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A South Florida Investment Company’s Acceleration Clause Argument Helps it Snuff Out a Defendant’s Judgment on the Pleadings

Back in 2016, Florida voters voted overwhelmingly to legalize medical marijuana in the Sunshine State. After that change took effect, an entire new industry was born. With it came new commercial opportunities, new businesses and new joint ventures.

Joint ventures sometimes may not unfold as envisioned, especially in new industries. With that will inevitably come failed joint ventures and, sometimes, commercial litigation arising out of those failed ventures. If you find yourself entangled in a commercial lawsuit over a joint venture gone wrong, whether it does or does not involve marijuana, you need the power of an experienced South Florida commercial litigation attorney on your side.

A Palm Beach County-based investments company’s commercial litigation is less a lesson about the medical marijuana industry and more one about the benefits of the right tactics in commercial litigation. The Palm Beach County company was one entity that entered into a marijuana-related joint venture. The participating entities entered into a contract and a promissory note was signed. The note’s terms contained a provision that allowed the investments company to call the note if a default occurred.

After multiple required payments allegedly were not made, the investments entity sued. One of the defendants argued that the investments firm had a major problem, though: the note wasn’t due. The plaintiff originally filed suit in October 2016 and, according to the defendant, the note wasn’t due until October 2018. The trial court sided with the defendant and granted a judgment on the pleadings in favor of the defendant.

The plaintiff’s alternate argument about an acceleration clause was key

That ruling later was overturned on appeal. Why did the investments company succeed in reviving its case against this defendant, even if the note was not due until two years after the filing date? The reason lay in the fact that the investments company asserted multiple bases for its claims against the defendant. On the one hand, it sought relief based on an argument that the note had matured and the defendant liable. On the other hand, the investments company also made an argument that the defendant had breached the contract between the parties and that the defendant’s breach had triggered an acceleration clause in the note. So, even if the evidence showed that the note had not otherwise matured, the plaintiff could still potentially succeed based upon its argument about the default-triggered acceleration.

The latter of these arguments, according to the appeals court, was not disposed of “in its entirety” by the trial judge, which meant that the defendant wasn’t entitled to a judgment on the pleadings.

While the investments company was aided by its strong tactical maneuvers, the defendant was beset by maneuvers not taken. The defendant tried to argue in the appeals court that that no breach sufficient to trigger the acceleration clause in the note had ever occurred. Unfortunately for the defendant, that argument was never presented to the trial judge and there was no evidence that the trial judge considered this argument in making the underlying ruling on the defendant’s motion for judgment on the pleadings. As a result of that failure to present the argument to the trial court, it could not be a winning argument in the appeals court.

Whenever you find yourself in a breach of contract or other commercial litigation situation, it pays to make sure you are taking the proper steps from beginning to end. The knowledgeable South Florida commercial litigation attorneys at Stok Kon + Braverman are here to help with that. Our attorneys have been providing our clients with reliable and effective representation for many years, and are ready to get to work for you. Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.

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