Sometimes, achieving success can mean going to trial and winning; other times, it can mean a settlement. A commercial tenant and a client of Stok Folk + Kon recently succeeded in reaching a settlement of its lease dispute with its landlord, a major South Florida casino. The landlord, which had attempted to force out the small tenant despite a lease term that ran through 2020, agreed to settle just a week after the two sides engaged in mediation. As reported by the Sun-Sentinel, the terms of the settlement were not made public (due to a confidentiality provision in the settlement agreement).
In contract law and in commercial litigation, the gap between success and failure can be as small as a single word. In the case of an electric utility and its breach of contract case, the outcome of its case hinged on three little words: “at a minimum.” The insertion of those words into its complaint meant that the damages it sought were not liquidated and it could not obtain a damages award in its default judgment case without first having a hearing on damages, the Second District Court of Appeal ruled.
A case currently pending before the U.S. Supreme Court could have a massive impact on the future of Chapter 11 bankruptcy law. In the case, the bankruptcy court approved a settlement that allowed some creditors with inferior claims to obtain a recovery, while other creditors with superior claims got nothing. According to a New York Times report, the high court’s ruling “could upend the common practice that ranks lenders, employees and other creditors in order of priority as they try to recover their money when a company files for bankruptcy.”
When you and a potential business partner contemplate entering into a commercial contract, there are many things to which you can agree and make binding on both sides by including relevant terms in your agreement. One of these issues is deciding, in advance, where you will litigate disputes if a problem arises later. There are many different ways to structure these clauses, with some being permissive and some being mandatory. In a recent case from Miami, the Third District Court of Appeal upheld a dismissal of a case brought here because the parties had a contract with a mandatory clause dictating California as the place to litigate disputes.
A nutritional supplement company, whose business took a major hit in late 2014 and early 2015, was allowed, in its lawsuit against one of its vendors, to continue using its expert witness on damages and continue asserting its claim for lost profits, which allegedly amounted to more than $15 million. Although the plaintiff’s business was badly damaged, the U.S. District Court for the Middle District of Florida ruled that the plaintiff’s business was merely interrupted but not totally destroyed. Had it been completely destroyed, the law would not have allowed the plaintiff to seek lost profits damages.
When you decide to pursue litigation as the means to resolve a commercial contract dispute, there are many things that can detour or, worse, derail your case. Some of these have nothing to do with the strengths or weaknesses of the factual part of your case. In two cases in which plaintiffs had suffered dismissals due to missteps, both entities were likely to face some form of penalty, although one likely much more severe than the other. A plaintiff from South Florida saw its case dismissed due to its erroneous actions, while a Tampa Bay plaintiff got its dismissal reversed because the statute called for a stay of the plaintiff’s case, rather than a dismissal.
In any commercial contract setting, things can go awry. When they do, and litigation becomes necessary, your case may present you with the opportunity to not only secure a judgment in your favor but also recoup some of your attorneys’ fees as well. In a recent case involving five South Florida malls, the appellate court upheld an award of attorneys’ fees in a commercial leasing breach of contract claim. The award was in the appropriate amount because each of the landlords’ claims shared a “common core” of facts and “related legal theories.”
Sometimes, the business relationship between commercial contract partners breaks down due to one side’s dissatisfaction with the other’s work. When this happens, the party that contracted for services may elect not to pay the service provider. If it is sued for non-payment, that party may seek to defend its case by asserting an affirmative defense that the service provider did not substantially perform under the agreement because its services were so far below the quality standards that the contract expressly demanded. In one Tampa Bay-area case involving such a scenario, the Second District Court of Appeal reversed a summary judgment for the unpaid service provider because, the court said, the provider’s argument did not conclusively refute all of the potential factual disputes related to the sufficiency of the work performed.
In a commercial leasing setting, there are many things a landlord can do to strengthen its position against the possibility that the tenant abandons its lease. Before litigation, the landlord can draft its lease to allocate certain risks explicitly to the tenant. During litigation, a landlord that has sued its tenant can make sure that it files all of the available pleadings, including optional ones like a reply to an answer, to counter affirmative defenses by the tenant. In the case of one Central Florida landlord, it didn’t file a reply, it didn’t have explicit risk-allocation terms in its lease, and these helped the tenant win its appeal before the Fifth District Court of Appeal.
There are lots of elements to obtaining full compensation in a commercial breach of contract case. Once you have established that you suffered damages and that the other side is liable, there is still more to your case. Part of the recovery in your case may be pre-judgment interest. A recent case from the Second District Court of Appeal serves as an important reminder regarding the awarding of pre-judgment interest, since the decision reiterated that, when an injured party proves that it “sustained out-of-pocket loss, prejudgment interest must be awarded” and accrues starting with the date of the loss.