Construction Case Law Update - October 2014 #2

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FLORIDA STATE CASES

  • Mediation, Settlement Agreements, and related Discovery – Disputes over a mediation agreement’s validity must be resolved prior to a court ruling on discovery requests regarding matters potentially settled by the agreement. A dispute arose after Jilco, Inc. (“Jilco”) subleased a commercial property to the respondent, MRG of South Florida (“MRG”). The court ordered mediation. The result was a “Memorandum of Mediation Results” that contained a provision indicating the parties’ intention to create a more formal agreement to memorialize their mediation, but provided that the Memorandum would suffice if no formal agreement was created. When a dispute arose over rents due under the conflicting paragraphs in the lease, MRG subpoenaed Jilco for information regarding all leases and subleases related to the property, all related communications, and all payments, records thereof, ledgers or bookkeeping entries of any property owner relative to any of the leases, and other documents accrued over a nineteen-year span. Jilco moved for a protective order, which the trial court denied under the belief that the parties had not truly entered into a settlement agreement until it was submitted and approved by the court. Given the absence of such an agreement, the trial court ruled that Jilco was not entitled to a stay of discovery for matters related to the mediation. The Fourth District Court of Appeal granted Jilco’s petition for certiorari, finding that (1) the trial court’s order had departed from the essential requirements of the law by concluding no mediation agreement existed, and that (2) Jilco was materially injured as a result. As the Fourth District noted, a signed mediation agreement is a contract, and it was undisputed that the parties had reached an agreement that was reduced to writing and signed by all parties pursuant to Florida Rule of Civil Procedure 1.730(b). Although the parties disputed the agreement’s validity, the Fourth District concluded that the proper course is for the court to resolve the validity dispute before ruling on discovery requests. This approach comports with Florida law, protects the sanctity of mediation agreements, and respects the rule that a settlement agreement bars discovery on settled matters. The trial court departed from the essential requirements of the law by failing to determine first the agreement’s validity and then limiting discovery to disputes that survive the agreement’s terms. Accordingly, the Fourth District granted certiorari and quashed the trial court’s order denying Jilco’s motion for protective order. Jilco Inc. v. MRG of South Florida, Inc., No. 4D14-2114, 39 Fla. L. Weekly D2171b (Fla. 4th DCA Oct. 15, 2014).
  • Insurance, Sinkhole claims, Neutral evaluation – Sinkhole proceedings must be stayed pending a neutral-evaluation process request from either party; this cannot be waived. The Second District Court of Appeal granted Citizens Property Insurance Corporation’s (“Citizens”) petition for certiorari of a trial court order that improperly sustained insured’s objection to Citizen’s notice of automatic stay based on insured’s argument that Citizens had waived its right to neutral evaluation. The Second District quashed the trial court’s order and granted Citizens’ writ of mandamus directing the circuit court to stay the underlying proceedings during the neutral evaluation process, which supersedes the alternative dispute resolution process under Fla. Stat. § 627.7015 and is mandatory when requested by either party. There is no waiver and no time limit to this process. Citizens Property Insurance Corporation v. Mario and Arie Diamantopulos, No. 2D14-1006, 39 Fla. L Weekly D2182a (Fla. 2d DCA Oct. 15, 2014). This case is not final until time expires to file rehearing motion and, if filed, determined.
  • Civil Procedure, Relief from Technical Admissions, Affidavits – Relief may be granted from an inadvertent technical admission if the adverse party is not prejudiced; affidavits to dispute the admission need not be filed before the hearing to warrant relief. West Hollywood, Pain  & Rehabilitation Center (“West Hollywood”), as assignee for insured, brought suit against insurer United Automobile Insurance Company (“United”). West Holly served upon United a request for admissions that functionally requested United to admit liability. United was a few weeks late in its response, but promptly filed for relief. United also filed its answer to the complaint, denying the matters that had it had technically admitted by its delay. West Hollywood filed for summary judgment nearly a year later. The trial court refused to grant United relief from the technical admission of liability, concluding that mere inadvertence was insufficient to warrant relief. The court subsequently struck an affidavit that United offered in opposition to West Hollywood’s summary judgment motion, and entered final judgment in favor of West Hollywood. Granting certiorari for second-tier review, the Second District Court of Appeal found that the trial court had mistakenly relied on an older version of Florida Rule of Civil Procedure 1.370, which has since been liberalized to remove the requirement of excusable neglect to warrant relief from a technical admission. The amended rule favors amendment to allow disposition on the merits rather than technicalities. Although the trial court acknowledged that it is an abuse of discretion to deny a motion for relief from technical admissions when (1) the true facts of the case contradict the admission and (2) the adverse party has failed to show prejudice, the trial court affirmed its decision on first-tier appeal because United had yet to file its affidavit opposing summary judgment by the time the motion for relief was heard. However, as the Second District noted, Florida law imposes no such requirement to grant relief from a technical admission. Because West Hollywood knew United was disputing liability based on its answer to the complaint, Florida law required West Hollywood to show prejudice in order to deny United relief from the admission. West Hollywood made no such showing. Accordingly, it was an abuse of discretion for the trial court to deny United’s motion for relief from the technical admission United Automobile Insurance Company v. West Hollywood Pain & Rehabilitation Center, No. 4D13-2232, 39 Fla. L. Weekly D2178a (Fla. 4th DCA Oct. 15, 2014).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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