Is The Frye Standard Making A Comeback In Florida?

Matthew I. Rochman | Proskauer Rose LLP | October 26, 2017

On July 11, 2017, the Florida Supreme Court accepted jurisdiction of a case in which it is expected to finally decide, conclusively, whether Florida courts are to apply the Frye or Daubert standard to determine admissibility of expert or scientific evidence.

The Frye standard, which was adopted in Florida in 1952, applies to expert testimony based upon new or novel scientific evidence. Under the Frye standard, “in order to introduce expert testimony deduced from a scientific principle or discovery, the principle or discovery ‘must be sufficiently established to have gained general acceptance in the particular field in which it belongs.'”

The Frye standard had reigned supreme nationwide for almost 70 years but, in 1993, the U.S. Supreme Court issued its opinion in Daubert v. Merrell Dow Pharmaceuticals, Inc. in which it held that the Federal Rules of Evidence superseded Frye‘s general acceptance test. In interpreting Federal Rule of Evidence 702, Daubertprovides that “the trial judge must ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable.” The Daubert standard is generally considered more stringent than Frye and it is now the controlling standard in federal courts, as well as a large majority of the states.

Florida had been one of the minority holdouts that continued to apply Frye after the Daubert decision, until 2013 when Florida’s Legislature made two amendments to Florida’s Evidence Code. These amendments were made in order to bring Florida’s statutes in line with Federal Rule of Evidence 702 and Daubert.1 Despite these amendments, however, there remained uncertainty about whether to apply Frye or Daubert even after these legislative changes because, under the Florida Constitution, the Florida Supreme Court has the exclusive power to create rules of procedure, whereas the Florida legislature has the exclusive power over rules that are substantive, and it was unclear whether the evidentiary standard was a procedural issue that had to be blessed by the courts or a substantive issue left to the control of the legislature. Thus, the 2013 legislative amendments intending to implement Daubert were arguably not final until Florida’s Supreme Court gave its blessing.

In that regard, on February 16, 2017, the Florida Supreme Court weighed in and declined to adopt the Daubertstandard to the extent it is procedural in nature.2 In its holding, the Florida Supreme Court declined to adoptDaubert but also did not address the ultimate question of whether the Legislature’s attempt to transition Florida from Frye to Daubert was a substantive rather than a procedural change, instead deferring those issues until it had a “proper case or controversy” before it.

Now it seems the Florida Supreme Court may have that case it has been waiting for.

In Crane Co. v. DeLisle, the plaintiff obtained a jury verdict at the trial level after the trial judge approved the appearance of three plaintiff expert witnesses. On appeal, the Fourth DCA decided that under Daubert, two of the plaintiff’s expert witnesses should not have testified and the appellate court overturned the jury verdict. Although the plaintiff argued that the court lacked authority to apply Daubert since it had not yet been approved by the Florida Supreme Court, the appellate court held that the amended statutes, which adopted Daubert, were presumed to be constitutional and were to be given effect until declared otherwise.

In their jurisdictional brief to the Florida Supreme Court, the plaintiffs’ attorneys noted that the Florida Supreme Court had been waiting for a case formally seeking review of an appellate decision touching on objections to “Daubert and making pertinent arguments in the context of the actual application of Daubert” and argued that “[l]awyers and parties across Florida want this court to take it up.” It seems the Florida Supreme Court listened because, on July 11, 2017, it accepted jurisdiction to hear the matter. Many amicus curiae briefs have been filed already, and the deadline for the Petitioners to file a reply brief has been set for November 9, 2017. Accordingly, it seems Florida litigants may soon find out whether the Frye standard is going to be revived in the Florida courts.

Footnotes

See Ch. 2013-107, Laws of Fla. งง 1, 2 (amending sections 90.702 and 90.704 of the Florida Statutes).

In re Amendments To Florida Evidence Code.

Windstorm Insurance May Not Be Your Only or Best Option

John A. Moore | Daily Business Review | October 2, 2017

As commercial and residential property owners in South Florida assess their damage after Hurricane Irma they should be cognizant that a claim against their own windstorm insurance may not be the only or best option. This is true in part because making a claim against one’s own insurer will inevitably require the payment of a deductible and may result in future higher premiums. Accordingly, consideration should be given as to whether other sources of recovery may exist to cover the damages.

An analysis of the damage including the causes is a necessary starting point. If, for example, a structural component such as roof shingles or membranes failed, the failure might be due to a manufacturing defect or defective installation. In those situations it may be possible to seek recovery from the product manufacturer or those involved in the construction, including the contractor, engineer and architect either based upon a construction defect claim or a warranty claim.

If the failure is the result of a construction defect the next aspect to consider is whether the work that failed was performed within the last 10 years. The 10-year time frame is important because Florida Statute Section 95.11(3)(c) provides a 10-year statute of repose for construction defects that requires a lawsuit be brought within 10 years “after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer whichever date is latest.” Although the law is clear that any construction defect claim is barred if it is not commenced within the 10-year statue of repose, the timing of when that 10-year period is triggered is less clear and may be later than one would think. For instance, a Florida state court ruled that the date of final payment instead of the date the work was completed was the point at which the statute of repose started to run. Whereas another Florida state court decided that the trigger for the statute of repose could be the date at which the engineer of record filed a final plat for the project, even though that filing took place three years after the certificate of occupancy had been issued and the owner had taken possession of the property.

Warranty Considerations

With respect to a potential product or workmanship warranty claim, obviously the specific language of the warranty needs to be reviewed to determine what the warranty purports to cover and to exclude. Again, it is important to know the cause of the damage, keeping in mind that there may be more than one cause, as it is more likely that coverage under the warranty will exist if the damage is caused by wind and driven rain as opposed to damage caused by windblown debris. The warranty may contain language that excludes coverage for damages caused by “Acts of God” which is an expression frequently used in the law and generally refers to damages caused by natural disasters or forces of nature that exist independent of any human acts. And although hurricanes are generally considered to be an “Act of God,” the inclusion of such language does not necessarily mean that one cannot pursue a warranty claim. It is possible to challenge such exclusions in situations where the product or work failed in wind speeds that are within the design criteria for the property’s location. With respect to Hurricane Irma, the National Weather Service in Miami’s preliminary reports of wind speeds in Miami-Dade and Broward County show that the sustained wind speeds did not exceed those of tropical force winds, which is less than 74 mph, and that the maximum hurricane force gusts did not exceed 100 mph. These wind speeds are well within the South Florida Building Code design criteria.

Interestingly, if the issuer of your warranty declares it to be void because the product or work was exposed to hurricane force winds, it may be possible to claim the value of the loss of that warranty as one of your damage components in a property insurance claim, provided of course that you suffered actual direct physical loss or damage to covered property.

If it is apparent that the neighbor’s tree or its limbs falling onto your property caused the damage, the general rule is that you are responsible and you would need to make a claim with your own insurer. If, however, the tree was diseased, had dead limbs or had been otherwise improperly maintained it is possible to prove that the neighbor was negligent and therefore liable for the damage.

Accordingly, the options available to a property owner will be dependent upon the type of damages and the cause of them, and in the case of construction defects whether the work was done within the last 10 years.

Insurance Coverage in Concurrent Cause Cases: Florida Supreme Court Decides District Split in Favor of Coverage

Elizabeth B. Fata | Claims Journal | August 9, 2017

On December 1, 2016, the Florida Supreme Court held in an insurance coverage case that “when independent perils converge and no single cause can be considered the sole or proximate cause, it is appropriate to apply the concurring cause doctrine.” This decision came on the heels of a recent district split in the state between Florida’s Second District Court of Appeal and Third District Court of Appeal. The split concerned which legal theory of recovery should apply when two or more perils converge to cause a loss, and at least one of the perils is excluded from coverage. The Third District, in Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d DCA 1988), applied the concurrent causation doctrine, which holds that insurance coverage may exist when there are concurrent causes of a loss and at least one cause is covered under the policy. In contrast, the Second District, in American Home Assurance Co. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA 2013), the decision from which the appeal was taken to the Florida Supreme Court, directed application of the efficient proximate cause doctrine. This theory holds that when different perils contribute to a loss, the efficient cause — the one that set the other causes in motion — is the cause to which the loss is attributable. If that cause is covered under the policy, the insured is entitled to coverage for the entire loss. The Florida Supreme Court resolved this divergence of views in Sebo v. American Home Assurance Company, Case number SC14-897, in favor of the Third District’s reasoning and the concurrent cause doctrine.

In Sebo v. American Home Assurance Company, homeowner John Sebo suffered severe property damage, resulting in the ultimate loss of his home, after Hurricane Wilma struck the West Coast of Florida in October 2005. Sebo had purchased his then four-year-old home in Naples, Fla., in April of that same year. Sebo then obtained homeowner’s insurance from American Home Assurance Company (AHAC) and was issued a custom “all risks” policy providing $8,000,000 in coverage. Shortly after purchasing the home, Sebo’s property began experiencing significant water intrusion and related problems during rainstorms. It became clear that the house suffered from major design and construction defects. When Hurricane Wilma subsequently hit Naples, Sebo’s home was further damaged. The residence could not be repaired and was eventually demolished. When Sebo submitted his claim to AHAC, the company denied coverage for any damage other than mold damage. Sebo subsequently renewed his claim but that was denied as well.

 

Sebo brought suit against the sellers of the property, the architect of the property, the construction company that built the property, and AHAC. Sebo settled against the other defendants and the issue went to trial with AHAC alone on the insurance coverage issue. The trial court entered judgment against AHAC and awarded Sebo the full policy limits of $8,000,000.

On appeal, the Second District Court of Appeal found that there was “no dispute in this case that there was more than one cause of the loss,” — that is, defective construction, rain, and wind — but disagreed with the trial court’s application of the concurrent causation doctrine and reversed and remanded for application of the efficient proximate cause theory.

The Florida Supreme Court, in reviewing the Second District’s decision and the diverging theories, reiterated that “ambiguous exclusionary clauses are construed even more strictly against the insurer than coverage clauses,” and that in all-risk policies such as Sebo’s, the “construction is governed by the language of the exclusionary provisions.” The court then rejected the Second District’s decision and its reasoning and held that the concurrent cause doctrine applied.

The Second District, in remanding for application of the efficient proximate cause doctrine, had reasoned that “a covered peril can usually be found somewhere in the chain of causation, and to apply the concurrent causation analysis would effectively nullify all exclusions in an all-risk policy.” The court disagreed with this logic because AHAC had explicitly written other sections of Sebo’s policy to avoid applying the concurrent cause doctrine. Because the relevant exclusionary language did not explicitly avoid applying the doctrine, the court found that the plain language of the policy did not preclude recovery.

The court concluded that because there was “no reasonable way to distinguish the proximate cause of Sebo’s property loss … it would not be feasible to apply the [efficient proximate cause] doctrine because no efficient cause can be determined.” As such, “when two independent perils converge and no single cause can be considered the sole or proximate cause, it is appropriate to apply the concurring cause doctrine.”

This is a policyholder friendly decision as it is not uncommon for multiple perils to combine and simultaneously cause properly damage. The decision frees policyholders from having to prove that the primary cause of a loss was a covered peril in circumstances involving unrelated causes of loss. While this decision provides policyholders some benefit when concurrent causes converge, the decision does not prohibit the application of the efficient proximate cause doctrine when the causes of loss are not concurrent; that is, when it is possible to trace the damage back through a chain of events and pinpoint a single cause that set the chain into motion.

Given that both the concurring cause and efficient proximate cause doctrines can still apply under Florida law when multiple causes contribute to a loss depending upon the facts giving rise to a particular claim, insurers handling claims in Florida will have to carefully evaluate the specific fact pattern giving rise to the loss to consider which causation doctrine should be applied and how. Furthermore, the court, while briefly mentioning that AHAC did not employ anti-concurrent cause language in the relevant exclusion, did not squarely address how the case would have been resolved if such language had been employed.

The resolution of this case in favor of policyholders should be an indicator to the insurance industry that they can expect to see an increase in claims, especially in the volatile environment of Florida where windstorms and similar occurrences are far from irregular. Policyholder and insurers alike will need to consider the implications this has on coverage of current contracts and how policies language will now be written moving forward in the wake of Sebo. Needless to say, as insurers adjust to this state of the law, similar coverage issues involving causation of loss will inevitably surface and the courts will have to address them at such time.

Claim Barred by Florida’s Construction Defect Statute of Repose? Maybe Not. Florida Court Says You Should Read the Construction Contract More Closely

Troy Vuurens | Butler Weihmuller Katz Craig | August 21, 2017

Claim professionals are often reminded that even the most meritorious claim is worthless if not filed within the applicable statute of limitations or statute of repose. In the world of construction defect claims, Florida law provides for a 10-year statute of repose. Under § 95.11(3)(c), the action must commence within 10 years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.

Not surprisingly, the parties do not always agree on the specific date that the countdown clock on the statute of repose commenced running. In a recent appellate decision, Florida’s 5th DCA reversed a trial court’s dismissal of a homeowner’s construction defect claim that was filed just beyond 10 years after the closing date on the property. See Busch v. Lennar Homes, LLC, 219 So.3d 93 (Fla. 5th DCA 2017).

In Busch, the defendant had taken the common position that the plaintiff’s claim was barred by the statute of repose because the Purchase and Sale Agreement, i.e. “the contract,” was completed on the date of the closing on the property, which was the latest date applicable under §95.11(3)(c). Therefore, argued the defendant, the claim expired exactly 10 years later and before the complaint was filed. The trial court agreed with the defendant and dismissed the claim upon determination that the contract was completed on the date of the closing, which commenced the running of the statute of repose.

The 5th DCA reversed on appeal and held that the trial court erred in finding that the contract was completed on the date of closing. The court held that a contract is not completed until both sides of a contract have been performed. The court pointed to the “inspection and punch-list clause” of the contract which stated: “Any remaining items that Seller has agreed to correct will be corrected by Seller at Seller’s sole cost and expense prior to closing or at Seller’s option within a reasonable time after closing.” In other words, the court found that the contract was not completed at the time of closing because there were remaining punch-list items that the Seller was obligated to correct. As such, the clock on the 10-year statute of repose did not start ticking until the contract was completed (i.e. when the Seller completed the punch-list items, post-closing).

In the context of residential construction, the closing date is generally the date when the statute of repose commences. It is typically the date on which the homeowner takes possession, final payment is made, and the contract is completed. However, the 5th DCA’s decision in Busch is a reminder that there are other factors to consider as well, including if there is a contractual obligation to complete any remaining work after the closing, such as punch-list items.

It is also worth noting that the defendant in Busch is a large production home builder who likely built thousands of homes with the same contract language. Other builders may have similar clauses incorporated into their contracts, too. The Busch case is an important new decision because of the sheer volume of homes that were likely built with this language. As such, it stands to reason that Florida practitioners engaged in residential construction defect litigation may begin to see these same issues arise in their cases, too. And in all cases where the statute of repose may become a critical issue, a careful analysis of the contract should be undertaken in order to identify similar language.

New Definition for Term “Completion” in Florida for Construction Defect Lawsuits

Neil Wilcove | Miller & Martin PLLC | August 14, 2017

For those that perform work in Florida, the Florida legislature updated the law pertaining to when construction defect lawsuits must be brought. While the Statute of Limitations for construction defect cases is four years, there was never really a set date on when the four years begins to run. Many cases in Florida are filed after the four-year statute of limitation as disputes erupt over when the statute of limitations actually begins to run. There is a Statute of Repose in Florida, which is ten years from the date of the latest to occur: actual possession by the owner, the date of the issuance of certificate of occupancy, the date of abandonment of the project if construction is not completed or the date the construction (or design) contract was completed or terminated.

Effective July 1, 2017, the definition for “completion of the contract” has been defined as “the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.” While there will certainly be litigation over what the definition means, as people will fight over whether final performance has occurred or whether final payment has become due, at least the Florida legislature has decided to take on the issue.

No matter what state you perform work in, you need to be cognizant of the applicable statute of limitations and statute of repose (if there is one). These laws will impact contractual language on the front of the project and how you deal with claims on the back end. It will impact how long you should keep your project files, insurance policies and potential impacts on bonding capacity. In Florida, at least, depending on the type of work you perform, it could also determine whether the statute of repose applies to your work.