Articles Posted in Business Litigation

Under Florida’s offer of judgment statute, Section 768.79, Florida Statutes, “if a defendant serves an offer which is not accepted by a plaintiff, and if the judgment obtained by the plaintiff is at least 25 percent less than the amount of the offer, the defendant shall be awarded reasonable costs, including investigative expenses, and attorney’s fees” incurred from the date the proposal was served.  Precedent from the Supreme Court of Florida in Anderson v. Hilton Hotels Corp., 202 So.3d 846 (Fla. 2016), determined that, “an offer [of judgment] that complies with section 768.79 and Rule 1.442 creates a ‘mandatory right’ to collect attorneys’ fees.”  Offers of judgment, however, are limited by a “bad faith” exception that can nullify the offer of judgment when the court determines the offering party conveyed the offer in bad faith.  “[O]nce an offer of judgment has been made and rejected and a judgment of no liability has been entered, the defendant has a right to an award of attorney’s fees unless the offer was found to have been made in bad faith.”  Transmission Co. v. Lauderdale Sand & Fill, Inc., 813 So.2d 1013 Fla. 4th DCA 2002).  Peter Mavrick 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.

Under Section 768.79(2), Florida Statutes, an offer of judgment must:

(1) Be in writing and state that it is being made pursuant to this section;

Many business litigation cases assert claims for conversion and civil theft.  Under Florida law, and as explained by Florida’s Third District Court of Appeal in Ice v. Cosmopolitan Residences on South Beach, a Condominium Association, Inc., 237 So.3d 408 (Fla. 3d DCA 2017), conversion “is the exercise of wrongful dominion and control over the property   to the detriment of the actual owner.”  In many cases, plaintiffs overplay their hands and assert conversion over matters that Florida law does not allow.  For example, it is well-established law in Florida that a simple debt which can be discharged by the payment of money cannot generally serve as the basis for a claim for conversion or civil theft.  Fla. Desk, Inc. v. Mitchell Int’l, Inc., 817 So.2d 1059 (Fla. 5th DCA 2002).  As another example, claims asserting conversion of money are limited in certain respects.  For money to be the subject of the conversion claim, “there must be an obligation to keep intact or deliver the specific money in question, so that money can be identified.”  Futch v. Head, 511 So.2d 314 (Fla. 1st DCA 1987).  In other words, “an action for conversion of money can only be maintained where the money at issue has been kept separate.”  Rupp v. Schon, 608 So.2d 934 (Fla. 4th DCA 1992).  Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, 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 law, and other legal disputes in federal and state courts and in arbitration.

Although a contractual relationship between the parties will not bar a claim for conversion or civil theft, the conversion or civil theft “must go beyond, and be independent from, a failure to comply with the terms of a contract.”  Gasparini v. Pordomingo, 972 So.29 1073 (Fla. 3d DCA 2008).  This is because of the long-standing principle in Florida law that “a plaintiff may not circumvent the contractual relationship by bringing an action in tort.”  Ginsburg v. Lennar Fla. Holdings, Inc., 645 So.2d 490 (Fla. 3d DCA 1994).  For example, in Burke v. Napieracz, 674 So.2d 756 (Fla. 1st DCA 1996), Florida’s First District Court of Appeal held that the economic loss rule did not preclude a cause of action for a tort that was distinct or independent from a breach of contract.  In Burke, the defendant was to receive specifically identifiable social security funds, deposit those funds in an identifiable bank account, and forward the funds to plaintiff.  The defendant was not authorized to withdraw monies from the account except as specifically authorized by Burke.  The breach of the agreement would have resulted from the defendant’s failure either to properly deposit the social security funds or to provide the funds to Burke as requested.  A tort was committed because, not only did the defendant fail to perform his contractual obligations, he took the funds for his personal use.  The Burke decision held that an “affirmative and intentional act of converting the funds to his own use by allegedly stealing the monies to which he was entrusted” gave rise to a tort separate and independent from the breach of contract.

Claims for civil theft go well beyond what is required to establish conversion.  Florida’s Fourth District Court of Appeal, in Heldenmuth v. Groll, 128 So.3d 895 (Fla. 4th DCA 1991), explained that “[t]o establish a claim for civil theft, a party must prove that a conversion has taken place and that the accused party acted with criminal intent.”  The criminal intent must be proven by “clear and convincing evidence,” which is a higher standard of proof than the “preponderance of the evidence” typically required in business litigation.  In Heldenmuth, the purchaser of real property appropriately stated a claim for civil theft against escrow agents by alleging that the escrow agents used some of the escrow funds for the escrow agents’ own use.

Under Florida law, breach of contract by anticipatory repudiation allows the non-breaching party to terminate his own contract and then sue for damages.  The Supreme Court of Florida in Hospital Mortgage Group v. First Prudential Development Corp., 411 So.2d 181 (Fla. 1982), explained in pertinent part that, “[i]n dealing with anticipatory repudiations[,] the law is clear that a repudiation gives rise to a claim for damages by the nonbreaching party.”  Relying on earlier precedent from the Supreme Court of Florida in Poinsettia Dairy Products, Inc. v. Wessel Co., 123 Fla. 120 (Fla. 1936), Hospital Mortgage explained that “the nonbreaching party is relieved of its duty to tender performance and has an immediate cause of action against the breaching party.”   Peter Mavrick 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.

In its Hospital Mortgage decision, the Supreme Court of Florida adopted important aspects of the Restatement (Second) of Contracts concerning the law of anticipatory breach of contract.  As stated in Restatement (Second) of Contracts at Section 253 (1979):

(1) Where an obligor repudiates a duty before he has committed a breach by non-performance and before he has committed a breach by non-performance and before he has received all of the agreed exchange for it, his repudiation alone gives rise to a claim for damages for total breach.

Business litigation cases frequently assert claims of unjust enrichment that fail to satisfy the requirements of Florida law.  Florida’s Third District Court of Appeal in Gonzalez v. Eagle Insurance Co., 948 So.2d 1 (Fla. 3d DCA 2006), explained that, “[a]t the core of the law of restitution and unjust enrichment is the principle that the party who has been unjustly enriched at the expense of another is required to make restitution to the other.”  Frito v. Attorney’s Title Insurance Fund, Inc., 83 So.3d 755 (Fla. 3d DCA 2011), set forth the elements for an unjust enrichment claim under Florida law, requiring the plaintiff to prove that (1) the plaintiff conferred a benefit on the defendant, (2) the defendant voluntarily accepted and retained the benefit, and (3) it would be inequitable for the defendant to retain the benefit without paying the value of the benefit to the plaintiff.  However, precedent from the Supreme Court of Florida in Kopel v. Kopel, 229 So.2d 812 (Fla. 2017), explained an important qualification on these elements: the plaintiff must directly confer a benefit on the defendant.  Peter Mavrick 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.

In Extraordinary Title Services, LLC v. Florida Power & Light Co., 1 So.3d 400 (Fla. 3d DCA 2009), the appellate court held the plaintiff’s unjust enrichment claim failed because the plaintiff did not prove a direct benefit had been conferred on the defendant.  Extraordinary Title Services explained that, “[i]n the instant case, the second amended complaint indicates that Plaintiff has absolutely no relationship with Group and has not conferred a direct benefit upon Group. Plaintiff contracted with FPL, not Group, for electricity; Plaintiff paid FPL, not Group; and Group provided no services to Plaintiff. Based on these facts, which are not in dispute, the Plaintiff cannot allege nor establish that it conferred a direct benefit upon Group. Therefore, we conclude that the trial court properly dismissed with prejudice the unjust enrichment claim asserted against Group.” Similarly, in People’s National Bank of Commerce v. First Union National Bank of Florida, 667 So.2d 876 (Fla. 3d DCA 1996), Florida’s Third District Court of Appeal affirmed dismissal with prejudice of an unjust enrichment count, because the plaintiff failed to allege a direct benefit given to the defendant.  In that decision, Southeast Bank had made two loans to a developer. Before making these loans, Southeast Bank made separate participation agreements with five lenders, including Peoples National. Under the participation agreements, Southeast Bank was supposed to act as the lead lender.  It was responsible for collecting payments from the developer and then remitting payments to each of the five participant lenders. Several years later, Peoples National filed an unjust enrichment action against the other four participant lenders, demanding a refund of alleged overpayments made to the four participant lenders. The appellate court rejected the plaintiff’s unjust enrichment claim, holding in pertinent part, “[h]ere, the plaintiff, Peoples National, could not and did not allege that it had directly conferred a benefit on the defendants, the other participant lenders. In actuality, if any benefit was conferred upon each participant lender in the form of overpayments, it could only have been conferred upon them by Southeast, not Peoples National. Because Peoples National failed to allege ultimate facts that support a prima facie case of unjust enrichment, the trial court properly dismissed with prejudice that count against the other participant lenders.”

Peter Mavrick is a Miami business litigation lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.

Florida’s Deceptive and Unfair Trade Practices Act, often called “FDUPTA,” prohibits certain deceptive and unfair trade practices.  In Bookworld Trade, Inc. v. Daughters of St. Paul, Inc., 532 F.Supp.2d 1350 (M.D. Fla. 2007), the United States District Court for the Middle District of Florida explained that “[a] deceptive practice is one that is likely to mislead consumers, and an unfair practice is one that ‘offends established public policy’ or is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.'”  To establish a cause of action under FDUPTA, a plaintiff must establish the following three elements: (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages. Peter Mavrick 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.

In business litigation where FDUPTA claims are based on alleged fraudulent acts, some defendants have successfully argued the plaintiff must plead the claim with specificity.  In Blair v. Wachovia Mortg. Corp., 2012 WL 868878 (M.D. Fla. Mar. 14, 2012), the federal court held, “this Court concludes that where the gravamen of the [FDUPTA] claim sounds in fraud, as here, the heightened pleading standard of Rule 9(b) would apply.”  In Pop v. Lulifama.com LLC, 2023 WL 4661977 (M.D. Fla. July 20, 2023), the federal court explained that: “This Court, however, applies the heightened pleading standards to FDUPTA allegations sounding in fraud…Here, Mr. Pop alleges that both the Luli Fama and Influencer Defendants engaged in ‘a deceptive act or unfair practice’ by ‘engaging in fraud and statutory violations.’ … Mr. Pop’s FDUPTA claim sound in fraud as it avers ‘unscrupulous [practices] … likely to mislead any consumer acting reasonably in the circumstances.’ … Therefore, Rule 9(b)’s heightened pleading standard applies.”  The United States Court of Appeals for the Eleventh Circuit, in Garvield v. NDS Health Corp., 466 F.3d 1255 (11th Cir. 2006), explained that this heightened pleading standard governing fraud claims requires a plaintiff allege with particularity the “who, what, when, where, and how” of the alleged fraudulent misconduct.  However, not all courts agree that FDUPTA claims alleging fraudulent conduct must be pled with specificity.  For example, the United States District Court for the Middle District of Florida, in Allstate Ins. Co. v. Auto Glass Am, LLC, 418 F.Supp.3d 1009 (M.D. Fla. 2019), stated that, “[a]s a threshold matter, this Court declines to impose the heightened pleading standard set forth in Rule 9(b).”

Regardless of whether there is a heightened pleading standard for FDUPTA claims based on fraud, the plaintiff has the legal burden to prove certain elements.  The “deceptive or unfair practice” element of a FDUPTA claim can be proved in two ways.  The first way is by proving a violation of “any rules promulgated pursuant to the Federal Trade Commission Act” or “any law, statute, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices” (under Florida Statute Section 501.203(3)(a), (c)).  The second way, as explained by Blair v. Wachovia Mortg. Corp., 2012 WL 868878 (M.D. Fla. Mar. 14, 2012), is by proving that “there is a representation, omission, or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.”  The plaintiff also must prove that the unfair practice at issue caused his allege harm.  Florida’s Fourth District Court of Appeal, in Stewart Agency, Inc. v. Arrigo Enterprises, Inc., 266 So.3d 207 (Fla. 4th DCA 2019), explained that “[c]ausation under FDUPTA must be direct, rather than remote or speculative.”  The United States Court of Appeals for the Eleventh Circuit held, in Fitzpatrick v. Gen Mills, Inc., 635 F.3d 1279 (11th Cir. 2011), that the element of causation is met when the alleged misrepresentations would have deceived an objectively reasonable person.  Where the harm does not result from the FDUPTA violation, the claim fails for lack of causation.

This article discusses the circumstances obligating parties in business litigation to arbitrate and when they can avoid arbitration.  “Arbitration is a preferred method of dispute resolution.” Obolensky v. Chatsworth as Wellington Green, 240 So. 3d 6 (quoting BallenIsles Country Club, Inc. v. Dexter Realty, 24 So. 3d 649, 652 (Fla. 4th DCA 2009)).  Precedent from the Supreme Court of Florida, in Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013), explained that “[c]ourts generally favor [arbitration] provisions, and [ ] try to resolve ambiguity… in favor of arbitration.”  But this favorability does not always force unwilling participants to arbitrate. Courts can, and do, refuse to mandate arbitration despite the existence of an contractual provision seemingly requiring arbitration. For example, Florida’s Third District Court of Appeal, in Apartment Inv. & Mgmt. Co. v. Flamingo/S. Beach 1 Condo. Ass’n, Inc., 84 So. 3d 1090 (Fla. 3d DCA 2012), upheld the trial court’s denial of a motion to compel arbitration because the parties had amended their contract to exclude certain legal issues from arbitration.  Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, 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 law, and other legal disputes in federal and state courts and in arbitration.

Florida courts must consider three elements when faced with a motion to compel arbitration: “(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 first two steps rest on contract interpretation, thereby requiring courts to construe the contracting parties’ intent.

The first factor requires a careful framing of the issue for consideration because it will dictate the presiding tribunal. Challenges to contract validity are resolved by arbitrators, while challenges to contract formation or the existence of a contract are resolved by courts. HHH Motors, LLP v. Holt, 152 So. 3d 745, 747 (Fla. 1st DCA 2014) (citing Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287 (2010)). Sometimes, it is easy to determine when a party challenges validity rather than contract formation. See, e.g., Airbnb, Inc. v. Doe, 336 So. 3d 698 (Fla. 2022) (explaining that “because Airbnb’s Terms of Service incorporate by reference the AAA Rules that expressly delegate arbitrability determinations to an arbitrator, the agreement clearly and unmistakably evidences the parties’ intent to empower an arbitrator, rather than a court, to resolve questions of arbitrability.”). Other times it is less obvious. See, e.g., Duval Motors Co. v. Rogers, 73 So. 3d 261 (Fla. 1st DCA 2011) (the court considered the issue of arbitrability because it had to determine whether a contract containing an arbitration provision was superseded by another contract entered contemporaneously that contained a merger clause negating all prior writings).

Sellers and buyers have competing interests when negotiating a contract. One term sellers and buyers should consider when negotiating their purchase agreement is the fraudulent inducement disclaimer provision. These provisions can help sellers avoid or defeat lawsuits if the buyer develops “buyer’s remorse” after entering the agreement because the buyer cannot claim the seller’s representations tricked him or her into entering the purchase agreement. However, fraudulent inducement disclaimer provisions may harm buyers by preventing them from asserting an otherwise legitimate fraudulent inducement claim against the seller.  Peter Mavrick 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.

The general rule of contracts prohibits parties from disclaiming fraudulent inducement because contracting parties are entitled to rely on each other’s representations before entering a contract. The Supreme Court of Florida explained in Oceanic Villas Inc. v. Godson, 4 So. 2d 689 (Fla. 1941), that “[i]t is well settled that a party can not [sic] contract against liability for his own fraud.”  Florida’s appellate courts have generally reiterated this legal principle concerning exculpatory clauses concerning fraud.  Mankap Enters., Inc. v. Wells Fargo Alarm Servs., a Div. of Baker Protective Servs., Inc., 427 So. 2d 332 (Fla. 3d DCA 1983) (“A party cannot contract against liability for his own fraud in order to exempt him from liability for an intentional tort, and any such exculpatory clauses are void as against public policy.”); Zuckerman-Vernon Corp. v. Rosen, 361 So. 2d 804 (Fla. 4th DCA 1978) (“A party cannot contract against liability for his own fraud in order to exempt him from liability for an intentional tort.”); see also HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So. 2d 1238 (Fla. 1996) (“The interest protected by fraud is a plaintiff’s right to justifiably rely on the truth of a defendant’s factual representation.”)  However, disclaimer is permitted in limited circumstances when contracting parties “expressly state that [the contract] is incontestable on the ground of fraud.” Global Quest, LLC v. Horizon Yachts, Inc., 849 F. 3d 1022 (11th Cir. 2017) (summarizing the holding in Oceanic Villas). The enforceability of a fraudulent inducement disclaimer depends on the provision’s specificity because it is so draconian. Bank of Am., N.A. v. GREC Homes IX, LLC, 2014 WL 351962, at *6 (S.D. Fla. Jan. 23, 2014) (“‘A party cannot contract against liability for his own fraud[,]’ absent specific contractual language to the contrary.”).

Courts allow disclaimers of fraudulent inducement  for several reasons. Courts presume contracting parties read the contract before agreeing to its terms. In Billington v. Ginn-La Pine Island, Ltd., 192 So.3d 77 (Fla. 5th DCA 2016), Florida Fifth District Court of Appeal explained that the “law necessarily presumes that parties to a contract have read and understood [the contract’s] contents.”  The Billington appellate decision added that prohibiting fraudulent inducement disclaimers would prevent parties from protecting “themselves against those who would fabricate claims of fraud to avoid the consequences of a contractual obligation.”  The appellate court also referenced that the sanctity of a contract and predictability of an outcome, together, take precedence over claim waiver when the parties clearly manifest their intent to avoid fraudulent inducement claims