FORT LAUDERDALE BUSINESS LITIGATION: ANTICIPATORY REPUDIATION CAN BE USED AS A CLAIM AND A DEFENSE IN A LAWSUIT

An anticipatory breach (also known as anticipatory repudiation) of a contract occurs when a party, by words or actions, repudiates a contract prior to the time of performance. Under Florida law, anticipatory breach can be asserted as a cause of action for damages, or as a defense to a breach of contract claim. The pivotal case on anticipatory breach is Hospital Mortgage Group v. First Prudential Development Corp., 411 So. 2d 181 (Fla. 1982). Relying on the Restatement (Second) of Contracts, the Florida Supreme Court in Hospital stated that a cause of action for anticipatory breach occurs “[w]here an obligor repudiates a duty 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.” However, Hospital also stated that, for a nonbreaching party to obtain damages for anticipatory repudiation, the nonbreaching party’s obligations under the contract must be performable. In other words, the nonbreaching party must prove it had the ability to perform under the contract. 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.

Anticipatory breach can constitute an affirmative defense to a breach of contract action. Hospital Mortgage Group, 411 So. 2d 181 (“Where performances are to be exchanged under an exchange of promises, one party’s repudiation of a duty to render performance discharges the other party’s remaining duties to render performance.”). However, Florida law is unsettled as to whether anticipatory breach must be pled as an affirmative defense or whether a denial of the plaintiff’s breach of contract claim is sufficient to raise anticipatory breach as an issue in the lawsuit. Compare Twenty-Four Collection, Inc. v. M. Weinbaum Const., Inc., 427 So. 2d 1110 (Fla. 3d DCA 1983) (“[A]lthough it is arguable that anticipatory repudiation is an affirmative defense required to be raised by defendant’s pleadings . . . we think the better rule to be that a defendant’s general denial to a plaintiff’s breach of contract action places in issue the plaintiff’s lack of breach of the contract.”), with Ryan v. Landsource Holding Co., LLC, 127 So. 3d 764 (Fla. 2d DCA 2013) (addressing elements of anticipatory breach as an affirmative defense).

Regardless of whether an anticipatory repudiation defense must be expressly pleaded as an affirmative defense or is implicitly included within a litigant’s denials, the elements needed to assert the defense differ from those required to plead a cause of action for anticipatory breach. The difference between the asserting the defense and the cause of action is that a defendant asserting the defense defendant does not need to demonstrate an ability to perform. Ryan v. Landsource Holding Co., LLC, is instructive on this point. In Ryan, the plaintiff sued the defendant for breaching a note and the defendant asserted an anticipatory repudiation defense. The plaintiff then served discovery seeking financial documents from the defendants that would demonstrate the defendant continued ability to pay the notes. The defendant objected arguing the request was irrelevant. The court sustained the defendant’s objection because the plaintiff’s request “overlooks the distinction between asserting anticipatory breach as a defense to a claim of breach of contract and asserting anticipatory breach as a basis for the recovery of damages.” A cause of action for anticipatory breach requires proof the contract was performable, while a defense does have any such requirement. Therefore, a defendant asserting anticipatory breach as a defense is relieved of the obligation to demonstrate a continued ability to perform.

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.