Subrogation & Recovery Law Blog : Insurance Subrogation Lawyer & Attorney : Cozen O'Connor Law Firm : Property Damage & Insurance Commentary

The Third District Court of Appeal of Florida recently brought us closer to clarity on Florida's approach to when a landlord's insurer can sue a tenant.  State Farm of Florida Ins. Co. v. Loo, 2010 WL 445945 (Fla. 3d DCA Feb. 10, 2010).  For the most part, jurisdictions adopt one of three approaches in this context:

                (1) The Sutton Approach ("Anti-Subrogation Rule"): Under this approach, a jurisdiction adopts a bright-line rule barring a landlord's insurer from bringing a subrogation case on the ground that the tenant is deemed an "implied co-insured." Thus, an insurer may not subrogate against its own insured.  The policy behind this approach is that "when fire insurance is provided for a dwelling it protects the insurable interests of all joint owners including the possessory interests of a tenant absent an agreement by the latter to the contrary." Sutton v. Johndahl, 532 P.2d 478 (Ct. App. Ok. 1975). This is the majority rule.

                (2) The Anti-Sutton Approach: The converse of the Sutton Approach is the order of the day in these jurisdictions.  Essentially, absent an express or implied agreement to the contrary, these jurisdictions presume subrogation is permissible. This is the minority rule.

                (3) The Case-by-Case Approach: This is an approach that places great emphasis on the lease provisions in order to determine the intent of the parties as to which party should bear the risk of loss.  This is often referred to as a "middle of the road" approach.

Until recently, it was unclear which of these approaches Florida was applying.  Even today, the Florida Supreme Court has not formally adopted or rejected any.  Instead, the approach in Florida has evolved from a number of different decisions from various Appellate Courts.  The first attempt made to articulate this doctrine came in 1980 when the Third District Court of Appeal held that "a limitation of liability for one's negligent acts cannot be inferred unless such intention is expressed in unequivocal terms."  Tout v. Hartford Accident & Indem. Co., 390 So. 2d 155 (Fla. 3d DCA 1980).  Two subsequent cases revealed an evolution in Florida toward Sutton without a specific adoption of the approach.  See, gen., U.S. Fire Ins. Co. v. Norlin Indus., Inc., 428 So.2d 325 (Fla. 1st DCA 1983); Continental Ins. Co. v. Kennerson, 861 So.2d 325 (Fla. 1st DCA 1995). 

However, the evolution toward Sutton was halted in Loo, supra.  Without overturning Tout or its progeny, the Court in Loo formally adopted the case-by-case approach pointing out that the Tout line of cases looked to the lease provisions to determine the intent of the parties as to who should bear the risk of loss.  In sum, for subrogation against a tenant to proceed, the lease must not contain "unequivocal terms" that the tenant is a co-insured.  Unequivocal terms are those that either (1) exculpate the tenant from liability for its own negligence, (2) require the landlord to maintain insurance for the benefit of the tenant, or (3) shift any risk of loss incurred as the result of the tenant's negligence to the landlord.

Perhaps one day the Supreme Court of Florida will weigh in on this issue with a formal adoption or rejection of one of the three approaches.  Until that day, subrogation against a tenant will be guided by the lease document's unequivocal (or lack thereof) articulation of the intent of the parties as to risk of loss.

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It’s every horseman’s nightmare—a trailer accident. There are many causes of these accidents, but in the chaos of attempting to remove the horses and tend to their wounds (or worse), questions that could pave the way for a subrogation opportunity often go unanswered. This post will discuss some of the primary reasons for trailer accidents, and subrogation opportunities that can be explored.

Interstate Hauling-ICC Termination Act
Often driver error is the cause of a trailer accident. When horses are being hauled over state lines, the ICC Termination Act (formerly known as the Carmack Amendment) provides the sole and exclusive remedy to shippers against a carrier for loss or damage to their horses in transit. The horse owner/insurer should be familiar with the strict notice requirements and other limitations of the Act.

Intrastate Hauling-Distracted Driving
When the planned route is within one state, the ICC Termination Act does not apply. Depending on the relationship between the owner and the hauler, claims for negligence, breach of warranty, bailment, or breach of contract may arise. There are new theories of negligence supported by recent events. In January, the United States Department of Transportation issued a nationwide ban on texting by drivers of commercial vehicles. After NTHSA reported almost 6,000 distracted driving deaths in 2008, this is an issue that is getting increasingly more attention. Not coincidentally, distracted driving in equine and livestock hauling is also becoming more prevalent. Mark Cole, managing member of USRider, a large national equine transportation company, has said “From our trailer accident study, we found that distracted driving was one of the primary reasons for trailer incidents.” When a commercial horse hauler is being used, it should be determined whether the driver was talking or texting on his phone while driving. Another area to explore is whether the driver is following company protocol. For example, had he logged more hours than allowed in order to make deadlines? Given the current political climate, such actions may give rise to a negligence claim.

Loading Problems
Injuries often occur due to failure to properly load or secure horses in the trailer. Consideration should be given to weight distribution, how the horses were secured/wrapped, and whether the horses were protected from sharp edges. If the injury occurred due to human error, the ICC Termination Act will still apply to interstate hauling, but intrastate routes may provide a common law avenue for recovery. The hauler should be asked if a they use a safety checklist and whether a safety check was performed.  An expert witness on the standard of care for loading and securing horses be consulted, as expert testimony will be critical if your case reaches the litigation stage.  If the injury is due to some problem with the truck or trailer itself, consideration should be given to a products liability claim.

Defective Truck or Trailer—Products Liability 
There have been several defects identified in horse truck and trailers, not always resulting in a product recall. Recently the Horse Transportation Safety Act of 2009 (H.R. 305) was introduced following the overturn of a double-deck truck carrying 59 Belgian draft horses. The accident resulted in the death of 18 of those horses. The bill would prohibit the interstate transport of any horse in a double-deck truck. It could be argued that the double-deck truck has a defective design which makes it unreasonably dangerous for the transport of horses.

Product defects resulting in accidents or fires typically cannot be fully evaluated at the scene of the accident. To protect your claim, take care to adequately document and photograph the accident scene, including the truck and trailer and the area of suspected defect.  Preserve the truck and trailer and immediately place the potentially responsible third parties on notice of your claim. As part of your investigation, research product recalls, find out if the truck or trailer is under warranty, determine the maintenance history for the truck and trailer, and request a copy of all maintenance records. If the damage is only to the truck or trailer itself, you may be faced with the economic loss doctrine. The economic loss doctrine is a principle of law that bars tort claims brought to recover purely economic losses – such as lost profits or the cost to repair or replace a defective product.  However, if horses or livestock are injured, the economic loss doctrine often will not apply to “other property” aside from the truck or trailer itself. 

Practice Tips
While the scene of a trailer accident is devastating and chaotic, early documentation of the evidence is critical. Ask questions to find out the who/what/when/where/why surrounding the accident and gather all of the shipping documents, maintenance records and recall information. Once you complete this initial fact gathering, determine if there are legal bars or limitations to recovery. A bit of effort at the outset gives your the best chance for recovery down the road.

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Mutual consent and court ordered mediation is becoming more prevalent as a means to resolve matters in conflict as litigation costs escalate and court calendars suffer from over-crowding, greater demand and budgetary constraints. While mediation is a valuable forum to access for all parties, there are specific areas which are often overlooked in preparing a matter for presentation and discussion in this type of forum.

Selection of Your Mediator

What has escaped many litigators and companies in the artful practice of mediation is a full and comprehensive examination of the mediator involved in the process. Some of the most prominent aspects that should be examined with regard to choosing a mediator are as follows:

Background of the Mediator

1.         Does the mediator have sufficient or significant exposure or knowledge of the area or matter of the litigation?

2.         Does the mediator have an employment, education or cultural bias which prejudices or taints his or her viewpoint to either of the parties?

Character Aspects of the Mediator

1.         Is the Mediator passive or aggressive in his or her approach to mediation;

2.         Does the Mediator participate in the respective factual patterns of the parties or in the process of mediation?

Key Element for Choosing a Mediator

Litigation history has shown lawyers and their clients that the best mediators involve themselves in the process of bringing resolution of the parties through the parties. A key mistake often made by mediators is advancement of their personal knowledge to educate the parties during mutual or separate sessions. For example, for a mediator to advance their personal experience or knowledge of "adjustment of damages" in a subrogation case can often tip either party to ideas or legal concepts which were not previously part of their reasoning towards resolution. Hence, a mediator who introduces ideas, knowledge or ideas to either party can otherwise distort the process of mediation which ultimately is designed for the parties to facilitate through their own devices, a solution to their conflict.

In looking towards mediation as an integral part of the litigation process, it is vital for the participants to fully examine the "third party neutral" to insure that the process is fully respected for its aims and ideals.

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