In a recent Fifth District Court of Appeal case, a Central Florida staffing company won a renewed opportunity to seek an award of damages as a result of its opponent’s assertion of baseless defenses. The decision clarified that, under the revised law, even if the defendant offered one potentially meritorious defense, the plaintiff was still allowed to seek delay damages for all of the other defenses advanced that were completely devoid of merit.
In this case, the underlying lawsuit was a breach of contract case involving an agreement for the hiring of temporary employees. MS Liquidators of Arizona, LLC and Infiniti Employment Solutions, Inc. agreed that Infiniti would interview, screen, and hire employees to work in MS stores and warehouses. Infiniti was to send MS an invoice after each employee it placed on the job. After nine invoices went unpaid, Infiniti launched a breach of contract lawsuit to collect the money MS owed it.
MS fought back by claiming affirmatives defenses related to the wording of the contract. It claimed that the contract was unenforceable because the document lacked essential terms and that there was no consideration for the agreement. It advanced other affirmative defenses as well.
At some later point, Infiniti asked the court to award it delay damages. It argued that the consideration and essential terms defenses “were both factually and legally unsupportable.” In Florida, you can potentially recover delay damages from your opponent and their attorneys if they “interpose frivolous defenses or pursue litigation for the purpose of unreasonable delay.”
On the morning of the trial’s start date, MS settled for the full amount of the nine invoices. Infiniti continued pursuing its delay damages claim, but the trial court reluctantly denied the request. In an oral ruling highly critical of MS and its attorneys, the judge concluded that exactly one of MS’ defenses was potentially not completely devoid of merit, but, since MS had one arguably non-frivolous defense, that meant that he could not award delay damages to Infiniti.
Infiniti appealed and won. The appeals court determined that, based upon the trial judge’s comments, he denied the delay damages request based upon an outdated version of the delay damages statute, Section 57.105. In the old version, the law only permitted an award of delay damages if the entire defense had “a complete absence of a justiciable issue of either law or fact.” As amended, though, the law permits an award whenever the losing side “knew or should have known that any claim or defense asserted ‘was not supported by material facts,’ or ‘would not be supported by the application of then existing law to those material facts.’” Based upon this standard created by the reformed statute, all but one of MS’ defenses potentially triggered an award, since only the essential terms defense had any merit.
Due to the error, Infiniti was entitled to a reversal and a hearing on delay damages. At this hearing, Infiniti would have the opportunity to prove the amount of damages, beyond just attorney’s fees, it incurred as a result of MS’ baseless defenses. The trial court had the option of imposing those damages against MS and against MS’ owner as well.
When you make the decision to bring a breach of contract lawsuit, your case may involve proving your claim at trial. Depending on your situation, however, there may be much more involved, such as seeking recovery for delay damages. Your commercial dispute, as with any legal dispute, can contain many twists and turns, meaning that you need experienced counsel on your side. The diligent Florida commercial litigation attorneys at Stok Folk + Kon have been helping commercial clients with their litigation issues for many years and are ready to help you as well.
Contact us online or by calling (305) 935-4440 to schedule your consultation.
More blog posts:
Court Awards South Florida Seller Liquidated Damages in Property Purchase Contract Dispute, Florida Business Lawyers Blog, Nov. 15, 2016
Federal Court in Florida Favors Subcontractor in Dispute Over Assessment of Delay Damages, Florida Business Lawyers Blog, April 30, 2016
Photo credit: Prince William County Government