Articles Posted in Commercial and Business

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Many times, winning your commercial litigation action may come down to the factual evidence you have. In other situations, achieving a fully successful result also requires a detailed knowledge of the rules of court procedure, as one case originally from Palm Beach County recently demonstrated. The rule that the plaintiff cited in its court papers made all of the difference in allowing that party to sue all of the defendants it desired to include in its contract dispute case. This example demonstrates how the knowledge and skill of experienced Florida contract litigation counsel can help you achieve favorable results.

The origins of the case began with a commercial contract between a precious metals and rare coins company and a marketing entity. The marketing entity agreed to promote the coin company’s publications for 15 years. In exchange, the coin company agreed to pay the marketing firm a percentage of net revenues.

Eventually, the relationship soured. The coin company sued the marketing firm in federal court, alleging violations of federal intellectual property law, as well as asserting state law claims. The federal court decided to dismiss the state law claims from the federal action, and those went forward in a separate state law case.

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There can be a lot of situations in which a property owner’s taking direct action against a lessee can have extremely serious and negative consequences for the lessor. There are many cases in which lessors have encountered significant legal trouble because they engaged in “self-help.” Generally, lessors that run into problems with regard to self-help are ones that undertake to evict a lessee without going through the proper legal procedures. In other situations, though, a property owner, as long as it is not functionally evicting its tenant without proper legal process, can take some steps to protect its business interests. A recent case originating in Palm Beach County concerns a property owner whose actions were legal and did not, contrary to its lessee’s arguments, violate Florida’s unlawful detainer law. To make sure that the actions you are taking to enforce your rights under a lease are legally permissible, make sure that you are consulting with knowledgeable Florida commercial landlord-tenant lawyers.

The contract that spawned the lawsuit was an agreement between a Boca Raton condominium association and a provider of commercial laundry equipment. The provider agreed to place its commercial washers and dryers in each of the association’s 26 buildings. The lease agreement expired in October 2014, but the arrangement continued after that on a month-to-month basis.

After complaints by residents, the association selected a new laundry machine provider in 2016. By late September, the new provider’s machines were at the site and ready for installation. With the association’s permission, the new provider disconnected and moved each of the old provider’s machines. The machines were not damaged and remained in an unlocked area accessible to the provider. The association sent a letter demanding that the provider remove the machines within 15 days or face an eviction lawsuit. The provider timely removed its equipment.

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Sometimes, in Florida. when landlords and tenants become embroiled in a dispute and in subsequent litigation, it becomes necessary for the court to handle and hold the rent payments that are owed under the terms of the commercial lease. Once those payments are made into the court’s registry, who has the right to obtain those funds if your case involves multiple parties like a landlord, a tenant, and a subtenant? For answers to questions like these and effective representation in your commercial leasing litigation, retain the services of an experienced Florida commercial landlord-tenant attorney.

One recent case from South Florida involved this mix of a landlord, a tenant, a subtenant, and the court registry. The Broward County building owner had leased a space to a pilates business. That tenant eventually subleased part of the space to a plastic surgery and cosmetic medicine office. For the subtenant, the arrangement made good business sense, since the subtenant counted on the traffic from the pilates studio to funnel some additional business to its plastic surgery and cosmetic medicine business. Additionally, the sublease agreement called for the tenant to provide marketing services for the subtenant’s office.

Before the lease ended, though, the tenant left the premises. The subtenant then stopped paying rent. It contended that its business required the traffic provided by the pilates business and that it was no longer getting the benefit of the marketing services promised to it in the sublease agreement. That spawned litigation, with the tenant seeking an order of eviction and money damages for breach of the lease, while the subtenant sought money damages for unjust enrichment. Once the case entered litigation, the subtenant paid its rent but paid it into the court registry, as required by Florida law.

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In any contract, including commercial leases and their associated personal guarantees, the choice of language is often extremely important. Sometimes, even seemingly small things make huge differences. That’s why it is so important to make sure that you carefully negotiate each term and then diligently defend the rights and benefits that you negotiated in your agreement. To ensure that you have the resources you need to make this happen, make certain you have experienced Florida commercial litigation attorneys on your side.

One example of a case in which the agreement’s precise wording made all of the difference was a landlord-tenant dispute at one of Orlando’s popular outlet malls. The tenant was a Caribbean restaurant, and the lease agreement called for the restaurant’s founder to sign a personal guaranty. Personal guarantees have become more commonly included terms within commercial leases ever since the economic downturn of the previous decade.

In the restaurant’s case, the guaranty provision in the lease said that, if the tenant defaulted, the guarantor would become responsible for paying the sums that remained due and owing. One key aspect of the case was the choice of wording used in the guaranty clause. The guaranty provision said that the guarantor “shall on demand of Landlord fully and promptly pay all Rental and other sums, costs, and charges to be paid by Tenant, … and in addition shall, on Landlord’s demand, pay to Landlord any and all sums due to Landlord under or pursuant to the terms of the Lease.”

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Whenever you sign any type of contract, it is important to ensure that you fully understand exactly what you are bargaining to get, especially when you are contracting for something that involves an element of financial risk, such as an investor who contracts to invest in a business venture. As an entity offering such investment opportunities, it is important to ensure that the contractual agreements you create are written in such a way that they will survive a legal challenge from a disgruntled investor. Both of these perspectives highlight the importance of working with skilled Florida business counsel when dealing with investments.

An example of a contract that was able to survive an investor’s court challenge was one used by a South Florida LLC that, in 2013, extended an offer seeking “accredited” investors to invest in a business venture. The business venture was a purchase of a commercial building in downtown Miami and the conversion of that building into office and retail space. In order to participate, the LLC required potential investors to sign a subscription agreement.

In August 2013, Keren signed a subscription agreement. The agreement required her to pay 10% at execution, 20% within 30 days, and the remaining 70% 30 days before the closing date of the purchase of the downtown building. The LLC made the deal for the building and notified investors that the closing date was Jan. 15, 2014. The LLC informed Keren that she still owed $2.47 million. The investor could not make the payment and asked for more time. The LLC offered to connect her with another investor who would advance her the money, but she refused the loan.

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When you are involved in a commercial dispute, there may be several hurdles you have to face as the party bringing the lawsuit. One hurdle that some commercial litigation plaintiffs may face is an argument that the case cannot be tried in the location where you’ve filed your lawsuit. Whether your opponent’s challenge is one of jurisdiction or forum, losing this challenge could force you into trying your case in someplace less favorable and more inconvenient for your business. You likely had important strategic and business reasons why you picked the Florida courts, and you should make sure that you have experienced and aggressive Florida commercial litigation attorneys by your side to protect your lawsuit.

An example of a plaintiff that was able to successfully preserve its Florida case was a dispute between a dentist and his clinics’ management services company. An was a dentist with four dental practice offices in north Texas. In 2013, the dentist entered into a territory agreement with a South Florida-based LLC, merging his practices into the LLC’s system. The arrangement called for the LLC to provide administrative and practice management-related services. In exchange, the LLC received a monthly service fee.

In 2016, the dentist cut off the relationship between his clinics and the LLC. That led the LLC to sue the dentist for terminating the parties’ contract without cause. In response to the LLC’s suing in Florida, the dentist asked the Broward County judge to dismiss the case. The dentist’s argument was that the contract he signed with the LLC did not require him or his clinics to do anything in Florida, and, as a dentist located in Texas, he and the clinics did not have enough contact with Florida to give the Florida courts jurisdiction to resolve the dispute.

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Whether you are a commercial tenant or landlord, the chances are that you have certain things that your business offers that provide you with a degree of leverage in your commercial lease negotiations. With that leverage, you may be able to negotiate certain advantageous lease terms. The key to getting the most, then, from your commercial lease is not simply negotiating the most favorable lease terms possible, but then also litigating when necessary to enforce those provisions. An experienced Florida landlord-tenant attorney can help you in accomplishing these necessary goals.

One federal case recently resolved by the 11th Circuit Court of Appeals was an example of needing to do both. A major supermarket chain had negotiated certain exclusivity provisions in many of its lease agreements. These terms barred other tenants within the shopping center (and within a certain proximity) from selling groceries.

At some point, the supermarket discovered that there were stores selling groceries that were in violation of the lease terms. To enforce its rights, the supermarket sued. However, instead of suing the landlords, the supermarket sued the other stores — two “dollar” store chains and one discount overstock retailer – for the violations. The supermarket’s argument in its lawsuit was that the exclusivity provisions in its leases were restrictive covenants that the other tenants violated when they moved in and started selling groceries.

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In science, there is something called the “butterfly effect.” This is a concept that Google defines as a “phenomenon whereby a minute localized change in a complex system can have large effects elsewhere.” An example is a 1972 article in a science journal entitled, “Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?” Just as is true in science, there are situations in legal matters in which sometimes seemingly small changes or decisions can have massive impacts down the road. Thus, when you are faced with a contract dispute, it is important to have skilled Florida contract litigation counsel, who can advise you about all of your options and the possible ramifications of each decision.

A recent case originating from Palm Beach highlights this concept. The transaction that led to the litigation was a sale of a commercial property, specifically, a cemetery in Boca Raton. The buyer agreed to pay $6.125 million. After the sale, however, the sellers learned that an attorney had been working both sides of the deal and had received a $100,000 kickback from the buyer after the transaction closed.

This discovery led the seller to sue both the buyer and the lawyer. The seller alleged that the lawyer’s misconduct led it to sell the property for less than fair market value. The lawsuit stated claims for breach of contract, intentional misrepresentation, and conspiring to breach a fiduciary duty. The lawyer settled, but the case went to a trial against the buyer. The jury ruled for the seller and awarded it $4.2 million, with $2.2 million of that being punitive damages. The other $2 million was “damages relating to attorneys’ fees and costs incurred in connection with the transaction.”

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Whenever you are negotiating a commercial contract, it is important to make sure that you are focused on all of the details of the agreement, both great and small. It is important because a contract provision that might seem merely perfunctory now may, at some later point, make the difference between a successful outcome and an unsuccessful one in a commercial litigation matter. An experienced Florida business attorney can help as you negotiate your contract and, later, as you litigate your dispute.

One contract that ended in litigation recently was a “Custody Services Agreement” between a Swiss trust and a U.S. bank headquartered in Ohio. That 2011 contract called for the bank to take custody of $428 million in Luxor bonds that belonged to the trust. The bank would hold the bonds for safekeeping and provide certain additional services. In exchange, the trust paid the bank a fee of $90,000 annually.

Two years later, in the summer of 2013, the bank sent the bonds to a third party:  specifically, the original issuer of the bonds. The trust sued the bank for breach of contract in December 2015. The bank, the trust argued, breached the agreement in two ways:  it did not keep custody of the bonds as it had promised to do, and it did not properly safeguard the bonds.

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If you encounter problems related to a commercial arrangement into which you entered, there are several things you need to keep in mind. One of these is that the law gives you a limited time to act. If you wait too long to sue, you may lose your right to seek recovery entirely. That is but one reason among many why it pays to retain skilled Florida commercial litigation attorneys for your case. Experienced counsel can help you be sure that your case meets all mandatory deadlines and that you are not blocked from suing by an improperly calculated statute of limitations.

One commercial litigation action in which the statute of limitations took center stage was a lawsuit arising from the fallout of a relationship between a Palm Beach county marina and the engineering firm it retained to construct a concrete runway slab. The marina intended for the slab to serve as a means for forklifts to transport boats from a boat barn to a water launch area.

At first, the marina was apparently satisfied with the slab. However, over time, that changed. The slab began developing “cracks, spalling and other deterioration.” The marina eventually came to the conclusion that the slab the engineer had constructed was defective, so it sued for damages based upon the defective slab.