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Florida Finally Ends the Daubert VS. Frye Debate on Experts

Florida’s newly re-constituted Supreme Court ended years of legislative and judicial maneuvering when it suddenly adopted the Daubert standard for admission of expert testimony.

Based on the Court’s adoption of the Daubert standard, parties offering expert testimony will have to meet stricter standards for admission of testimony than had been historically required under Florida law, which previously allowed for experts to be qualified essentially on experience alone under the Frye standard.  Now, parties will have to establish that an expert’s opinions are based on sufficient facts/data and application of reliable principles/methodologies to such facts/data.

The practical effect of this change has not yet been established through Florida case law, but it is likely to result in courts limiting the testimony of experts attempting to rely solely on experience as the basis for their opinions.  It is also likely to change the way litigants approach preparation of their experts’ opinions. (READ MORE)

On May 23, 2019, without case or controversy, the Florida Supreme Court formally adopted the Daubert standard.  This ended a six-year battle between lawyers, the legislature and judiciary over the applicable standard for expert testimony in Florida.

Florida had applied the Frye standard for expert testimony, typically a more plaintiff-friendly standard, until 2013. The Florida Legislature then passed legislation adopting the Daubert standard, typically a more defense-friendly standard, which became Florida Statute Section 90.702.  This sparked a debate among lawyers and the judiciary as to whether the statute was constitutional as it potentially superseded the Legislature’s authority to impact procedural issues in the court system.  In 2017, the Florida Supreme Court elected not to adopt the Daubert standard as procedural rule and left the determination of the constitutionality of the Daubert statute for a later case or controversy.

The first case that reached the Florida Supreme Court on the issue was DeLisle v. Crane Co., a tobacco case where the defendants challenged an $8 million judgment after a trial court denied a Daubert challenge to the plaintiff’s experts.  In October 2018, the Florida Supreme Court held that the Daubert standard did not apply and that admissibility of expert testimony in Florida was still governed by the Frye standard.  In its opinion, the Court stated that the Court has been constitutionally provided its exclusive rulemaking authority for judicial procedure and the Florida legislature has the authority to create substantive law. The Court found that since the standard for admitting expert opinions was procedural in nature, the 2013 legislative adoption of the Daubert standard was a constitutional encroachment on the Court’s rule making authority.

About 3 months of the DeLisle opinion, the Florida Supreme Court was re-constituted with 3 new justices appointed by Florida’s new governor.  About 7 months after the DeLisle opinion, the newly constituted Florida Supreme Court took the somewhat extraordinary step of adopting the Daubert standard as a procedural matter without any case or controversy before it.

Following this decision, there has been much speculation about the motivations of the Florida Supreme Court and whether this sudden decision was meant to serve as a signal of the Court’s inclination on other issues.  In another new development, 2 of the 3 newly appointed judges that led to the sudden adoption of the Daubert standard have just been appointed to the United States Eleventh Judicial Circuit of Appeals.  The impact of those appointments on the 11th Circuit’s ongoing review of issues concerning construction claims will be something to monitor moving forward.  In the interim, the same governor that appointed the 3 judges who adopted Daubert will be charged with appointing their replacements on the Florida Supreme Court.  This dynamic of the continually changing Florida Supreme Court will no doubt have other impacts on construction claims.

Florida Continues to Evolve the Statute of Repose

 

The trend of Florida courts eroding the statute of repose for construction and design claims is being countered by a statutory amendment that makes the date of a pre-suit notice irrelevant to the 10-year time bar for defect claims.  This is the third time in 3 years that legislation has bolstered the statute of repose in response to judicial rulings.  However, the Florida Supreme Court is currently considering whether this statutory amendment has any effect due to a potential conflict with another statute.

In the latest judicial limitation to the statute of repose, a Florida appellate Court held in 2018 that the service of a Chapter 558 notice of claim was enough to satisfy the statute of repose even when a lawsuit is not filed within the repose period.  The Legislature responded by introducing Florida Statute Section 558.004(1)(d) that became effective on July 1, 2019 and states that Chapter 558 notices of claim “shall not toll any statute of repose” applicable to construction and design claims.

Florida’s statute of repose for construction and design claims has been under attack in recent years in Florida courts.  The two areas at issue have been: 1) the definition of “completion of contract” for purposes of triggering the running of the statute of repose; and 2) the act required to initiate an action within the statute of repose period.

The first issue has already gone through the cycle of judicial erosion and legislative bolstering.  In 2015, a Florida appellate court held that “completion of contract” for purposes of starting the running of the statue of repose means the “date on which payment was made.”  See Cypress Fairway Condo. v. Bergeron Const. Co. Inc., 164 So. 3d 706, 707 (Fla. 5th DCA 2015).  Given that construction projects often include payment disputes after the conclusion of work, this ruling had the potential effect of delaying the statute of repose from running for several years.  In 2017, the Legislature amended the statute of repose to define “completion of construction” as the “date that final payment for such services becomes due without regard to the date final payment is made.”  See Fla. Stat. 95.11(3)(c).  In 2018, the Legislature eliminated an unresolved issue following the 2017 amendment by clarifying that “completion of contract” does not include warranty or post certificate of occupancy repair work. See Id.

The latest issue that is now the subject of new legislation is the act required to initiate an action before the expiration of the statute of repose.  In September 2018, Florida’s Fourth District Court of Appeal held in Gindel v. Centex Homes, et al., that compliance with the pre-suit requirements of Chapter 558 constitutes an action for purposes of the 10-year construction defect statute of repose. In Gindel, the plaintiff homeowners took possession of their townhomes on March 31, 2004 and filed suit on May 2, 2014.  The defendants argued that the statute of repose began to run on March 31, 2004 and had run prior to the filing of the plaintiffs’ lawsuit.  However, the plaintiffs argued that their Chapter 558 notice of claim served on February 6, 2014, was within the 10-year repose period and constituted an action for purposes of the statute of repose.  The trial court and appellate court agreed with the plaintiffs that a Chapter 558 notice of claim served as a statutory pre-requisite to a lawsuit constituted an “action” and brought the plaintiffs’ claims within the statute of repose.

This decision provided no favor to Florida’s construction industry. It could be used for the proposition that a property owner can eliminate the statute of repose by serving a Chapter 558 notice any time within 10 years after the completion of construction.  However, the Legislature quickly responded in amending Section 558.004(1) of the Florida Statutes to expressly state that a Chapter 558 notice of claim does not toll the statute of repose.  The bill that led to the statutory amendment expressly addressed the implication of Gindel v. Centex Homes as the basis for the amendment.

While this latest legislation might end the dispute about the impact of Chapter 558 notices served after the effective date of the statutory amendment on July 1, 2019, there remains an unresolved question about the impact of Chapter 558 notices served prior to that date.  A two-prong test exists to determine whether newly enacted statutes apply retroactively: 1) whether the legislation clearly expresses an intent that it should be applied retroactively; and 2) whether retroactive application would violate any constitutional principles.  See Metro. Dade Cty. v. Chase Fed. Hous. Corp., 737 So. 2d 494, 499 (Fla. 1999). As it relates to the second prong, it has been held that procedural and remedial measures are presumed to apply retroactively and that substantive measures do not apply retroactively. See Basel v. McFarland & Sons, Inc., 815 So. 2d 687, 692 (Fla. 5th DCA 2002).  This issue has not been tested in any published opinion, but the new statute does not specifically state it is retroactive in nature, which raises the likelihood that it will not be applied retroactively.  In addition, a statute impacting whether a party has a right to bring a lawsuit is arguably substantive in nature, which also raises the likelihood this statute will not be applied retroactively.

Importantly, the issue of whether this new statute has any impact moving forward remains the subject of briefing at the Florida Supreme Court in the Gindel case.  After the approval of the new statute, Gindel filed a brief arguing that the statutory amendment rendered Centex’s appeal moot.  Centex responded with a brief stating that the new statute does not remedy the issue caused by the Gindel opinion because the Fourth District Court of Appeals held that service of the pre-suit notice of claim was an action as that term is used in Florida Statutes Section 95.11(3)(c).  As a result, Centex asserted that the statement in the new Section 558.004(1)(d) that a Chapter 558 notice of claim does not toll the statute of repose is essentially meaningless because it does not address the definition of “action” under Section 95.11(3)(c).  The Florida Supreme Court has not yet rendered any decision on this issue.

Based on these circumstances, it seems likely Florida’s Statute of Repose for construction and design claims will continue to evolve through legislation and decisional case law.  Until the issue is clarified further through the legislature and/or judiciary, it is likely that plaintiffs and defendants will take opposing views on whether a Chapter 558 notice can constitute an action for purposes of the statute of repose.

Contribution for Defense Costs Soon to be Allowed in Florida

Due to new legislation, Florida’s days of being a “first in loses” jurisdiction for multiple insurers with a duty to defend a mutual insured in a latent construction defect claim may be over.  The legislation may also end some leveraging tactics against insurers on additional insured claims.

For any construction related claim initiated on or after January 1, 2020, insurance carriers will have the ability to pursue contribution claims against other insurers for defense costs incurred on behalf of a mutual insured. This law applies to admitted and surplus insurers for any action within a Florida Court regardless of whether the subject policies were issued in Florida.

This significant change in Florida law came as part of an omnibus insurance regulation known as House Bill 301 that was signed into law in July 2019 and the right to contribution is codified as Florida Statutes Section 624.1055.  Section 624.1055 legislatively overturns the well-known precedent contained within Argonaut Insurance Company v. Maryland Casualty Company, 372 So.2d 960 (Fla. 3d DCA 1979), and its progeny, Continental Casualty Company v. United Pacific Insurance Company, 637 So. 2d 270 (Fla. 5th DCA), which held a primary insurer that defends an insured cannot not seek contribution from co-primary insurers that did not defend the mutual insured.  The rationale for this anti-contribution law was that every insurer has an obligation to defend its insured irrespective of the actions of other insurers.  However, this stance resulted in some unforeseen consequences that have played themselves out in construction-related lawsuits and settlements in recent years.

Two of the most common scenarios have been: 1) where an insurer with a duty to defend refuses/delays defense after another insurer accepts defense and then uses its defense position to leverage a minimal (if any) contribution toward settlement; and 2) where a party entitled to defense as an additional insured under multiple insurers’ policies leverages the duty to defend against insurers for purposes of increasing insurers’ settlement offers and exposure.

The first scenario often includes a subcontractor insured with multiple insurers on risk over an extended time period.  Under the prior law, if one insurer defended the insured, the remaining insurers could delay/refuse defense and then use the money that would have been spent on defense to secure a release at the time of settlement—without the risk of liability for defense costs to the first insurer that defended the insured.

The second scenario often involves a general contractor owed additional insured coverage under multiple subcontractors’ insurance policies over an extended time period.  Under the prior law, the first insurer that accepted defense usually incurred an extensive cost for reimbursing post-tender defense costs that could not be recovered from any other subcontractors’ insurers.  Based on this reality, some insureds have used the potential of liability for defense costs or the threat of stipulated judgments against non-defending insurers as leverage in settlement negotiations or have carved-out insurers from settlements for purposes of continued litigation.

Ideally, Florida’s adoption of contribution between insurers should provide insurers more certainty about their defense cost exposure.  This could prevent some of the scenarios that are born from the fact that the first defending insurer usually incurs significant cost that does not reduce its indemnity exposure.  For example, an insurer faced with a situation where there is a questionable duty to defend under its policy, but a clear duty to defend under another insurer’s policy, could defend and seek contribution from the other insurer to eliminate the typical risks associated with denying a duty to defend. Another example could be a group of insurers agreeing to defend and then jointly seeking contribution from non-defending insurers.  These possibilities and others could end some of the leveraging tactics between insurers and insureds in construction claims. However, the ability to sue over defense costs may also result in more litigation between insurers and have its own set of unforeseen consequences.

One issue that may not need to be litigated is whether pre-tender defense costs are recoverable between insurers.  The new statute expressly states that “contribution may not be sought from any liability insurer for defense costs that are incurred before the liability insurer’s receipt of notice of the claim, suit, or other action.” However, the statute is silent as to whether insureds can seek pre-tender defense costs and it is likely that issue will continue to be the source of disputes in certain claims.

Florida’s adoption of contribution between insurers raises a host of potential issues that have not been dealt with during the process of litigation or in the state’s courts before. Insurers writing policies providing a duty to defend in Florida would be prudent to follow the trends as the application of this new law begins to take shape in the coming year.

Lydecker Diaz Announces The Winner of College Scholarship Program

In July of 2018, Lydecker Diaz announced the launch of a college scholarship program designed to benefit an undergraduate or graduate student enrolled in a U.S. college, university or institute. Applicants delivered a 500-word essay expressing why he or she wants to practice law.

On December 15, 2018, a panel of judges chose Samuel Hurtado, from Arizona Western College, Yuma, AZ, as the winner of the scholarship program. Samuel will receive a $1000 gift to go towards his law school education.

“The thought of being able to own a practice and be able to do what I love on a day to day basis excites me,” said Samuel in his submission for the scholaraship. “Even if that means turning every rock because this a profession that I am in love with.”

“Samuel’s essay was very compelling and we hope that this scholarship will help him continue to pursue a career in law with as much passion and determination as he displayed in his submission,” said Richard Lydecker, Senior Partner at Lydecker Diaz.

If you are an undergraduate or graduate student enrolled in a U.S. college, university or institute and interested in applying for the 2019 Lydecker Diaz Scholarship, please check back at https://www.lydeckerdiaz.com/scholarship/ to learn more about this year’s application deadline.

Senior-level hires and promotions for the week of Dec. 10, 2018

At the Miami office of Lydecker Diaz:

▪ Forrest Andrews has been hired as a partner in the firm’s appellate division. Most recently, he served in the appellate division of the City of Miami Attorney’s office. Andrews has a bachelor’s in political science at the University of Delaware and studied law at Albany (N.Y.) Law School.

▪ Patrick Russell was recently hired as a partner. He previously was ethics trial counsel for The Florida Bar, and before that, he managed his own law firm. Russell is a graduate of Marquette University and the University of Miami’s law school.

If you want to see the whole article, please click here!

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