26 Fla. L. Weekly Supp. 844a

Online Reference: FLWSUPP 2610CHAVNOT FINAL VERSION OF OPINION
Subsequent Changes at 27 Fla. L. Weekly Supp. 976aInsurance — Personal injury protection — Provider’s motion for leave to file amended reply which would interject new and inconsistent theory of recovery over five years into litigation, sought by provider after defendant had prevailed before the Florida Supreme Court on the sole issue pled and litigated in the case, is denied — Motion to strike or exclude unpled issues is granted

ACTIVE WELLNESS CENTER INC. (a/a/o Ignacio P. Chavez), Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2013-575-SP-24 (01). December 14, 2018. Diana Gonzalez-Whyte, Judge. Counsel: Ryan Peterson, The Patino Law Firm, Hialeah, for Plaintiff. Manuel Negron and Raul L. Tano, Shutts & Bowen LLP, Miami, for Defendant.

[Editor’s note: Corrected February 27, 2020, to add omitted material. Court’s holding not affected.]

ORDER GRANTING ALLSTATE’S MOTIONTO EXCLUDE/STRIKE ISSUES WAIVED AND/OR NOTPLED BY THE PLAINTIFF IN ITS COMPLAINT ANDDENYING PLAINTIFF’S MOTION FOR LEAVETO FILE AMENDED REPLY

THIS CAUSE, having come before the Court on September 11, 2018 on Defendant’s Motion to Exclude/Strike Issues Waived and/or Not Pled by the Plaintiff and Plaintiff’s Motion for Leave to File Amended Reply, the Court having reviewed Defendant’s Motion, Plaintiff’s Motion, heard argument of counsel, and being otherwise fully advised on the premises, this Court makes the following findings of fact and conclusions of law:Material Facts

On March 5, 2013, the Plaintiff filed a three-count Complaint for PIP benefits payments in connection with an automobile accident. The Complaint specifically alleges that “the amount in controversy is $36.00, plus interest, penalty, and postage, if applicable.”¹ Count II of the Complaint, titled “Declaration of Rights against Defendant on Behalf of Plaintiff Related to Fee Schedules,” asserted that the controversy at issue was “whether the Defendant may limit reimbursement to the fee schedules in Fla. Stat. 627.736(5)(a)(2) in light of the language in the policy form at issue here, which states that the Defendant shall pay a ‘reasonable fee.’ ” The Plaintiff took the position, as articulated in its Complaint, that “the Defendant may not utilize the fee schedules in this case, as the language of Florida Statute §627.736(5)(a)(2) is permissive in that an insurer ‘may limit’ reimbursement to the applicable Medicare and Worker’s Compensation fee schedules” because “the insurer in this case did not exercise the option to limit reimbursement at the applicable fee schedules because it did not make clear that it would do so under the terms of the insurance policy issued.”

On April 10, 2014, Allstate answered the Complaint by asserting only one defense, wherein Allstate quoted the language in its policy and asserted that Allstate’s policy expressly elected reimbursement based on the fee schedule limitations authorized by the Florida PIP statute. Thereafter, the Plaintiff timely filed a Reply wherein it specifically asserted that “the fee schedule does not apply as the insurance policy in this case does not permit the insurer to pay pursuant to the fee schedule at issue.” The Plaintiff further reiterated its position that it was seeking 80% of its bills, reasserting that “the Plaintiff submitted bills which were reasonable in price, and the Defendant is obligated to pay those bills.” Notably, at no point did Plaintiff allege in its pleadings that Defendant miscalculated or misapplied the fee schedules.

On January 26, 2017, in Allstate Insurance Company v. Orthopedic Specialists, 212 So. 3d 973 (Fla. 2017) [42 Fla. L. Weekly S38a] (the “Serridge decision”), the Florida Supreme Court held that the policy language at issue in this case provides “legally sufficient notice” of Allstate’s election to reimburse based on the fee schedule limitations. Following the Serridge decision, the Plaintiff allowed this case to lie fallow, triggering a Notice of Lack of Prosecution. Thereafter, Plaintiff engaged in a flurry of record activity, including additional discovery and deposition requests, multiple notices for trial, and a motion in limine. Critically, at no point in these filings did Plaintiff identify a new litigable issue.

It was not until July 12, 2018 that Plaintiff filed its “Motion for Leave to Amend to File Plaintiff’s Amended Reply” in which Plaintiff attempted to raise new claims (hereinafter “Unpled Issues”).² It was not until after the Florida Supreme Court issued its ruling in Serridge that Plaintiff first alluded to a different theory of recovery. Specifically, in its proposed Amended Reply, the Plaintiff alleged for the first time that Defendant misapplied the deductible, and that “the Defendant utilized the incorrect methods of calculating the reimbursement and/or fee schedules and has not paid at the schedule of maximum charges in the No Fault Act.”

Legal Standard and Conclusions of Law

I. Unpled Issues

Florida law is well established that a party is bound by the issues as framed by its own pleadings, and the Complaint must be pled with sufficient particularity to permit the Defendant to prepare its defense. See Assad v. Mendell, 550 So. 2d 52, 53 (Fla. 3d DCA 1989). Inherent in that statement is the notion that a party should not suffer the unfair surprise and prejudice of legal claims and theories not encompassed by the pleadings. See, e.g., Arky, Freed, Stearns, Watson, Greer, Weaver & Harris, P.A. v. Bowmar Instrument Corp., 537 So. 2d 561, 563 (Fla. 1988) (if a claim is not pled with sufficient particularity for the opposing party to prepare a defense, the plaintiff is precluded from recovery on the unpled claim); Bank of Am. v. Asbury, 165 So. 3d 808, 809 (Fla. 3d DCA 2015) [40 Fla. L. Weekly D1230a] (“Litigants in civil controversies must state their legal positions within a particular document, a pleading, so that the parties and the court are absolutely clear what the issues to be adjudicated are”). Furthermore, the law is clear that a judgment must be based on a claim or defense that was either properly pled or tried by consent of the parties. See Goldschmidt v. Holman, 571 So. 2d 422, 423 (Fla. 1990). This principle is so grounded in the law that the Florida Supreme Court has held that where a claim is not pled with sufficient particularity for the opposing party to prepare a defense, the plaintiff is precluded from recovery on the unpled claim. See Arky, Freed, Stearns, Watson, Greer, Weaver & Harris, P.A., 537 So. 2d at 563.

The Florida Supreme Court case of Arky, Freed is the seminal case holding that unpled claims and issues may not be tried. Relying on Arky, Freed, the Third District Court of Appeal has consistently held that parties are precluded from recovery on unpled claims tried without the consent of the parties. See Sunbeam Television Corp. v. Mitzel, 83 So. 3d 865, 875 (Fla. 3d DCA 2012) [37 Fla. L. Weekly D183a] (“when a plaintiff pleads one claim but tries to prove another, it is error for a trial court to allow the plaintiffs to argue the unpled issue at trial”); Bloom v. Dorta-Duque, 743 So. 2d 1202, 1203 (Fla. 3d DCA 1999) [24 Fla. L. Weekly D2532a] (“[i]t is well settled that a defendant cannot be found liable under a theory that was not specifically pled”); Robbins v. Newhall, 692 So. 2d 947, 949 (Fla. 3d DCA 1997) [22 Fla. L. Weekly D945b] (reversing final judgment where plaintiff had alleged three specific acts of negligence, but tried the case on a fourth alleged act that was never pled). Many other Florida courts have held that it is error for a trial court to allow a plaintiff to argue an unpled theory or cause of action at trial. See E.I. Du Pont De Nemours & Co. v. Desarrollo Indus. Bioacuatico S.A., 857 So. 2d 925, 930 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D2171a]; see also Straub v. Muir-Villas Homeowners Ass’n, Inc., 128 So. 3d 885, 890 (Fla. 4th DCA 2013) [38 Fla. L. Weekly D2655a] (relying on Arky, Freed and Du Pont to find error in trial court’s consideration of an unpled defense). See also Cioffe v. Morris, 676 F.2d 539, 543 n. 8 (11th Cir. 1982) (confirming that unpled issues tried without consent deny due process).

Numerous cases have followed Arky Freed to bar the injection of new claims or theories into an action, including in cases where the new claim or theory was devised to evade a recent ruling that undermined the original claim or theory. For example, in Noble v. Martin Memorial Hospital Association, Inc., 710 So. 2d 567 (Fla. 4th DCA 1998) [23 Fla. L. Weekly D58a], after nearly five years of litigation defending against a claim for money damages, defendant hospital filed a motion for summary judgment based on a newly decided federal case which would entitle the hospital to immunity. Id. at 568. Shortly after defendant’s summary judgment motion was filed, the plaintiff filed a motion to amend its complaint to seek injunctive relief. Id. The trial court denied leave to amend and granted summary judgment to the defendant, and the Fourth District Court of Appeal affirmed. In affirming, the Fourth District reasoned that the “claim for monetary damages stood alone for over four years. This . . . is a case where [plaintiff] did not want injunctive relief until it appeared that his quest for monetary damages had come to an end.” Id. The Fourth District held that the trial court properly exercised its discretion to deny leave to amend where it was clear the plaintiff “only wanted injunctive relief if his request for monetary relief was to be denied.” Id. at 569.

II. Amendment of Pleadings

Leave to amend may be denied “if allowing the amendment would prejudice the opposing party, the privilege to amend has been abused, or amendment would be futile.” State Farm Fire & Cas. Co. v. Fleet Fin. Corp., 724 So. 2d 1218, 1219 (Fla. 5th DCA 1998) [24 Fla. L. Weekly D56b] (citations omitted). Under Rule 1.190, the test of prejudice to the nonmoving party is the primary consideration in determining whether a motion to amend should be granted or denied. Lasar Mfg. Co., Inc. v. Bachanov, 436 So. 2d 236, 238 (Fla. 3d DCA 1983). Florida law is clear that leave to amend is properly denied when there is a sufficient showing of prejudice to the opposing party in preparing for the “new issue.” See Designers Title Int’l Corp. v. Capitol C. Corp., 499 So. 2d 4, 5 (Fla. 3d DCA 1986) (trial court committed reversible error when it allowed plaintiff to amend its pleading at the end of trial to plead a new cause of action, “a material change which under the facts of this case greatly prejudiced the defendants”).

Further, while as a general proposition leave to amend is freely granted, that general proposition diminishes as trial approaches and does not apply at all where prejudice would result. The trial court is “vested with the discretion to deny such motions where appropriate.” Noble, 710 So. 2d at 567, 568.

It is well established Florida law that there comes a point in litigation where each party is entitled to some finality, and the rule of liberality gradually diminishes as the case progresses to trial. Levine v. United Cos. Life Ins. Co., 659 So. 2d 265, 266-67 (Fla. 1995) [20 Fla. L. Weekly S444c] (“Levine”); Alvarez v. DeAuguirre, 395 So. 2d 213, 216 (Fla. 3d DCA 1981) (stating that “a trial judge may deny further amendments where a case has progressed to a point that liberality ordinarily to be indulged has diminished”); Versen v. Versen, 347 So. 2d 1047, 1050 (Fla. 3d DCA 1977) (“this rule of liberality does not authorize a party to state a new and different cause of action under the guise of an amendment, or if it will change the issue, introduce new issues, or materially vary the grounds of relief. . .”); Ruden v. Medalie, 294 So. 2d 403, 406 (Fla. 3d DCA 1974) (“a trial judge in the exercise of sound discretion may deny an amendment where the same materially varies from the relief initially sought, or where a case has progressed to a point that the liberality ordinarily to be indulged has diminished”); U.S. v. State, 179 So. 2d 890 (Fla. 3d DCA 1965) (“such amendments are not allowable if they would change the issue, or introduce new issues, or materially vary the grounds for relief” (emphasis omitted).

Moreover, an amendment must be denied where the amendment seeks to raise an issue that is inconsistent with the original pleading. Warfield v. Drawdy, 41 So. 2d 877 (Fla. 1949) (“We have discovered no case which authorizes such an amendment inconsistent with the allegations of the original bill”) see Bailey v. State Farm Mut. Auto. Ins. Co., 789 So. 2d 1181, 1182 (Fla. 4th DCA 2001) [26 Fla. L. Weekly D1739b] (affirming the trial court’s order granting insurer’s motion for summary judgment where the Plaintiff took inconsistent positions in parallel actions); Salcedo v. Asociacion Cubana, Inc., 368 So. 2d 1337 (Fla. 3d DCA 1979) (“the universal rule which forbids the successful assertion of inconsistent positions in litigation precludes the acceptance of any such result”).

Courts separately have held that leave to amend should not be granted where a party knew or should have known of the matter to be pled early in litigation, but declined to do so. See U.S. v. State, 179 So. 2d at 892-893; Watkins v. Watkins, 123 Fla. 267, 274 (1936) (“ ‘It is also held that applications to amend should be made promptly after the necessity for the amendment has been discovered’ ”) (quoting Griffin v. Societe Anonyme La Floridienne J. Buttgenbach & Co., 53 Fla. 801, 830) (1907)); San Martin v. Dadeland Dodge, Inc., 508 So. 2d 497, 498 (Fla. 3d DCA 1987) (affirming denial of leave to amend where “plaintiff, in the exercise of due diligence, should have been aware of the alleged basis for the proposed fraud count long before he sought to amend his complaint”); U.S. v. State, 179 So. 2d 890 (affirming denial of leave to amend where party knew of relevant facts two years before seeking leave to amend); see also Tampa Bay Water v. HDR Engineering, Inc., 731 F.3d 1171, 1186 (11th Cir. 2013) [24 Fla. L. Weekly Fed. C672a] (“A district court may find undue delay when the movant knew of facts supporting the new claim long before the movant requested leave to amend, and amendment would further delay the proceedings”); Soltys v. Costello, 520 F.3d 737, 743 (7th Cir. 2008) (“Eleventh hour additions . . . [are] bound to produce delays that burden not only the parties to the litigation but also the judicial system and other litigants.’ ”) (quoting Perrian v. O’Grady, 958 F.2d 192, 195 (7th Cir. 1992)); Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2nd Cir. 1990) (a trial court may “deny leave to amend where the motion is made after an inordinate delay, no satisfactory explanation is offered for the delay, and the amendment would prejudice the defendant. . . The burden is on the party who wishes to amend to provide a satisfactory explanation for the delay”).³

Courts have also separately held that a party who opposes summary judgment will not be permitted to alter the position of his or her previous pleadings, admissions, affidavits, depositions or testimony in order to defeat a summary judgment. Inman v. Club on Sailboat Key, Inc., 342 So. 2d 1069, 1070 (Fla. 3d DCA 1977); see also Noble, 710 So. 2d at 568 (holding a party should not be permitted to amend its pleadings for the sole purpose of defeating a motion for summary judgment). Moreover, a party may not defeat a summary judgment by altering previously filed pleadings, especially when the matters it seeks to present were available prior to summary judgment. Boyd v. Int’l Fid. Ins. Co., 412 So. 2d 944, 945 (Fla. 3d DCA 1982).

Conclusions of Law

A party is bound by the issues as framed by its own pleadings, and the Complaint must be pled with sufficient particularity to permit the Defendant to prepare its defense. Assad, 550 So. 2d at 53; see also Arky, Freed Stearns, Watson, Greer, Weaver & Harris, P.A., 537 So. 2d. at 563 (holding that claims must be pled with sufficient particularity at the outset of a suit for the opposing party to prepare a defense); see also Bank of Am., 165 So. 3d at 809 (holding that “[l]itigants in civil controversies must state their legal positions within a particular document, a pleading, so that the parties and the court are absolutely clear what the issues to be adjudicated are”).

The sole issue framed for disposition within the pleadings and litigated by the parties in this case for over five years was whether the subject policy properly elects the Fee Schedules, or whether, as Plaintiff asserted in its initial pleadings and maintained for five years, it was due 80% of its bills.⁴ It was not until well after the Florida Supreme Court found in favor of Allstate on this issue, quashing the ruling from the Fourth District Court of Appeal, that the Plaintiff contended for the first time that there were issues presented in this lawsuit other than whether the subject policy properly elects the Fee Schedules. With the current amendment, Plaintiff seeks to reverse course by alleging that, while the Defendant may limit reimbursement to the fee schedules, it did not apply the fee schedules correctly. Plaintiff’s proposed Amended Reply offers no factual support for this allegation. In fact, the Plaintiff did not disclose its new theory of recovery with any of the required specificity until Plaintiff’s counsel did so ore tenus during the course of the hearing on the subject motions. During argument, the Plaintiff alleged for the first time that Allstate breached the insurance contract by reimbursing three CPT Codes at 80% of the billed amount rather than 100%, a theory of recovery which could only ripen upon the Plaintiffs concession that the insurer did properly elected to limit reimbursement to the schedule of maximum charges. In essence, Plaintiff now takes a position which is wholly inconsistent with the position that it vigorously litigated over the past five years of litigation.

Plaintiff was on notice of how the Defendant paid Plaintiff’s bills before the instant lawsuit was filed and could have alleged the facts supporting this new alleged underpayment in its original Complaint or even the original Reply, both before the Supreme Court decided that Defendant’s policy properly elected the Fee Schedules.

Allowing the Plaintiff to amend its Complaint to raise a new and inconsistent theory of recovery over five years into litigation, and after Defendant prevailed at the Florida Supreme Court on the sole issue pled and litigated in this case, would unfairly prejudice the Defendant. Defendant will also sustain prejudice because, consistent with the sole issue Plaintiff litigated being whether Defendant’s policy properly elected the Fee Schedules, Defendant conceded numerous other defenses, including, as potentially applicable in this case, deficient demand.

As held by the Florida Supreme Court in Levine, supra, Defendant is entitled to finality in this five-year-old case. The prejudice to Defendant in having to litigate an entirely new issue which Plaintiff knew about before it filed the Complaint as well as the original Reply overrides Plaintiff’s need to raise this issue five years after the inception of this lawsuit, and only after the Supreme Court ruled against Plaintiff on the sole dispositive issue litigated by the parties during the course of this litigation. It is clear that up until the finalization of the Florida Supreme Court’s ruling in Orthopedic Specialists in favor of Allstate on the issue of policy language as to application of fee schedule, Plaintiff’s position was that the Serridge Issue was the sole issue presented by this litigation and as such, Orthopedic Specialists is case-dispositive in this matter. Accordingly,

IT IS HEREBY ORDERED AND ADJUDGED that Defendant’s Motion to Strike/Exclude Issues Waived and/or not Pled by Plaintiff is GRANTED. Plaintiff’s Motion for Leave to Amend its Reply is DENIED.

__________________

¹During argument, defense counsel asserted that the amount in controversy delineated in Plaintiff’s Complaint was equal to the difference between 80% of the billed amount minus payments made by Allstate, a representation that was not refuted by Plaintiff’s counsel.

²Plaintiff’s Motion alleges that the Plaintiff was seeking leave to file an Amended Reply to remedy “clerical mistake.” The Court rejects Plaintiff’s assertion that the changes in the proposed Amended Reply are merely clerical, and specifically finds that the new Reply raises new material issues not previously encompassed within the original pleadings.

³Decisions of the Federal courts construing federal rules of civil procedure identical to Florida’s rules of procedure have been held to be in point as to the proper construction of the Florida Rules. U.S. v. State, 179 So.2d 890 (1965); Carson v. City of Fort Lauderdale, 173 So.2d 743 (Fla. 2d DCA 1965).

⁴The Court rejects Plaintiff’s argument that any specific theories of recovery are encompassed within what it labeled a “general breach of contract” count. To accept Plaintiff’s position would be to allow Plaintiff to vaguely allege the same unspecified breach of contract across multiple lawsuits, and then materially change its theories as it sees fit to litigate any number of potential theories of recovery, without making it absolutely clear to the Court and to the Defendant what the issues to be adjudicated are. See Bank of Am., 165 So. 3d at 809; see also Robbins, 692 So. 2d 947 (rejecting Plaintiff’s argument that a fourth theory of negligence was encompassed within the general negligence count of its Complaint). The prejudice to Defendant is crystalized here by the fact that its proposed Amended Reply is identical to one in a second case of nearly identical posture where the same motions were argued by the parties, but where Plaintiff’s newly raised theory of recovery was totally different than the one in the instant case. See Right Choice Medical & Rehab Corp. a/a/o Evelyn Martinez v. Allstate Fire and Casualty Insurance Company, Case No. 2013-123-SP-24 (01) (11th Jud. Cir.).