Beware of Attorney Charging Liens
11.06.13 | Permalink
Posted by: Damien A. Orato
Attorneys’ fee liens, commonly referred to as “charging liens,” pose a difficult problem for defendants. Increasingly, plaintiffs are represented by multiple attorneys due to plaintiffs switching attorneys or attorney referrals. This is particularly true in product liability cases where it is typical for the original plaintiff’s attorney to refer the case to an attorney specializing in product liability. Sometimes former plaintiff’s attorneys file a formal notice of lien in the lawsuit. However, other times the former plaintiff’s attorney does not file a formal lien notice with the court. When a settlement is reached it is typical for the defendant to require the plaintiff to resolve all liens, including any attorney charging liens, as a condition of the settlement. However, if the plaintiff and current plaintiff’s attorney fail to resolve a charging lien, then the former attorney claiming a charging lien may seek to collect from defendant either in the original action or in a separate action.
Because of the risk that charging liens pose to defendants, it is important that defendants identify any potential charging liens. Defendants should include an indemnification provision in the settlement agreement that requires the plaintiff to indemnify the defendant against any charging liens. However, this provision often provides limited protection, because the plaintiff has exhausted the settlement money and lacks other assets. Florida Bar Rules prevent defendants from including indemnity provisions in settlement agreements that would require the settling plaintiff’s attorney to indemnify the defendant should a lienholder assert a claim. Therefore, when significant settlement sums are involved, a defendant should take steps to ensure that the charging liens are resolved as part of the settlement reached with the settling plaintiff’s attorney. For example, a defendant can refuse to disburse the settlement funds until the plaintiff proves that any charging liens have been resolved. By taking steps to ensure that plaintiff’s and settling plaintiffs’ attorneys comply with their duties to resolve any liens, defendants can minimize their exposure to charging liens.
What Lies Ahead as Florida Transitions to Daubert
06.04.13 | Permalink
Posted by: Armando G. Hernandez
Florida Governor Rick Scott has signed into law a piece of legislation that transforms Florida into a Daubert jurisdiction, aligning Florida courts with their federal counterparts. Florida was one of only 10 remaining hold-outs in the minority of states still applying the nearly century-old requirements of Frye v. United States, 293 F. 1013 (D.C. Cir. 1923). In its third year up for vote, the Florida legislature finally approved the legislation and teed it up for the Governor’s approval.
Florida’s recent expert testimony reform and amendment of Florida Statute §90.702, makes the standard of admissibility of expert testimony in Florida courts stricter and more exacting. Simply stated, the Daubert standard requires that:
a) the testimony is based on sufficient facts or data;
b) the testimony is the result of reliable principles and methods; and
c) the witness has applied the principles and methods reliably to the facts of the case.
The Daubert standard contemplates the trial court as a “gatekeeper” that independently assess the scientific validity and reliability of the reasoning, methodology and principles underlying proffered expert evidence. See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Under the Daubert standard, the trial court can exclude a scientific expert’s opinion even if the expert had used reliable and accepted methodology if the trial court, as gatekeeper, determined the expert’s conclusion(s) were unsupported by the given methodology’s data. See General Electric Co. v. Joiner, 522 U.S. 136 (1997). The Daubert standard is applicable to all experts under Federal Rule of Evidence 702 and is not limited in its reach to only “scientific” experts. See Kuhmo Tires Co. v. Carmichael, 526 U.S. 137 (1999). Pure opinion testimony, which differs from offering a scientific fact, will no longer be admissible unless the opinion testimony satisfies the Daubert test.
There are several upsides to the change to Daubert. The prospect of Daubert hearings to challenge the validity of expert testimony may serve as a disincentive to some plaintiffs from bringing suit in the first place. Novel scientific expert testimony used to establish causation may likely be scrutinized to a greater degree, which in turn will prohibit the introduction of unreliable and unsupported expert testimony. A successful challenge of a plaintiff’s expert witness on Daubert grounds can put a prompt and definitive end to a plaintiff’s case. Verdicts predicated upon “junk science” may become less common.
Opponents of the reform contend that a shift to the more expansive Daubert standard will lead to an increase in costs, mini-trials, prolonged litigation, and parties retaining experts to testify about other experts as well as the reliability of the principles and methods. Opposing counsel will likely argue that defense counsel is merely stalling the litigation with motions challenging plaintiff’s experts, there is meager precedent regarding Florida’s application of Daubert, and pivot to policy concerns regarding wastedmoney, time and judicial resources involved in expert challenges.
The new law will take effect on July 1, 2013 and is not intended to apply retroactively. The inclusion of an effective date in the enacting legislation rebuts any argument that the legislature intended retroactive application. Any attempts to enforce the law in the interim period from the date the governor signs the legislation into law until the actual date of enactment for trials during that interim period will likely prove futile. Therefore, the reformed standard will apply to all cases tried on or after July 1, 2013, even if the case was filed prior to the enactment date. Moreover, for any cases retried following a favorable appellate decision after July 1, 2013, the case would likely be tried under Daubert.
The effective date and temporal application of the law will present various issues in pending litigation. Practioners and clients alike with pending state court cases will be faced with procedural conundrums and strategic considerations.
Hypothetical #1: Several, if not all, expert depositions have already been taken but trial is post-enactment. Defense counsel may want to consider opening up any expert depositions for the limited purpose of determining any unknown basis to strike on Daubert grounds. Alternatively, defense counsel may seek to propound expert interrogatories to obtain that information.
Hypothetical #2: Several, if not all, expert depositions have already been taken but trial is post-enactment. Defense counsel did not update the Frye depositions and has not yet moved to strike any experts. Under such circumstances, defense counsel may want to strike the experts under Daubert.
Hypothetical #3: Several, if not all, expert depositions have already been taken but trial is post-enactment. Defense counsel has filed Frye motions to strike experts. Defense counsel may need to amend the motions applying the Daubert standard and conduct any necessary Daubert hearings.
Hypothetical #4: Post-enactment, plaintiff seeks to amend or substitute experts given the shift to Daubert. Will the Court allow plaintiffs in cases to do so? As a result, will all discovery be reopened or extended?
All in all, here is what can reasonably be anticipated. There will be varying degrees of understanding, adaptation, and rulings from different trial court judges given their varying levels of experiences in federal court and familiarity with Daubert. Pre-trial motion practice may see an increase in the early stages of the transition. The Florida Senate expected as much. Motions for continuance will likely be more liberally granted for pending cases that are set for trial close in time to the enactment date. Court dockets may experience a temporary backlog. A 2011 study on the effects of the Daubert standard revealed a noteworthy increase in Daubert challenges to all types of experts from 2000 to 2010. The study also revealed a 49% success rate of having experts stricken in whole or in part. Members of the plaintiff’s bar who are unaccustomed to litigating in federal court will be at a disadvantage.
Florida's 4th DCA Underlines Importance of Rules Governing Depositions of Designated Corporate Representatives
05.02.13 | Permalink
Posted by: Timothy N. Bench
In a recent decision, a Florida appellate court discussed why we have rules allowing for corporate entities to designate corporate representatives to speak for them, and the implications of failing to utilize the designated procedures properly. In Carriage Hills Condominium, Inc. v. JBH Roofing & Constructors, Inc., --- So. 3d ---, 2013 WL 1136399, 38 Fla. Law Weekly D643 (Fla. 4th DCA, March 20, 2013), the court addressed the appeal of a summary judgment granted by a trial court following the deposition of an employee of a corporation.
Carriage Hills, a condominium association, through its board of directors, hired JBH Roofing to perform building repairs necessitated by Hurricane Wilma pursuant to a contract which obligated JBH to perform only work approved by Carriage Hills’ public adjuster, and to accept payments approved by and received from Carriage Hills’ insurer. Less than a year later, Carriage Hills had terminated JBH’s contract and JBH sued alleging breach of contract and other related claims. The breaches alleged by JBH included (a) failure to pay for repairs approved by the carrier; (b) failure to diligently present claims for loss to the carrier; and (c) retention of other roofing contractors to perform work that should have gone to JBH pursuant to the contract.
Carriage Hills answered and asserted affirmative defenses alleging, among other things, that (1) the contract was “executed without Board approval”; (2) that it had already paid JBH in full for all work performed; (3) that JBH failed to mitigate damages; and (4) that JBH failed to perform its repairs satisfactorily or with due diligence.
JBH noticed for deposition the “Corporate Representative of Carriage Hills Condo with the most knowledge of the allegations contained in the complaint.” The notice made no reference to any particular issue(s) to be addressed, or to Carriage Hills' affirmative defenses and counterclaims.
Carriage Hills tendered Ms. Diane Foley, who in her then-capacity as President of the association, executed the JBH contract and was apparently the person with “the most knowledge” of the allegations in JBH’s complaint.
After testifying that she was authorized to execute the contract, Ms. Foley was repeatedly asked whether, in her “opinion,” contentions within the parties' pleadings were accurate. When asked whether she “believed” JBH had breached the contract, she responded, “In my layman opinion, no.” She testified that she was “not aware” of any unauthorized work performed, and that she “believed” that JBH completed all the tasks it was authorized to do up to the time of termination. She also did not believe JBH's work was defective.
Armed with this testimony, JBH filed its Motion for Summary Judgment, in response to which Carriage Hills filed affidavits of another former president of the association and of its treasurer, in which it was asserted that JBH performed “substandard work with respect to the roof systems”, “submitted duplicate charges”, and “conducted unauthorized work, including work that was not paid for [by the carrier].” The affiants further asserted that due to JBH's shoddy repair work, Carriage Hills was forced to retain other roofing contractors to fix “water leaks and problems encountered with the roof system,” and that JBH was paid all of the funds approved by -- and received from -- the insurer.
The trial court held that Ms. Foley, as its corporate representative, was “Carriage Hills,” and that her testimony was therefore binding on Carriage Hills. Accordingly, it struck the two affidavits, reasoning that “[i]n situations where the non-movant in a motion for summary judgment submits an affidavit which directly contradicts an earlier deposition . . . , courts may disregard the later affidavit.” Based upon Ms. Foley’s deposition testimony, the trial court granted summary judgment to JBH, and Carriage Hills appealed.
On appeal, Florida’s 4th District Court of Appeals addressed the proper procedure for noticing and taking the deposition of a designated corporate representative in Florida. Florida Rule of Civil Procedure 1.310(b)(6), which governs depositions of designated corporate representatives, requires the party seeking the deposition to describe, with reasonable particularity, the matters for examination. This allows the corporate entity to select an individual or individuals able to testify on its behalf regarding the designated subjects. The Rule does not require that the person with “the most knowledge” regarding anything be produced. In fact, the court pointed out that the “knowledge” as to which the designated representative(s) are produced to testify is that of the corporation, and not the personal knowledge of the selected individual(s). The deponent needn’t have any relevant personal knowledge at all.
Against this backdrop, the appellate court noted that Ms. Foley had not been properly noticed as a corporate representative, since the notice failed to designate specific areas of inquiry, instead asking for the person “with the most knowledge’ regarding the allegations in the complaint. And JBH got exactly what it asked for as a result – a deponent with personal knowledge of relevant facts but not a person who would testify to the knowledge and litigation positions of Carriage Hills. To add insult to injury, the deposition was also not properly conducted, in that Ms. Foley was repeatedly asked about her personal opinions rather than the positions of the corporation. The result was that Ms. Foley’s testimony did not directly contradict the affidavits subsequently submitted by Carriage Hills, and the appellate court held that the trial court had acted improperly when it struck them and entered summary judgment based on Ms. Foley’s testimony. The summary judgment was therefore reversed and the case remanded to the trial court for further proceedings.
It has, unfortunately, become a common practice in Florida for notices for corporate representative depositions to request the “person or persons with the most knowledge” regarding designated subject areas or, most broadly, “the issues set forth in the pleadings.” The Carriage Hills decision serves as an important reminder of how failure to properly notice and conduct a corporate representative deposition can severely diminish the usefulness of the resulting deposition and the streamlining purpose of Rule 1.310(b)(6). Conversely, practitioners receiving such notices should consider filing objections and/or objecting on the record to such improper language.
11.06.13 Beware of Attorney Charging Liens Read Article >>
06.04.13 What Lies Ahead as Florida Transitions to Daubert Read Article >>
05.02.13 Florida's 4th DCA Underlines Importance of Rules Governing Depositions of Designated Corporate Representatives Read Article >>
04.08.13 Update Regarding Florida's Proposed Product Liability Instructions Read Article >>
02.26.13 Proposed Florida Law H.B. 587 Seeks Fairness in Plaintiff Recoveries on Claims for Medical Expenses Read Article >>