Fed. Ins. Co. v. Perlmutter

376 So.3d 24

FEDERAL INSURANCE COMPANY, Harold Peerenboom, and William Marvin Douberley, Appellants,

v.Isaac "Ike" PERLMUTTER and Laura Perlmutter, Appellees.

Nos. 4D2022-1558

4D2022-1560

4D2022-1562

District Court of Appeal of Florida, Fourth District.

[December 13, 2023]

Consolidated appeals of nonfinal orders from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Gerard Joseph Curley, Judge; L.T. Case No. 50-2013-CA-015257.

ON MOTION FOR CERTIFICATION AND SUA SPONTE REHEARING EN BANC

Kenneth R. Drake of DeMahy Labrador Drake Cabeza, Coral Gables, for appellant Federal Insurance Company.

Jordan S. Cohen, Ethan A. Arthur, and Victoria N. DeLeon of Wicker Smith O’Hara McCoy & Ford, P.A., Fort Lauderdale, for appellant Harold Peerenboom.

Daniel M. Bachi of Sellars, Marion & Bachi, P.A., West Palm Beach, for appellant William Marvin Douberley.

Roy Black and Jared M. Lopez of Black, Srebnick, Kornspan & Stumpf, P.A., Miami, and Elliot B. Kula and William D. Mueller of Kula & Associates, P.A., Miami, and Joshua E. Dubin of Joshua E. Dubin, P.A., Miami, for appellees.

EN BANC

Conner, J.

We grant the appellees’ motion for certification of conflict and question of great public importance, sua sponte proceed with rehearing en banc, withdraw our opinion dated September 27, 2023, and issue the following in its place.

In this consolidated appeal, Federal Insurance Company ("Federal"), Harold Peerenboom ("Peerenboom"), and William Douberley ("Douberley") (collectively, "the Appellants") separately appeal from trial court orders granting Isaac and Laura Perlmutter’s ("the Perlmutters") motions to amend their counterclaims to seek punitive damages from the Appellants. We reverse because the record evidence was insufficient to permit claims for punitive damages. To explain our decision, we examine the substantive and procedural requirements for motions to amend seeking punitive damages. We also apply those requirements to our review of the trial court orders in this case.

Part 1: Background

The Perlmutters and Peerenboom lived in a residential community in which a dispute arose over retaining the community tennis instructor. The dispute resulted in the tennis instructor filing a defamation suit to which Peerenboom was eventually added as a defendant. Peerenboom notified his insurance carrier, Federal, about the tennis instructor’s defamation suit. Federal designated Douberley’s law firm as Federal’s in-house counsel to defend Peerenboom in the tennis instructor’s suit.

During the tennis instructor’s suit, Peerenboom’s family, friends, neighbors, and colleagues received a series of "hate mail" letters falsely accusing Peerenboom of child molestation and murder. Peerenboom suspected the Perlmutters were involved in the hate mail because, a year earlier, Isaac Perlmutter had circulated negative news articles about Peerenboom. Believing he was the victim of a crime, Peerenboom reported the hate mail to law enforcement and postal investigators and hired private investigators to develop information about who had sent the hate mail.

As part of that investigation, Peerenboom and Douberley surreptitiously obtained the Perlmutters’ DNA to compare against DNA obtained from the hate mail. Peerenboom then reported to the police and media that the DNA results had linked the Perlmutters to the hate mail campaign.

Peerenboom later filed a complaint against the Perlmutters raising various causes of action related to the sending of the hate mail.

Upon learning that Peerenboom had surreptitiously tested their DNA, the Perlmutters asserted a counterclaim against the Appellants. In their counterclaim, the Perlmutters alleged conversion and civil theft of their genetic information; abuse of process for issuing subpoenas upon them for improper purposes; defamation for false reports of their involvement in sending the letters; invasion of privacy for the surreptitious collection, testing, and reporting of their DNA; and civil conspiracy to defame them and falsely implicate them in criminal conduct.

The Perlmutters’ intentional tort counts relied generally upon section 760.40, Florida Statutes (2013), which at the time¹ pertinently stated:

(a) Except for purposes of criminal prosecution, except for purposes of determining paternity as provided in s. 409.256 or s. 742.12(1), and except for purposes of acquiring specimens as provided in s. 943.325, DNA analysis may be performed only with the informed consent of the person to be tested, and the results of such DNA analysis, whether held by a public or private entity, are the exclusive property of the person tested, are confidential, and may not be disclosed without the consent of the person tested. …

(b) A person who violates paragraph (a) is guilty of a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.

§ 760.40(2), Fla. Stat. (2013).²

The Perlmutters later moved to amend their counterclaims to seek punitive damages from the Appellants. The Appellants responded in opposition. After a hearing on the Perlmutters’ motions to amend, the trial court entered the separate orders, now on appeal, granting the motions to amend as to each of the Appellants.

The first order, granting the punitive damages motion against Peerenboom and Douberley, described the Perlmutters’ proffered evidence in detail. The trial court found the Perlmutters had made a reasonable evidentiary showing in support of the motion.

[1] The second order, granting the punitive damages motion against Federal, likewise detailed the proffered evidence and found: (1) Douberley committed "intentional misconduct" as defined in section 768.72(2)(a), Florida Statutes (2013); (2) Douberley was Federal’s employee; (3) Federal "actively and knowingly participated" in Douberley’s intentional misconduct; and (4) Federal "knowingly condoned, ratified, or consented to" Douberley’s intentional misconduct. The trial court again found the Perlmutters made a reasonable evidentiary showing in support of the motion. More specifically, the trial court permitted the Perlmutters to seek punitive damages from Federal based on section 768.72(3)(a) and (b), Florida Statutes (2013).³

The Appellants separately gave notice of appeal. We have consolidated all three appeals for our review.

Part 2: Statute, Rule, and Caselaw Applicable to Pretrial Orders Ruling on Motions to Amend to Assert Punitive Damages

A. Section 768.72 and Florida Rule of Civil Procedure 1.190

[2] Section 768.72, Florida Statutes (2013), and Florida Rule of Civil Procedure 1.190(a) and (f) control the Perlmutters’ entitlement to punitive damages and establish the basic substantive and procedural requirements for such an award. Both the statute and the rule require parties to initiate the process by moving to amend the complaint or counterclaim. § 768.72(1), Fla. Stat. (2013); Fla. R. Civ. P. 1.190(f). In other words, a complaint or counterclaim cannot plead entitlement to punitive damages without prior court approval.

The primary foundational requirement under both the statute and the rule is "a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages." § 768.72(1), Fla. Stat. (2013); Fla. R. Civ. P. 1.190(f). Section 768.72 pertinently provides:

(1) In any civil action, no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages. The claimant may move to amend her or his complaint to assert a claim for punitive damages as allowed by the rules of civil procedure. The rules of civil procedure shall be liberally construed so as to allow the claimant discovery of evidence which appears reasonably calculated to lead to admissible evidence on the issue of punitive damages. No discovery of financial worth shall proceed until after the pleading concerning punitive damages is permitted.

(2) A defendant may be held liable for punitive damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence. As used in this section, the term:

(a) "Intentional misconduct" means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result and, despite that knowledge, intentionally pursued that course of conduct, resulting in injury or damage.

(b) "Gross negligence" means that the defendant’s conduct was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct.

§ 768.72(1)-(2), Fla. Stat. (2013) (emphasis added). Rule 1.190 similarly provides:

(a) Amendments. … If a party files a motion to amend a pleading, the party shall attach the proposed amended pleading to the motion. Leave of court shall be given freely when justice so requires.

….

(f) Claims for Punitive Damages. A motion for leave to amend a pleading to assert a claim for punitive damages shall make a reasonable showing, by evidence in the record or evidence to be proffered by the claimant, that provides a reasonable basis for recovery of such damages. The motion to amend can be filed separately and before the supporting evidence or proffer, but each shall be served on all parties at least 20 days before the hearing.

Fla. R. Civ. P. 1.190(a), (f) (emphasis added).

We now discuss caselaw interpreting section 768.72’s and rule 1.190’s substantive and procedural requirements regarding punitive damages motions.

B. The Trial Court’s Gatekeeping Function

In discussing the caselaw, we begin with the overarching concept of the trial court’s gatekeeping function.

In Globe Newspaper Co. v. King, 658 So. 2d 518 (Fla. 1995), our supreme court said:

We read section 768.72 to create a substantive legal right

...