February 1st, 2024
construction
FLORIDA COURT MAINTAINS REQUIREMENT FOR EVIDENTIARY BAR BEFORE A MOVING PARTY CAN ASSERT PUNITIVE DAMAGES

In 701 Palafox, LLC v. Scuba Shack, Inc., the Florida Court of Appeals reversed the trial court’s granting of a motion to amend to add punitive damages, holding that the moving party failed to make the required evidentiary showing to support a claim of gross negligence to seek punitive damages. 367 So. 3d 624 (Fla. 1st DCA 2023).

Plaintiff Scuba Shack, Inc. (“Scuba Shack”) owned a parcel of land alongside its neighbor, Defendant 701 Palafox, LLC (“Palafox”). Palafox intended to build a multi-story condominium building and hired a geotechnical engineer to analyze the soil and determine the foundation design. The engineer recommended against using vibratory compaction equipment in order to avoid potential damage to existing structures, but instead to use auger cast in place piles with minimal noise and vibration. Palafox did use the recommended piles, but also installed “sheet piles” along the border of its property and Scuba Shack’s property. Soon after the sheet pile installation began, Scuba Shack’s building began showing signs of cracking. Scuba Shack hired an engineer who concluded the damage was severe enough to render the building a total tear down and rebuild.

Scuba Shack sued Palafox for negligence, and upon uncovering the report advising of the risk of vibrations, moved to amend its complaint to include a claim for gross negligence and seek punitive damages. The trial court granted the motion to amend, and Palafox appealed, arguing there was no “reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages” as is required by Fla. Stat. § 768.72(1) (2019).

Reversing the trial court’s grant of the motion to amend, the Court of Appeals ruled that Scuba Shack failed to make the required evidentiary showing to support a claim of gross negligence and to seek punitive damages. While Scuba Shack asserted that the engineer’s report warned against using any vibratory equipment, the report makes no mention of sheet piles.

The Court also noted that Scuba Shack had changed its theory for why it was entitled to punitive damages. When it moved to amend its complaint, Scuba Shack argued that Palafox’s use of vibratory compaction equipment was “in reckless disregard” of the engineer’s report. The Court observed that that theory failed because there was no evidence that Palafox had used such equipment.

Plaintiff’s second theory was that the damage to its building was caused by vibrations from the installation of the sheet piles (not from the use of large compaction equipment). According to Scuba Shack, the warning in the engineer’s report against using large vibratory compaction equipment put Palafox on notice that the installation of the sheet piles would damage the property of Scuba Shack. The Court concluded that the engineer’s report together with the engineer’s testimony revealed no ground for Palafox to be concerned that the installation of sheet piles would damage Scuba Shack’s building. Finally, the Court noted that the record was also void of any testimony from the contractor that had installed the sheet piles.

This ruling affirms the heightened pleading requirements for parties moving for punitive damages in Florida.  It also presented an issue of first impression to the First District Court of Appeals as to the effect of the 2022 amendment to Florida Rule of Appellate Procedure, Rule 9.130, to allow appeals of nonfinal orders granting or denying a motion for leave to amend to assert a claim for punitive damages. Following the lead of other district courts, the First District adopted a de novo standard of review as it was analyzing a purely legal question.

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