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The decision whether to bring a case in federal court or Florida state court can have significant consequences to the disposition of non-compete litigation.  While both federal and Florida will usually apply the same substantive law, the procedure applied differs.  This is particularly pertinent in non-compete litigation.  Florida courts, when considering whether to enjoin a former employee from competing, will not consider particular categories of evidence because of a Florida statute (§ 542.335(g)(1-3).  Federal courts are free of this limitation, and may consider nearly any admissible and relevant evidence.  This distinction can ultimately mean the difference between whether an employee or an employer will prevail in non-compete litigation. Peter Mavrick is a Miami non-compete attorney, and also advocates for clients in Fort Lauderdale, Boca Raton, and Palm Beach, Florida. The Mavrick Law Firm represents clients in business litigation, trade secret litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

Non-compete litigation can be heard in both federal courts and state courts.  While a Florida court almost always has jurisdiction to hear a Florida non-compete case, there are certain requirements before a matter may be heard in federal court.  The primary method by which a federal court would have jurisdiction is that a “federal question” is raised.  This can happen when a non-compete claim is brought along with a trade secret claim under the federal Defend Trade Secrets Act.  18 U.S.C. § 1836, et seq.  While it is technically possible that a federal court can have jurisdiction over the parties because a “diversity of citizenship” between the plaintiff and defendant, this would rarely happen because both a company attempting to enforce a non-compete and the employee will usually qualify as a citizens of Florida.

Federal courts and Florida courts have their own rules of civil procedure.  While the Florida Rules of Civil Procedure were derived in significant part from the federal rules, the differences between them are substantial, and include different pleading and discovery requirements.  There are also differences between federal and Florida courts which do not arise from the differences in procedural rules.  Generally, federal courts have a greater budget and fewer cases, and so may have more time and staff to address complex and nuanced issues.  Federal courts also tend to place more time constraints which are less flexible than their Florida counterpart.

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Commercial relationships are governed, in significant part, by contract law.  When disputes arise between businesses, the interpretation of the terms of the parties’ agreement often will determine which side prevails.  Litigants in contract disputes will often seek to gain advantage by bringing in testimony and evidence which supports their own interpretation of a contract.  Testimony and evidence may not be introduced to interpret contracts which are unambiguous.  As reflected by the recent case, Thompson o/b/o R.O.B. v. Johnson, 45 Fla. L. Weekly D2710 (Fla. 5th DCA Dec. 4, 2020), this principle applies even when there exists significant evidence that a party likely did not consider a particular term to have that meaning. Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Generally, when a contract is unambiguous, contract interpretation is accomplished by applying the principles of contract interpretation to the text of the contract.  “Where a contract is clear and unambiguous, it must be enforced pursuant to its plain language” without resort to outside evidence. Hahamovitch v. Hahamovitch, 174 So. 3d 983 (Fla. 2015).  “In such a situation, ‘the language itself is the best evidence of the parties’ intent, and its plain meaning controls.’” Crawford v. Barker, 64 So.3d 1246 (Fla.2011).

In business litigation, ambiguous contracts may be interpreted by the judge without considering outside evidence or the expense of a jury.  Langford v. Paravant, Inc., 912 So. 2d 359 (Fla. 5th DCA 2005) (“Contract interpretation is generally a question of law for the court, rather than a question of fact”).  When the language of the contract is ambiguous, the parties are allowed to bring in evidence from outside the contract to help with interpreting the contract.  For example, a party would likely be able to testify what the parties really meant when using a term with multiple meanings, such as “light bulb.”  However, a party would likely not be permitted to testify about what was meant by a specific term, “4 pin Gx24q base 10-watt LED bulb.”

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An “implied contract” is a principle of law whereby courts will bind a party to an implied agreement when the elements of a contract are not otherwise met (an offer by one party over a matter which each party must provide some form of consideration which is accepted by another party).  It is a fundamental principle of  law that an implied contract cannot supplant an express contract.  However, an implied contract can exist when parties to an express contract act in a way which exceeds the scope of the express contract.  A recent case before the Fourth District Court of Appeal clarified this principle.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

An implied contract (aka implied-in-law contract or quasi-contract) is a legal principle which can establish liability when the parties did not actually agree to terms.

The elements of a cause of action for a quasi contract are that: (1) the plaintiff has conferred a benefit on the defendant; (2) the defendant has knowledge of the benefit; (3) the defendant has accepted or retained the benefit conferred and (4) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying fair value for it.  Because the basis for recovery does not turn on the finding of an enforceable agreement, there may be recovery under a contract implied in law even where the parties had no dealings at all with each other.

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Florida law permits a person or company to sue under a business contract which that party did not actually agree to because that person or business is a “third-party beneficiary” to the contract.  A third-party beneficiary is an entity which receives a benefit under a contract but is not one of the parties that signed that contract.  The status of third-party beneficiary permits the non-party standing to sue even though the third-party beneficiary has no obligations under the contract.  Generally, for a third-party beneficiary to have standing to sue, the contract itself must clearly express that a benefit is intended to a non-party to the contract.  If the contract expressly states that the parties are the only intended beneficiaries to the contract, then there can be no third-party beneficiary.  A recent case before Florida’s Fourth District Court of Appeals upheld this principle.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, employment litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

“The doctrine of third-party beneficiaries provides that under certain circumstances, a person may sue to enforce a contract, even though the person is not a party to the contract.”  Mendez v. Hampton Court Nursing Ctr., LLC, 203 So. 3d 146 (Fla. 2016).  In business litigation, a non-party may qualify as a third-party beneficiary when the following elements are met: “(1) existence of a contract; (2) the clear or manifest intent of the contracting parties that the contract primarily and directly benefit the third party; (3) breach of the contract by a contracting party; and (4) damages to the third party resulting from the breach.” Mendez v. Hampton Ct. Nursing Ctr., LLC, 203 So. 3d 146 (Fla. 2016).

The law of third-party beneficiaries is an issue of contract interpretation.  Parties to a business contract are free to enter into nearly any kind of contract.  Whether the parties intended to allow a third-party to sue under a contract is a ultimately a question as to whether the parties intended to give that third-party the right to sue for violations under the contract. Contracts cannot reasonably contemplate every possible dispute or circumstantial permutation which may arise.  Thus, courts apply the “gap-filler” rules of contract interpretation when the contract does not directly address the dispute.   “The parties’ intention governs contract construction and interpretation; the best evidence of intent is the contract’s plain language.”  Whitley v. Royal Trails Prop. Owners’ Ass’n, Inc., 910 So. 2d 381 (Fla. 5th DCA 2005).

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Attorneys’ fee provisions in contracts can significantly influence how a dispute will be resolved.  An aggrieved party can become emboldened if an attorneys’ fees award is available as a prevailing party.  At first blush, it may appear prudent for a business to have its contract contain an attorneys’ fee provision which allows it to claim attorneys’ fees if it prevails, but not allow the other party to claim attorneys’ fees if the opposing party prevails.  Florida law generally requires that all attorneys’ fee provisions be treated as if they are mutual.  The Florida Supreme Court recently resolved a “circuit split” which appeared to permit some litigation parties to continue to gain the benefit of a unilateral attorneys’ fee provision without that provision being applied mutually.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

The default “American Rule” generally provides that parties pay for their own attorneys’ fees unless there is a contract or statute governing attorneys’ fees.  When litigants in business litigation sue for bogus claims or engage in litigation misconduct, courts may order that the other party be compensated for their attorneys’ fees.  § 57.105(1)-(4), Florida Statutes (describing the standard by which attorneys’ fees may be awarded against a party that brought improper claims or defenses).  In contrast, traditional English law allows courts to order losers in litigation to pay the attorneys’ fees of the victors.

The character of business litigation can change dramatically depending upon whether litigants can be awarded their attorneys’ fees.  It may not make economic sense for a plaintiff to pursue a claim when the potential recovery is outweighed by the cost of retaining counsel and prosecuting litigation.  When a litigant can potentially be awarded his or her attorneys’ fees, it may incentivize litigation over smaller claims which would not have otherwise been worth pursuing.  It is not uncommon for the attorneys’ fee awards in such cases to dwarf the matter at issue.

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Preservation of a business’ trade secrets may constitute a legitimate business interest that justifies the enforcement of a non-compete agreement. However, it is vital that a business seeking to enforce the non-compete agreement sufficiently prove the existence of the trade secret. General statements that the business has such valuable information cannot act as a substitute for proof. Peter Mavrick is a Fort Lauderdale non-compete attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

An example of this occurred in the case of Gould & Lamb, LLC v. D’Alusio, 949 So. 2d 1212 (Fla. 2d DCA 2007). Gould & Lamb, LLC (Gould & Lamb) and John D’Alusio (D’Alusio) executed an employment agreement that contained a non-compete provision that prohibited D’Alusio from working for a competitor for a two-year period after termination of his employment. Gould & Lamb later terminated D’Alusio’s employment because they eliminated his position from the firm. After an intensive negotiation, Gould & Lamb and D’Alusio entered into a severance agreement.  The severance agreement did not reference the earlier non-compete agreement, but instead referenced a different agreement that the parties entered. D’Alusio filed a lawsuit against Gould & Lamb, seeking a declaration that the severance agreement superceded the non-compete agreement.  Gould & Lamb filed a counterclaim against D’Alusio to enforce the non-compete agreement.

Gould & Lamb requested that the court reform the severance agreement to incorporate the noncompete provisions of the earlier contract. Reformation is a legal doctrine that is applied to correct a defective writing to accurately reflect the true terms agreed to by the parties. Providence Square Assn v. Biancardi, 507 So. 2d 1366 (Fla. 1987). To allege a claim for reformation, a plaintiff must allege that: 1) there was a written agreement, 2) there was a defect in the writing due to mutual mistake, fraud or misrepresentation, and 3) proof by clear and convincing evidence. Providence Square Assn v. Biancardi, supra. The trial court found there was no mistake of fact or inequitable conduct by D’Alusio that would support reformation of the severance agreement. The trial court concluded that the noncompete agreement did not survive.

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Resolving a dispute through arbitration can affect the scope and amount of discovery, the speed of resolution, as well as the ultimate result of business litigation.  Whether a particular dispute between parties is arbitrable is defined by what the parties agreed to.  Arbitration clauses often narrow the scope of arbitrable issues to particular types of disputes.  As a result, parties may have both arbitrable and non-arbitrable disputes.  When this happens, parties may be required to address their arbitrable claims in arbitration and their non-arbitrable claims in court.  To the extent that the non-arbitrable claims are inextricably intertwined with claims in arbitration, those non-arbitrable claims may be stayed.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

Court and arbitration are two alternate methods of dispute resolution.  Because most disputes in business litigation are addressed in either court or arbitration, there is a common misconception that all of a parties’ claims must be addressed in only one forum.  However, neither the Federal Arbitration Act (FAA) nor the Revised Florida Arbitration Code (RFAC) require that parties’ disputes be brought in a single forum.

Both the FAA and RFAC require that parties’ arbitrable disputes be addressed in arbitration and non-arbitrable disputes be addressed in court, even when those claims are related.  To the extent that arbitrable and non-arbitrable claims are so intertwined that it would be impossible independently resolve the parties’ disputes in both forums simultaneously, the court proceedings should be stayed pending arbitration.  RFAC states this explicitly at § 682.03(7), Florida Statutes, which provides, “[i]f the court orders arbitration, the court on just terms shall stay any judicial proceeding that involves a claim subject to the arbitration.  If a claim subject to the arbitration is severable, the court may limit the stay to that claim.” The FAA does not expressly state this rule, however, United States Supreme Court precedent has made it clear that “piecemeal” dispute resolution is necessary when parties have both arbitrable and non-arbitrable claims.  The Supreme Court interpreted the FAA to require “district courts to compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel, even where the result would be the possibly inefficient maintenance of separate proceedings in different forums.”  Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985); see also KPMG LLP v. Cocchi, 88 So. 3d 327 (Fla. 4th DCA 2012) (quoting Dean Witter Reynolds).

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Trial of a business dispute through the court system or through arbitration can have significant consequences.   As discussed in previous articles, resolving a dispute through arbitration can affect the scope and amount of discovery, the speed of resolution, as well as the ultimate result of the case.  Arbitration of a dispute may be more beneficial for one party than for the other.  Accordingly, parties in business litigation often contest whether the dispute is covered by an arbitration clause.  Courts typically determine these disputes based on the issue of whether the terms of the arbitration agreement contemplate the dispute being arbitrated.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

In disputes about arbitrability, courts analyze three elements.  “[T]here are three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla.1999). The existence of an arbitration agreement between the parties does not necessarily mean that a particular dispute is arbitrable.  Courts analyze the intent of the parties as to whether a particular business litigation dispute is arbitrable.  “The general rule is that where an arbitration agreement exists between the parties, arbitration is required only of those controversies or disputes which the parties have agreed to submit to arbitration.”  Miller v. Roberts, 682 So. 2d 691 (Fla. 5th DCA 1996), citing to Pacemaker Corp. v. Euster, 357 So.2d 208 (Fla. 3d DCA 1978).

While courts generally favor arbitration as a form of dispute resolution, “arbitration is favored only as to those disputes which the parties actually agreed to arbitrate.” Medanic v. Citicorp Inv. Services, 954 So. 2d 1210 (Fla. 3d DCA 2007); Episcopal Diocese of Cent. Florida v. Prudential Sec., Inc., 925 So. 2d 1112 (Fla. 5th DCA 2006) (“Federal law favors arbitration only as to issues the parties have actually agreed to arbitrate”). When evaluating whether a dispute is arbitrable, courts generally compare the language of the arbitration provision with the allegations made in the complaint. “The determination [of] whether a dispute must be arbitrated ‘turns on the parties’ intent,’ which is manifested in the plain language of the contract itself.”  Vanacore Constr., Inc. v. Osborn, 260 So. 3d 527 (Fla. 5th DCA 2018), quoting Maguire v. King, 917 So.2d 263 (Fla. 5th DCA 2005).  “Because arbitration provisions are contractual in nature, they are subject to the rules of contract interpretation.” Vanacore Constr., Inc. v. Osborn, 260 So. 3d 527 (Fla. 5th DCA 2018), citing to Jackson v. Shakespeare Found., Inc., 108 So.3d 587 (Fla. 2013). “Whether a claim falls within the scope of an arbitration agreement turns on the factual allegations in the complaint rather than the legal causes of action asserted.” Gregory v. Electro-Mech. Corp., 83 F.3d 382 (11th Cir.1996).

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As a defense to the enforcement of a contract, a party can claim the affirmative defense that the agreement is “unconscionable.”  The unconscionability defense requires that the party claiming it show that both the substance of the agreement is unreasonably favorable to a party and that the agreement was made procedure by which the parties entered the contract was entered into with an absence of meaningful choice.  The recent case, SHEDDF2-FL3, LLC v. Penthouse S., LLC, 3D19-1100, 2020 WL 6472548 (Fla. 3d DCA Nov. 4, 2020), affirmed this dual requirement.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

“Unconscionability is a common law doctrine that courts have used to prevent the enforcement of contractual provisions that are overreaches by one party to gain ‘an unjust and undeserved advantage which it would be inequitable to permit him to enforce.’”  Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014). “Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014).

In business litigation, a party claiming that its contract is unconscionable has a heavy burden.  When possible, courts will tend to enforce a parties’ agreement in accordance with its terms rather than allow a party to evade his or her contractual duties on the basis that the agreement is not fair.  Conceptually, a party is in the best position to bargain for his or her rights.  Accordingly, a court must find that a contract is both unfair in its substance as well as in the process of how it was agreed to.  Florida Holdings III, LLC v. Duerst ex rel. Duerst, 198 So. 3d 834 (Fla. 2d DCA 2016) (“An agreement […] will be deemed unenforceable on grounds of unconscionability when it is both procedurally and substantively unconscionable”).

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The unprecedented COVID-19 pandemic affected many Florida business’ ability to comply with their contractual obligations.  Government quarantine measures as well as changes in economic conditions and consumer demand continue to influence contract compliance.  Mavrick law released two articles at the outset of the pandemic concerning contractual disputes and COVID-19.  The first addressed the contractual defense of force majeure clauses and the second discussed common law defenses of “frustration of purpose” and impossibility.  At that time, there had not been any cases concerning COVID-19 complications in contract law.  Since then, however, several orders have been entered applying the defenses of force majeure and frustration of purpose.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

“For a breach of contract claim, Florida law requires the plaintiff to plead and establish: (1) the existence of a contract; (2) a material breach of that contract; and (3) damages resulting from the breach.” Vega v. T–Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009).  In business litigation, the terms of a contract may sometimes be implied or derived from advertisements and publications.  Salerno v. Florida S. Coll., 8:20-CV-1494-30SPF, 2020 WL 5583522 (M.D. Fla. Sept. 16, 2020) (“It is also generally accepted that the terms and conditions of that contractual relationship may include the publications of the private university”).

Contract law encourages contracting parties to allocate for themselves the risk of certain events which cannot feasibly be mitigated (such as a natural disaster).   This is more easily done when categories of risk are predictable.  For example, leases often describe whether the landlord or the tenant will bear the costs when a natural disaster causes real property to become uninhabitable.  While the COVID-19 pandemic was not entirely unpredictable, it has been more than a hundred years since the United States has experienced a pandemic with a similar scale and scope.  Accordingly, few, if any, contracting parties contemplate how such a risk would be apportioned in their pre-COVID-19 contracts.

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