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The Week In Torts – Cases from July 29, 2022
Finally, something that’s not arbitrable!
FLORIDA LAW WEEKLY
VOLUME 47, NUMBER 30
CASES FROM THE WEEK JULY 29, 2022
TRIAL COURT PROPERLY FOUND THAT PLAINTIFF’S CLAIMS FOR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS AND VIOLATIONS OF THE FLORIDA CIVIL RIGHTS ACT WERE NOT ARBITRABLE PURSUANT TO THE AGREEMENT BETWEEN THE PARTIES AS THOSE CLAIMS LACKED THE NECESSARY NEXUS TO THE AGREEMENT
Navarro v. Varela, 47 Fla. L. Weekly D1554 (Fla. 3rd DCA Jul. 20, 2022):
The plaintiff joined the defendant law firm as a partner. Upon joining the firm, she executed an addendum to the firm’s operating agreement. That document provided the attorney’s compensation scheme, budgeting procedures, procedures for disassociation and expulsion of a partner. It also contained a mandatory arbitration clause.
The arbitration clause stated that any unresolved disagreements regarding the interpretation of the agreement or the rights and obligations of shareholders and partners with respect to the agreement would be submitted to arbitration.
The firm terminated the attorney. She then sued it on various bases including breach of contract, for an accounting, intentional infliction of emotional distress, fraudulent misrepresentation, and violation of the Florida Civil Rights Act, arising out of her high risk pregnancy.
The intentional infliction of emotional distress Florida Civil Rights claims arose out of the attorney’s request for reasonable accommodations due to her high risk pregnancy. The firm argued those claims were also subject to arbitration, because they arose from the parties’ partnership relationship set forth in the agreement.
The appellate court disagreed. Nothing about the plaintiff’s claim for intentional infliction of emotional distress or Florida Civil Rights Act violations as pled in the complaint alleged that the firm’s conduct in those instances violated the agreement, nor were the attorney’s claims based on the terms of the agreement.
Instead, the plaintiff alleged that the firm violated the Florida Civil Rights Act, which imposes legal duties on an employer regardless of the existence of a contract. Intentional infliction of emotional distress would extend to anyone, including third parties who might be injured.
The court relied on cases stating that although the employment agreement created the legal relationship between the attorney and the firm, the complaint did not address any particular duties created by the contract. Because there was no nexus between the terms and provisions of the agreement and the allegations of the complaint regarding the intentional infliction of emotional distress and the violation of the Florida Civil Rights Act, the trial court properly concluded that those claims were not arbitrable for lacking sufficient nexus to the agreement.
Practice Tip: In trying to preserve your client’s constitutional right to a trial by jury, remember that if at all possible to allege claims that a court can interpret to fall outside of the arbitration clause. It is often not possible, but when it is, do it!
DISMISSAL WARRANTED WHERE PLAINTIFF’S ASSIGNMENT OF BENEFITS DID NOT COMPLY WITH SECTION 627.7152
The Kidwell Group v. Olympus Insurance Co., 47 Fla. L. Weekly D1571 (Fla. 5th DCA Jul. 22, 2022):
A wind storm damaged the insured’s home. She reported the damage to her insurer.
She then executed an assignment of benefits in favor of the plaintiff, Kidwell, who submitted an invoice to the insurer, and later filed suit when the insurer failed to make the payment.
The insurance company moved to dismiss, arguing that the assignment failed to comply with Section 627.7152.
Kidwell argued that the insurance policy was issued before the effective date of the statute, and because the statute did not indicate that it applied retroactively to the policy, it did not apply (and argued that a retroactive application would be unconstitutional anyway).
Both the trial and appellate courts concluded that this argument was without merit, because the operative date for purposes of the statute was the date of the assignment, not the date the insurance policy was issued. Section 627.7152 provides a list of requirements for any agreement that assigns post-loss benefits under a property insurance policy, and the failure to comply with those terms makes the assignment invalid and unenforceable.
The court observed that the Fourth District ruled similarly, and rejected Kidwell’s reliance on a trial court decision from the Middle District of Florida which addressed an assignment to attorney’s fees. The Fifth District explained that the assignment in this case was invalid and unenforceable because Kidwell had indisputably failed to comply with Section 627.7152. As a result, it never successfully stepped into the shoes of the insured, forcing the court to affirm the dismissal of the complaint.