Law in its basic definition is a system of rules and ethical guidelines, usually enforced through a set of institutions. It shapes various facets of society in numerous ways and serves as a social mediator of relations between people and corporate entities. So what happens when one party to a transaction does not uphold their end of the bargain? What happens when the party seeking to pull the rug out from the other is counsel for an insurance company during litigation involving a hurricane claim? You get a scathing opinion like the one last week in Central Square Tarragon, LLC v. Great Divide Ins. Co., No. 4D09-4795, 2011 WL 1563136 (Fla. 4th DCA April 27, 2011).

As I was researching legal issues, this opinion caught my attention because the first paragraph begins as follows:

This appeal pits ‘integrity’ in the practice of law against an unwarranted game of ‘gotcha.’

The basic facts of the case involve a named insured that sold a twenty-two acre site to the purchaser and assigned its rights to an insurance policy that provided property insurance coverage, including hurricane and windstorm coverage. The named insured even took the steps to add the purchaser to the insurance policy as an additional insured. After this transaction, Hurricane Wilma destroyed the property and the purchaser/assignee filed a claim with the insurer, Great Divide. Great Divide paid some of the damages—$770,981.21—and the purchaser/assignee filed a lawsuit, claiming damages greater from Hurricane Wilma than that amount paid.

The trial court ordered the parties to file a Joint Pretrial Stipulation. In the Joint Stipulation, the parties agreed that the assignor assigned its rights to the insurance proceeds to the purchaser/assignee. The only disputed issues in the Joint submission were whether the insurer was in breach of the insurance policy; and the amount of covered damages under the policy, if anything above the prior payment.

During opening statements at the trial, counsel for the insurer conceded the purchaser’s entitlement to the insurance proceeds. At the close of the purchaser’s case at trial, insurance counsel made a motion for a directed verdict, arguing that the insurer should win because the purchaser/assignee did not prove the existence of the assignment of insurance policy and insurance proceeds. The purchaser responded that the assignment had already been stipulated to as part of the Joint Stipulation. The trial court denied the insurer’s motion. Insurance counsel again argued the lack of proof of the assignment at the conclusion of its case, which the court again denied.

The trial court then instructed the jury and gave them the issue of whether there was a valid assignment of insurance policy and proceeds. The jury found there was no valid assignment based on the evidence it had seen. The purchaser filed a Motion for New Trial. The trial court denied it, entered judgment for the insurer, and the purchaser/assignee appealed.

On appeal, the purchaser argued that the Joint Pretrial Stipulation bound the parties and the court and eliminated the need for certain proof at trial, particularly the need to prove a valid assignment of insurance proceeds. The Fourth District Court of Appeal of Florida agreed, and noted that pretrial stipulations are meant to narrow the issues on which cases are to be tried and should be strictly enforced. The Court further noted that throughout hearings and its opening statement, insurance counsel admitted the dispute concerned only the amount of damage—not the purchaser’s entitlement to proceeds. When the trial court provided the jury verdict and a proposed jury verdict form, it abandoned the stipulation, and that was error.

The Fourth District Court of Appeal concluded:

Our system of justice depends upon lawyers as officers of the court. Here, insurance counsel abandoned that role and engaged in gamesmanship by failing to honor the stipulation. That conduct deprived the purchaser of a fair trial; justice requires a new trial.