Florida Business Litigation Lawyer Blog

Published on: September 14, 2024

MIAMI BUSINESS LITIGATION: CLAIMS OF MALICIOUS PROSECUTION

When a business prevails in a lawsuit that was brought unjustly, it might have a cause of action for malicious prosecution. The cause of action for malicious prosecution arises out of the wrongful commencement of a judicial proceeding. “The essence of the tort of malicious prosecution is the misuse of legal machinery for an improper purpose.” Rushing v. Bosse, 652 So. 2d 869 (Fla. 4th DCA 1995). Malicious prosecution could be an option if your business is sued in a baseless lawsuit. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

To prevail on a claim of malicious prosecution, a plaintiff must prove the following elements:

an original judicial proceeding against the present plaintiff was commenced or continued’

Continue reading →

Published on: September 11, 2024

FORT LAUDERDALE BUSINESS LITIGATION: CONTRACT REMEDIES

By Mavrick Law Firm

Breach of contract is a common cause of action in business disputes. When deciding whether to file a lawsuit for breach of contract, one must determine the remedies are available for the particular breach of contract in question. Florida law allows remedies for damages, restitution, and specific performance. Ocean Commc’ns, Inc. v. Bubeck, 956 So. 2d 1222 (Fla. 4th DCA 2007). A plaintiff should carefully consider the potential remedies before lodging the lawsuit to obtain the best possible recovery. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

A party may maintain an action at law for breach of contract to recover damages. The typical measure of damages in Florida is expectancy damages. See Capitol Environmental Servs., Inc. v. Earth Tech, Inc., 25 So. 3d 593 (Fla. 1st DCA 2009). Expectancy damages are “monetary damages that will put [the injured party] in the same position it would have been had the other party not breached the contract.” In other words, expectancy damages place the non-breaching party in the position they expected to be in but for the breach. A subcategory of expectancy damages are general damages and special damages. General damages are those damages that naturally flow from the breach of contract. Hardwick Properties, Inc. v. Newbern, 711 So. 2d 35 (Fla. 1st DCA 1998). While special damages do not normally result from the breach of contract, but “may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract.” Lost profits are a common form of special damages in business disputes.

But what if a business does not want expectancy damages, but instead wants to be placed in the position it was in immediately prior to the entering into the contract? This is covered by restitution. “The purpose of restitution . . . is to require the wrongdoer to restore that which he has received and thus tend to put the injured party in as good a position as he occupied before the contract was made; in this context the injured party may be said to have considered the contract as ‘terminated’ or ‘ended.’” Beefy Trail, Inc. v. Beefy King Intern’l, Inc., 267 So. 2d 853 (Fla. 4th DCA 1972). Restitution may be applicable if, for example, a business wants the breaching party to return the money it paid the breaching party pursuant to the contract terms. A plaintiff may elect between restitution and expectancy damages discussed above when there is a total breach of contract. McCray v. Murray, 423 So. 2d 559 (Fla. 1st DCA 1982).

Continue reading →

Published on: September 7, 2024

MIAMI BUSINESS LITIGATION: LEGALITY OF GEOGRAPHIC AREA IN NON-COMPETE AGREEMENTS

By Mavrick Law Firm

Businesses commonly enter into restrictive covenants with their employees to prohibit them from unfairly competing with the business during and after employment. Restrictive covenants include contracts that restrict competition, such as non-compete agreements, non-disclosure agreements, and confidentiality agreements. When preparing a restrictive covenant, what provisions should be included? Typically, a business should include provisions that specifically define the geographic area, time limit, and line of business of the covenant. Many states require that the restrictive covenant be reasonable in time, geographic area, line of business, and be supported by a legitimate business interest. Seemingly, the requirement that a restrictive covenant be reasonable in geographic area means that the restrictive covenants should have a defined geographic scope. However, a recent case from the Supreme Court of Georgia, North American Senior Benefits, LLC v. Wimmer, 2024 WL 4029937 (Ga. 2024), has eliminated any such requirement in Georgia. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The Georgia Supreme Court issued its decision in North American Senior Benefits, LLC v. Wimmer, 2024 WL 4029937 (Ga. 2024), on September 4, 2024. Wimmer involved a non-solicitation agreement between an employer and two former employees that prohibited the former employees from soliciting any employees of the employer. The non-solicitation agreement had an effective period of two years after the end of employment, and was not limited to a geographic area. The employees left the employer and started a competing business. The employer then sued the employees for violation of the non-solicitation provision. The trial court granted to the employees a motion for judgment on the pleadings because the non-solicitation provision did not define a geographic area, and the Georgia Court of Appeals affirmed. However, the Georgia Supreme Court reversed. The Georgia Supreme Court held that a restrictive covenant does not require an express geographic area. It reasoned that the geographic area can be determined “from the facts and circumstances” of the case without being expressly stated in the restrictive covenant.

Florida law also enforces restrictive covenants only if they are reasonable in time, geographic area, and line of business. Fla. Stat. § 542.335. Yet, some courts have also treated Florida’s geographic area requirement with flexibility. For example, recently, in Hayes Medical Staffing, LLC v. Eichelberg, 2024 WL 670440 (S.D. Fla., Jan. 23, 2024), a court in the Southern District of Florida granted a permanent injunction that enforced a non-disclosure provision that did not contain a geographic area. In another example, in Office Depot v. Babb, 2020 WL 1306984 (S.D. Fla., March 19, 2020), the court enforced a broad restrictive covenant that included the entire United States. It is also notable that Florida has the “blue pencil” rule. The “blue pencil” rule allows courts to modify an overly broad restrictive covenant to make its scope reasonable. See Fla. Stat. § 542.335 (“If a contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.”).

Continue reading →

Published on: September 4, 2024

FORT LAUDERDALE BUSINESS LITIGATION: PUNITIVE DAMAGES

By Mavrick Law Firm

Plaintiffs often attempt to pursue punitive damages in litigation. Punitive damages are intended to punish reprehensible conduct by a defendant. Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001). Punitive damages can be attractive for plaintiffs because they can multiply compensatory damages thereby resulting in a much larger recovery. See Fla. Stat. § 768.83 (generally allowing up to three times multiplier for punitive damages). In Florida, a plaintiff must move to amend its complaint to add a claim of punitive damages to recover punitive damages. The plaintiff must make a “reasonable showing by the evidence” supporting entitlement to punitive damages. Fla. Stat. § 768.72(1). What constitutes a “reasonable showing by the evidence”? The Supreme Court of Florida might answer this question in Fed. Ins. Co. v. Perlmutter, Case No. SC2024-0058 if it elects to assert jurisdiction over the matter. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The Florida appellate courts established conflicting standards for how much evidence a plaintiff must proffer to add a claim for punitive damages. The Fifth District Court of Appeal and Second District Court of Appeal established relatively low standards. In Estate of Despain v. Avante Group Inc., 900 So. 2d 637 (Fla. 5th DCA 2005), the Fifth District Court of Appeal held that a plaintiff must proffer “merely a representation of what evidence the defendant proposes to present and is not actual evidence.” In Deaterly v. Jacobson, 313 So. 3d 798 (Fla. 2d DCA 2021), the Second District of Appeal held that the clear and convincing evidentiary standard used to prove punitive damages at trial under Florida Statute Section 768.72 does not apply to a plaintiff moving for leave to amend to add a punitive damages claim because Section 768.72 only applies at trial.

However, in Fed. Ins. Co. v. Perlmutter, 376 So. 3d 24 (Fla. 4th DCA 2023), the Fourth District Court of Appeal established a higher standard for adding punitive damage claims. In Perlmutter, the Fourth DCA addressed a trial court order granting a plaintiffs’ motion to amend to add a claim of punitive damages. The Fourth DCA reversed the trial court’s order finding that the plaintiffs did not make a sufficient evidentiary showing supporting a punitive damages claim. The Fourth DCA held that adding a claim for punitive damages requires “the trial court to make a preliminary determination of whether a reasonable jury, viewing the totality of proffered evidence in the light most favorable to the movant, could find by clear and convincing evidence that punitive damages are warranted.” Thus, unlike the Second DCA’s holding in Deaterly, the Fourth DCA held that the clear and convincing standard must be considered at the pleading stage. However, it appears the Fourth DCA was not positive in its conclusion because the Fourth DCA certified the question to the Supreme Court of Florida based on the conflict with the Second DCA and Fifth DCA rulings.

Continue reading →

Published on: August 31, 2024

MIAMI BUSINESS LITIGATION: PREVAILING IN LAWSUIT AND RECOVERING ATTORNEYS’ FEES

By Mavrick Law Firm

Parties to a lawsuit are generally responsible for paying their own attorney’s fees regardless of the lawsuit’s outcome. This is known as the “American Rule.” However, exceptions to the American Rule exist when the lawsuit arises from a breach of contract that contains an attorney’s fee provision or the violation of a statute that contains an attorney’s fees-shifting provision. MV Senior Management, LLC v. Redus Florida Housing, LLC, 319 So. 3d 66 (Fla. 1st DCA 2020). These contracts and statutes require the non-prevailing party in the litigation to pay the reasonable attorney’s fees of the prevailing party. But determining who prevailed in complex lawsuits with multiple parties, claims, crossclaims, and counterclaims can be difficult. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The leading case in Florida for determining who is the prevailing party in a breach of contract action is Moritz v. Hoyt Enterprises, Inc., 604 So. 2d 807 (Fla. 1992). In Moritz, the Supreme Court of Florida held that the prevailing party in litigation is the party that prevails on the “significant issues” in the case. The purchasers of a home paid an initial down payment to a vendor to purchase the home. The purchasers then attempted to repudiate the contract and subsequently sued for breach of contract to recover their down payment. The vendor counterclaimed for breach of contract. The trial court found that the purchasers breached the contract and the vendor did not. However, the trial court also ordered the vendor to return the difference between the purchaser’s down payment and the vendor’s damages to the purchaser. The Florida Supreme Court found that the significant issue in the litigation was the breach of contract issue. Therefore, because the vendor prevailed on that issue, the vendor was the prevailing party and entitled to attorney’s fees even though the purchasers were entitled to a larger judgment award.

Moritz indicates that, at times, it may be difficult to determine who is the prevailing party based on the “significant issue” test. The Supreme Court of Florida further addressed the matter in Prosperi v. Code, Inc., 626 So. 2d 1360 (Fla. 1993), where it stated that a net judgment is a “significant factor” but does not necessarily control the determination of who is the prevailing party. Interestingly, in cases involving the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), the Florida Fourth District Court of Appeal continues to focus on whether a party obtained a net judgment. FDUTPA claims are commonly included in lawsuits because FDUTPA has broad application and a fee-shifting provision. See Fla. Stat. § 501.2105 (2024). For example, in Banner v. Law Office of David J. Stern, P.A., 198 So. 3d 1133 (Fla. 4th DCA 2016), the Fourth District Court of Appeal held that “where a claim involves multiple claims directed at the same conduct,” to recover attorney’s fees, a party must “(1) recover judgment on the [FDUTPA claim], and (2) recover a net judgment for the entire case.” Employment litigation also has fee shifting provisions, sometimes evenly shifting fees to the winning party and in other statutes, the fee shifting is explicitly deferential to the litigating employee if he or she wins the case.

Continue reading →

Published on: August 28, 2024

FORT LAUDERDALE BUSINESS LITIGATION: CLAIMS OF “NEGLIGENT MISREPRESENTATION”

By Mavrick Law Firm

Sometimes businesses enter contracts under false pretenses because certain material information is misrepresented or concealed from the business. The business can assert a claim for fraudulent inducement to try and escape the contract. However, the business will have to prove the misrepresentation was made with fraudulent intent. Gemini Inv’rs III, L.P. v. Nunez, 78 So. 3d 94 (Fla. 3d DCA 2012) (“To plead fraudulent inducement, Gemini must allege that the defendants: (1) made a statement concerning a material fact, (2) knowing that the statement was false, (3) with intent that the plaintiffs act on the false statement; and (4)… damage[s].”). This element can be difficult to prove. See Collins v. McKelvain, 189 So. 655, 656 (Fla. 1939) (recognizing that it can be difficult to prove fraudulent inducement at the time the agreement is consummated). Asserting a claim for negligent misrepresentation offers an alternative avenue for redress. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

To prevail on a claim of negligent misrepresentation, a plaintiff must prove the following elements:

A misrepresentation of material fact;

Continue reading →

Published on: August 24, 2024

MIAMI BUSINESS LITIGATION: THE DEFENSE OF JUDICIAL ESTOPPEL

By Mavrick Law Firm

Under Florida law, the rule of judicial estoppel prohibits a litigant from taking a position in a former action or judicial proceeding and then taking an inconsistent position in a subsequent action or judicial proceeding that prejudices the adverse party. Blumberg v. USAA Casualty Insurance Co., 790 So. 2d 1061 (Fla. 2001). The rule is designed to prevent litigants from making a mockery of the justice system. Scarano v. Cen. R. Co. of N.J., 203 F. 2d 510 (3rd Cir. 1953) (A situation justifying application of judicial estoppel “is more than affront to judicial dignity [because] intentional self-contradiction is being used as a means of obtaining unfair advantage in a forum provided for suitors seeking justice.”). The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The judicial estoppel rule has three considerations. The first is party mutuality because application of the judicial estoppel doctrine only applies when the parties of the earlier proceeding and subsequent proceeding are the same. Blumberg, 790 So. 2d 1061. However, party mutuality is not required when “special fairness and policy considerations” compel application of the doctrine. The rationale for creating an exception to party mutuality is that the same exception applies in similar contexts such as res judicata and collateral estoppel. See West v. Kawasaki Motors Mfg. Corp., 595 So. 2d 92 (Fla. 3d DCA 1992) (“Florida courts have on occasion recognized exceptions to the identity of parties requirement under the res judicata or collateral estoppel doctrines where special fairness or policy considerations appear to compel it.”). Therefore, court have reasoned that the party mutuality exception should be extended to apply in the judicial estoppel context too. See Keyes Co. v. Bankers Real Estate Partners, Inc., 881 So. 2d 605 (Fla. 3d DCA 2004) (applying judicial estoppel even through party mutuality did not exist).

The second consideration is whether the party asserting the judicial estoppel argument was misled and changed positions based on the opposing party’s initial position in the first judicial proceeding. The judicial estoppel rule used to require a party to demonstrate it had been misled by the opposing party and changed positions as a result. See Chase & Co. v. Little, 156 So. 609 (Fla. 1934) (“The party claiming the estoppel must have been misled and have changed his position.”). However, Florida law appears to have dispensed with these requirements because Florida’s Supreme Court allowed a litigant to prevail on a judicial estoppel argument without demonstrating he was misled or changed positions. Blumberg, 790 So. 2d 1061.

Continue reading →

Published on: August 21, 2024

FORT LAUDERDALE BUSINESS LITIGATION: COURT OVERRULES FEDERAL RULE BANNING NON-COMPETE CONTRACTS

By Mavrick Law Firm

The Federal Trade Commission’s (FTC) rule banning most non-compete agreements continues to produce legal developments. Conflicting opinions were previously issued by a court in the U.S. District Court for the Northern District of Texas and by a court in the U.S. District Court for the Eastern District of Pennsylvania. In Ryan LLC v. FTC, Case No. 3:24-CV-00986-E, 2024 WL 3297524 (N.D. Tex., July 3, 2024), the United States District Court for the Northern District of Texas issued a preliminary injunction prohibiting the enforcement of the FTC’s rule against the named plaintiff in that case. On the other hand, in ATS Tree Services, LLC v. FTC, Case No. 2:24-CV-01743, 2024 WL 3511630 (E.D. Pa., July 23, 2024), the court denied a motion for a preliminary injunction to prevent enforcement of the rule. On August 20, 2024, this legal saga saw another significant development as the Ryan LLC court issued a permanent injunction against the FTC rule in Ryan LLC v. FTC, Case No. 3:24-CV-00986, 2024 WL 3879954 (N.D. Tex., Aug. 20, 2024). Unlike the preliminary injunction that the court previously issued, the permanent injunction is national. The non-compete agreement ban, which was scheduled to go into effect on September 4, 2024, is now nullified due to the permanent injunction of the federal court. This, however, is subject to appeal and other possible legal developments. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The federal court in Ryan LLC issued the permanent injunction based on many of the same reasons as its preliminary injunction entered earlier in the case. The Judge relied heavily on the federal Administrative Procedures Act (APA), which requires that courts set aside administrative agency actions when they are “arbitrary, capricious, or otherwise not in accordance to the law” or “in excess of statutory jurisdiction, authority, limitations, or short of statutory right.” 5 U.S.C. § 706. In applying the APA, the court found that the FTC Act does not grant substantive rulemaking authority to the FTC, and the non-compete ban is arbitrary and capricious. 2024 WL 3879954. The court reasoned that the FTC Act does not grant it substantive ruler making authority. Section 6 only vested the FTC with the authority “to make rules and regulations to carry out the provisions of the subchapter.” The Ryan LLC court characterized section 6 as a “housekeeping” statute. See also Chrysler Corp. v. Brown, 441 U.S. 281 (1979). It lacks a statutory penalty and is in a nonessential location. In addition, the court determined the non-compete ban is arbitrary and capricious because it is unreasonably broad. The studies the FTC relied on a to enact its rule did not support a such a sweeping ban.

In reaching its holding, the Ryan LLC court did cite to Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), the recent Supreme Court case that eliminated court deference to agency rules. This reference suggests the court did not provide deference to the rule that would normally be applied before the Looper Bright Enterprises decision. However, the court did not expressly make such a ruling.

Continue reading →

Published on: August 17, 2024

MIAMI BUSINESS LITIGATION: TRADE SECRETS AND CONFIDENTIALITY CONTRACTS

By Mavrick Law Firm

It is important for every business to take extensive efforts to protect their trade secrets and limit their disclosure to persons with subject to comprehensive confidentiality agreements. Often, trade secret misappropriation occurs when a business shares its trade secrets with an outside vendor. This is exactly what a plaintiff claims to have happened in Ecolab, Inc. v. IBA Inc. & Webco Chemical Corp., Case No. 4:24-cv-40407-DHH (D. Mass., August 14, 2024), a recent case filed in the U.S. District Court of Massachusetts. Ecolab shows the importance of businesses being careful with whom they share their trade secrets and effectively using confidentiality agreements. Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

According to the complaint filed by the plaintiff, Ecolab, Inc. (Ecolab), Ecolab creates and sells infection prevention products. This includes “acified sodium chlorite teat dip products” (ASC products) that Ecolab sells to the dairy industry. Ecolab alleges it developed these products after extensive efforts over a period of several years, and its manufacturing process for its ASC products constitute trade secrets.

Ecolab contracted with IBA Inc. (IBA) in 2002 to manufacture and distribute Ecolab’s ASC products. Ecolab had to share its trade secrets with IBA to facilitate IBA’s manufacturing duties. Before disclosure, Ecolab required IBA to execute a confidentiality agreement prohibiting IBA from disclosing the trade secrets or using the trade secrets for its own purposes. The confidentiality agreement allowed IBA to disclose the trade secrets to third party subcontractors as long as the subcontractors were subject to the same confidentiality provisions. IBA then, with Ecolab’s permission, contracted with Webco Chemical Corporation (Webco) for Webco to manufacture the ASC products, while IBA would distribute them. Webco also executed a confidentiality agreement. The three parties continued this relationship until 2022, when, as Ecolab alleges, IBA and Webco stole Ecolab’s trade secrets and released their own line of competitive ASC products.

Continue reading →

Published on: August 14, 2024

FORT LAUDERDALE BUSINESS LITIGATION: BREACH OF CONTRACT DEFENSE OF “NOVATION”

By Mavrick Law Firm

If you replace a contract with another contract, is the original contract still enforceable? The answer to this question involves a contract principle called novation. Peter Mavrick is a Fort Lauderdale business litigation attorney. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Under Florida law, “novation is a mutual agreement between the parties to a contract for the discharge of a valid existing obligation by the substitution of a new valid obligation.” Jakobi v. Kings Creek Village Townhouse Ass’n, Inc., 665 So. 2d 325 (Fla. 3d DCA 1995). Novation is similar to modification of a contract, but with an important distinction. Modification “merely replaces some terms of a valid and existing agreement while keeping those not abrogated by the modification in effect.” Bornstein v. Marcus, 275 So. 3d 636 (Fla. 4th DCA 2019). Novation, on the other hand, completely replaces the prior agreement.

The elements for a valid novation are (1) the existence of a previously valid contract, (2) an agreement of the contracting parties to cancel the first contract, (3) an agreement of the contracting parties that the second contract replaces the first, and (4) validity of the second contract. Thompson v. Jared Kane Co., Inc., 872 So. 2d 356 (Fla. 2d DCA 2004); U.S. Home Acceptance Corp. v. Kelly Park Hills, Inc., 542 So. 2d 463 (Fla. 5th DCA 1989) (stating that a novation must be supported by valid consideration, and finding that a promise to perform an act that a party was already obligated to perform did not constitute valid consideration). The manifestation of a novation depends on the parties’ intention, which can be implied from the surrounding circumstances.

Continue reading →