Florida Business Lawyers Blog

When you are negotiating your commercial lease, you may be focused on things that feel the most immediate. Matters like the lease term, rental rate and CAM charges/fees all factor into your decision-making process. However, the spectrum of possible benefits or added responsibilities that your commercial lease can give you, or impose on you, can go much, much further. Even considerations like determining whether or not a tenant is liable to a landlord’s insurer for a fire in the tenant’s space may come down to exactly how the lease was written. In other words, every aspect and each detail potentially matters, so be sure your interests are protected by a knowledgeable South Florida commercial leasing attorney.

One recent example of this concept played out in state court in Miami. A restaurant chain signed a 190-month lease for a space in Miami Beach in 2010. Almost five years into the lease, a fire broke out in the restaurant’s kitchen. The insurance company that insured the property eventually paid the landlord more than $2.1 million. Subsequently, however, the insurance company took action against the tenant, filing a subrogation claim and seeking to recover damages from the tenant.

The tenant defended against the insurer’s subrogation action by asking the judge to dismiss the case. The tenant’s argument was that, based upon the language in the lease agreement it signed with the landlord, it was an implied co-insured with the landlord. (If the tenant was an implied co-insured, then the insurer couldn’t pursue subrogation; if it wasn’t, then the insurer could.)

When you are involved in a commercial litigation case, there are several possible negative outcomes that can occur. Obviously, there is the possibility that the other side will win. Sometimes, though, even in a case that eventually ends with a successful final result for your side, the mere process of going through litigation against a particular opponent has the potential to be injurious to your business interests. For example, the pre-trial process can possibly leave you vulnerable to invasive discovery requests. When it comes to not only getting the final outcome you deserve, but also getting protection from improper disclosure demands, you need a skilled South Florida commercial litigation attorney on your side.

A Plantation-based software development company found itself in exactly that kind of potential predicament recently. It had sued an Arizona gaming company in Broward County for breach of contract after, allegedly, it had rendered its services and the gaming company had failed to pay for those services.

In reaction to the filing, the gaming company sought quite a bit of the software company’s financial information through discovery. The types of information the gaming company sought included the software company’s “profit margin, estimates, projections, cost analysis or formula to determine profit for agreement.” The gaming company also asked the software company to hand over all documents related to those financial topics. The gaming company claimed that the disclosures were necessary as part of its pursuit of a counterclaim against the software company, alleging that the software company understaffed the gaming company’s project.

Protecting your business interests can take many forms. It may involve carefully negotiating a contract, or ensuring that the agreement that is drafted matches the results of the contract negotiations. Ideally, the contract you end up with will be flawless. Even if it isn’t, though, the flaws that may exist will not necessarily result in the invalidation of sweeping portions of the contract. As always, a knowledgeable South Florida commercial litigation attorney can give you the advice you need about your specific circumstances.

A case from the “Space Coast” provides an example. The underlying construction job was a residential condominium project in Brevard County that involved several buildings. After the construction was completed, the condo association sued the general contractor for alleged construction defects. The general contractor, asserting that the defects were really the fault of several subcontractors, filed a series of lawsuits against those subcontractors for contractual and common law indemnification.

Each of the agreements between the general contractor and the subcontractors contained the same indemnification provision. That indemnification provision was the key to the subcontractors’ defenses, as they argued that it was legally void and unenforceable. Specifically, the subcontractors argued that the provision didn’t comply with Section 725.06 of the Florida Statutes, which requires that all indemnification provisions in contracts for the “construction, alteration, repair, or demolition” of buildings must contain ‘a monetary limitation on the extent of the indemnification that bears a reasonable commercial relationship to the contract.’”

If your commercial contract eventually results in litigation, there are several things that are worth knowing, or at least being familiar with. One of these is the parol evidence rule. The parol evidence rule says that, when a legal dispute involves a contractual agreement, the court should resolve the case based solely upon the wording contained in the contract document itself. This rule can be very important in getting certain piece of evidence excluded. There are, however, some scenarios where the rule doesn’t apply and can’t be cited as the basis for keeping outside (or “parol”) evidence out of the record.

If the underlying agreement is unclear or ambiguous, then the rule is not applied and all evidence is admissible. The same is true if the contract document is shown not to be a “complete and accurate integration of the” agreement. Additionally, outside evidence is allowed if the party submitting it intends to use that proof to show the existence of fraud, accident or mistake. What you should take away from all of this is that there are many tools potentially available to strengthen your commercial contract litigation case, including the parol evidence rule, and the assistance of an experienced Florida business attorney can be invaluable in utilizing these tools to your maximum advantage.

As an example, consider this case that arose from work done on a major outlet shopping mall in the Tampa area. The electrical subcontractor on the job, which was responsible for light fixtures at the mall, obtained a price quote from a Miami-Dade supplier, which the subcontractor accepted. As the work proceeded, the subcontractor made nine change orders to the original purchase order, which made both qualitative and quantitative alterations to the initial terms.

Recently a dispute over a personal guaranty on a loan went before the Third District Court of Appeal. That the case made it all the way to the appeals court was not surprising, as there were tens of millions of dollars on the line. As with so many commercial litigation matters, the outcome came down to the details of the drafting of the agreement. Given how much every detail can matter in these transactions, one thing to learn from this case is that it is extremely important to be sure you have skilled South Florida commercial litigation counsel on your side.

The transaction that set off the subsequent chain of events, including litigation, was a 2005 agreement for financing. Several entities, of which M.R. was a principal, reached an agreement with a bank for a revolving mortgage note and construction loan. The principal amount was $41 million. The entities intended to develop waterfront condominium homes in the Tampa area. M.R. personally guaranteed the loan.

Unfortunately for M.R. and his entities, the recession and the real estate market crash intervened. Most of the condo purchasers defaulted. By May 2008, the bank declared the loan in default due to non-payment. The bank moved to foreclose, and a $38.9 million judgment of foreclosure was entered. The obligation changed hands a few times and eventually a Tampa-area LLC emerged as the assignee.

There are many things that may represent hurdles along the path of your lawsuit. While problems with your entity’s standing with the state’s Division of Corporations may represent a bump along your path, it does not have to be a permanent roadblock. With the help of skilled South Florida business counsel, these problems can be addressed and corrected, and you can continue your pursuit of your case in court.

There are many reasons why an entity might not be in good standing with the Division of Corporations. Administrative dissolution can occur for a variety of reasons, with some being as procedural as a failure to file an annual report. One reason why this might happen is if the entity is ceasing activity and winding down.

A case that originated in the Tampa area was an example. A fence installation business sued another business for civil theft, conversion and replevin. The defendant filed a counterclaim against the plaintiff.