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FLORIDA LAW WEEKLY

VOLUME 46, NUMBER 33

CASES FROM THE WEEK AUGUST 20, 2021

TRIAL COURT ERRED IN DENYING DEFENDANT’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT ON PLAINTIFF’S PUNITIVE DAMAGES CLAIM BECAUSE THE CULPABLE “AGENT” WAS NOT A MANAGING AGENT FOR PURPOSES OF IMPOSING DIRECT LIABILITY – THERE IS ALSO NO EVIDENCE UPON WHICH THE JURY COULD FIND THAT THE AGENT’S CONDUCT WARRANTED DIRECT LIABILITY FOR PUNITIVE DAMAGES BECAUSE THERE WAS NO PROOF OF A SUPERIOR’S FAULT

Wells Fargo v. Electronic Funds Transfer Corp., 46 Fla. L. Weekly D1824 (Fla. 5th DCA August 13, 2021):

A jury found that a “relationship manager” for Wells Fargo negligently misrepresented to the plaintiff, Electronic Funds Transfer Corp. that an account of one of its customers was in good standing. Wells Fargo had actually decided to terminate its relationship with the client because the account activity suggested it was engaging in high-risk and/or fraudulent business practices. The defendant’s misrepresentation induced the plaintiff to continue its ongoing business relationship with the client (Checkcare), which resulted in substantial losses.

Plaintiff asserted a claim for punitive damages against Wells Fargo based on direct and vicarious liability. To establish vicarious liability against a corporation, there must be a showing of vicarious liability based on the willful and malicious actions of an employee, along with a finding of independent negligent conduct by the corporation. Without that evidence, there can be no direct liability based on the willful and malicious actions of managing agents of the corporation. In this case, the jury rejected liability based on vicarious liability so the court confined its analysis to direct liability.

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In order to prevail on a direct liability theory, the plaintiff was required to establish that the “relationship manager” was a “managing agent” or held a policy-making position at Wells Fargo. A managing agent is an individual such as a president, primary owner, or another individual who holds a position with the corporation which might result in his act being deemed acts of the corporation. A managing agent is more of a mid-level employee who has some, but limited managerial authority.

In this case, the evidence established that the person at issue was a mid-level employee with limited managerial authority. Thus, while he had the power to remove holds placed on certain transactions, the evidence did not establish that he had the authority on his own to remove a hard hold such as the one placed on the account in this case. Thus, the trial court should have granted the judgment notwithstanding the verdict for the defendant on punitive damages.

ERROR TO DISMISS BAD FAITH CLAIM BASED ON STATUTE OF LIMITATIONS BAR – PLAIN LANGUAGE OF THE CUNNINGHAM AGREEMENT REQUIRED COURT APPROVAL OF THE AGREEMENT

Wright Insurance Agency v. Nationwide, 46 Fla. L. Weekly D1796 (Fla. 2nd DCA August 11, 2021):

The defendant had a $100,000 policy with Nationwide which Nationwide failed to tender timely. The parties ultimately agreed to resolve the underlying claim by entering into an agreement entitled “Stipulation and Joint Motion to Stay.” At that point, the plaintiff’s lawsuit had been pending for six years.

The parties’ agreement explained that it was a “variant” of the procedure the Florida Supreme Court approved in Cunningham v. Standard Guaranty Insurance Co. A Cunningham agreement involves the parties’ stipulation that allows for bad faith litigation, and if none is found, a settlement for the policy limits.

In this modified Cunningham agreement, the parties agreed on the amount of damages the insurer would pay if there were a bad faith verdict, to avoid litigating the underlying claim entirely. The parties stipulated that the value of the plaintiff’s claim was $550,000.00 and stated that the action would stay until there was a determination made on the bad faith litigation.

The agreement also outlined the settlement amount, the fact that there would be a separate lawsuit for bad faith, and other terms of what would happen if a bad faith determination were made. It contained a provision dictating what would happen if the court did not approve the agreement, or construed it in a manner that would prevent bringing the bad faith action. In that circumstance, the settlement would remain intact, but the court would enter a judgment for the agreed amount of the plaintiff’s claim, less the policy limits and the parties would proceed with the bad faith action based on the excess judgment. The final paragraph stated that the parties jointly moved the court to approve the stipulation.

As the court observed, as part of the stipulation, Nationwide “relentlessly sought to rid itself of the bad faith litigation to which it had agreed.” However, the path ended when the trial court dismissed the bad faith complaint with prejudice, finding that it was barred by the statute of limitations.

A cause of action for third-party bad faith against an insured’s liability carrier does not ripen until the third party obtains a judgment against the insured for an amount that exceeds the insurance policy limits. In this case, the parties entered into a stipulation, as well as a joint motion to stay, and intended for it to serve as the functional equivalent of the excess judgment needed to pursue the bad faith claim.

However, Nationwide then asserted in its motion to dismiss that the agreement became the functional equivalent of an excess judgment when the parties signed it for statute of limitations purposes.

In construing the contract, and looking at the intent of the parties from the words of the contract as a whole, the court found it was clear that the parties meant to proceed with the bad faith claim without first litigating the tort case.

Because the agreement proposed two alternatives – either obtain court approval of the agreement or failing that, have the court enter an excess judgment against the defendants in the amount to which the parties had stipulated, the parties did not have to resort to the entry of an actual excess judgment, because if the court approved of the agreement, it would be the functional equivalent of an excess judgment.

The court also found that Nationwide’s obligation to pay the policy limits was not triggered until the court approved the agreement, lending further support to the conclusion that the parties did not intend for the stipulation to be effective before it was approved by the court. Because the bad faith action was filed within four years from the date the court approved the agreement as the parties intended, it was not barred by the statute of limitations.

NO ERROR IN VACATING ORDER SETTING ASIDE A MEDIATED SETTLEMENT AGREEMENT, WHEN THE SUIT HAD BEEN VOLUNTARILY DISMISSED PRIOR TO ENTRY OF THE ORDER

Burns v. Law Offices of Lynwood Arnold, 46 Fla. L. Weekly D1799 (Fla. 2nd DCA August 11, 2021).

PETITION SEEKING REVIEW OF ORDER DENYING MOTION TO DISMISS COMPLAINT FOR PURE BILL OF DISCOVERY, AND DIRECTING PETITIONER TO FILE AN ANSWER, DENIED BECAUSE PETITIONER FAILED TO DEMONSTRATE IRREPARABLE HARM

IMC Medical Center v. Deluca, 46 Fla. L. Weekly D1816 (Fla. 4th DCA August 11, 2021):

The trial court denied the defendant’s motion to dismiss the plaintiff’s complaint about pure bill of discovery. However, the trial court merely denied the defendant’s motion to dismiss and directed the defendant to file an answer. This did not cause irreparable harm.

The only way such irreparable harm could have been found is if the trial court had rendered final judgment compelling discovery after the defendant filed an answer.

Because there was no requirement that the defendant discloses any discovery sought by the underlying complaint, the defendants could not demonstrate the requisite irreparable harm needed for certiorari.