Jeff's July 2023 Legal Roundup
Jeffrey Molinaro
Board Certified Specialist in Appellate Practice | Partner and Chair of the Appellate Practice Group at Fuerst Ittleman David & Joseph, PL
Jeff’s July 2023 Legal Roundup[i]
Just a couple cases and new rules that have caught my eye this month that I wanted to share. This month’s edition includes cases discussing stays during appeals of denials of motions to compel arbitration, insurance law, mandamus, amendments to the rules of appellate procedure, venue rules, the Second Amendment, basic tenants of property law from 1L year, and more.
The US Supreme Court resolved a circuit split and held that district court proceedings are automatically stayed pending an appeal of a decision denying a motion to compel arbitration.
Section 16(a) of the Federal Arbitration Act provides for an immediate interlocutory appeal when a district court denies a motion to compel arbitration. However, the statute is silent on whether the district court action is stayed while that issue is pending on appeal. The Supreme Court held that section 16(a), although silent, was enacted against the clear background principle that an appeal—including an interlocutory appeal—divests the district court of its control over those aspects of the case involved on appeal. Thus, where the question is whether the case itself belongs in arbitration or in the district court, the entire case essentially is involved in the appeal and a stay makes sense.
The Supreme Court also noted staying a case in its entirety on interlocutory appeal of an order denying a motion to compel makes common sense for several reasons. First, the benefits of arbitration such as speed, expense, and limited discovery would be irretrievable lost if a case could proceed forward in district court while an interlocutory appeal was pending. Second, allowing cases to proceed in district court which ultimately head to arbitration would waste scare judicial resources. Third, the Supreme Court was concerned that absent a stay pending interlocutory appeal, parties could be coerced to settle cases in order to avoid district court proceedings—such as costly discovery—that they had contracted to avoid through arbitration.
2.??????????People's Trust Ins. Co. v. The Kidwell Group, LLC, No. 4D22-1314 (Fla. 4th DCA June 28, 2023).
The Fourth District held that, where: (i) the homeowner policy states that the insurer will pay “the cost to repair or replace” the damaged property; (ii) the homeowner’s public adjuster hires a company to complete an engineering report to assess the damage; but (iii) there is no evidence establishing that the engineering report was ever discussed or provided to the roofing company who repaired the project and that the report was not necessary to replace the roof, the cost associated with the engineering report was not covered by the policy as a “cost to repair or replace.” Thus, the Fourth District held that the lower court erred in denying the carrier’s directed verdict at trial.
The Fourth District noted that the jury did not act unreasonable under the circumstances because the lower court committed a second error in the jury instructions and verdict form. In finding this second error, the Fourth District reminded us of the high standard that exists when challenging jury instructions. As the Fourth District explained, “[a] trial court is accorded broad discretion in formulating appropriate jury instructions and its decision should not be reversed unless the error complained of resulted in a miscarriage of justice or the instruction was reasonably calculated to confuse or mislead the jury.” Reversible error occurs when an instruction is: (i) an erroneous statement of law; (ii) an incomplete statement of law; (iii) confusing; or (iv) misleading.
? The Third District held that where a plaintiff’s complaint seeks declaratory relief as to whether plaintiff may invoke appraisal, and plaintiff subsequently moves ore tenus to compel appraisal with no prior notice that a motion to compel appraisal would be heard at the previous scheduled hearing, the lower court violated the carrier’s due process rights.
In this case, plaintiff filed a complaint for declaratory relief on the issue of whether they may invoke their insurance policy’s appraisal provision without first complying with the carrier’s demand they submit evidence of the proximate cause of the loss and/or actual cash value of the damages’ plaintiff sustained. The carrier moved to dismiss, moved to strike the complaint as a sham, and moved for sanctions. The lower court subsequently issued an order setting a case management conference to entertain “all pending motions and issues in the case, including time-frame to complete discovery, for filing dispositive motions, and trial settings.” At the case management conference, the plaintiff moved ore tenus for an order compelling appraisal. The carrier objected to the oral motion. The trial court granted the motion and, in the words of the Third District, “ostensibly award[ed] the [plaintiff] the very relief sought in their complaint.”
In reversing, the Third District explained that a trial court violates a litigant’s due process rights when it expands the scope of a hearing to address and determine matters not noticed for hearing. Thus, because the motion to compel was not noticed, and the motion was, “in essence, [ ] a thinly veiled, dispositive motion on the merits of their complaint,” allowing the trial court to rule on the matter would violate the carrier’s due process rights.
Important practice tip: remember, the carrier objected at the case management conference. Had no objection been made, it is possible the appellate court would have found the motion was argued by consent and no due process error occurred.
4.??????????Atrium Medical Corp. v. MSP Recovery Claims, Series, LLC, No. 3D23-0384 (Fla. 3d DCA July 5, 2023).
Interesting mandamus case out of the Third District involving a pure bill of discovery. Petitioners sought a writ of mandamus to compel the lower court to enter a final appealable judgment after the lower court granted the summary judgment motion of MSP resolving the sole issue in the case, but refused to enter final judgment.
In granting the petition, the Third rejected MSP’s argument that because the petitioners had not yet produced the records sought via the granted pure bill of discovery, judicial labor remained outstanding, thereby precluding the issuance of a final judgment. In rejecting this argument, the Third District explained that the entry of a pure bill (i.e., granting the relief requested in a pure bill of discovery)—not the execution (i.e., the production of documents)—completes the trial court’s labor. Thus, entry of a final appealable judgment was appropriate.
The case also reminds us of the elements necessary to be entitled to the issuance of a writ of mandamus. In order to be entitled to a writ of mandamus: (1) the petitioner must have a clear legal right to the requested relief; (2) the respondent must have an indisputable legal duty to perform the requested action; and (3) the petitioner must have no other adequate remedy available.
5.??????????In re: Amendment to Florida Rule of Appellate Procedure 9.130, No. SC2023-0701 (Fla. July 6, 2023) & Univ. of Fla. Bd. of Trs. v. Carmody, No. SC2022-0068 (Fla. July 6, 2023).
The Florida Supreme Court, on its own motion, amended Florida Rule of Appellate Procedure 9.130 to provide for interlocutory review of orders that deny a motion to dismiss on the basis of the qualifications of a corroborating witness under subsections 766.102(5)-(9), Florida Statutes. In amending, the Court expressly noted that the amendment only applies to orders denying motions to dismiss, not orders granting such motions. The amendment is effective immediately and found at Rule 9.130(a)(3)(H). However, because the amendments were not published for comment previously, interested persons shall have seventy-five days from the date of this opinion in which to file comments with the Court. Comments must be filed with the Court on or before September 19, 2023.
The amendment was issued with a concurrent opinion in Univ. of Fla. Bd. of Trs. v. Carmody. In Carmody, the Court held that the First District Court of Appeal did not have the authority to perform certiorari review of a trial court’s denial of a motion to dismiss a medical malpractice action under chapter 766, Florida Statutes. There, the Court acknowledged that “the Medical Malpractice Act changed the law such that an interlocutory remedy for parties facing claims that fail to satisfy its presuit requirements is warranted.”
Justice Labarga dissented arguing that the proposed rule should be referred to the appropriate committee for consideration and recommendation prior to its adoption.
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6.??????????Schultz Builders & Pools, Inc. v. Icon Welding & Fabrication, LLC, No 2D22-4138 (Fla. 2d DCA July 12, 2023).
The Second District affirmed an order denying a motion to transfer venue. In so holding, the court provided a helpful summary of the venue rules known as the “place of payment” rule and the “local action rule.”
In Schultz, the defendant contractor, located in Pinellas County, hired the plaintiff subcontractor, located in Sarasota County, to fabricate and install exterior stairs at a Pinellas County apartment complex. The parties’ agreement was silent as to venue and where the payments were due. Ultimately, plaintiff sued in Sarasota for breach of contract and also sought a declaratory judgment that it could record a lien against real property located in Pinellas County. Subsequently, defendant sought to transfer venue to Pinellas County arguing it was the appropriate venue because: i) the real property at issue was located there; and ii) the place of payment rule did not apply. The lower court denied the motion.
In affirming the denial of defendant’s motion to transfer venue, the Second District found that: i) the “place of payment” rule applied because plaintiff sought liquidated damages; and ii) the “local action rule” did not apply to plaintiff’s declaratory relief action because plaintiff was merely seeking a declaratory judgment that it could assert a lien on property in Pinellas County and not actually seeking to place a lien on the property itself.
The Second District described the “place of payment” rule as follows: A "place of payment" venue rule applies for the breach of contract to pay money. If a plaintiff alleges breach of a covenant to pay money due or already earned under a contract, the cause of action accrues where performance of the act of payment was to occur. If the action is for breach of some other covenant, venue is proper in the county where that covenant was to be performed. Additionally, where, a contract involves the payment of money and the contract fails to specify the place of payment, payment is due where the creditor resides. However, the “place of payment” venue rule only applies when a debtor-creditor relationship exists between the plaintiff and defendant and the promise sued on is for the payment of a specified amount of money. When damages are unliquidated, this rule does not apply.
In describing the “local action rule,” the Second District explained that, although the rule is often discussed in the context of venue, it is not a venue concept. Instead, it is a jurisdictional doctrine concerning a court’s jurisdiction to resolve disputes related to real property outside of the court’s territorial boundary. Under the rule, a court may not exercise in rem jurisdiction over property located outside its geographical territory. Thus, actions directly related to the legal status of real property, such as an action to quiet title or to foreclose a mortgage or lien, must be brought in the circuit where the property is located.
However, the rule does not limit a court’s in personam jurisdiction, even if the relief sought may incidentally affect real property located outside the court’s territory. Whether an action falls under the “local action rule” depends upon the underlying major question in the case. For example, where a suit is merely for payment of money, such as the purchase price of the property, there is no “property in litigation,” and the local action rule would not apply. Here, because plaintiff’s declaratory relief only incidentally involved property in Pinellas County, the “local action rule” did not apply.
7.??????????NRA v. Commissioner, Florida Dept. of Law Enforcement, No. 21-12314 (11th Cir. July 14, 2023) & NRA v. Commissioner, Florida Dept. of Law Enforcement, No. 21-12314 (11th Cir. March 9, 2023).
The Eleventh Circuit voted in favor of granting rehearing en banc on a case brought to challenge the Marjory Stoneman Douglas High School Public Safety Act that precludes those under 21 from buying firearms while still leaving that age group free to possess and use firearms of any legal type. The act is codified at section 790.065(13), Florida Statutes.
The Court’s July 14, 2023 Order vacates the prior panel opinion issued March 9, 2023. There, the panel affirmed the decision of the lower court upholding the Act as constitutional. In affirming, the panel found that the statute was consistent with the nation's historical tradition of firearm regulation at time of ratification of Fourteenth Amendment, through which the Second Amendment was made applicable to the states; therefore, statute did not violate the Second Amendment right to keep and bear arms. The panel found that historical statutes at time of ratification and the Act both applied broadly to many, though not all, types of “arms” under the Second Amendment. Additionally, historical statutes prohibited the selling, giving, or loaning of handguns to 18-to-20-year-olds. Thus, the Act was no more restrictive than historical statutes. Furthermore, similar to its historical analogues, the Act aimed to improve public safety.
Second Amendment practitioners are watching this case with a keen eye given the recent shift in jurisprudence concerning the scope of Second Amendment protections.
This case involved the reversal of summary judgment on the matter of whether property owners were in violation of a covenant concerning parking on a public road. Ultimately, the First District reversed summary judgment for the plaintiffs seeking to enforce the covenant holding that the covenant was personal to the developer and did not run with the land. Time to put on those 1L property law caps for the brief recap of covenants this case provides.
Covenants are divisible into two major classes: (1) real covenants which run with the land and typically bind the heirs and assigns of the covenanting parties, and (2) personal covenants which bind only the covenanting parties personally. Where a covenant “runs with the land,” successors to the property owner who made that covenant “become liable as promisors upon the promise made by their predecessor,” even though they are succeeding to an ownership or possessory interest in the real property rather than assuming the obligations of a contract under an assignment. When, however, a promise regards the use of land, a successor to the ownership of one who has made a promise respecting the use of his land may, merely by virtue of such succession, become subject to promissory or contractual obligations on promises made by his predecessor. Running with the land, in essence, is a substitute for consideration.
Three conditions must exist to create a valid and enforceable covenant running with the land: (1) the existence of a covenant that touches and involves the land; (2) an intention that the covenant run with the land; and (3) notice of the restriction on the part of the party against whom enforcement is sought. In order that a covenant may run with the land it must have relation to the land or the interest or estate conveyed, and the thing required to be done must be something which touches such land, interest, or estate and the occupation, use, or enjoyment thereof. In other words, a promise cannot run with the land unless it relates to the way in which the land is used.
In this case, the developer of the property made the promise that there would be no street parking as part of its declaration of covenants and restrictions recorded in May 1991. By the time the developer recorded the declaration, it had already turned over the responsibility for the neighborhood roads via deed to the City of Tallahassee. Thus, the declaration could not include the publicly owned roadways.
Here, the First District found that the covenant of no parking was personal to the developer and did not run with the land for several reasons. First, the restriction on parking concerns parking on public roads, not the property owners’ property. Second, the court rejected the logic that the restriction affects the use of the Hucks’ property because it affects how many people they can have over to the house at one time by de facto restricting how many cars can be parked on the property. In rejecting this argument, the court found the connection between the covenant and the property was “too tenuous and indirect” to characterize the covenant as one running with the land and binding upon the Hucks. As the First District explained, “the use of land involved must be a primary consideration of the undertaking of which the promise is a part and the promise must contemplate a degree of permanency in the particular use.” Thus, had the covenant been a restriction on cars parked on the Hucks’ property instead of concerning the public road, the outcome would be different.?
[i] Jeffrey J. Molinaro, B.C.S., is board certified in appellate practice and chairs the appellate practice group at Fuerst Ittleman David & Joseph. Mr. Molinaro represents clients throughout Florida and the United States on various appellate matters. He can be reached at [email protected] or 305-350-5690.