Articles Posted in Commercial and Business

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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.)

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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.

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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.’”

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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.

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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.

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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.

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Commercial contracts require many things in order to achieve their maximum potential successful usefulness. One component to this maximization is making sure that you understand exactly what your commercial contract does, and does not, require of you. What are the situations in which your agreement requires a written modification? What are the situations in which you can proceed without a written modification? Being wrong about the answers to these questions can cost you thousands or even millions of dollars. In other words, it is essential to be right, which is one of many reasons why it is imperative to have knowledgeable Florida business counsel representing your interests.

As an example, consider this case from here in Miami-Dade County. A Miami painting business signed on to serve as a subcontractor that would provide painting and waterproofing services on a public building project in the Overtown neighborhood of Miami. Problems emerged when the building owner, Miami-Dade County, decided that it wanted the waterproofing work done in a particular manner not previously contemplated by the contractor or subcontractor. Meeting this added demand was more time-intensive and, therefore, more costly.

The subcontractor sent the contractor a change order for $95,100 for the extra work that was required. The contractor sent it to the county, but the county rejected it. The project architect expressly refused to approve the change order, contending that the more time-intensive work demand was “within the scope of the construction documents,” which would mean that the county was not required to pay the demanded extra sum.

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Some breach of contract cases turn on highly complex issues of the law or of the industry involved. Their resolutions can involve deep dives into the law and into an understanding of that industry. Others, while no less important, can come down to much more discreet issues. In the case of one recent South Florida breach of contract case, an unpaid seller lost its opportunity for summary judgment in its favor because it didn’t have unassailable proof that its buyer received a copy of the seller’s “terms and conditions” document. The absence of uncontroverted evidence of receipt of that single document made an enormous difference in the outcome of the motion for summary judgment. It is a reminder of the importance of paperwork, of documentation of delivery of paperwork, and of skilled South Florida commercial litigation counsel in any commercial contract dispute.

The seller in this case was a South Florida manufacturer of pyro-electric components. The buyer was the manufacturer of a patented device used for detecting refrigerant gas leaks. The seller provided the buyer with a quote for 10,000 detector components to be used in the buyer’s devices. As is not uncommon, the quote document contained language that stated that all “items are subject to our Standard Terms and Conditions, a copy of which is attached.” The seller’s terms and conditions stated that the buyer had the right to inspect the components upon delivery. They also stated that if the buyer did not inspect and give the seller written notice of “any alleged defect or nonconformity” within 30 days, then that would make the acceptance irrevocable.

The buyer sent out a purchase order and the seller shipped 6,000 detectors, along with an invoice for $87,780, to the buyer. The buyer didn’t pay, which led the seller to pursue its breach of contract claim. The seller also asked the court to award it summary judgment. It argued that it shipped the components and the buyer neither rejected the delivery within 30 days nor paid, which created an “open and shut” case of breach of contract, based upon the terms and conditions.

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There are a great many steps that lead to protecting your business interests and achieving a successful result if you find yourself in a breach-of-contract litigation action. If you are the party whose business interests were damaged by the breach, then you will likely be the plaintiff in that litigation. One of the keys to success involves making sure that the required complaint or pleading documents you file in court make it “easy” for the court to see why you are correct and why you should win the case. This means establishing a clear and easy-to-deduce theory of liability against each of the parties you’ve sued. To make sure your litigation action is as strong and persuasive as possible, be sure you’re working an experienced South Florida commercial litigation attorney.

A recent case from southwest Florida was one where this issue of pleadings and theories of liability took center-stage. The origin of the case traced to a real estate sales transaction. The purchaser attempted to assign its rights and obligations under the agreement to a different corporation shortly before the transaction’s closing date. The assignee closed on the subject properties. The assignee did not, however, pay the real estate broker that brokered the transaction. The broker sued to recover the commissions it alleged that it was owed under a pair of sales contracts.

Of course, in many business transaction litigation matters, including this one, there may be different defendants. And, if there are different defendants, there may be different theories of liability against each of those defendants. The case against the purchaser was a straightforward claim of breach of contract based upon the purchaser’s failure to pay the commission. The case against the assignee was murkier, as the assignee had signed neither sales agreement and, in fact, there was no contract directly between the broker and the assignee at all. The broker’s case against the assignee did not state that the assignee was an assignee or a third-party beneficiary of the contract.

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When you initiate a commercial litigation action, or when you defend such a case, you’ll have to make several essential decisions, like choosing whether to settle or to continue to litigate. As part of that calculation, you’ll need to factor any settlement offers you receive and whether they may leave you on the hook for a portion of your opponent’s attorneys’ fees. Making that determination involves knowing how much your case is “worth” and knowing whether or not the settlement offer you’ve received meets all of the statute’s requirements for a qualifying offer. In other words, not only does success mean knowing the details of your case, but also the details of the law, which is why your case needs an experienced South Florida commercial litigation attorney.

One recent case from South Florida was something that focused prominently on this issue of settlement offers and attorneys’ fees. The case arose over a dispute about fill material. A Miami construction company, performing a contract it signed with the state Department of Transportation, temporarily stored fill material on land that a Key West real estate LLC owned. The LLC and the construction company encountered a dispute about who owned the fill material, which led the construction company to sue.

The construction company later proposed a settlement in which the construction company would drop the lawsuit in exchange for a payment of $50,000. The defendants declined and the case went to trial. At the conclusion, the construction company won on its claim of conversion and received a damages award of $86,000.