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Company’s Lack of Bad Intent Allows It to Escape Contempt in Florida Breach of Contract Case

Commercial litigation actions involve many obligations that the parties must perform, both during the case and after its completion. A party that loses in a commercial litigation matter may not only be required to pay the other side, but also complete a financial statement regarding its financial condition. One company ordered to complete such a form was held in contempt for failing to do so, but the 2d District Court of Appeal overturned that ruling after concluding that no evidence existed showing that the losing company intentionally failed to complete the form.

The case involved a breach of contract dispute between People Tech Group, Inc. and System Soft Technologies LLC. People Tech, which is based in the Seattle area, hired Florida counsel to defend the case in Pinellas County, but the lawyers withdrew from the case after filing initial pleadings. A little more than a year after the complaint was filed, the trial court issued a judgment in favor of System Soft and awarded it more than $26,700.

In many cases, one of the first actions a victorious party will do after receiving a civil damages award, as part of the judgment collection process, is to demand that the losing party complete a financial statement. The Florida Rules of Civil Procedure have a standard form called a “Fact Information Sheet.” A judgment creditor can ask the trial court to order the losing party to complete a Fact Information Sheet and submit it within 45 days. The sheet must be notarized, and any misstatements can be subject to perjury penalties.

The judgment in favor of System Soft placed exactly such a disclosure requirement on People Tech. By that summer, People Tech still had not completed the sheet, so the trial court ordered People Tech to appear in court and explain why it should not be held in contempt of court for its lack of performance.

People Tech appeared at the hearing and informed the court that this was the first it had heard of System Soft’s judgment or the information sheet order. People Tech stated that it was unaware that its original lawyers withdrew, and that those lawyers erroneously provided as People Tech’s place of business the address of a home belonging to the company’s CEO, where mail often went unchecked.

The trial court ruled People Tech’s reasons to be insufficient and found it in contempt, ordering it to pay System Soft’s attorney fees and court costs, but the appeals court reversed this ruling. The appeals court explained that, in order to find a party in contempt, the trial court must first conclude that the offending party intended to violate the court’s order. In People Tech’s case, the trial judge never made any finding regarding People Tech’s intent, and no evidence was introduced that would contradict the company’s claim that it never received notice of the judgment and information sheet order. Since People Tech offered evidence of its lack of intent, no proof contradicting that evidence existed, and the court made no finding of bad intent, People Tech could not be held in contempt.

Although People Tech eventually dodged the contempt ruling in this circumstance, this case nevertheless contains some pertinent lessons for both judgment creditors or debtors in commercial litigation. An experienced commercial litigator can help your business complete all the steps it must take in order to collect, or to satisfy, a civil judgment. For reliable advice and counsel regarding your commercial litigation issue, talk to the knowledgeable Florida commercial litigation attorneys at Stok Kon + Braverman. Our hardworking attorneys can help your business stay on top of all of its commercial litigation obligations.

Contact us online or by calling (954) 237-1777 to schedule your consultation.

More blog posts:

Lack of Trial Transcript Dooms Appeal Challenging the Nature of Contract Between Warehouse Owner and Contractor, Florida Business Lawyers Blog, March 25, 2015

Dealing with a Contractor’s Invoice Paid by the Wrong Developer, Florida Business Lawyers Blog, March 13, 2015

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