Articles Posted in Commercial and Business

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In a commercial lease dispute, the outcome of the case may hinge upon the plaintiff’s ability to prove that the other side’s conduct met the legal standard for a breach of the lease agreement. Even if the plaintiff successfully shows that its opponent breached the contract, the defense may still be able to reduce or eliminate the damages award by succeeding in showing that the plaintiff failed to mitigate its damages. There are many different issues that can decide a commercial lease case. Be prepared for your litigation by making sure you have experienced South Florida commercial leasing counsel on your side.One recent case from Brevard County was an example of such a lease dispute, in which the issue of mitigation of damages was central. The case began when each side accused the other of breaching the lease. The landlord eventually filed two different complaints against the tenant for breaching the lease.

In this case, the key issues were deciding which party breached the lease and when the landlord retook possession of the property. Why was the date of the landlord’s retaking possession so important? It comes down to something called “mitigation of damages.” The law says that, if you are harmed by another party’s breach of contract, you are entitled to recover the damages you suffered, but you are required to take all reasonable steps to reduce your harm.

You do not have to go to extremes or make major sacrifices to mitigate; just take those actions that are reasonable. If, for example, a commercial tenant vacates leased property before the lease term ends (and ceases paying rent), the tenant has breached the lease. If the landlord, however, retakes control of the property and does absolutely nothing, the landlord has failed to mitigate its damages by failing to re-rent the space, and that failure to mitigate may reduce the amount of damages to which the landlord is entitled.

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Certainly, it is preferable in any commercial setting to make sure that the terms of any contractual agreement are carefully negotiated and then put down in writing in a clear and accurate written document. Sometimes, though, the reality of business is different, and some commercial agreements are consummated through express oral contracts. Oral contracts are potentially valid and enforceable in the Sunshine State. When the party with whom you’ve contracted breaches your express oral contract, it is extremely important to understand what the law requires in order to achieve a successful result in your breach of contract action; or, more directly, it is important to make sure that you have experienced South Florida commercial litigation counsel to present the arguments you need and pursue the outcome you deserve.Florida courts have made it clear that, to advance a case of breach of an express oral contract, you need only to assert that a contract existed, that you performed, that the other side materially breached, and that the breach caused you to suffer damages. Florida law does not require you to allege, or provide evidence of, monetary consideration. Consideration doesn’t need to be anything of monetary value; it can anything that is a potential detriment to you or a benefit to the other party.

In one recent case from the Tampa Bay area, a commercial real estate company entered into an oral contract with a developer. The oral contract provided that, if the real estate company persuaded CVS pharmacy to lease a Pinellas County property that the developer owned, the developer would pay the real estate company a commission of $150,000. The real estate company allegedly was able to procure the pharmacy giant as a tenant for the property, but, after CVS inked the lease, the developer paid the real estate company nothing.

These allegations that the real estate company made were all it needed to have the necessary requirements to advance a claim of breach of oral contract. Florida requires that all valid and enforceable oral contracts demonstrate a mutual agreement to a definite proposition and avoid leaving any essential terms open. In this case, the real estate company’s allegations said that the two sides had a certain and definite contractual meeting of the minds (namely, a $150,000 commission in exchange for getting CVS to lease the developer’s property). The real estate company also had sufficient assertions to show performance (CVS leased the property) and breach (the real estate company got paid $0). Finally, the real estate company had allegations of financial damages that it incurred in the form of expenses incurred in getting CVS to lease the space, for which the plaintiff received nothing.

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Negotiating effective commercial contracts involves many considerations. You must achieve terms that are mutually acceptable. Then you also have to be certain that the terms that end up in black and white comply with the law. Including a provision that violates federal or state law can ultimately lead to an outcome far different than what your contract document says, and different that you want. The key is to get a contract that meets your needs and meets the law’s requirements. At every step in the process, make sure you have an experienced Florida business and commercial representing your interests.

A failure to ensure that all provisions of a contract comply with the law can result in a term in your document being declared void. A case where that was a potential outcome was the dispute that arose after a Coral Gables drywall company signed a subcontractor agreement to perform drywall services for an improvement of a property in Naples. The contractor was an LLC from Detroit, Michigan. The contract included a paragraph that declared that disputes between the two sides “may be submitted to mediation and/or arbitration pursuant to the Construction Industry Rules of the American Arbitration Association.” The provisions also stated that any such arbitration would occur in, or within 20 miles of, Southfield, Michigan.

A dispute eventually did occur, and the subcontractor sued the contractor in Florida for breach of contract. Based upon the contract document, it might seem that the contractor would be entitled to demand arbitration in Michigan. However, as the subcontractor argued, Florida has a statute that says that any term in a contract for improvement of real property that requires legal action against a Florida contractor or subcontractor in someplace other than Florida is “void as a matter of public policy” and unenforceable. Based on that Florida statute, the trial court sided with the subcontractor and declared the arbitration paragraph void.

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A few decades ago, a U.S. president once famously responded to a question under oath by noting that “it depends on what the meaning of ‘is’ is.” Whatever one’s opinions of that statement, the reality is that, in the law, sometimes the outcomes of disputes hinge upon small phrases or even single words, and the very precise definition of those terms. That is especially true when it comes to commercial contracts and commercial litigation. That is why you should make sure you have highly skilled Florida business and commercial attorneys to meet your commercial contract needs.

As an example, take a recent case that originated in Palm Beach County. A real estate contract called for the making of payment if one of a list of several triggers took place. The first of those criteria was a “sale of the property’ at a designated street address. Eventually, the property in question was sold… at a foreclosure sale.

The party scheduled to receive payment under the contract argued that this was a valid trigger and payment was owed. The party owing payment contended it was not and refused to make the payment. The case went to trial and the singular key to the outcome was: what did the contract mean when it said “sale of the property”? Did that term include any sale or did it implicitly exclude involuntary sales like foreclosure sales? More specifically, was it clear what the contract meant? If it was not, then the parties were entitled to bring in outside “parol evidence” at trial. If it was clear, then outside evidence was inadmissible.

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While one always enters into a business relationship hoping and expecting the best, there are many ways that a commercial leasing arrangement can go wrong. There can be damage to the property, a failure to maintain the property or non-payment of rent. These and more can sometimes trigger a need for litigation. With commercial rent disputes comes the possible need for using the court registry. Whatever challenges your commercial lease dispute poses, make sure you’re prepared with experienced Florida commercial litigation counsel.

One recent South Florida case was just such a dispute between a commercial tenant and a landlord. The business relationship started with a tenant signing a commercial lease to operate a gym in a space in Palm Beach County. The lease dictated an amount of fixed rent the tenant owed. An additional section of the lease provided for some reduction to the tenant’s rent if the space encountered damage and the repairs to that damage impeded the operation of the tenant’s gym. Specifically, the lease stated that the rent “will be reduced proportionately to the extent to which the repair operations interfere with the business conducted on the Premises by Lessee.”

As fate would have it, damage did occur. The property encountered roof problems and, according to the tenant, water damage and debris from roof repairs harmed his business’ gym equipment.

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Your sales distribution agreement is undoubtedly a very important contract to you. Whether you are the manufacturer or the distributor, these agreements can be vital to the success of your business. It stands to reason, then, that a breach of the agreement by the other side can be devastating to your business. Generally, proof of a breach will only entitle the injured party to monetary damages although, in some narrow circumstances, an injured party may be entitled to an injunction. To learn more about your array of options if you’ve been harmed by the breach of a commercial agreement, talk to an experienced South Florida commercial litigation attorney about your case.

One recent South Florida case offered a real-life example of a scenario that did not warrant an award of injunctive relief. On Jan. 1, 2017, a medical device company entered into an agreement with a distributor of medical devices. The agreement called for the latter to become an exclusive distributor of the former’s products in a specific sales territory for a period of five years. The agreement contained a clause that barred the distributor from selling products or services that the manufacturer considered to be in competition with its own.

Almost 12 months later, the two entities wound up in court. The manufacturer accused the distributor of breaching the contract. The manufacturer alleged that the distributor tried to unilaterally cancel the agreement and also solicited business on behalf of one of the manufacturer’s chief competitors.

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Sometimes, when the entity with which you have contracted does not perform as it promised in your agreement, resolving that problem can be as straightforward as suing, obtaining a favorable verdict and damages award, and then receiving payment from the party that lost. At other times, though, deciding to bring a breach of contract lawsuit to resolve your commercial dispute is just the beginning. Whatever your commercial litigation case needs, make sure that you have Florida business litigation counsel who is familiar with all of the techniques and tools available to protect your interests.

The seeds of what would become a protracted commercial litigation case began with a real estate investor’s agreement to purchase several notes and mortgages for several properties. The purchaser wired more than $370,000 to the sellers, but they never transferred the notes or the mortgages. The failure led the buyer to sue for breach of contract and fraud. The crux of the buyer’s complaint was that the sellers didn’t actually own the mortgages and notes they purported to sell and had no intention of doing anything other than pocketing the payment provided by the purchaser.

The sellers did not take any action, and the buyer obtained a default judgment. The judgment called for the sellers to pay the buyer almost $430,000. The buyer eventually concluded that pursuing the seller companies directly was not going to yield actual payment, so it employed a new strategy. The buyer launched a supplemental legal action in which it attempted to “pierce the corporate veil” in order to go after the assets of the two individuals who owned the seller companies, as well as their other entities. The action also named the couple’s children.

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One of the most fundamental decisions that has to be made in any commercial litigation action is where to bring the lawsuit. Obviously, there are many considerations that go into this decision. It is essential, though, to make sure that the court you select is a proper forum and has jurisdiction over the parties you seek to sue. Without jurisdiction, the court cannot act, and your case cannot proceed. When making these and other vital decisions, it pays to get advice from knowledgeable Florida commercial litigation counsel.

The underlying case that led to this recent jurisdiction argument was a contract dispute between a Central Florida substance abuse and eating disorder rehab facility and an insurance company based in Maryland. According to the rehab facility, it provided treatment to eight of the insurance company’s members, and it confirmed the members’ eligibility under each of their insurance policies.

The rehab facility didn’t get paid and sued the insurance company for breach of contract in Broward County. The insurance company sought an order dismissing the case against it, arguing that it did not have sufficient contacts with Florida to give the Florida courts jurisdiction over it.

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Commercial landlords face many potential challenges with regard to their tenants. For example, what does it mean if a tenant stays on past the expiration of the lease period but continues paying rent month to month? What does it mean if that tenant eventually stops paying rent but still does not vacate the property? Each of these two scenarios is legally different and may call for different legal responses. To ensure that your interests are fully protected, make sure you have a knowledgeable South Florida landlord-tenant attorney representing your business.

Recently, a court outside Florida was presented with an interesting legal question. In the case, a commercial tenant (a medical clinic) had leased a space from a landlord. The term of the most recent written lease had expired in 2003. After that expiration, the tenant remained, paying rent month-to-month. In July of 2011, the tenant stopped paying rent. In December, the landlord sent a notice telling the tenant to pay up or get out. The tenant did not respond.

The landlord next filed an unlawful detainer action. Between the filing of the unlawful detainer action and the order of eviction, plumbing problems caused raw sewage to flow from the sinks in the space, permanently damaging the medical equipment, supplies, and patient records of the tenant. The tenant sued the landlord for negligence (among other causes of action). The case went to the Court of Appeal, which determined that the landlord was not liable to the tenant for damages.

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Seeking to invalidate an agreement based upon a contract term that is allegedly unenforceable under the law can be tricky. The court may decide that the provision is, in fact, enforceable under Florida law. Alternately, the court may decide that the provision is unenforceable but that it is severable and, as a result, the larger agreement survives. Success, if you are seeking invalidation, lies in proving that the problematic provision was unenforceable and that it was integral to the larger agreement. If you find yourself challenging a commercial contract for this or any other reason, be sure you have representation from experienced South Florida commercial litigation attorneys on your side.

These issues of enforceability and severability were at the center of a recent dispute in South Florida. The agreement was a “subcontract” in which a construction management firm contracted for the subcontractor’s provision of doors in an assisted living facility. The subcontractor allegedly completed all of its obligations under the agreement. However, more than $100,000 remained due and unpaid, according to the door company.

So, the subcontractor sued the contractor and its surety in South Florida. Not wanting to go through a full civil trial, the contractor and the surety asked the judge to compel arbitration. The subcontract contained an arbitration provision that covered any “claim, dispute or other matter in question arising out of or related to this Subcontract Agreement.”