Jeff's October 2024 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 Oct 2024 Legal Roundup[i]
Just a couple cases that have caught my eye this month that I wanted to share. This month’s edition includes: the Middle District of Florida declaring that the relator under the False Claims Act is a constitutional officer that must be appointed by the President; a discussion of when a contractual jury trial waiver applies to non-contract claims and non-signatories; the interplay between additur, waiver, and invited error; when a non-party to an arbitration agreement can enforce the arbitration provision; and a refresher on the “officious intermeddler” doctrine.
1.?????????? United States of America ex. rel Clarissa Zafirov v. Florida Medical Associates, LLC, No. 8:19-cv-01236 (M.D. Fla. September 30, 2024).
Interesting case out of the Middle District of Florida. Judge Mizelle dismissed a qui tam suit on the grounds that the relator under the False Claims Act is a constitutional officer that must be appointed by the President. No doubt this case will go up to the 11th Circuit and maybe beyond. Nevertheless, here are the highlights.
Generally speaking, under the False Claims Act, a private citizen may bring a suit on behalf of the federal government to recover funds received from the government via fraud. This private citizen is known as a relator. Although the federal government may intervene and take over the suit, it is not required. If a relator is successful in their prosecution of suit, they are entitled to a percentage of the recovery as a reward of up to thirty percent. This provision—known as a qui tam provision—encourages litigation and has resulted in private relators bringing the majority of FCA actions.
The Middle District described the authority of the relator as follows:
The FCA allows a relator not only to direct litigation, but also to bind the federal government without direct accountability to anyone in the Executive Branch. A relator need not consult with the federal government before filing suit, nor does she receive a commission or swear an oath of loyalty to the United States. Instead, a relator enjoys unfettered discretion to decide whom to investigate, whom to charge in the complaint, which claims to pursue, and which legal theories to employ.
Nor does a relator’s discretion stop at final judgment. A relator determines whether to appeal and which arguments to preserve, thereby shaping the broader legal landscape for the federal government. In that way, a relator acts with greater independence than a Senate-confirmed United States Attorney or Assistant Attorney General, who must obtain the approval of the Solicitor General to appeal.
The defendants moved to dismiss arguing that the relator qui tam provisions of the False Claims Act violate the Appointments Clause because a relator is an improperly appointed officer of the United States. In granting the motion to dismiss the Middle District found that an FCA relator is an officer of the United States subject to the Appointments Clause for two reasons. First, as explained above, a relator exercises significant authority under the statute. Second, the statutory duties and powers result in the relator occupying a “continuing position established by law.” As to a continuing position, the Court explained that the fact that who the relator is changes on a case-by-case basis is not dispositive in determining whether the relator is occupying a continuing position. Instead, the focus is on the office of relator itself. In so finding, the Court compared the position to bank receivers and special prosecutors—each of which are considered officers despite the fact that each only have a term that endures for a single action.
For now, FCA attorneys will watch with a keen eye how this plays out.
2.?????????? Bergeron Environmental and Recycling, LLC v. LGL Recycling, LLC, No. 4D2022-2159 & 4D2022-3155 (Fla. 4th DCA October 9, 2024).
The Fourth District provides a great overview of when a contractual jury trial waiver applies to non-contract claims and non-signatories.
This case stems from a joint venture agreement between Bergeron and Sun Recycling. The agreement provided a jury waiver provision that stated: “The venturers hereby knowingly waive the right of any of them may have to a trial by jury in respect of any litigation based hereon or arising out of under or in connection with this agreement. This provision is a material inducement for the venturers’ acceptance of this agreement.”
After Sun’s parent company sold its assets—excluding the joint venture—to Waste Management, Inc., litigation ensured. The complaint brought by Bergeron contained sixteen counts: two breach of contract counts against Sun, tortious interference with contract against Waste, tortious interference with contract against the individual defendants, breach of fiduciary duty against Sun, aiding and abetting a breach of fiduciary duty against Waste and the individual defendants, conspiracy to tortiously interfere with contract against Waste and the individual defendants, conspiracy to breach fiduciary duties against Waste and the individual defendants, accounting against Sun, wrongful dissociation against Sun, damages incidental to dissolution of the joint venture against all defendants, misappropriation of trade secrets against all defendants, and conversion against all of the defendants except for one of the individual defendants. Despite the fact that the complaint alleged tort and contract claims against both signatories and non-signatories, the lower court applied the jury waiver to all counts and parties. Bergeron appealed.
As to whether the jury trial waiver included tort claims in addition to the contract claims, the Court explained that broad jury trial waivers have been construed to include tort claims as well as contract claims where the jury waiver clause covers claims “arising out of” or “concerning” a contract where the allegations in the claims related to the contract. A claim “relates to” a contract when the dispute occurs as a fairly direct result of the performance of contractual duties. The Court went on to apply the “significant relationship” test—a test normally used to determine whether a claim is arbitrable—to determine whether a claim is subject to a jury trial waiver. Under the “significant relationship” test, a claim is subject to a jury trial waiver regardless of its label (tort or contract) where a significant relationship exists between the claim and the agreement containing the jury waive provision. A significant relationship exists where (1) the tort claim is inextricably intertwined with both the circumstances that surrounded the transaction from which the contract emanated and the contract itself; and (2) resolution of the tort claim requires the construction and consideration of duties arising under the contract. Here, all of Bergeron’s claims were connected to the agreement. Thus, the jury waiver applied to all claims.
As to non-signatories, the Court found that equitable estoppel and agency theory applied to prohibit Bergeron from avoiding the jury waiver in their claims against non-signatories.
As to equitable estoppel, the Court explained that the doctrine can be used by non-signatories to enforce a jury waiver in two circumstances: i) when the signatory to the contract relies on the terms of the contract to assert his or her claims against the non-signatory; and ii) when the signatory raises allegations independent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract. As the Court explained, the linchpin of equitable estoppel is fairness. A party cannot have it both ways by bringing litigation connected to an agreement containing a jury waiver and then repudiating the waiver by suing non-signatories to force a backdoor jury trial on all counts, including those against a signatory. Parties should be held to the promises exchanged in a contract. The haphazard addition of non-signatory parties to a lawsuit, especially employees or principals of a signatory, should not trump a negotiated jury trial waiver. Allowing non-signatories to enforce the jury waiver on inextricably intertwined counts is necessary to avoid evisceration of the jury waiver between the signatories.
As to agency theory, the Court adopted a similar approach to the application of an arbitration clause to agents. The Court explained that where an agent is sued for conduct undertaken in furtherance of its principal’s interests and the agent’s position on jury waiver is consistent with that of the principal under a waiver in the contract between the principal and the claimant, the agent may invoke the waiver against the claimant.
The Fourth District discusses the interplay between additur, waiver, and invited error.
This case stems from a breach of stock purchase agreement. At trial, counter-plaintiff sought $1,931,453.24 in damages on his breach claim. This amount included outstanding principal, pre-breach default amounts, and post-breach interest.
During closing argument, counter-defendant’s attorney stated in closing that the jury “can decide whatever number you want.” No objection was made to these comments. Nor did counter-plaintiff seek to correct this comment during rebuttal closing. Subsequently, the trial court instructed the jury as follows: “if you find for [counter-plaintiff], you should award [counter-plaintiff] an amount of money that the greater weight of the evidence shows will fairly and adequately compensate [counter-plaintiff] for his damages.” Additionally, the verdict form did not instruct the jury that it was required to award damages in a specific amount on the breach of contract.
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Ultimately, the jury found in favor of counter-plaintiff and awarded $810,349.11 in damages. After the verdict was read, counter-plaintiff did not object to the verdict or otherwise request the jury be reinstructed.
The counter-plaintiff moved for additur which the lower court granted based on factors established in section 768.043, Fla. Stat. Counter-defendant appealed.
In reversing, although the Court noted that it agreed that the verdict appeared to be inadequate based on the jury’s findings, additur was improper because the jury instructions and the verdict form gave the jury the discretion to award any amount of damages and nothing in the verdict form instructed the jury that it was required to award damages in a specific amount if it did not award counter-defendant a setoff.
Under these circumstances, the Court found that counter-plaintiff waived and invited any error with respect to the verdict. Slip Op. at 5 (citing Plana v. Sainz, 990 So. 2d 554, 557 (Fla. 3d DCA 2008) (recognizing that a “jury cannot be faulted for doing exactly what it was instructed to do,” and holding that by failing to object to the trial court's instructions and verdict form, the plaintiffs “waived any objection to the zero damage award”); Am. Sales & Mgmt. Org. LLC v. Lopez, 373 So. 3d 1198, 1207 (Fla. 3d DCA 2023) (holding that additur was unauthorized where the unobjected-to jury instructions authorized the jury to decide as it did); Baker v. R.J. Reynolds Tobacco Co., 158 So. 3d 732, 737-39 (Fla. 4th DCA 2015) (concluding that failure to object to the submission of the jury instructions or the verdict form constituted a waiver and invited error)).
The Fifth District explains when a nonparty to an arbitration agreement can enforce the arbitration provision.
Here, Appellant owned The Pineapple Corp. who contracted with Appellees for construction of a new home. Appellant signed the contract as the Pineapple Corp.’s president; not individually. The contract contained an arbitration agreement that stated in pertinent part:
All controversies and claims between the Owner [the Surrencys] and Contractor [The Pineapple Corp.], directly or indirectly rising out of or relating to this Contract or this transaction will be settled by binding arbitration….
The Surrencys sued Appellant individually asserting claims for negligence, FDUTPA, conversion, and fraudulent transfer. Appellant moved to enforce the arbitration agreement and compel arbitration under the grounds of equitable estoppel. The lower court denied Appellant’s motion and Appellant appealed.
In affirming the lower court, the Fifth District first noted that Appellant was not a party to the agreement because, although he signed the agreement, he did so in his capacity as president of The Pineapple Corp. The Court further explained that all claims were asserted against Appellant individually. Thus, because nowhere in the agreement did the Surrencys consent to arbitration of any claims they have against Appellant individually, they cannot be compelled to arbitrate.
The Court then explained when a non-party to an arbitration agreement may enforce the provision via equitable estoppel. The Court explained that equitable estoppel can only be used in two circumstances: “(1) when the signatory's claims allege ‘substantially interdependent and concerted misconduct' by the signatory and the non-signatory or (2) when the claims relate directly to the contract and the signatory is relying on the contract to assert its claims against the non-signatory.” Slip Op. at 5 (quotations and citations omitted). However, neither situation was present in this case.
The Court further noted that, even assuming arguendo equitable estoppel could be used to allow Appellant to access the arbitration forum, the doctrine cannot be used to expand the scope of the disputes subject to arbitration. Thus, the individual claims against Appellant could not be subjected to arbitration even if Appellant had the ability to access arbitration under the doctrine of equitable estoppel.
5.?????????? City National Bank of Florida as Trustee of Land Trust No. 2400-9492-00 v. Signature Land, Inc., No. 5D2023-0308 (Fla. 5th DCA October 25, 2024).
The Fifth District reverses a judgment finding liability for unjust enrichment. In doing so, the Court provides a great refresher on the “officious intermeddler” doctrine.
Here, Appellee and Appellant entered into a contract for the purchase of land in 2013 but the deal fell through because of Appellee’s inability to find an investor. In 2014, the parties again entered negotiations. At that time, Appellee knew any contract would require the beneficiaries of the Trust’s approval. During these subsequent negotiations, Appellee believed it would need to rezone the property in order to secure an investor. Appellee also believed that rezoning would be difficult and wanted to propose rezoning to the current city council to increase the likelihood of approval. Although no contract to purchase was yet agreed to, Appellee asked Appellant to sign the rezoning application to present to the city.
The rezoning was approved, but the decision was appealed. At that time, Appellee was unable to defend against appeal because it was not the property owner and attempts to contract for the Property again fell through. As a result, Appellant defended the appeal. Appellee later sued Appellant for unjust enrichment for Appellee’s efforts at getting the Property rezoned. Appellant moved for directed verdict arguing that the undisputed evidence established Appellee was an “officious intermeddler” because Appellee acted without contract for his own benefit. The motion was denied. A jury returned a verdict for Appellee. Appellant appealed.
In reversing the unjust enrichment verdict, the Court explained that “there is no liability in restitution for an unrequested benefit voluntarily conferred. In other words, there is no liability to a claimant characterized as officious, an intermeddler, or a volunteer.” Slip Op. at 4 (quotations omitted). “A benefit can be voluntarily conferred, for instance, when a party conveys a benefit during contract negotiations in the hope (or the reasonable expectation) of a future contract between them.” Slip Op. at 4 (quotations omitted).
In relying upon Restatement (Third) of Restitution and Unjust Enrichment (2011), the Court further explained that “[i]f benefits were conferred before a promise of counter-performance had been obtained, in the context of a prospective exchange that the recipient was still free to reject, the result is a form of uncompensated enrichment that is neither unjust nor unjustified. Precontractual performance in such a case rests on a self-interested calculation by which the anticipated reward to the performing party is the enhanced likelihood of a future return.” Slip Op. at 4 (quotations omitted; emphasis supplied by court).
Here, Appellees were officious intermeddlers for two reasons. First, Appellee’s precontractual performance was unrequested and conferred before a promise of counter-performance. Second, Appellee’s effort was a self-interested calculation in that Appellee sought rezoning to attract an investor and sought it before the current city counsel in an effort to ensure it would be approved. Thus, Appellee cannot recover on a claim for unjust enrichment.
[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.