Voluntary Dismissal Without Prejudice Does Not Bar Attorney's Fees Under Proposal for Settlement Following Partial Summary Judgment

On September 15, 2023, the Fifth District Court of Appeal of Florida reversed the Circuit Court of Duval County’s order, finding that the trial court erred in denying attorney’s fees to the Defendant following a partial summary judgment in her favor, which prompted the Plaintiff to voluntarily dismiss the remaining action without prejudice. Kuthiala v. Goldman, et al., No. 5D23-121 (Fla. 5th DCA, September 15, 2023).

The Plaintiffs, David M. Goldman and Beth Mayers Goldman, filed a three-count complaint against the Defendant, Dr. Sejal Kuthiala, M.D.  During the litigation, Defendant served proposals for settlement to both Plaintiffs pursuant to Florida Statutes Section 768.79, which the Plaintiffs did not accept.

The trial court granted Defendant’s summary judgment motion on the first and third counts of the complaint but denied the motion on the second count. Following the summary judgment rulings, the Plaintiffs filed a notice of voluntary dismissal without prejudice.

Thereafter, the Defendant filed a motion to tax costs and attorney’s fees based on Plaintiffs’ rejection of her proposals for settlement. The trial court denied Defendant’s motion for attorney’s fees, holding that granting the motion “would be inconsistent with binding authority” under MX Investments v. Crawford, which held that a dismissal without prejudice does not support an award of attorneys’ fees under Section 768.79. 700 So. 2d 640, 641-42 (Fla. 1997). However, in MX Investments, the plaintiff in that case had voluntarily dismissed the entire action, and none of the claims were adjudicated on the merits.

Defendant, Dr. Kuthiala, appealed the denial of the motion.  On appeal to the Fifth District, Dr. Kuthiala distinguished MX Investments on the basis that there was an adjudication on the merits for counts one and three of the complaint during the summary judgment hearing. Dr. Kuthiala further argued that the Fifth DCA’s decision in Scherer Construction & Engineering of Central Florida, LLC v. Scott Partnership Architecture, Inc., was the controlling case law and provided support for the reversal of the order denying her request for attorney’s fees. 151 So. 3d 528 (Fla. 5th DCA 2014).  In Scherer, the Fifth DCA held that attorney’s fees were not awardable under Section 768.79 for a claim that was voluntarily dismissed. Id. at 530. However, the Scherer court affirmed the portion of the trial court’s order that awarded attorney’s fees on the claim on which the trial court had entered summary judgment in favor of the defendant. Id.

The Fifth DCA agreed with Dr. Kuthiala position that MX Investments was factually distinguishable from the instant case. The Fifth DCA further agreed that Scherer was binding because the facts were identical.  Accordingly, the Fifth DCA reversed the trial court's order denying Dr. Kuthiala’s motion to tax costs and attorneys' fees, remanding for the entry of an order awarding attorney’s fees to Dr. Kuthiala based on counts one and three of the Plaintiffs’ complaint.

C&F Again Obtains Summary Judgment in “Ongoing Storm” Negligence Action

Callahan & Fusco recently obtained summary judgment in New Jersey Superior Court, Union County, in a slip and fall negligence action. In the Complaint, plaintiff alleged the defendant snow contractor negligently and carelessly maintained a commercial parking lot and failed to give proper notice of hazardous conditions causing severe and permanent injuries.

As New Jersey courts have held, in instances where a commercial property owner has contracted to perform snow removal services, the snow removal company has a duty to perform said snow removal “in a careful and prudent manner.” The duties of the snow removal contractor are, however, defined by the terms of the contract. Moreover, the New Jersey Supreme Court in Pareja v. Princeton International Properties, 246 N.J. 546 (2021) first recognized that a duty arises “after the cessation of the hazardous precipitation; none opine on the imposition of a duty before that point”, thereby formally adopting the “on-going storm” rule throughout the state of New Jersey. Furthermore, in Carol Smith v. Costco Wholesale, et al, 2023 N.J. Super. Unpub. LEXIS 1112, the court declined to distinguish between commercial property owned publicly versus privately – effectively re-affirming the holding in Pareja.

In this recent matter, the plaintiff allegedly sustained injuries after he slipped and fell due to snow as he exited his apartment building. As a result, the plaintiff sustained multiple disc bulges, muscle spasms, hypertension/hyperflexion to the cervical and lumbar spine, and radiculopathy of the cervical and lumbar spine; these injuries were alleged to be permanent. The defendant snow contractor had contracted with the commercial property owner to begin snow removal at the request of the property owner, only. The plaintiff testified during his deposition that it was not actively snowing or freezing rain at the time of the fall, and the plaintiff did not retain any liability or weather expert to address concerns of an ongoing storm. The defendants presented a meteorologist expert report to prove that there was an active ice storm at the time of the incident, despite the lull in between showers.

It was thus argued that the snow contractor did not breach any duty owed, as there was no evidence that the snow removal contract was triggered, without evidence that the property owner requested the services of the snow contractor prior to the plaintiff’s fall. Furthermore, even if the snow contractor was indeed contacted prior to the fall, the ongoing storm rule applied, as this was a commercial residential property, and the duty of the property owner and snow contractor thus did not commence until a reasonable time after the storm ended.

After considering the motion and conducting oral arguments, the court ultimately granted the motion for summary judgment in full against the defendant snow removal contractor and dismissed all claims against them.  The ongoing storm rule thus continues to be a valuable tool for defendants in weather-related premises liability actions, leading to another favorable decision for our firm.

Update on Grieving Families Act

Last year, the New York State Senate and Assembly passed Bill S74A, also known as the Grieving Families Act, which amended the law regarding payment and distribution of damages in wrongful death actions.  Thereafter, Governor Hochul vetoed the Act and, earlier this year, the Act was revised.  This year, the Senate and Assembly passed the Act again.  It currently awaits Governor Hochul’s signature or veto.

By way of background, the Act (1) extended the time to bring a wrongful death action for up to three years and six months, (2) permitted recovery for emotional loss when a tortfeasor is found liable for causing a death, and (3) permitted recovery by close family members which included a spouse or domestic partner, children, grandparents, stepparents, and siblings. It also replaced the term “distributees” with “persons for whose benefit the action is brought”. Finally, it stated that the Act shall take effect immediately and apply to all pending actions commenced on or after such date.

The Act collected significant support and cleared the New York State Senate in June 2022, gathering a vote of 57-6. The bill advanced to the New York State Assembly where it received more support in July 2022, securing a vote of 147-2. However, Governor Kathy Hochul vetoed the Act on January 30, 2023. She agreed with the objective of the bill, but raised some concerns which included the potential creation of open-ended beneficiary groups, the confusion that may result for judges and litigants regarding the wide-ranging types of damages, potential for conflicting claims for damages in ongoing legal cases, and the potential rise in insurance costs burdening families and small businesses.

In order to ease the Governor’s concerns Senator Holyman and Assembly member O’Donnell reintroduced the Grieving Families Act in May 2023. The revised Act extends the time to bring a wrongful death action to only three years after a close family member’s death to file a wrongful death suit. The eligible classes of individuals entitled to damages would include spouses, domestic partners, children, parents, grandparents, siblings, stepchildren, stepsiblings, and individuals who stood in loco parentis to the deceased. The Act also outlines the limitations of non-economic damages incorporating aspects such as grief, loss of companionship, consortium, support, protection, and pain and suffering. It also has been amended to only apply to causes of action that arose on or after July 1, 2018.

The effects of the passing of this Act would include the expansion of the definition of a family member allowing more individuals to bring a wrongful death lawsuit. Additionally, these individuals would be able to seek both economic and non-economic damages. There is still a concern that because the Act allows insurance companies to pay for grief, pain, and suffering this will cause for higher insurance premiums. Furthermore, there might be confusion, increased costs and competition for the claims of damages. The Act was passed on June 6, 2023, by the Senate and a few days later by the Assembly. The Act will now go to the Governor for consideration.

Callahan & Fusco will continue to monitor the status of the Act and any corresponding court decisions on this issue.

Georgia Supreme Court Holds that Snapchat Could be Liable for Distracted Driving

A person uses an app on their phone while driving. The person is distracted while using that app. As a result of using the app, the person collides with another car, injuring a third party. In this scenario, at first glance, the idea of holding the app developer liable for the third party’s injuries seems tenuous at best. After all, would a writer be liable in this scenario if the person was distracted by a really enthralling book rather than a phone app? But in 2022, the Georgia Supreme Court held that app developers like Snapchat could be liable under the same statutory and common law product liability standards as more traditional manufacturers are.

Wentworth and Karen Maynard were driving together at 10:15 P.M. in Clayton County, County. At the same time, 19 year old Christal McGee and two friends were speeding at upwards of 107 miles per hour until they crashed into the rear of the Maynards’ vehicle. At the time of the wreck, McGee was using Snapchat, a popular social media app that allows users to send quick photos and videos to friends. Snapchat had previously implemented a feature called a “Speed Filter.” The filter would add an overlay to your photo or video that displayed the speed at which you were traveling. McGee, allegedly, was attempting to get her speed to over 100 miles per hour so she could post it on Snapchat for her friends to see.

The Maynards alleged that Snapchat had negligently designed the Speed Filter as it encouraged reasonably foreseeable dangerous behaviors. They argued that Snapchat had a duty of ordinary care when designing their app and that they breached that duty when designing and implementing the Speed Filter. Furthermore, although Snapchat included a disclaimer telling users to not use the filter while driving, the Maynards argue this was inadequate and knowingly ineffective.

The trial court then granted Snapchat’s motion to dismiss on the grounds that (1) Snapchat owed no legal duty to Plaintiffs to design products to prevent McGee from driving dangerously or to control her behavior, and (2) Plaintiffs could not establish proximate cause. The Court of Appeals affirmed the dismissal on the basis of Snapchat owing no duty. Plaintiffs then appealed to the Georgia Supreme Court which reversed and remanded the Court of Appeals’ decision. On remand, the Court of Appeals reversed the granting of the motion to dismiss on Snapchat’s remaining arguments.

The Supreme Court disagreed with the Court of Appeals majority’s opinion that a manufacturer’s duty to use reasonable care in designing a product does not extend to the intentional misuse of a product in a tortious way by a third party. The Court held simply that regardless of how a product is being used, a manufacturer may owe a design duty to an injured party. The Court of Appeals majority also erred in holding that a manufacturer can never owe a design duty to an injured person if that person was injured by a third party’s use of its product.

The Plaintiffs alleged that Snapchat knew its users were driving in excess of 100 miles per hour in order to record high speeds in their posts. They alleged that Defendant McGee told her friends of her plan to speed in excess of 100 miles per hour in order to post it to Snapchat. They alleged that Snapchat incentivized misuse the product and speed. And they alleged that they were injured as a result of the negligence of Snapchat and McGee. In short, the Supreme Court held that Plaintiffs’ claims were sufficiently pled under Georgia’s laws regarding products liability, duty, and causation to avoid dismissal.

While, as stated before, on first glance, the idea that an app developer could be held liable for developing an app, a review of the Georgia Supreme Court’s decision shows that its rationale and supporting theory is well-established and reasonable considering Georgia statutory and common law.

Should we expect that Maynard will trigger a wave of successful products liability lawsuits against phone app developers in Georgia and across the country? Probably not. The filter at issue in Maynard seemed to be almost tailor-made for incurring liability as it was so intentionally designed to not only be used while driving, but obviously would encourage reckless or impressionable people to speed as much as possible. Major app developers like Snapchat, Instagram (Meta), Twitter, and TikTok, and more have most likely taken Maynard as a cautionary tale and will avoid creating such obviously-dangerous features within their products. However, many popular apps begin as small startups run by young, inexperienced developers who are more focused on increasing their userbase than on potential legal liabilities. These hypothetical young developers know little-to-nothing about products liability much less have knowledge of Maynard v. Snapchat, Inc. It is through these young startups that a products liability-invoking lawsuit may be seen again.

However, even if a developer is not designing a feature in an app that is so obviously encouraging dangerous behavior, developers, both for consumer-facing and industry-facing applications, should keep Maynard in the back of their minds while designing features and avoid features that encourage dangerous behaviors like speeding or distracted driving even if the intent behind the feature is innocent and innocuous.

The Fourth DCA Shields Defendant Employer from Punitive Damages Exposure Under Vicarious Liability Claim

The Fourth District Court of Appeal of Florida recently decided the case of HRB Tax Group, Inc. v. Florida Investigations Bureau, Inc., No. 4D22-2981 (4th DCA May 17, 2023), wherein it reversed the trial court’s order granting the plaintiff’s motion for leave to amend the complaint to add a claim for punitive damages against the defendant based on a theory of vicarious liability.  The Fourth District found that the plaintiff failed to make sufficiently allege or proffer evidence to establish a reasonable basis for the recovery of punitive damages under Section 768.72(3), Florida Statutes against the corporate defendant, HRB Tax Group, Inc. (“HRB”).

The action arose from an alleged fraudulent investment which the corporate plaintiff made through a third party. The proffered evidence was that plaintiff was referred to the third party fraudster by one of HRB’s employees, who was an expert in investments and tax planning. HRB’s employee allegedly advised the plaintiff’s president to invest at least $250,000 with the third party.  Further, it was alleged that HRB’s employee facilitated communications between the plaintiff and the third party using a personal email address, and her personal emails contained a signature line reflecting her HRB employment.  It was alleged that, due to the employee’s influence and recommendation, the corporate plaintiff wired more than $250,000 to the third party’s bank account in Hong Kong, but never received any returns on the investment.  Moreover, when the plaintiff requested that the money be returned, the requests were ignored by HRB’s employee and the third party, who absconded with the money.

The plaintiff’s original complaint alleged claims of fraud and negligence against HRB’s employee, a claim for civil conspiracy against HRB’s employee and the third party, and claims for vicarious liability and negligent supervision against HRB.

After the complaint was filed, the plaintiff learned that HRB’s employee had recommended the investment as part of a reciprocal referral program implemented by HRB’s managers. The plaintiff also learned that the involved employee was later terminated by HRB for violating company policies, including HRB’s policy against using personal email addresses to communicate with clients.

Based on this information, the plaintiff moved for leave to amend the complaint to assert a claim for negligence against HRB based on its reciprocal referral program.  Thereafter, the plaintiff moved to amend and add a claim for punitive damages against HRB.

The trial court granted the plaintiff’s motion for leave. In doing so, the trial court partially relied on evidence relating to the direct negligence claim against HRB regarding the referral program.  HRB appealed the order to the Fourth District.

In reversing the trial court, the Fourth District noted that section 768.72(1), Florida Statutes provides that “no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record by the claimant which would provide a reasonable basis for recovery of such damages.”  Under section 768.72, a defendant may be liable for punitive damages if the defendant was personally guilty of intentional misconduct or gross negligence.  In order to impute an employee’s conduct to his or her employer, a plaintiff must establish that the employee’s conduct constituted “intentional misconduct” or “gross negligence,” AND establish one of the following: (a) the employer, principal, corporation, or other legal entity actively and knowingly participated in such conduct; (b) the officers, directors, or managers of the employer, principal, corporation or other legal entity knowingly condoned, ratified, or consented to such conduct; or (c) the employer, principal, corporation or other legal entity engaged in conduct that constituted gross negligence and that contributed to the loss, damages, or injury suffered by the claimant.

The Fourth District found that the plaintiff’s proffered evidence relating to HRB’s maintenance of a reciprocal referral program did not establish any of the three bases for vicarious punitive liability, as there was no evidence proffered that HRB knew that the third-party would defraud the plaintiff and abscond with its investment, nor that its failure to vet the third-party participating in its reciprocal referral program rose to the level of gross negligence.

This decision reminds us of the high bar plaintiffs face in Florida to support a claim for punitive damages against a corporate defendant based on the conduct of the defendant’s employee.

NJ Raises Minimum Amount of Liability Coverage Required for Auto Insurance Policies

The State of New Jersey enacted new legislation that raises the minimum amount of liability coverage required for automobile insurance policies effective as of January 1, 2023. The new law has generated significant discussion among insurance providers, policyholders, and legal practitioners. In this article, we will delve into the background of PIP coverage, the changes brought forth by the new legislation, and the potential consequences for insurance defense litigation.

Personal Injury Protection (PIP) coverage, commonly known as “no-fault” coverage, is a form of auto insurance that covers medical expenses, and in some instances, lost wages and other damages, regardless of who is at fault in an accident. PIP coverage is mandated in several states, including New Jersey, and is intended to expedite the claims process, reduce litigation, and ensure injured parties are promptly compensated for their losses.

Effective January 1, 2023, the new law raised the State’s minimum automobile insurance limits, for the first time since 1972, in two (2) phases: January 2023 and January 2026.

The new law increases the minimum amount of liability and uninsured/underinsured motorist coverage for bodily injury or death as to one person from $15,000.00 to $25,000.00 on insurance policies purchased or renewed as of January 1, 2023. N.J.S.A. § 17:28-1.1. For plans purchased or renewed on or after January 1, 2026, the law will further increase minimum liability coverage to $35,000.00. Id.

Also, effective January 1, 2023, insurance plans must raise minimum coverage from $30,000.00 to $50,000.00 for accidents involving more than one person resulting in either bodily injury or death. N.J.S.A. § 17:28-1.1. Thereafter, the law provides that plans issued or renewed on or after January 1, 2026, require minimum coverage in the amount of $70,000.00. Id.

The recently enacted legislation raises the minimum coverage levels and premiums for PIP policies. This change impacts both insurance providers and policyholders.

Advocates of the new law argue that increasing the minimum coverage levels and premiums will bolster financial stability within the insurance industry and ultimately benefit consumers by ensuring that insurers can continue to provide adequate coverage. However, opponents argue that the higher premiums may lead to financial strain for policyholders due to a likely rise in insurance premiums, particularly those with limited incomes or driving records that already result in elevated premium rates.

The new law’s effects on insurance defense litigation can be varied. Some potential implications include:

1. Increased Coverage Disputes: With higher PIP coverage levels and premiums, policyholders may be more inclined to dispute coverage decisions or seek to reduce their out-of-pocket expenses. This will likely yield an increase in coverage disputes.

2. Shift in Claimant Strategies: The rise in PIP coverage levels and premiums could lead claimants to explore alternative compensation routes, such as filing claims against other drivers or their insurers. This shift may result in an increase in third-party liability claims.

3. Greater Potential for Bad Faith Claims: Insurers that fail to adequately inform policyholders of the changes to their coverage levels or premium rates may face allegations of bad faith.

4. Monitoring Legislative and Regulatory Developments: As the new law is implemented, insurance defense practitioners must remain informed of any legal challenges, regulatory guidance, or additional legislative developments that could impact PIP coverage and litigation. This knowledge will be crucial in advising clients on best practices and developing effective defense strategies. 

The recent legislation increasing minimum PIP coverage levels and premiums presents both challenges and opportunities for insurance defense. By understanding the potential implications of the new law on litigation and staying current on developments in the legal landscape, insurance defense attorneys can effectively represent their clients and navigate the evolving dynamics of PIP coverage disputes. Our firm is dedicated to assisting clients in navigating these changes and providing expert advice on insurance matters. If you have any questions about how this new law may affect you or your business, please do not hesitate to contact us.