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january-calendar-600x400In an issue without prior precedent in the Florida courts, the 2d District Court of Appeal addressed an important question regarding the amount of time a party has to challenge a fraudulent transfer. In the recently decided case, the court ruled that a creditor waited too long because the period for filing claims started when the creditor learned of the existence of the allegedly fraudulent transfer, not when it discovered that the transfer was a fraudulent one.

The origin of the business relationship between a St. Petersburg-based landlord, F/R 550, LLC and F/R 3329, LLC, and its tenant, National Auto Service Centers, Inc., was the execution of two 30-year leases in 2005. National, which was in the auto repair business, ran two of its repair shops at a pair of properties owned by the F/R companies. Two years later, National sold off some of its locations, including both of the shops located in the F/R-owned properties. The buyers executed promissory notes to National, which it subsequently assigned to its parent company. By late 2008, nobody was making rent payments to F/R. The landlord sued and obtained a $2.1 million judgment.

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home-interior-designA Bal Harbour-based property company received new life in its breach of contract battle with a Miami interior design company. The 3d District Court of Appeal ruled that the trial court in the case should not have refused the property company’s request to modify its court filing answering the designer’s complaint, because the property company’s proposed amendment offered no risk of prejudicing the designer, abusing the legal process, or being futile.

The litigation occurred after RV-7 Property, Inc. hired Stefani De La O, Inc. to provide interior design services. A dispute arose and the designer sued, accusing the property company of failing to pay for services rendered. RV-7 acknowledged the contract at first but argued that the designer was the one who failed to perform.

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Screen Shot 2016-03-10 at 5.58.58 PMIf you find yourself needing to utilize the court system in order to sort out a dispute between yourself and another of your fellow members of a limited liability company, it is important to understand what you’ll need to win your case. In a dispute among members of a sun visor LLC, one member’s lawsuit ultimately failed when the Fifth District Court of Appeal decided that he did not have enough of the correct type of evidence to succeed. The member’s case rested largely upon his own affidavit, and that affidavit did not include required information indicating how the member came to know the things about which he alleged to have “personal knowledge.”

The case emerged in the wake of a dispute between members of a limited liability company. The company sold Vizers, a variety of sun visor product that was brightly colored and floated in water. Stephen Johns owned 50% of the LLC, Kirk Dannels owned 30%, and a third member owned 20%. After the dispute between Dannels and Johns flared, Dannels sued on behalf of himself and the LLC. Dannels alternately accused Johns of orchestrating the sale of LLC assets without consulting the other two owners and “purport[ing] to sell the assets.” Dannels also alleged that he demanded an accounting (access to certain of the LLC’s books and records), but Johns did not provide that accounting. Additionally, Dannels alleged that he was wrongfully kicked out of the LLC.

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Property owners in Florida have a number of statutory options to accelerate the removal of mechanics liens on their property. Among the procedures that can be followed are: (1) record a notice of contest of the lien; (2) provide lienors with 60 days notice to institute foreclosure proceeding; or (3) file a 20 day summons for an order to show cause, which shortens the time in which lienors can foreclosure on their lien to 20 days. Alternatively, a property owner can secure a bond, which transfers the lien from the property to a security, normally a cash or surety bond, removing the cloud of the lien from the property’s title.

In the past, it was uncommon for a property owner to shorten the time period in which a lienor could foreclosure while simultaneously bonding off the lien. Once the lien was transferred to a bond, there was less external pressure on an owner from a purchaser or a mortgagee and the owner could simply allow the transferred lien to lay dormant until it expired after a year. However, a recent ruling by the Second District Court of Appeal in Georgia Hiller v. Phoenix Associates of South Florida, 189 So. 3d 272 (Fla. 2d DCA 2016) has created a potential new opening for property owners to accelerate the removal of unknowledgeable lienors’ lien rights.

In Hiller, a homeowner retained a contractor to perform maintenance work on her home. The homeowner then allegedly failed to pay the contractor pursuant to their oral agreement. The contractor elected to record a lien for the amount due under the contract against the property and timely commenced an action against the homeowner for breach of contract, unjust enrichment, and to foreclose on the lien. The homeowner responded by posting a transfer bond pursuant to Fla. Stat. § 713.24 to remove the encumbrance from her property. In addition, the homeowner recorded a notice of contest under Fla. Stat. § 713.22(2), shortening the time frame in which the contractor could commence an action against the transfer bond to 60 days.

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new-home-construction-1The 11th Circuit Court of Appeals issued another ruling in the long-running case of the bankruptcy of a South Florida-based homebuilder whose fortunes collapsed along with the housing market in the 2000s. The appeals court affirmed a ruling of the bankruptcy court that gave the debts held by two creditors (who had purchased the claims of landowners) priority status, based upon the terms contained in the property development contracts the homebuilder had created several years earlier.

The debtor in the case was a homebuilder named TOUSA Homes, Inc. The collapse of the housing market sent TOUSA into financial failure, and it filed for Chapter 11 bankruptcy. Ultimately, the bankruptcy court approved a confirmation plan that placed the debts TOUSA owed into different categories. Creditors holding debts classified as “senior debt” would stand to recover much greater percentages of the debts owed to them than creditors holding other categories of debt.

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Florida_toll_roadAnyone who has driven the Sawgrass Expressway toll road through Broward and Miami-Dade Counties is likely familiar with the road’s two toll plazas, the southern one in Sunrise and another, the Deerfield Toll Plaza, to the north. The northernmost of these two toll areas emerged as the subject of a commercial dispute case recently, with a contractor and a subcontractor litigating which one actually installed a toll gantry and was therefore liable to the state for paying sales and use taxes. The 4th District Court of Appeal reversed a summary judgment in favor of the subcontractor, ruling that relevant factual issues remained in dispute, making summary judgment inappropriate at this point in the case.

The source of the conflict dated back to 2007, when Lambert Brothers, Inc., a contractor, reached an agreement with Community Asphalt Corporation to provide certain services related to the construction of the Deerfield Toll Plaza. Part of those services included constructing two steel gantries at the plaza. Mid-Park, Inc. bid on, and secured, the work for manufacturing and delivering the gantries. The contractor and the subcontractor signed an agreement that, according to Lambert, also included Mid-Park’s installing the gantries and paying all the taxes involved in the job.

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One of the key stages in any commercial litigation occurs when one side asks the trial court to award summary judgment. A successful motion means securing a victory without the expense and stress of a trial. Unsuccessfully defending against such a motion means the exact opposite — losing without ever even making it to trial. One key in defending against these motions is showing that there does exist at least some sort of factual dispute that requires a trial to resolve. One party to a commercial contract succeeded in persuading the 3d District Court of Appeal to throw out a summary judgment against it because it had proof of precisely such a factual dispute.

The source of this litigation was payment upon a contract. Specifically, American Construction and Repairs entered into an oral contract with JVN Holdings, Inc., and two individuals, Mark Weider and Natalie Weider, for construction services on two residential properties. The agreement called for American to receive an hourly rate for labor and receive reimbursement for all materials and third-party labor. American allegedly didn’t get paid and, as a result, sued for breach of contract.

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road_constructionWhen you enter into a commercial contract, you may have some very specific expectations, including an expectation that the party with which you’ve contracted will be the one directly responsible for performing the work covered by the agreement. If you have such an expectation, your agreement may have a clause prohibiting any assignment of interests under the contract. But how far does that anti-assignment clause go? According to a recent federal case ruled upon by the U.S. District Court for the Southern District of Florida, such clauses only apply during the contract’s performance period, and once all sides have performed under the contract, parties are free to assign legal rights, such as the right to recover damages for a breach of the contract, to others.

This recent South Florida case featured two entities involved in a roadway improvement project in Broward County. The county hired Edwards & Kelcey to design the project, including the project’s drainage. Jacobs Engineering Group, Inc. bought Edwards and took over all of its business, including the Broward road project. The county contracted with H&J Contracting, Inc. to perform the construction work in accordance with Jacobs’ designs. According to H&J, there were certain flaws within Jacobs’ drainage designs, and these problems caused both H&J and the county to incur monetary damages. H&J sued the county and settled that case out of court. As part of that deal, the county assigned H&J all its rights to recovery from Jacobs.

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CourtroomWhen a business arrangement deteriorates and the matter ends up in litigation, there are several considerations you must take into account in order to maximize your chances of a favorable outcome. One of those is controlling, to the extent possible under the law, where the litigation will take place and, when necessary, challenging efforts to be hauled into court in a state where you have no meaningful contact. A borrower based in Virginia found itself facing that scenario when it was sued for a breach of contract in Florida. The borrower defeated the lawsuit by persuading the Fourth District Court of Appeal that its contract did not give it reasonable notice that a breach could lead to its being hauled into court in Florida.

The underlying dispute started with a $300,000 commercial loan that Arnold S. Goldin, Inc. made to Cornerstone Investment Funding LLC. Goldin, which was based in Palm Beach County, signed the loan agreement in Florida. Virginia-based Cornerstone signed the agreement in that state.

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handshakeA business emerged successful in the 5th District Court of Appeal in its battle regarding the payment of certain money to one of its co-founders. While the co-founder succeeded in proving the existence of a valid oral contract, his failure to prove that all of the conditions required to trigger the company’s obligation to pay had, in fact, occurred meant that the co-founder lacked proof of a breach.

New Dirt, Inc. was a Central Florida company created in 2010 by Michael Harrison and David Cattell. Eventually, a dispute erupted between the company and Harrison that led to litigation. New Dirt accused Harrison of theft and breach of fiduciary duty. Harrison countersued, accusing the company of not paying him his salary as well as not paying him back for loans he made to the company.

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