All entries for November 2016

The Corporate Shell Game - Enforcing Judgments Against Successor Entities

One challenge facing holders of judgments against a company that often arises is that of successor entities.  Imagine holding a judgment against a company called “Bob’s Widgets” only to see that company dissolved with no assets remaining and then only to see a company called “Bobby’s Widgets” open in the same space, with the same equipment and owners, and selling the same goods to the same customers.  The frustration caused by this ‘shell game’ can overwhelm litigants and attorneys alike.

A recent decision made clear that parties are allowed to seek recovery against a successor, alter-ego, or continuation of business entity either during or after judgment. Oceanside Plaza Condo. Ass'n v. Foam King Indus., No. 3D15-2449, 2016 Fla. App. LEXIS 16667, at *7 (3d DCA Nov. 9, 2016).  The holding of this case and its predecessors allows claimants to pursue a company that is essentially a business entity continuing the same operations as either a successor or alter-ego as part of the first judgment or after that judgment is entered.  Id.

This flexibility helps ensure the proper defendants are included in a case and also helps preserve both judicial economy (read: not wasting the court’s time) as well as the time and monetary resources of the aggrieved party. 

If you have questions about your rights or you believe a company is playing a ‘shell game’ to avoid your valid claims, reach out to the litigation attorneys of Icard Merrill for a consultation. 


Florida's Impact Rule for Emotional Distress in Tort Actions

Prospective clients often wonder whether they can try to collect “pain and suffering” damages from another person or party when a dispute arises.  Outside of certain somewhat limited types of claims (e.g., employment discrimination/retaliation, negligence cases, etc.), these types of damages are not normally available to aggrieved parties complaining of negligent behavior.   

A recently decided case reminds parties of the greatest hurdle preventing “pain and suffering” (usually referred to as ‘non-economic damages’); the Florida Impact rule.  In the case of G4S Secure Solutions USA, Inc. v. Golzar, the plaintiff had been allegedly captured in a state of undress on video from outside her home by a security guard holding his cell phone against her window while on his rounds in the early hours of the morning in a residential security job.  No. 3D14-2588, 2016 Fla. App. LEXIS 16663, at *7 (3d DCA Nov. 9, 2016).  The defendant security firm was alleged to have hired the guard without properly verifying certain aspects of the man’s past (including specifically allegations that he had done something similar previously).  Id.    

As the holding makes clear, non-economic damages are not available against the security company for negligent hiring since the employer’s behavior was allegedly negligent—not intentional—and the intentional conduct of the employee could not be imputed (i.e., held against) the employer for purposes of collecting non-economic damages.  Id.  This would violate both the law regarding imputing liability as well as Florida’s impact rule, which requires that there be an actual physical impact (i.e., touching) of the person in order for non-economic damages to be available.  Id

One exception to this rule about which sometimes laypersons are familiar is in the area of intentional infliction of emotional distress claims.  However, given that these claims require no proof of touching, the standard is extraordinarily high for a plaintiff to prove in order to be awarded non-economic damages.  The plaintiff must show:

(1) The wrongdoer's conduct was intentional or reckless, that is, he intended his behavior when he knew or should have known that emotional distress would likely result;

(2) the conduct was outrageous, that is, as to go beyond all bounds of decency, and to be regarded as odious and utterly intolerable in a civilized community;

(3) the conduct caused emotion distress; and

(4) the emotional distress was severe.

Legrande v. Emmanuel, 889 So. 2d 991, 994 (Fla. 3d DCA 2004). 

If you have concerns about claims you may have against another person or company, contact the attorneys of Icard Merrill for information about non-economic damages in your case.  


Significant Blow to Borrowers, Courts Expand Statute of Limitations for Foreclosures

A crucial blow to wayward borrowers and a life raft for inattentive banks and foreclosure counsel were handed out simultaneously by the Florida Supreme Court recently in Bartram v. U.S. Bank, N.A., 41 Fla. L. Weekly S493 (Fla. November 3, 2016).   This case will likely have far-reaching impact in the foreclosure world and likely represents a death-knell for the “free house” dream held by many borrowers and defense attorneys. 

Before the Court in Bartram was the issue of statute of limitations in a foreclosure action and the impact of acceleration letters from lenders.  The essence of the issue could be summarized by stating that banks are generally owed payments on a monthly basis, but when buyers default, banks often “accelerate” the note, meaning that all remaining payments come due as of the month of the acceleration notice.  

The argument by defense attorneys, therefore, has long been that, by the mechanism of the acceleration notice, no more payments are due after the date of acceleration and rather one lump final payment was due.  The issue arose for lenders when they then either failed to bring an action within the five-year statute of limitations following that acceleration or the bank’s action was so mis-prosecuted that it ended up being dismissed or adjudicated against the bank (meaning that the court determined that the case brought on that accelerated obligation was found in favor of the borrower).  Under either scenario, the argument went; the bank had no new defaulted obligation to complain of and could no longer bring a successful case against the homeowner.

However, the Bartram decision appears to have firmly slammed shut the door on that argument.  Id.  The Court held (in what could conceivably be called a bit of tortured logic) that a dismissal by the bank of its action effectively acts as a “revocation” of the acceleration clause and returns the parties to their pre-foreclosure positions (i.e., monthly payments again due).  Id.  This allows the bank to bring a new action on payments missed post-acceleration.

Curiously, the Court stated that this artificial “revocation” mechanism may not be allowed if there is an express term to the contrary in the parties’ note/mortgage (a term that has never likely been seen in any mortgage or note).  What is also curious is how the Court seemed to ignore entirely the fact that acceleration notices are often sent in advance of a foreclosure action and are not a part of the action itself (raising the question of how far “pre-foreclosure” the parties are actually being returned—potentially months or maybe longer?).  Also curiously, the Court was silent on whether the borrowers could then resume making payments on the newly re-instated monthly obligation (hint: the banks won’t allow that). 

This case likely represents an ugly, but potentially necessary “bail-out” for banks and their attorneys. The logic and legal basis for the ruling is fairly questionable. Yet, it often happens that banks and the massive foreclosure-focused legal firms serving them are so inattentive that cases languish for months or years and are often dismissed or not brought in a timely manner. 

Therefore, allowing banks a perpetual ‘do-over’ on bringing foreclosure cases probably reaches the correct result; homes that banks lent a lot of good money to buy are returned to the banks once the borrowers have long since stopped paying for them.  It would be arguably a more logical result to have homes left in the hands of borrowers if banks and their attorneys botch the great many opportunities they have to properly foreclose, but it would not necessarily be the just result.  In Bartram, the court appears to have recognized the just result and simply stretched (tortured) the law to achieve it, potentially sacrificing logic to get there.  

If your home is in foreclosure, or you are a lender seeking a law firm that will actively protect your rights, contact the foreclosure attorneys at Icard Merrill today. 


A Loophole in Proposals for Settlement in Joint and Several Liability Cases?

A fascinating practice point was revealed in a Florida Supreme Court ruling earlier this month relating to offers of judgment and proposals for settlement pursuant to Florida Statutes § 768.79 and Florida Rule of Civil Procedure 1.442 and the reasoning forming the framework of the Court’s analysis came from right here in the Second District. 

In the case of Anderson v. Hilton Hotels Corp., the Court agreed with the reasoning provided by the Second District in conflict with a ruling from the Fifth District in determining that offers of judgment to separate defendants against whom a joint and several judgment is rendered cannot be aggregated for purposes of denying the prevailing party’s motion for attorneys’ fees.  41 Fla. L. Weekly S500 (Fla. November 3, 2016).

This is an interesting clarification on the practical use of and strategy concerning offers of judgment.  For instance, similar to an example given by the Court, an offer to Defendant A could be very high (say, $300,000) and the offer to Defendant B could be quite low (say, $5,000), yet a judgment against both defendants in the amount of $20,000 would entitle the Plaintiff to fees against Defendant B.  Id.  Further, offers to Defendants A, B, and C in equal amounts of $100,000 would result in an entitlement to fees by the Plaintiff against all three Defendants if the judgment lists all three jointly and severally even on a judgment in the amount of only $126,000  (at least 25% greater than each respective offer). 

The Court’s ruling makes clear that the offer to a party and a judgment against that party (even if other parties are included in the judgment) are what triggers liability for fees—not some aggregation of offers and judgments.  As the Court notes, this is true regardless of what a jury verdict states as to apportionment of damages against various defendants so long as the final judgment applicable against any party is greater than the amount offered by at least 25%.  Id. at 22-23.

This provides practitioners with varied options for strategies in their civil actions and offers of judgment—to wit, the Court quotes these examples from the Second District’s opinion:

It is worth explaining that the plaintiff may have a logical, strategic reason to make such differentiated offers. It forces one defendant to settle. The plaintiff obtains money that can be used to further prosecute the lawsuit or which can be safeguarded from the risk of a future judgment if the defendants obtain the right to a judgment for their fees. The plaintiff can eliminate the defendant for whom the jury may have sympathy, or the defendant who may be on the brink of bankruptcy. If more than one lawyer is involved, the plaintiff can remove the defendant with the best lawyer. We doubt that  these are considerations addressed by the legislature when enacting these fee-shifting provisions, but they are logical considerations and we cannot rule that they are matters that a plaintiff's attorney should disregard when making a good faith offer to settle a case. . . .

Id., quoting Hess v. Walton, 898 So. 2d 1046 (Fla. 2d DCA 2005). 

As has been previously noted in this Blog, the offer of judgment rule and statute provide a significant challenge even for experienced practitioners and provide one excellent example for why lay persons should seek the help of a skilled attorney in disputes (as the old saying goes, you wouldn’t perform your own open heart surgery even if you have a pretty good idea how it is supposed to be done).

If you have questions about your rights in a dispute or future litigation, reach out to our skilled and experienced trial attorneys today at Icard Merrill.