Steinberger Applied To Florida Cases 1-2014

SLelnberger Applled Lo llorlda Cases
Carfleld, kelley & WhlLe, LLC

4832 kerry loresL arkway, SulLe 8
1allahassee, lL 32309

The law firm of Garfield, Kelley & White focuses its legal practice on foreclosure defense and related debtor issues. We have
reviewed and analyzed a recent Arizona decision (Steinberger v. McVey) which we believe can be applied to the foreclosure cases
here in Florida. Our research strongly suggests that multiple legal theories and causes of action in that case have support here in
Florida. Steinberger deals with a homeowner that alleged she was lured into default status in order to qualify for a loan modification,
and then the modification never took place due to the negligence (or intention) of the lender. We think this case has introduced an old
common law theory for negligent undertaking. Using the Good Samaritan doctrine, the Steinberger court avoided the banks
argument that they were under no duty to grant a modification or a loan. Once they take the step of inducing you to trust them, they
have a duty to process the transaction in a non-negligent manner. The court ruled that a lender can be held liable for inducing a
homeowner to default on their loan as a requirement for modification. Below is our analysis of the Steinberger case and how we
believe it can be used as an effective defensive tool in Florida.

Garfield, Kelley & White, LLC 2014

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FACTS .......................................................................................................................................................................................................................................................................... 4
LAW - NEuLIuENT PERF0RNANCE 0F AN 0NBERTAKINu ............................................................................................................................................................................... 4
FAIL0RE T0 EXERCISE B0E CARE ......................................................................................................................................................................................................................... 4
B0TY 0F v0L0NTEER .............................................................................................................................................................................................................................................. 4
LAW - NEuLIuENT PERF0RNANCE 0F AN 0NBERTAKINu ............................................................................................................................................................................... 4
u00B SANARITAN B0CTRINE ................................................................................................................................................................................................................................ 4
EC0N0NIC BARN (vS. PBYSICAL) ......................................................................................................................................................................................................................... S
LAW - INCREASEB RISK 0F EC0N0NIC BARN ................................................................................................................................................................................................... S
C0NCL0SI0N .............................................................................................................................................................................................................................................................. S
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CASE LAW - 0NBERTAKERS B0CTRINE ............................................................................................................................................................................................................... 7
NEuLIuENT PERF0RNANCE 0F AN 0NBERTAKINu T0 RENBER SERvICES S2S ........................................................................................................................................ 7
CASE LAW - RESTATENENT (SEC0NB) 0F T0RTS S2S NEuLIuENT PERF0RNANCE 0F AN 0NBERTAKINu .................................................................................... 8
CASE LAW - RESTATENENT (SEC0NB) 0F T0RTS S2S NEuLIuENT PERF0RNANCE 0F AN 0NBERTAKINu .................................................................................... 9
CASE LAW - "PBYSICAL BARN" ............................................................................................................................................................................................................................ 9
CASE LAW - "PBYSICAL BARN" .......................................................................................................................................................................................................................... 1u
CASE LAW - "EC0N0NIC L0SS" ........................................................................................................................................................................................................................... 1u
CASE LAW - "EC0N0NIC L0SS R0LE" ................................................................................................................................................................................................................ 1u
CASE LAW - "EC0N0NIC L0SS R0LE" ................................................................................................................................................................................................................ 11
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SLelnberger v. Mcvey ex rel. CnLy. of Marlcopa, 1 CA-SA 12-0087, 2014 WL 333373 (Arlz. CL. App. !an. 30, 2014)

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Steinberger alleges (1) Respondents lured her into defaulting on her loan
with the prospect of a loan modification and (2) then negligently
administered her application for the modification, causing her to fall so far
behind on her payments that it was no longer possible to reinstate her
original loan. Steinberger alleges that she never obtained a loan
modification, and that Respondents' conduct ultimately led to the
foreclosure on her home.

Steinberger v. McVey ex rel.
Cnty. of Maricopa, 1 CA-SA
12-0087, 2014 WL 333575
(Ariz. Ct. App. Jan. 30,
2014)
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Arizona recognizes a cause of action for negligent performance of an
undertaking as it is summarized in the Restatement (Second) of Torts:
One who undertakes, gratuitously or for consideration, to render services to
another which he should recognize as necessary for the protection of the
other's person or things, is subject to liability to the other for physical harm
resulting from his failure to exercise reasonable care to perform his
undertaking, if
(a) his failure to exercise such care increases the risk of such harm, or
(b) the harm is suffered because of the other's reliance upon the undertaking.

12-0087, 2014 WL 333575
2014)
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Thus, under 323, a party may assume the duty to act with reasonable care
even though it otherwise had no duty to do So.Under this Good Samaritan
Doctrine, a party may be liable for negligent performance of an assumed
duty by either: (1) increasing the risk of harm to another, or (2) causing
another to suffer harm because he or she relied on the party exercising
reasonable care in undertaking the duty.

12-0087, 2014 WL 333575
2014)


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Steinberger's Good Samaritan claim alleges increased risk of economic
harm, rather than physical harm. The Arizona Supreme Court has extended
the Good Samaritan Doctrine beyond ordinary physical harm to include
economic harm.

12-0087, 2014 WL 333575
2014)
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To state a claim for increased risk of economic harm, Steinberger was
required to allege the following elements: (1) Respondents undertook to
render services to Steinberger that they should have recognized were
necessary for the protection of Steinberger's property, (2) Respondents'
failure to exercise reasonable care while doing so increased the risk of harm
to Steinberger, and (3) Steinberger was in fact harmed because of
Respondents' actions.

12-0087, 2014 WL 333575
2014)
)LA=HODILA
In sum, we hold that Steinberger alleged a cognizable claim under the Good
Samaritan Doctrine... Specifically, a lender may be held liable under the
Good Samaritan Doctrine when: (1) a lender, or its agent/representative,
induces a borrower to default on his or her loan by promising a loan
modification if he or she defaults; (2) the borrower, in reliance on the
promise to modify the loan, subsequently defaults on the loan; (3) after the
borrower defaults, the lender or its agent/representative negligently
processes or fails to process the loan modification, or due to the
lender/agent/representative's negligence, the borrower is not granted a loan
modification; and (4) based on the default, the lender subsequently
forecloses on the borrower's property.

12-0087, 2014 WL 333575
2014)


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2
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Restatement of Torts is PERSUASIVE not BINDING in FL
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It is clearly established that one who undertakes to act, even when under no
obligation to do so, thereby becomes obligated to act with reasonable care.

Union Park Mem'l Chapel v.
Hutt, 670 So.2d 64, 66-67
(Fla. 1996)

As this Court recognized over sixty years ago in Banfield v. Addington, [i]n
every situation where a man undertakes to act, ... he is under an implied
legal obligation or duty to act with reasonable care, to the end that the
person or property of others may not be injured. 104 Fla. at 667, 140 So.at
896.
Hutt, 670 So.2d 64, 67 (Fla.
1996)

Whenever one undertakes to provide a service to others, whether one does
so gratuitously or by contract, the individual who undertakes to provide the
service-i.e., the undertaker-thereby assumes a duty to act carefully and to
not put others at an undue risk of harm.
3
This maxim, termed the
undertaker's doctrine, applies to both governmental
4
and nongovernmental
entities.
5
The doctrine further applies not just to parties in privity with one
another-i.e., the parties directly involved in an agreement or undertaking-but
also to third parties. Florida courts have applied the doctrine to a variety of
third-party, contract-based negligence claims and ruled that the defendants
could be held liable, notwithstanding a lack of privity.
Clay Elec. Co-op., Inc. v.
Johnson, 873 So.2d 1182,
1186 (Fla. 2003)

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another which he should recognize as necessary for the protection of others
person or things, is subject to liability to the other for physical harm
undertaking, if:
(b) the harm is suffered because of the others reliance upon the
undertaking.
Restatement (Second) of
Torts 323


8
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Hence, the undertaker's doctrine is a well-developed, entrenched aspect of
Florida tort law. Three sections of the Restatement (Second) of Torts (1965)
outline the parameters of this doctrine. First, section 323 provides:

another which he should recognize as necessary for the protection of the
other's person or things, is subject to liability to the other for physical harm
undertaking, if
(b) the harm is suffered because of the other's reliance upon the
undertaking.
(Emphasis supplied.)
Wallace v. Dean, 3 So.3d
1035, 1051 (Fla. 2009)

As recently as 2007, this Court explained the common law elements of a
negligence cause of action:
The claimant must first demonstrate that the defendant owed a duty,
or obligation, recognized by the law, requiring the [defendant] to
conform to a certain standard of conduct, for the protection of others
against unreasonable risks. Clay Elec. Coop., Inc. v. Johnson, 873
So.2d 1182, 1185 (Fla.2003) (quoting Prosser and Keeton on the
Law of Torts 30, at 164 (W. Page Keeton et al. eds., 5th ed. 1984)).
Second, the claimant must establish that the defendant failed to
conform to that duty. Id. Third, there must be [a] reasonably close
causal connection between the [nonconforming] conduct and the
resulting injury to the claimant. Id. Fourth, the claimant must
demonstrate some actual harm. Id.
Williams v. Davis, 974 So.2d 1052, 1056 (Fla.2007) (alterations in original)
(emphasis supplied).
Am. Optical Corp. v.
Spiewak, 73 So.3d 120, 127
(Fla. 2011)


9
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Consequently, [w]here ... the actor's assistance has put the other in a worse
position than he was in before, either because the actual danger of harm to
the other has been increased by the partial performance, or because the
other, in reliance upon the undertaking, has been induced to forego other
opportunities of obtaining assistance, the actor is not free to discontinue his
services where a reasonable man would not do So.He will then be required
to exercise reasonable care to terminate his services in such a manner that
there is no unreasonable risk of harm to the other, or to continue them until
they can be so terminated. 323 cmt. c (emphasis supplied).
1035, 1051 (Fla. 2009)

Section 323 applies whether the harm to the other or his things results from
the defendant's negligent conduct in the manner of his performance of the
undertaking, or from his failure to exercise reasonable care to complete it or
to protect the other when he discontinues it; however, [t]he actor may
normally abandon his efforts at any time unless, by giving the aid, he has put
the other in a worse position than he was in before the actor attempted to aid
him. 323 cmts. a, c (emphasis supplied).
1035, 1051 (Fla. 2009)
Voluntarily undertaking to do an act that if not accomplished with due care
might increase the risk of harm to others or might result in harm to others
due to their reliance upon the undertaking confers a duty of reasonable care,
because it thereby creates a foreseeable zone of risk.
Hutt, 670 So.2d 64, 67 (Fla.
1996) citing McCain v.
Florida Power Corp., 593
So.2d 500 (Fla.1992);
Kowkabany, 606 So.2d at
720-21
Even where there is no duty to act, the law imposes a general duty that the
actor, if he acts at all, must exercise reasonable care to make his acts safe for
others. Restatement of Torts, Second 547, Comment b (1965). If the
actor does an act, and subsequently realizes or should realize that it has
created an unreasonable risk of causing physical harm to another, he is
under a duty to exercise reasonable care to prevent the risk from taking
effect. Restatement of Torts, Second 321(1) (1965).
White v. City of Waldo, 659
So.2d 707, 710 (Fla. Dist. Ct.
App. 1995) cause dismissed
sub nom. Hindery v. White,
666 So.2d 901 (Fla. 1996)
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The phrase some actual harm does not require a precise technical level or
particular threshold of injury or impairment symptom that a plaintiff must
satisfy to file an action.
Spiewak, 73 So.3d 120, 127
(Fla. 2011)
Moreover, Florida common law does not and has never required an
impairment or a particular manifestation of injury according to some
Spiewak, 73 So.3d 120, 128


10
arbitrarily adopted level before a cause of action accrues. (Fla. 2011)
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Legal precedent and the common law principles clearly demonstrate and
cover that an individual who sustains an *129 injury due to the wrongful
conduct of anotherregardless of the particular level of physical symptoms
or impairmentmay maintain a cause of action against the person or entity
that allegedly inflicted the injury if injury has occurred. See Clark, 107
So.2d at 61112; Hagan, 804 So.2d at 1241. If there is no injury, there is
simply no action; however, if there is proof of injury, there is no
requirement of any particular level of impairment.
Spiewak, 73 So.3d 120, 128-
29 (Fla. 2011)
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We have defined economic loss as damages for inadequate value, costs of
repair and replacement of the defective product, or consequent loss of
profitswithout any claim of personal injury or damage to other property.
Casa Clara, 620 So.2d at 1246 (quoting Note, Economic Loss in Products
Liability Jurisprudence, 66 Colum. L.Rev. 917, 918 (1966)).
Tiara Condo. Ass'n, Inc. v.
Marsh & McLennan
Companies, Inc., 110 So.3d
399, 401 (Fla. 2013)
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Simply put, the economic loss rule is a judicially created doctrine that sets
forth the circumstances under which a tort action is prohibited if the only
damages suffered are economic losses. Indem. Ins. Co. of N. Am. v. Am.
Aviation, Inc., 891 So.2d 532, 536 (Fla.2004).
Marsh & McLennan
399, 401 (Fla. 2013)


11
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Subsequently, in American Aviation, we recognized that despite the general
prohibition against a recovery in tort for economic damages for parties in
privity of contract, we have allowed it in torts committed independently of
the contract breach, such as fraud in the inducement For example, in HTP,
Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238 (Fla.1996), we
stated:
The economic loss rule has not eliminated causes of action based
upon torts independent of the contractual breach even though there
exists a breach of contract action. Where a contract exists, a tort
action will lie for either intentional or negligent acts considered to be
independent from the acts that breached the contract. Fraudulent
inducement is an independent tort in that it requires proof of facts
separate and distinct from the breach of contract.
Marsh & McLennan
399, 402 (Fla. 2013)

Simply stated, [t]he essence of the early holdings discussing the rule is to
prohibit a party from suing in tort for purely economic losses to a product or
object provided to another for consideration, the rationale being that in those
cases contract principles [are] more appropriate than tort principles for
resolving economic loss without an accompanying physical injury or
property damage. Moransais, 744 So.2d at 980 (citing Florida Power,
510 So.2d at 902). Such was the reasoning in East River, Seely, and
ultimately, Florida Power.
Marsh & McLennan
399, 405 (Fla. 2013)
Having reviewed the origin and original purpose of the economic loss rule,
and what has been described as the unprincipled extension of the rule, we
now take this final step and hold that the economic loss rule applies only in
the products liability context. We thus recede from our prior rulings to the
extent that they have applied the economic loss rule to cases other than
products liability.
Marsh & McLennan
399, 407 (Fla. 2013)


12
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Agent, 6
Aiizona, S, 4, S, 6
Aiizona Supieme Couit, 6

Cases
Am. 0ptical Coip. v. Spiewak, 11, 16, 17
Ameiican Aviation, 18
Banfielu v. Auuington, 8
Clay Elec. Coop., Inc. v. }ohnson, 11
East Rivei, 19
Floiiua Powei, 1S, 19
BTP, Ltu. v. Lineas Aeieas Costaiiicenses, 18
Noiansais, 19
Seely, 19
Steinbeigei v. Ncvey ex iel. Cnty. of Naiicopa, S, 4, S, 6
Tiaia Conuo. Ass'n, Inc. v. Naish & NcLennan Companies, Inc., 17,
18, 19, 2u
0nion Paik Nem'l Chapel v. Butt, 8, 1S
Wallace v. Bean, 11, 14
White v. City of Waluo, 1S
Williams v. Bavis, 11
Causal Connection !"" Negligent Peifoimance of an 0nueitaking,
0nueitakei's Boctiine, 11
Claimant, 11
Claims, 8
Contiact-baseu negligence claims !"" Contiact, Claims, 8
Contiact
!"" 0nueitakei's Boctiine, 8, 18, 19

Bamages !"" Economic Loss, 17, 18

Economic Loss, 17, 18
Consequent loss of piofits, 17
Costs of iepaii, 17
Befective piouuct, 17
Inauequate value, 17
Loss of piofits, 17
Piouuct, 17, 19
Puiely economic losses, 19
Replacement, 17
Economic Loss Rule, 18, 2u

Failuie to Exeicise Bue Caie, 4
Failuie to Piocess Loan Nouification, 6
Floiiua
Common law, 11, 16, 17
Floiiua Toit Law, 11
Foieclosuie, 4
Fiauu
Fiauu in the inuucement, 18
Fiauu in Inuucement
Inuuces a boiiowei, 6

uoou Samaiitan Boctiine, S, 6
uiatuitously
!"" 0nueitakei's Boctiine, 4, 8, 9, 11

Baim, 4, S, 6, 8, 9, 11, 14, 1S, 16
Actual Baim !"" Bamages, Negligent Peifoimance of an 0nueitaking,
0nueitakei's Boctiine, Williams v. Bavis, 11, 16
Economic Baim, 6
Baim is Suffeieu !"" Negligent Peifoimance of an 0nueitaking,
0nueitakei's Boctiine, 4, 9, 11
Baimeu, 6
Impaiiment, 16, 17
Nanifestation of injuiy, 16
Physical Baim, 4, 6, 9, 11, 1S
Physical haim to anothei !"" Negligent Peifoimance of an
0nueitaking, 0nueitakei's Boctiine, 1S

Lenuei, 6
Loan Nouification, 4, 6
Application foi Nouification, 4

Negligence
Inuuces a boiiowei, 6
negligence, 6, 8, 11
Negligent, 4, S, 9, 11, 14, 18
Negligent Peifoimance, 4, S, 9, 11, 14


13
negligently, 4, 6
Negligently piocessing loan mouification, 6
Negligent Peifoimance of an 0nueitaking, 4, S, 9, 11, 14
Abanuon effoits, 14
Fiee to uiscontinue, 14
0ppoitunity !"" Loss of oppoitunity, 14
Paitial peifoimance, 14
Put othei in woise position, 14
0nieasonable iisk, 11, 14, 1S
Negligent Peifoimance of an 0nueitaking !"" 0nueitakei's Boctiine, 4,
S, 9, 11, 14

Paities in Piivity, 8, 18
Piivity, 8, 18
Piomising Loan Nouification, 6

Reasonable Caie, 4, S, 6, 8, 9, 11, 14, 1S
Reliance, 4, 6, 9, 11, 14, 1S
Repiesentative, 6
Restatement (Seconu) of Toits, 4, 9, 11, 14
Section S2S !"" 0nueitakei's Boctiine, 11
Resulting Injuiy !"" Negligent Peifoimance of an 0nueitaking,
0nueitakei's Boctiine, Williams v. Bavis, 11
Risk, 4, S, 6, 8, 9, 11, 14, 1S
Risk of Baim, S, 6, 8, 14, 1S

Seivice
!"" 0nueitakei's Boctiine, 8
Shoulu have iecognizeu, 6

Thiiu-Paity
Thiiu paities, 8
Thiiu-Paity !"" Thiiu paity beneficiaiies, Tiust beneficiaiies, 8
Toits
Piossei anu Keeton on the Law of Toits !"" Clay Elec. Coop., Inc. v.
}ohnson, 11
Toit piinciples, 19
Toits committeu inuepenuently of the contiact bieach !"" Economic
Loss, 18

0nueitakei's Boctiine
Nongoveinmental entities, 8
0bligateu to act, 8
0ne who unueitakes to act, 8
0nueitakei, 8, 11
0nuue iisk of haim, 8
voluntaiy unueitaking, 1S

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