Articles Posted in Business Litigation

An exculpatory clause is a contract provision that is often raised in business litigation. The purpose of an exculpatory clause is to relieve one party of liability if damages are caused during the execution of the contract. Exculpatory clauses are enforceable only where and to the extent that the intention to be relieved was made clear and unequivocal in the contract, and the wording must be so clear and understandable that an ordinary and knowledgeable party will know what he is contracting away. Fuentes v. Owen, 310 So.2d 458 (Fla. 3d DCA 1975). 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, employment litigation, and other legal disputes in federal and state courts and in arbitration.

In the case of Orkin Exterminating Company v. Montagano, 359 So.2d 512 (Fla. 4th DCA 1978), Florida’s Fourth District Court of Appeal held that a homeowner was entitled to recover for termite damages from an exterminating company despite the fact that the homeowner had signed a contract containing an exculpatory clause limiting the exterminating company’s damages liability. The appellate court determined that the exculpatory clause was ambiguous on its face because it provided for two different guarantees (a “total protection” guarantee and a guarantee limited to retreatment only) and did not differentiate as to which guarantee was applicable. Florida courts in business litigation have frequently recognized that exculpatory clauses are not favored in the law. Florida courts strictly construe the clauses against the party claiming to be relieved of liability. Southworth & McGill, P.A. v. S. Bell Tel. & Tel. Co., 580 So. 2d 628 (Fla. 1st DCA 1991). Orkin Exterminating Company v. Montagano held that “because we do not look with favor on exculpatory clauses, we must require the draftsmen of all contracts which contain them to use clear and unequivocal language totally without a hint of deceptive come-on, or inconsistent, clauses.”

The Third District Court of Appeals in the case of Michel v. Merrill Stevens Dry Dock Co., 554 So. 2d 593, 595 (Fla. 3rd DCA 1989), relied on the ruling in Orkin Exterminating Company v. Montagano and found that Merrill Stevens’ exculpatory clause was ambiguous because the wording purported to absolve Merrill Stevens of all liability for its negligence and breach of contract in the first sentence of the clause, and yet, in the second sentence, stated that Merrill Stevens’ potential liability for negligence and/or breach of contract was not to exceed $300,000.  The appellate court held that by limiting negligence and breach of contract claims to $300,000, Merrill Stevens tacitly acknowledged that such liability may have existed in addition to liability for gross negligence. The appellate court held that this provision may have potentially misled ship owners by affording them a false sense of protection in the event of negligence. Courts in business litigation look to the intent of the parties to interpret contract provisions. The inconsistent wording contained in the exculpatory clause which Merrill Stevens drafted did not clearly express exculpatory intent for breach of contract and therefore did not absolve Merrill Stevens from liability under these theories. The appellate court reversed the trial court’s summary judgment in favor of Merrill Stevens on the issue of liability for negligence and breach of contract.

Company websites often play a vital role in business litigation, both as a source of biographical and background information, as well as intellectual property disputes. Some lawsuits involve content that was displayed on the website at one point in time but is no longer available. A resourceful method of obtaining records of historical website content is the Internet Archive’s Wayback Machine. The Wayback Machine is a webcrawler (search engine) that searches out and records website content. Internet Archive’s webcrawler records have been recognized by several courts as a reliable and accurate source. Several courts have taken judicial notice of Internet Archive’s records to resolve controversies when the parties dispute what a public website stated historically. 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, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Courts generally treat the Internet Archive’s records differently than records collected from other websites. “[T]he federal courts have recognized that Internet archive services, although representing a relatively new source of information, have sufficient indicia of reliability to support introduction of their contents into evidence, subject to challenge at trial for authenticity.” Foreword Magazine, Inc. v. OverDrive, Inc., No. 1:10-cv-1144, 2011 WL 5169384 (W.D. Mich. Oct. 31, 2011).  A federal court described the Wayback Machine:

The third party donating the material is an automated software program that is designed to capture the information on a website as it appeared on the date the crawler visited it. The crawler does not exercise any “decisionmaking” power as to what will be preserved but simply takes a snapshot of a website at a particular point in time. If the crawler had the discretion to alter the impression it captured of a website, the Wayback Machine would defeat its own purpose of archiving images on the Internet.

Businesses have several available causes of action to claim when a competitor attempts to replicate the business’ appearance in advertising or its products.  Trademark law, such as the Lanham Act, provides many remedies to a business which believes that a competitor is emulating the business and creates a “likelihood of confusion.” Consumer protection laws, like the Florida Unfair and Deceptive Trade Practices Act can also cover such conduct because it qualifies as an unlawful “unfair” or “deceptive” method of competition.  Also available to aggrieved businesses is a claim that the competitor violated their copyright.  When it is appropriately brought, copyright law provides unique remedies and may provide recovery which might not otherwise be unlawful under trademark or consumer protection laws.  However, copyright law has a more limited application in comparison to trademark law in cases involving emulation of design amongst competing businesses, as reflected in the recent case, Off Lease Only, Inc. v. Lakeland Motors, LLC, 20-10825, 2020 WL 5553301 (11th Cir. Sept. 17, 2020).  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, employment litigation, and other legal disputes in federal and state courts and in arbitration.

When a competitor emulates the appearance of a company’s products or advertising, the first cause of action to consider is usually under trademark law.  Trademark law was enacted to prevent a business emulating or copying the appearance of another.  Copyright law is generally more concerned with protecting artists from unlawful reproductions of their work, such as in music, film, or in books.  However, in limited scenarios, an aggrieved business may also have the opportunity to initiate business litigation under copywrite law when a competitor copies the artistic qualities of a business’ advertising or products.

Title seventeen of the United States Code protects “in original works of authorship fixed in any tangible medium of expression.  17 U.S.C. § 102(a).  However, “[i]n no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.”  17 U.S.C.A. § 102 (b).  Compilations of “work formed by the collection and assembling of preexisting materials” such that “the resulting work as a whole constitutes an original work of authorship” may also be protected by copyright. 17 U.S.C. § 101.  The copyright protection for compilations only protects “the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.  The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material.”  17 U.S.C. § 103(b).  Cases deciding business litigation involving copyrights for compilation work has made clear that the protection is far more limited than copyright protection for an original work.  Intervest Const., Inc. v. Canterbury Estate Homes, Inc., 554 F.3d 914 (11th Cir. 2008) (“Accordingly, any similarity comparison of the works at issue here must be accomplished at the level of protected expression—that is, the arrangement and coordination of those common elements…. In undertaking such a comparison, it should be recalled that the copyright protection in a compilation is ‘thin’”).

Most contractual disputes involve parties that dispute the meaning of particular contract terms.  Whether a party will prevail in a breach of contract case will often depend on the interpretation of terms or phrases within the contract.  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, trade secret litigation, non-compete agreement litigation,  employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

Contracts establish the rights and responsibilities between the parties agreeing to the contract.  The question as to whether a contract establishes liability depends on the terms of the contract and what the parties intended.

Resolution of a contractual dispute is often dependent upon contract interpretation.  Courts have established general rules for interpreting contracts in business litigation.  “When interpreting a contract, the court must first examine the plain wording of the contract for evidence of the parties’ intent.” Perez-Gurri Corp. v. McLeod, 238 So. 3d 347 (Fla. 3d DCA 2017).  “[W]ords in a contract are presumed to have been used with their ordinary and customary meaning.” Emergency Assocs. of Tampa, P.A. v. Sassano, 664 So.2d 1000 (Fla. 2d DCA 1995).  “The expressed intent of the parties is the controlling factor.  Intent unexpressed will be unavailing, and substantial ambiguity or doubt must be resolved against the person claiming the right to enforce the covenant.”  McInerney v. Klovstad, 935 So. 2d 529 (Fla. 5th DCA 2006).  “[A] court must construe a contract in a manner that accords with reason and probability; and avoid an absurd construction.” Kipp v. Kipp, 844 So.2d 691 (Fla. 4th DCA 2003).

A person or company must have standing (the legal right to assert a claim) to file a lawsuit at the commencement of the case. In other words, a party cannot file a lawsuit based on a contract until it has been assigned those contractual rights.  Businesses often have multiple corporate entities that act interchangeably, however, only the corporate entity with contractual rights may assert a claim. 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, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

“A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.” Matthews v. Fed. Nat. Mortg. Ass’n, 160 So. 3d 131 (Fla. 4th DCA 2015). Standing in business litigation may be established by an assignment of contractual rights prior to the filing of the complaint. In foreclosure lawsuits standing may also be established by show of an equitable transfer of the mortgage before the lawsuit was commenced. In Matthews, the appellate court held that Fannie Mae failed to establish standing at the beginning of the lawsuit because there was no assignment that pre-dated the lawsuit and the promissory note attached to the complaint was not made payable to Fannie Mae. The promissory note also was not endorsed in blank, so that it would be actionable by whomever possessed it. Matthews reversed the final judgment of foreclosure because there were no apparent contractual rights.

Court’s construe the individual circumstances of each case in business litigation to determine whether standing exists. “Officers, directors, or stockholders of the client, and others not in privity with the [contractual party], lack standing to maintain an action for breach of contract.” Mulligan v. Wallace, 349 So. 2d 745 (Fla. 3d DCA 1977). In Mulligan, after an intracorporate conflict for management of a corporation, the former corporate officers and directors filed a lawsuit against the company’s accounting firm for, among other things, breach of contract. The trial court dismissed the breach of contract count and found that these former officers and directors did not have standing to sue the accounting firm. The former officers and directors immediately appealed and contended that they were third-party beneficiaries of the accounting contract. The appellate court disagreed. The appellate court held that because 1) accountants are liable to their clients, which was the corporation, and 2) the primary injury of the breach of contract was to the corporation, therefore, those former officers and directors’ circumstances did not establish their standing for a breach of contract claim.