822 So. 2d at 536.
[10] Travel Opportunities of Fort Lauderdale, Inc. v. Walter Karl List Management, Inc., 726 So. 3d 313 (Fla. 4th DCA 1998);
[11] Pathman, 714 F. Supp 2d at 1324.
[12] Id.
[13] Travel Opportunities of Fort Lauderdale, Inc., 726 So. 3d 313; Plantation-Pioneer Industries Corp., 689 So. 2d 1293; Fla. Stat. 48.193(1)(a)