DRAFTING A CONTRACTUAL ARBITRATION PROVISION

shutterstock_505551922A recent Florida case discussing a contractual arbitration provision in a homebuilder’s contract discussed the difference between a narrow arbitration provision and a broad arbitration provision.  See Vancore Construction, Inc. v. Osborn, 43 Fla.L.Weekly D2769b (Fla. 5th DCA 2018).   Understanding the distinction between the two types of arbitration provisions is important, particularly if you are drafting and/or negotiating a contractual arbitration provision.

 

A narrow contractual arbitration provision includes the verbiage “arises out of”  the contract such that disputes arising out of the contract are subject to arbitration.  Arbitration is required for those claims the have a direct relationship with the contract.

 

A broad contractual arbitration provision includes the verbiage “arises out of or relating to” the contract such that disputes arising out of or relating to the contract are subject to arbitration.  Arbitration is required for those claims that have a significant relationship to the contract. A significant relationship exists if there is a nexus between the claim and the contract meaning the “claim presents circumstances in which the resolution of disputed issues requires either reference to, or construction of, a portion of the contract.”  See Vancore Construction, Inc., supra, (citation omitted). 

 

When drafting or negotiating an arbitration provision, make sure you understand those claims that will be subject to arbitration and those potential claims that will not.    Typically, if you want a arbitration provision in your contract, you more than likely prefer a broad arbitration provision such that claims arising out of or relating to the contract will be subject to arbitration.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

BAILOUT FOR AN IMPROPERLY DRAFTED INDEMNIFICATION PROVISION

shutterstock_1060051475A recent opinion came out that held that even though an indemnification provision in a subcontract was unenforceable per Florida Statute s. 725.06, the unenforceable portion is merely severed out of the indemnification clause leaving the rest of the clause intact.  In essence, an otherwise invalid indemnification clause is bailed out by this ruling (which does not even discuss whether this subcontract had a severability provision that states that if any portion of any provision in the subcontract is invalid, such invalid portion shall be severed and the remaining portion of the provision shall remain in full force and effect). 

 

This opinion arose from a construction defect case, CB Contractxors, LLC v. Allens Steel Products, Inc.,43 Fla.L.Weekly D2773a (Fla. 5thDCA 2018), where the general contractor, sued by an association, flowed down damages to subcontractors based on the contractual indemnification provision in the subcontracts.  Subcontractors moved to dismiss the contractual indemnification claim because it was not compliant with Florida Statute s. 725.06.  The indemnification provision required the subcontractors to indemnify the general contractor even for the general contractors own partial negligence, but failed to specify a monetary limitation on the extent of the indemnification as required by Florida Statute s. 725.06.  (The indemnification clause in the subcontract was the standard intermediate form of indemnification that required the subcontractor to indemnify the general contractor for claims regardless of whether the claims were caused in part by the general contractor.) 

 

The trial court held that because the indemnification clause was unenforceable under Florida Statute s. 725.06, the general contractor’s contractual indemnification claims fail.   But, the appellate court reversed providing a bailout to an unenforceable indemnification clause by simply severing out the unenforceable portion. Thus, while a subcontractor would be required to indemnify the general contractor for its own negligence, it would not be required to indemnify the general contractor for any partial negligence caused by the general contractor.  

 

This case leads to a couple of very important takeaways:

 

  • Make sure the indemnification clauses in your construction contracts comply with Florida Statute s. 725.06.  Have a construction attorney review the indemnification provision.  Do not, and I mean, do not, bank on this ruling that even if the indemnification provision is noncompliant, only the unenforceable part will be severed.  That is not good practice.

 

  • Include a severability provision in your contract. Always.  Even though this case did not discuss such a clause, the clause will bolster the argument that only the unenforceable aspect of the provision should be severed. 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

EXISTENCE OF “DUTY” IN NEGLIGENCE ACTION IS QUESTION OF LAW

shutterstock_523440886In a negligence action, the issue of whether a duty applies is a question of lawSee Limones v. School Dist. of Lee County, 161 So.3d 384, 389 (Fla. 2015) (“[T]he existence of a duty is a legal question because duty is the standard to which the jury compares the conduct of the defendant.”); McCain v. Florida Power Corp., 593 So.2d 500, 502 (Fla. 1992) (“Since duty is a question of law, an appellate court obviously could reverse based on its purely legal conclusion that no such duty existed.”).  Thus, the trial court determines, as a matter of law, whether a legal duty of care applies in a negligence action.

 

Florida law recognizes the following four sources of duty: (1) statutes or regulations; (2) common law interpretations of those statutes or regulations; (3) other sources in the common law; and (4) the general facts of the case.  

See id.  

 

Oftentimes it is the fourth source – the general facts of the case – that comes into play to determine whether the defendant owed the plaintiff a duty of care.  

 

To determine whether a defendant owed the plaintiff a duty under the general facts of the case, the issue becomes “whether the defendant’s conduct foreseeably created a broader ‘zone of risk’ that poses a general threat of harm to others.”  McCain, 593 So.2d at 502.  

 

For example, in White v. Ring Power Corp., a personal injury case discussed here regarding an expert’s qualifications, the trial court granted summary judgment (as a matter of law) finding that the lessor of a crane did NOT owe the plaintiff a duty to download certain crane overload data before renting the crane to the lessee.  The appellate court affirmed because nothing in the record established that the failure to download such data by the lessor before renting the crane created a broader zone of risk to the plaintiff.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

AN EXPERT’S QUALIFICATIONS ARE IMPORTANT

shutterstock_351957167An expert’s qualifications are important. Please remember this the next time you retain an expert to analyze documents or data and render an opinion based on that information.  An expert must be qualified to render an opinion.  Otherwise the expert will not be allowed to render the opinion you may be looking for or need for purposes of trial, as discussed below.

 

A recent personal injury case, White v. Ring Power Corp., 43 Fla.L.Weekly D2729a (Fla. 3d 2018), involved a crane operator that became severely injured when operating a leased crane.  The case proceeded to trial against only the equipment lessor of the  crane based on the plaintiff’s contention that there were deficiencies with the crane.   The plaintiff intended on using expert witnesses to interpret the crane’s load movement indicator (referred to as LMI) and render opinions that the LMI data showed prior overloads of the crane which resulted in the injury to the operator of the crane.

 

During a pre-trial motion, the trial court held that the experts were NOT qualified to interpret the LMI data and, therefore, were not qualified to render opinions based on this data.  The experts were not allowed to render such expert testimony at trial.  After the trial, the plaintiff appealed this ruling.  The Third District Court of Appeal affirmed this pre-trial ruling.

 

The trial court’s decision to exclude portions of White’s [plaintiff] experts’ testimony was based upon a finding that these witnesses were unqualified to interpret the LMI data or offer opinions on its significance. This finding is supported by competent substantial evidence, including the experts’ own deposition testimony, in which they acknowledged, for example:

· Expert witness Barth: He has never been trained to interpret LMI data, never took a course on LMI systems, and stated he “self-trained” regarding LMI data by reviewing the instant accident and reading depositions of other witnesses. Barth acknowledged he was not proficient in reading LMI data, and a review of the deposition establishes that Barth was unfamiliar with the LMI system and had difficulty answering basic questions about its purpose and use.

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· Expert witness Barbe: Although he certifies crane operators, he does not certify crane maintenance workers, is not a certified crane inspector, and none of his training specifically involves wire ropes. The cranes he inspects do not use LMI systems. He did not know how to download the LMI data on the crane in question, received no training on how to read LMI data, and was unfamiliar with many of the LMI codes contained in the data.

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· Expert witness Mankins: He conceded to “not being an expert on LMI or this type of data”; “I wouldn’t know an LMI if I saw one”; “I have no personal experience with LMI systems, nor do I profess to have any expertise associated with such a system.” Mankins did not know the significance of a one-, two- or four-parts line on a crane, and acknowledged “I essentially know nothing about cranes.”

None of the three experts had ever interpreted LMI data or used LMI data to investigate the cause of a crane accident or wire rope failure. Instead, all three of White’s expert witnesses accepted the LMI data at face value without sufficient knowledge, training or expertise to interpret the data or opine as to its significance. We conclude that the trial court did not abuse its discretion in excluding that portion of their proposed testimony.

 

 

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.