Seaman Entitled to Attorney's Fees Under Florida's Offer of Judgment Statute

In ROYAL CARIBBEAN CRUISES, LTD., v. COX, 37 Fla. L. Weekly D2029a (Fla. 3d DCA August 22, 2012), the Third District Court of appeals held that the trial court properly awarded injured seaman attorney's fees pursuant to Florida's offer of judgment statute in his action asserting claims against cruise line for Jones Act negligence, failure to treat, maintenance and cure, unearned wages, and unseaworthiness. Given the short length of the opinion, I have copied it in its entirety (less the footnotes).  

 

QUOTE

(LAGOA, J.) Royal Caribbean Cruises Ltd. (“RCCL”) appeals an order awarding seaman Byron Cox (“Cox”) attorney's fees pursuant to Florida's offer of judgment statute, section 768.79, Florida Statutes (1997), following a jury verdict in his favor in an admiralty case. We are compelled to affirm based on the authority of Royal Caribbean Corp. v. Modesto, 614 So. 2d 517 (Fla. 3d DCA 1992).

I. FACTUAL AND PROCEDURAL HISTORY

Cox filed the underlying action against RCCL after he sustained injuries while employed aboard an RCCL vessel. Cox's complaint asserted claims for Jones Act negligence, failure to treat, maintenance and cure, unearned wages and unseaworthiness. Pursuant to Florida Rule of Civil Procedure 1.442 and section 768.79, Cox served an offer of judgment on RCCL. RCCL moved to strike the offer of judgment, arguing that section 768.79 was inapplicable in this case because it conflicted with federal maritime law. In response, Cox cited Modesto, 614 So. 2d at 517, which held that there is no conflict between section 768.79 and federal maritime law. Following trial, the jury found in favor of Cox and he sought attorney's fees based on the offer of judgment. The trial court agreed with Cox's position, denied RCCL's motion to strike, and found that Cox was entitled to attorney's fees and costs. The trial court awarded Cox $245,856.87 in fees and costs, and this appeal ensued.

II. ANALYSIS

In Modesto, a seaman sought damages under the Jones Act and general maritime law for injuries he sustained aboard a Royal Caribbean ship. He filed a motion for attorney's fees pursuant to Florida's offer of judgment statute. The trial court denied the motion. On appeal, this Court reversed the trial court's order, stating that:

[W]e find no conflict between Florida's rules of law regarding offers of judgment and federal maritime law. In federal admiralty actions, an award of attorney's fees as a component of maintenance and cure is traditionally within the equitable jurisdiction of the courts. Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed. 2d 88 (1962). Awards of attorney's fees made pursuant to Florida law regarding offers of judgment are intended to deter unnecessary litigation and encourage the timely settlement of claims . . . . Because Florida's rules relating to offers of judgment are an integral part of this state's management of its courts' proceedings and do not conflict with federal admiralty law, we reverse the order denying attorney's fees.

Id. at 520; see also Juneau Tanker Corp. v. Sims, 627 So. 2d 1230, 1232 (Fla. 2d DCA 1993) (citing Modesto without discussion in support of reversal of denial of attorney's fees to seaman).

RCCL properly concedes that Modesto governs the precise issue in this case -- whether attorney's fees pursuant to section 768.79 may be awarded in a maritime case involving a seaman. Here, as in Modesto, a seaman sought attorney's fees based on an offer of judgment in an action to recover Jones Act and other damages under maritime law. The trial court was bound by this Court's precedent and did not err in awarding attorney's fees to Cox, as this Court has not receded from Modesto en banc nor has the Florida Supreme Court overruled Modesto. See State v. Washington, 37 Fla. L. Weekly D1535 (Fla. 3d DCA June 27, 2012); Ellis v. State, 703 So. 2d 1186, 1187 (Fla. 3d DCA 1997); Wood v. Fraser, 677 So. 2d 15, 18-19 (Fla. 2d DCA 1996); see generally Sys. Components Corp. v. Fla. Dep't of Transp., 14 So. 3d 967, 973 n.4 (Fla. 2009) (“[A] trial court may not overrule or recede from the controlling decision of a district court.”).

RCCL, however, argues that the attorney's fee award should be reversed based on federal case law holding that the offer of judgment statute impermissibly conflicts with maritime law, and based on this Court's case law impliedly receding from Modesto.

We acknowledge that the weight of federal authority supports RCCL's contention that Modesto was wrongly decided. Those cases hold that automatic fee-shifting statutes such as Florida's offer of judgment statute may not be applied in admiralty cases because such state statutes conflict with and interfere with the uniformity of federal maritime law as to attorney's fees. See Misener Marine Constr., Inc. v. Norfolk Dredging Co., 594 F.3d 832, 841 (11th Cir.), cert. denied, 130 S.Ct. 3505 (2010); Texas A & M Research Found. v. Magna Transp. Inc., 338 F.3d 394, 405 (5th Cir. 2003); Narte v. All Alaskan Seafoods, Inc., 211 F.3d 1274 (9th Cir. 2000) (unpublished opinion); Southworth Mach. Co. v. F/V Corey Pride, 994 F.2d 37, 41 (1st Cir. 1993); Sosebee v. Roth, 893 F.2d 54, 56-57 (3d Cir. 1990); Garan, Inc. v. M/V Aivik, 907 F. Supp. 397, 400 (S.D. Fla. 1995); Tai-Pan, Inc. v. Keith Marine, Inc., 1997 WL 714898, at *10 (M.D. Fla. May 13, 1997); Tampa Port Auth. v. M/V Duchess, 65 F. Supp. 2d 1279, 1296-97 (M.D. Fla. 1997), amended, 65 F. Supp. 2d 1299, affirmed, 184 F.3d 822 (11th Cir. 1999) (table).

Furthermore, this Court's case law subsequent to Modesto may support RCCL's position that this Court “impliedly” receded from Modesto. See Frango v. Royal Caribbean Cruises, Ltd., 891 So. 2d 1208 (Fla. 3d DCA 2005); Chapman v. Laitner, 809 So. 2d 51 (Fla. 3d DCA 2002); Hilton Oil Transp. v. Oil Transp. Co., S.A., 659 So. 2d 1141 (Fla. 3d DCA 1995).

A three-judge panel of this Court, however, cannot “impliedly” recede from or overrule Modesto. See In re Rule 9.331, 416 So. 2d 1127, 1128 (Fla. 1982) (“We would expect that, in most instances, a three-judge panel confronted with precedent with which it disagrees will suggest an en banc hearing.”); Wood, 677 So. 2d at 18 (holding that a three-judge panel would not have receded from earlier case and would have suggested en banc consideration); McBride v. State, 604 So. 2d 1291, 1292 n.1 (Fla. 3d DCA 1992) (noting that there appears to be no authority for a court's departure from an earlier panel decision “without the intervention of an en banc court”). Thus, even assuming that the cases previously discussed may appear to have “impliedly” receded from or overruled Modesto, we remain bound to follow Modesto until this Court expressly recedes en banc from this precedent. See Kloster Cruise Ltd. v. Segui, 679 So. 2d 10, 12 (Fla. 3d DCA 1996); Langmead v. Admiral Cruises, Inc., 696 So. 2d 1189, 1191, n.1 (Fla. 3d DCA 1997); Holding Elec., Inc. v. Roberts, 512 So. 2d 1112, 1112 (Fla. 3d DCA 1987), quashed on other grounds, 530 So. 2d 301 (Fla. 1988); cf. Hearn Props., Inc. v. Cruce, 20 So. 3d 877 (Fla. 1st DCA 2009) (noting that in order to follow earlier supreme court decision district court must sit en banc to recede from its case law).

Accordingly, we affirm the portion of the order awarding Cox attorney's fees based on this Court's decision in Modesto.

Affirmed.

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UNQUOTE

If you are interested in receiving a complete copy of the decision with full footnotes, please feel free to contact me at mov@chaloslaw.com to seek a copy.

North American Emissions Control Area Is Now Here

The North American Emissions Control Area ("NAECA") entered into force last August and included a one-year grace period to give the various enforcement agencies and the maritime community sufficient time to adapt to the new regulations. The grace period ended on August 1, 2012.

The NAECA covers nearly all coastal waters of the United States and Canada out to 200 nautical miles from their coasts. A chart of the area concerned is found below:

Photo taken from: http://themaritimeblog.com/1866/cruise-lines-balk-at-pollution-proposal

Within the ECA, ships and yachts of 400 gross tons and above are required to reduce harmful air emissions by adopting one of three approved alternatives:

1. Use fuel with a sulfur content that does not exceed 1.0 %;


2. Utilize an exhaust gas cleaning system approved by its flag administration in accordance with IMO guidelines; or


3. Adopt any other technological method that is verifiable, enforceable, and has been approved by its flag administration in accordance with IMO guidelines.


Where applicable, vessels that burn more than one type of fuel must maintain detailed records regarding fuel changeovers. All vessels must continue the current requirement of retaining bunker delivery notes and samples. Beginning on January 1, 1015, the maximum sulfur content in fuel oil will lower to 0.1%. Vessels that operate predominately in coastal and inland areas of this area will potentially incur the most added costs, as those vessels will constantly operate within the NAECA.

An issue of importance is that ECA-compliant fuel will generally need to be obtained by a vessel prior to sailing for an NAECA port. This is because the obligation to utilize the low-sulfur oil arises when the vessel comes within 200 nautical miles of the NAECA. There have been numerous commentaries questioning the availability of NAECA-compliant fuel outside of the NAECA. Some suggest that vessels will have to carry a certain quantity of ECA-compliant fuel to enter the NAECA; others suggest vessels will have to divert at considerable expense and delay.

There is also some controversy, as an attempt has been made by foreign-flagged cruise ships that operate out of the NAECA. They state that they deserve a modification to the rules or some type of dispensation, as they spend a large percentage of their time underway within the NAECA. To date, such requests have been unanswered by the regulatory authorities.

I have a copy of a report from The Triton magazine related to the affect of the NAECA on yachts. If you are interested in receiving a scanned copy of this article or wish to contact me, you may do so by writing to me at miamipandi@comcast.net or mov@chaloslaw.com.

Bank Loses Its First Preferred Ship Mortgage Status

In the case of BRANCH BANKING & TRUST CO. of VIRGINIA v. M/Y "BEOWULF," 23 Fla. L. Weekly Fed. D285a (S.D. Fla.  June 7, 2012) (Hurley, J.), a bank filed an in rem admiralty action to foreclose a first preferred ship mortgage claimed by mortgagee bank on defendant vessel, which was assigned second identification number after execution of mortgage, documented under different name, and sold to third-party purchaser for value, all without notice to bank. The third-party purchaser for value claims competing ownership interest in defendant vessel as subsequent innocent purchaser for value. The court found that the mortgagee bank is not entitled to preferred ship mortgage status under Ship Mortgage Act because the mortgage was invalid to create a security interest in defendant vessel where mortgagor did not hold good and valid legal title to vessel on day he executed the mortgage. The court reasoned that only a valid mortgage is eligible for preferred status under Ship Mortgage Act.

The court also found that notwithstanding mortgagor's failure to permanently affix the HIN to vessel in violation of federal law at time of application for initial issue of certificate of documentation, substantial compliance with recordation requirements of Ship Mortgage Act is adequate to show eligibility for preferred status, where there was no evidence of fraud or purposeful intent to evade or mislead on part of mortgagee. Irregularities in recorded mortgage documents or failure to comply with the minutiae of recording will not result in loss of preferred status of mortgagee where there is “honest and substantial compliance” with recordation requirements of Ship Mortgage Act. As a result, the court found that the bank's conduct justifies the equitable subordination of its claimed preferred ship mortgage to interest claimed by third-party purchaser for value gross, where the bank deviated from acceptable banking practices when it decided to forego a declaration of default on loan and granted a five-year extension of loan term without inspecting or reevaluating the collateral or insisting on proof of insurance and where bank failed to insist that mortgagor permanently affix the HIN on the vessel before initial documentation.The court noted the bank's handling of the loan to be "the product of egregious, reckless lending practices."

Thus based on the court's findings, it ruled that the mortgagee bank's complaint to foreclose a First Preferred Ship Mortgage was denied; entered  Final judgment is entered against the mortgagee bank and in favor of the third-party purchaser, which took the vessel free and clear of any mortgage liens claimed by the Plaintiff; and reserved jurisdiction to tax costs in favor of the third-party purchaser.

This is lengthy decision that is worth reading. The decision details the facts of the case, including the various security agreements involved, includes a discussion into the requirements of the Ship Mortgage Act (which is good reading for anyone regularly engaged in preferred ship mortgages), title and ownership issues, the legal theory of equitable subrogation, and what is required of a bank seeking preferred status under the Ship Mortgage Act. If you are interested in receiving a copy of this decision, please feel free to write to me at mov@chaloslaw.com and I would be more than happy to send you an e-copy of this decision at no charge to you.

Speaking Engagement: Jones Act and 905(b) Claims

I am speaking next week at the 67th Annual Workers' Compensation Educational Conference in Orlando, Florida on the the topic of Jones Act Claims, 905(b) and Other Marine Injury Claims: Defenses and Damages. The partial agenda of the conference (as there are numerous breakouts) can be found here => http://www.wci360.com/conference/breakout-on-longshore-and-harbor-workers-act-and-jones-act-and-defense-base-act/.

If you are interested in this topic and have never been to this conference, it is a huge conference that provides lawyers, insurance adjusters, underwriters, medical providers and planners opportunities to collect the continuing education they require.

If you have any questions regarding this conference or are interested in receiving the outline for this presentation, please feel free to contact me at miamipandi@comcast.net or mov@chaloslaw.com.

4th DCA Doesn't Allow Production of Records in Fee Request

The Daily Business Review reports recently that the Fourth District Court of Appeal granted a petition on August 14, 2012 to stop discovery of the billing records of a losing attorney who defended a driver in an auto accident case. Steven Dyda, who was injured, sued Balande Estilien and won at trial. Dyda then asked Palm Beach Circuit Judge Lucy Chernow Brown to require Estilien's attorney to produce all billing records in the case.

Estilien objected on relevance grounds, but Chernow Brown allowed limited discovery with an exception for privileged information. Dyda's attorney said the information was needed to reconstruct the time he spent on the case because he didn't keep time records on the contingency case.

The 4th DCA has issued a reminder that a trial court’s discretion to allow discovery of an attorney’s billing records is not unfettered. The Court held that the requesting attorney must show relevancy, need and undue hardship to find the information elsewhere. This is because an attorney’s failure to keep his own records reflecting the time spent on the case is not a sufficient basis for ordering the production of opposing counsel’s records.

Finally, a court has stood up to this practice of plaintiff's attorneys not recording their time on a case and then demanding the defense provide their fee records as a justification for the plaintiff's fee.

Florida Gives Port Canaveral $24.4 Million to Complete Harbor Improvements

The Maritime Executive reports today that Port Canaveral will get $24.4 million in state funding to complete its harbor widening and deepening project to accommodate larger cruise and cargo ships. The money from the Florida Department of Transportation ("FDOT") will allow the project to be completed four years earlier than possible through the federal process.

During his recent visit to Port Canaveral, Florida Governor Rick Scott emphasized the importance of Florida’s seaports for increasing the state’s international competitiveness and for generating high-paying jobs. A FDOT study shows every $1 invested in seaports generates $7 to the state’s economy. The channel improvement project is expected to yield $11 for every dollar invested.

With this remarkable news, Port Canaveral should rethink its current practice of charging cruise passengers $20 a day to park in a spacious port terminal. For a cruise passenger taking a one-week cruise out of Port Canaveral, that is a parking bill of $140.00--a charge that is not posted anywhere prior to a visitor parking at Port Canaveral. While Florida's Space Coast may be financially struggling after the retirement of the Space Shuttle program, there is no reason for Port Canaveral to financially squeeze visitors to the area as a way to "make up" for a loss that has nothing to do with those visitors. If Port Canaveral wants to insure return visitors with the opening of their new Cruise Terminal 6, its officials may need to reconsider this current plan of fleecing visitors to its parking lots.

Insurer's Duty to Defend Under Injury-In-Fact Theory

In the case of AXIS SURPLUS INSURANCE COMPANY v. CONTRAVEST CONSTRUCTION COMPANY, et al, 23 Fla. L. Weekly Fed. D279a (M.D. Fla. June 5, 2012) (Antoon, J.), the court found that in a declaratory judgment action filed by an insurance company, a commercial general liability insurer has a duty to defend insureds in an underlying suit for allegedly negligent construction and development of individual dwelling units and common areas of condominium community where property damage occurred during policy period.

The court reasoned that under injury-in-fact theory which provides that damage “occurs” at the moment that there is actual damage and date of discovery is irrelevant, the insurer has duty to defend where underlying complaint suggests that “property damage” at issue occurred at some point after buildings were completed but before discovery by expert inspections, which includes the time that the policies were in effect. The court also found that even under the insurer's strict interpretation of the manifestation theory, that property damage “manifests” when it is discovered, the insurer still has duty to defend insurers where allegations of underlying complaint potentially brings the suit within coverage. The court further found that the decision as to insurer's duty to indemnify is premature absent a resolution of the underlying suit.

Facts of the Case

Axis sought a declaration that it had no duty to defend or indemnify its insureds in an underlying suit brought against the insureds by a condominium association. The insureds, in turn, filed a counterclaim against Axis and a third-party complaint against several other insurers, seeking a declaration regarding the various insurers' obligations to defend and indemnify the insureds in conjunction with the underlying suit and, relatedly, the appropriate trigger for coverage with respect to the policies at issue. Two of the third-party insurers moved to dismiss the third-party complaint for lack of subject-matter jurisdiction, asserting that the insured had not presented a justiciable issue.

In the underlying suit, an association brought claims against the insureds for alleged negligent construction and development of individual dwelling units and common areas of a condominium community. Due to this negligence, the community allegedly sustained severe damage, including damage caused by water intrusion, which were not readily discoverable by the association or its members and that they only became aware of the defects through the retention of construction experts.

Axis issued four CGL policies to the insureds and defended the insureds for two policy years in the underlying suit under a reservation of rights and denied coverage for two other policy years. In the third-party complaint, the insureds allege that all of the insurers named issued reservations of rights regarding their duties to defend and indemnify the insureds in the underlying suit and have taken inconsistent positions regarding the issues of coverage and the trigger for coverage. To resolve these inconsistencies, the insureds sought a judgment declaring the following: (1) each insurer's obligation to defend the insureds in the underlying suit; (2) each insurer's obligation to indemnify the insureds regarding the underlying suit; (3) the appropriate trigger for coverage with respect to the policies at issue; and (4) the obligation of the insurers pursuant to section 627.428, Florida Statutes to pay attorneys' fees incurred by the isureds in filing the declaratory action.

Justiciable Controversies?

The court found that the issues regarding the third-party insurers' duty to defend and duty to indemnify did not create justiciable controversies because those insurers had not yet denied any coverage to the insureds.

Furthermore, because there had been no resolution of the underlying suit, a declaration as to the third-party insurers' duty to indemnify was premature.

The court reasoned that a declaration as to the trigger for coverage under each of the third-party insurer policies amounts to a determination of the obligations of the insurers pursuant to those policies and, that this amounted to an advisory opinion and is not justiciable.

Concerning the insured's request for a declaration of the insurers' obligations to pay the insureds' attorneys' fees in connection with bringing the declaratory judgment action, the court found that because it did not have subject-matter jurisdiction over the declaratory judgment claims against the third-party insurers, the insureds have not obtained a “judgment or decree” against either insurer to be entitled to any attorneys' fees pursuant to section 627.428.

Main Lawsuit Against CGL Insurer

The court noted that in order to trigger coverage under Axis's policy, “property damage” must have “occurred” during the policy period. The parties did not dispute that the alleged damage would constitute “property damage” under the terms of the policy. The parties disagreed over whether the alleged property damage “occurred” during the policy period.

Axis asserted that damage “occurs” when it is discovered and that the allegations of the complaint indicate that the damage was not discovered until 2008, which was after the latest Axis policy expired. The insureds asserted that damage “occurs” when it is discoverable and that, based on the allegations of the complaint, the damages may have been discoverable during the Axis policy periods.

The court noted that the Florida Supreme Court has yet to issue an opinion on this issue, and there is disagreement among the trial courts as to which theory is correct, citing the different interpretations of two cases -- Trizec Properties, Inc. v. Biltmore Construction Co., 767 F.2d 810 (11th Cir. 1985), and Travelers Insurance Co. v. C. J. Gayfer's & Co., 366 So. 2d 1199, 1200 (Fla. 1st DCA 1979).

The court carefully analyzed these decisions and noted that under Florida law, whether there is a duty to defend is determined by the facts and legal theories alleged in pleadings against the insured. The court reasoned, “The insurer must defend when the complaint alleges facts which fairly and potentially bring the suit within policy coverage.” Lime Tree Vill. Cmty. Club Ass'n, Inc. v. State Farm Gen.l Ins. Co., 980 F.2d 1402, 1405 (11th Cir. 1993). "The [ ] complaint suggests that the damage occurred at some point after the buildings were completed but before the experts inspected the property. This time period includes the time that Axis's policies were in effect, and therefore Axis has a duty to defend the Insureds in the underlying suit."

If you are interested in receiving a complete copy of this decision, please feel free to ask me for a copy via this Blog or by email at miamipandi@comcast.net.