Torts — Indemnity — Action by plaintiff who was injured when she became entrapped in an elevator in office building against building owner and elevator maintenance company, with building owner filing cross-claim against elevator maintenance company for contractual and common law indemnity — Trial court erred in finding that building owner abandoned its cross-claim by failing to amend it after plaintiff amended complaint to inject new issues of non-delegable duty and negligent response — Building owner’s secret settlement agreement with plaintiff was not a prohibited Mary Carter agreement where payment of settlement was made during damages phase of case after liability had been established during liability phase of bifurcated trial, so that there was no incentive to decrease building owner’s liability or increase maintenance company’s liability, and trial court erred in denying indemnity on basis that agreement was a prohibited Mary Carter agreement — Trial court’s determination that building owner could not seek indemnity because its settlement with plaintiff was voluntary was premature — Remand for further proceedings on cross-claim for indemnity

HIGHWOODS PROPERTIES, INC., Appellant, v. MILLAR ELEVATOR SERVICE COMPANY and SCHINDLER ELEVATOR COMPANY, Appellees. 1st District. Case No. 1D16-5675. May 16, 2018. On appeal from the Circuit Court for Duval County. Karen Cole, Judge. Counsel: Richard A. Sherman, Sr., and James W. Sherman of Law Offices of Richard A. Sherman, P.A., Fort Lauderdale; Dennis R. Schutt and Jeffrey Devonchik of Schutt, Schmidt & Noey, Jacksonville, for Appellant. Jay C. Howell of Jay Howell & Associates, Jacksonville; Stuart Aaron Weinstein, Richard S. Weinstein, and Richard P. Hermann, II, of Shapiro, Blasi, Wasserman & Hermann, P.A., Boca Raton; Bradley J. Edwards of Farmer Jaffe Weissing Edwards Fistos & Lehrman, P.L., Fort Lauderdale; H. Christopher Bartolomucci of Kirkland & Ellis, Washington, D.C., for Appellees.

(ROBERTS, J.) Highwoods Properties Incorporated (Highwoods) appeals a final order denying its motion for final judgment for indemnity against Schindler Elevator Company (Schindler). For the reasons discussed herein, we find Highwoods was not precluded from seeking indemnity in this action, but remand for further litigation on the merits of the indemnity claims. We affirm the final order in part, reverse in part, and remand for further proceedings.¹

In 1999, Janice Beasley was entrapped and injured in an elevator in the subject office building. She and her husband, Stephen Beasley, filed suit against Highwoods and Schindler alleging Highwoods breached a common law duty to use reasonable care in the inspection and maintenance of the elevator, and Schindler negligently failed to perform its duty, per the service contract, to inspect and maintain the elevator. Counsel for Highwoods asked Schindler to assume the defense of the entire case per the service contract, but Schindler declined the request. Highwoods then filed a cross-claim against Schindler for common law and contractual indemnity that alleged Highwoods was entirely without fault, that the plaintiffs’ damages were solely and proximately caused by Schindler, and that any liability on Highwoods’s part would be “vicarious, constructive, derivative, and technical in nature.”

Some years later, the plaintiffs amended the complaint to include a claim that Highwoods had a non-delegable duty under chapter 399, Florida Statutes, to ensure the safe operation and proper maintenance of the elevator. The amended complaint also alleged Highwoods and Schindler failed to reasonably respond to the elevator malfunction. Highwoods did not seek to amend its cross-claim in response to the amended complaint.

The case proceeded to a jury trial that was bifurcated into two phases: liability and damages. On liability, the jury determined that neither Highwoods nor Schindler was negligent in the inspection, maintenance, service, or repair of the elevator. The jury found Highwoods and Schindler were each fifty percent negligent in their response to the elevator malfunction. Highwoods later successfully moved for a directed verdict on liability. The order granting the motion for directed verdict found no evidence that Highwoods’s active negligence was a legal cause of the plaintiffs’ injuries, but concluded Highwoods had a non-delegable duty to the plaintiff regarding the safe operation and proper maintenance of the elevator in question.

The case proceeded to a jury trial on phase two for causation and damages. During the phase two trial, Highwoods and the plaintiffs reached a secret settlement agreement that Highwoods characterizes as a “high-low” agreement between $490,000 and $510,000.³ Highwoods remained in the trial, but did not appear on the verdict form. Highwoods’s settlement agreement with the plaintiffs was not disclosed to the jury and was not disclosed to Schindler and the trial court until later. While the jury was deliberating, Schindler and the plaintiffs reached a settlement, which was disclosed to the court. The jury returned a verdict for $13,000,000, which was in excess of Schindler’s settlement amount. The plaintiffs eventually dismissed the action against both parties.

We conclude that the final order on appeal prematurely decided the issue of voluntariness in point (2), but agree with the portion of the final order vacating summary judgment for the reasons discussed in point (4) of the final order. We reverse points (1) and (3) of the final order, which means that Highwoods’s cross-claim for indemnity survives in this action. We remand to allow Highwoods to pursue a full trial on indemnity in this action.

Highwoods’s cross-claim asserted claims for common law and contractual indemnity. The cross-claim also asserted that the plaintiffs’ damages were solely and proximately caused by Schindler, that Highwoods was entirely without fault, and that any liability on Highwoods’s part would be “vicarious, constructive, derivative, and technical in nature.” This language was also sufficient to place Schindler on notice of a claim for indemnity based upon a breach of a non-delegable duty. See Houdaille Indus., Inc. v. Edwards, 374 So. 2d 490, 493 (Fla. 1979) (“[Indemnity] shifts the entire loss from one who, although without active negligence or fault, has been obligated to pay, because of some vicarious constructive, derivative, or technical liability, to another who should bear the costs because it was the latter’s wrongdoing for which the former is held liable.”); Stewart, 427 So. 2d at 779 (recognizing a defendant, who is not personally liable but has a non-delegable duty, may assert a claim for indemnity against an independent contractor hired to discharge the non-delegable duty). We reverse the portion of the final order deeming the cross-claim abandoned in this action. Highwoods’s cross-claim for contractual and common law indemnity withstood the amended complaint and remains viable in this action if Highwoods wishes to pursue it on remand.

A Mary Carter style agreement is one in which a defendant in a multi-defendant case secretly agrees with the plaintiff to work together to the detriment of the other defendant. Panama City-Bay Cty. Airport & Indus. Dist. v. Kellogg Brown & Root Servs., Inc., 140 So. 3d 1112, 1116 (Fla. 1st DCA 2014) (citing Dosdourian v. Carsten, 624 So. 2d 241, 243 (Fla. 1993)). In Frier’s, Inc. v. Seaboard Coastline Railroad Company, 355 So. 2d 208, 210 (Fla. 1st DCA 1978), this Court recognized the following hallmarks of a typical Mary Carter agreement:

(a) secrecy;

(b) the agreeing defendants remain as party defendants in the lawsuit;

(c) the agreeing defendants’ liability is decreased in direct proportion to the nonagreeing defendants’ increase in liability;

(d) the agreeing defendant guarantees the plaintiff a certain amount of money if plaintiff does not receive a judgment against any of the defendants or if the judgment is less than a specified sum.

Mary Carter style agreements are not allowed in Florida because they are antithetical to the trial process, create a charade of adversity, and prejudice the non-settling defendant. Dosdourian, 624 So. 2d at 245-46.

Here, Highwoods’s $510,000 payment was done in secret and was dependent on the jury’s verdict. However, the payment was made during the damages phase of the case, well after liability had already been determined in phase one. Thus, there was no incentive to decrease Highwoods’s liability or increase Schindler’s liability because liability had already been determined. The settlement agreement lacked two key features of a Mary Carter agreement: Highwoods elected to remain in the case, but was not required to do so, and Highwoods could not and did not inflict any harm upon Schindler by remaining in the case. Highwoods had a legitimate reason to stay in the case based on the previous court rulings on its non-delegable duty and on summary judgment. The settlement here does not raise red flags of deceit, collusion, or fraud that were of concern in Dosdourian. Because the settlement is not a prohibited Mary Carter agreement, indemnification was improperly denied for this reason. We reverse the portion of the final order denying indemnification on the finding that the settlement was a prohibited Mary Carter agreement.

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¹Our opinion addresses Issues II-VI of Highwoods’s amended initial brief. Issue I is affirmed without comment.

²The parties do not dispute that Schindler was obligated to honor the service contract after merging with Millar. The two companies will be referred to collectively as Schindler for ease of reference.

³Under the terms of the agreement, if the total damages were less than $490,000, Highwoods would pay $490,000. If the total damages were between $490,000 and $510,000, Highwoods would pay the damage amount. If the total damages exceeded $510,000, Highwoods would pay $510,000.