Gulf Industries, Inc. v. Nair

• Decision Date: 07 March 2007
• Docket Number: No. 4D05-2433.,4D05-2433.
• Citation: 953 So.2d 590
• Parties: GULF INDUSTRIES, INC., Appellant, v. Jayachandran NAIR, Sreelatha Nair, his wife, and Travelers Property & Casualty Company, Appellees.
• Court: Florida District Court of Appeals

953 So.2d 590

GULF INDUSTRIES, INC., Appellant, v. Jayachandran NAIR, Sreelatha Nair, his wife, and Travelers Property & Casualty Company, Appellees.

No. 4D05-2433.

District Court of Appeal of Florida, Fourth District.

March 7, 2007.

Mark Hicks, Susan Y. Marcus, Cindy L. Ebenfeld of Hicks & Kneale, P.A., Miami, and Bart Cozad of Peterson Bernard, West Palm Beach, for appellant.

Julie H. Littky-Rubin of Lytal, Reiter, Clark, Fountain & Williams, LLP, West Palm Beach, for appellees.

POLEN, J.

Appellant Gulf Industries, Inc. ("Gulf") timely appeals a final money judgment against it in a personal injury jury trial in favor of co-plaintiffs/appellees Jayachandran and Sreelatha Nair ("the Nairs"). We affirm.

The dispute at issue in this appeal arose out of three motor vehicle accidents in which plaintiff/appellee Jayachandran Nair ("Nair") was the victim. The first accident occurred on July 17, 1999; the second September 1, 2000; and the third August 20, 2002. Nair underwent lumbar fusion surgery on November 6, 2000 and a cervical fusion on March 5, 2003 as a result of injuries he sustained in these accidents.

Because there was no dispute that the first two accidents were caused by uninsured motorists, Travelers Property & Casualty Company ("Travelers"), which provided Nair with uninsured motorist coverage, defended both those claims. Travelers admitted that the uninsured motorists were at fault for the first two accidents and hence, that it was responsible for all damages/injuries caused by those accidents. Gulf admitted responsibility for causing the third accident and thus defended that claim.¹ However, since Nair sustained injuries which predated the third accident, Gulf argued that Nair's need for the second surgery was not caused entirely by the third accident. Gulf further disputed that it was entirely responsible for Nair's present and future medical problems. Finally, Gulf challenged Nair's assessment of economic damages.

Following trial, the jury returned a verdict of $6,971,495. It apportioned damages against Travelers (attributed to the first two accidents) in the amount of $2,714,637 and against Gulf (attributed to the third accident) in the amount of $4,256,858. After setting off personal injury protection ("PIP") benefits, disability payments and bodily injury coverage, the trial court entered an amended final judgment ("final judgment") against Gulf for $4,204,238 and against Travelers for $2,634,637. The trial court also awarded costs in the amount of $69,465.89 against each defendant.

High-Low Agreement

The first issue on appeal concerns a secret "high-low" agreement entered into between the Nairs and Travelers. The agreement provided a minimum payment to the Nairs of $1,000,000 irrespective of the jury's ultimate verdict, and capped Travelers' liability for damages caused by the first two accidents at $2,000,000 total. During the course of the trial, Gulf's counsel asked the other parties whether there were any settlement agreements among them. Both the Nairs' counsel and Travelers' counsel disclosed the agreement and Gulf consequently moved for mistrial, in the alternative asking the trial court to disclose the agreement to the jury. But the court denied the motion and refused disclosure. Gulf now appeals the denial of its motion and its request for publication to the jury.

A trial court's determination regarding admissibility of evidence is subject to an abuse of discretion standard of review. Vavrus v. City of Palm Beach Gardens, 927 So.2d 992, 995 (Fla. 4th DCA 2006) (citation omitted). The same standard applies to a trial court's ruling on a motion for mistrial. Goodwin v. State, 751 So.2d 537, 546 (Fla.1999) (citations omitted). However, whether a high-low agreement is permissible as a matter of law and/or must be disclosed to the jury is reviewed de novo. See Garrett v. Mohammed, 686 So.2d 629, 629 (Fla. 5th DCA 1996) (concluding that the trial court did not err in denying defendant's motion for a mistrial where a high-low agreement had not been disclosed prior to trial), overruled on other grounds, Allstate Ins. Co. v. Sarkis, 809 So.2d 6, 7 (Fla. 5th DCA 2001).

Gulf concedes that the high-low agreement secretly executed by Travelers and the Nairs is not a "Mary Carter agreement" because it does not contain a proportionate liability shifting feature, and therefore is not explicitly proscribed by Dosdourian v. Carsten, 624 So.2d 241 (Fla. 1993).² Nevertheless, Gulf contends that high-low agreements invoke the same dangers posed by Mary Carter agreements and should therefore be banned in accordance with Dosdourian where a co-defendant(s) is not a party to the agreement. See id. In the alternative, Gulf asserts that, at the very least, this court should reverse and direct the trial court to grant a mistrial for failing to permit disclosure of the agreement to the jury.

The Florida Supreme Court in Dosdourian did not specifically outlaw high-low agreements in addition to Mary Carter agreements. See Garrett, 686 So.2d at 630 n. 2. This is because Dosdourian did not address 27th Ave. Gulf Service Center v. Smellie, 510 So.2d 996, 998 (Fla. 3d DCA 1987), wherein the Third District upheld the use of high-low agreements. Garrett, 686 So.2d at 630 n. 2. Addressing the question of whether high-low agreements are still permissible in light of Dosdourian, the Fifth District stated that the answer "perhaps . . . should turn on a case by case analysis of whether such agreements are in fact true settlements." Id. The Fifth District continued:

In deciding whether the agreements are true settlements, the trial court should consider whether the agreement requires the co-defendant to participate in the trial. In other words, is the high range of the agreement contingent on participation in the trial. The trial court should also consider the amount in controversy as a result of the agreement. The greater the window between the "high" and the "low" limits of the agreement, the more incentive a co-defendant has in genuinely and aggressively litigating the dispute. If the trial court concludes that the "high-low agreement" is not a settlement and the co-defendant still has a genuine incentive to defend, then in our view the agreement would not be prohibited by Dosdourian.

Id.

In this case, the high-low agreement did not require Travelers to participate in the trial; Travelers could present a defense or withdraw and simply stand on the agreement. Furthermore, the $1,000,000 range between the high and low limits of the agreement suggests that Travelers had a genuine incentive to defend itself against fault resulting from the first and second accidents. Cf. Cardona v. Metro Transit Agency, 680 So.2d 1098, 1099 (Fla. 3d DCA 1996) (reversing trial court's refusal to enforce high-low agreement where agreement set settling defendants' liability at a range of no more than $100,000 and no less than $15,000). Based on these considerations, we find that the high-low agreement was not prohibited.

The next, and perhaps more contentious, question is whether trial courts should permit nonsettling defendants to disclose high-low agreements to juries. The answer, however, is not perfectly clear, and a study of the admissibility of high-low agreements in other states demonstrates that there is no consensus on the issue. Compare Reynolds v. Amchem Prods., Inc., 32 A.D.3d 1268, 1269, 822 N.Y.S.2d 216 (2006) ("Absent evidence of collusion between the co-defendant and plaintiffs to the detriment of the company the failure to disclose the high-low agreement did not mandate reversal."), Monti v. Wenkert, 2006 WL 3908564, *14, 2006 Conn.Super. LEXIS 3849, 45-6 (Conn.Super.Ct.2006) (In upholding use of high-low agreement without disclosure to nonsettling defendant: "If the true alignment of the codefendants is apparent to the parties, the court and the jury, introduction of the agreement to the jury is unnecessary because there is no prejudice to be avoided."), and Ziegler v. Wendel Poultry Servs., Inc., 67 Ohio St.3d 10, 17, 615 N.E.2d 1022 (Ohio 1993) (holding high-low settlement agreement between estate and company was not a Mary Carter agreement and it was not erroneous to have allowed the company to participate in the trial or by failing to disclose the agreement to the jury), with Hashem v. Les Stanford Oldsmobile, Inc., 266 Mich.App. 61, 84-85, 697 N.W.2d 558 (Mich.Ct.App.2005) (requiring disclosure of high-low agreement to prevent distortion of the adversarial process and preserve integrity of the judicial system), Gen. Motors Corp. v. Lahocki, 286 Md. 714, 410 A.2d 1039 (Md. 1980) (stating that disclosure was required to allow jury to judge the credibility of witnesses), and Mustang Equip., Inc. v. Welch, 115 Ariz. 206, 210, 564 P.2d 895 (Ariz.1977) ("[T]he disclosure of [pretrial] agreements is or should be required to avoid the inherent tendency to work a fraud on the court and to avoid "collusion" between the plaintiff and some of the defendants") (citing Ward v. Ochoa, 284 So.2d 385 (Fla.1973)).

The lack of accord concerning publication of high-low agreements is perhaps due to underlying and often conflicting policy considerations. On one hand, secret agreements between plaintiffs and one or more of several defendants can mislead the jury and may "border on collusion," thereby robbing the judicial system to some extent of its truth-seeking function. See Hashem, Lahocki and Welch, supra; see also Ward, 284 So.2d at 388 ("The search for the truth, in order to give justice to the litigants, is the primary duty of the courts.").

Yet, while disclosure may avoid collusion between plaintiffs and settling defendants, see Welch, 115 Ariz. at 210, 564 P.2d 895, it may also lead the jury to believe that those plaintiffs and settling defendants conspired to prevent a fair trial. Luis F. Collins, Admissibility of High/Low Settlements, Fla. B.J., Jan. 1993, at 37. Disclosure may also detract from the benefits...