Articles Posted in Business Litigation

Florida companies should always consider the risk that a business litigation defendant will attempt to avoid paying an adverse money judgment through bankruptcy proceedings.  While bankruptcy protection is usually invoked by people and companies that are genuinely insolvent, bankruptcy protection can also be abused by cunning defendants to avoid paying adverse judgments.  Claims which are discharged in bankruptcy are not collectable. Accordingly, a money judgment against a defendant for a claim discharged in bankruptcy is not worth the paper it is printed on.  A savvy plaintiff can strategically plan to limit the possibility that a nefarious defendant will avoid his or her liability through bankruptcy.  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.

Bankruptcy permits a debtor to discharge certain debts to give the debtor a fresh start.  A discharge of a debt in bankruptcy “voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor.”  11 U.S.C. § 524(a)(1).  It also bars a plaintiff from pursuing such a claim.  11 U.S.C. § 524(a)(2) (“A discharge in a case under this title […] operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover[,] or offset any such debt as a personal liability …”).  Because of this, bankruptcy protection can be a powerful tool for defendants to avoid their obligations to pay money judgments.

Sometimes, however, a cunning defendant in business litigation will invoke bankruptcy protection even though he or she has the money to pay a judgment.  A plaintiff who expects a defendant to attempt such a scam can preemptively strategize to avoid this result.  This is accomplished by ensuring that the causes of action brought against a party are exempt from bankruptcy discharge.

Businesses often include provisions in their contracts which require any disputes to be resolved in arbitration. Under Florida law, there are very narrow circumstances where a court may interfere with the arbitrator’s decision. Common arbitration errors that occur in business litigation include due process errors, errors in application of a legal standard, fraud, partiality of the arbitrator, and arbitrator acting in excess of the scope of the arbitrator’s authority. A court, however, may not review the Arbitrator’s decision making for errors in its factual findings. 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.

When a party files a motion to vacate or set aside an arbitration award, it is not the prerogative of the Court to retry the issues and determine whether the arbitrator came to the correct decision.  “Courts do not review findings of fact contained in an arbitration award or attempt to substitute their judgment for that of the arbitrator.” Deen v. Oster, 814 So.2d 1065 (Fla. 4th DCA 2001).  The importance of this standard in business litigation is to preserve the integrity of the arbitration process. Otherwise, the party who is unhappy with the arbitrator’s decision may seek an evidentiary hearing, i.e. a second trial, before the trial court. For parties to be entitled to an evidentiary hearing on a motion to set aside an arbitration award, their motion on its face must set forth a basis for relief. Davenport v. Dimitrijevic, 857 So. 2d 957, 963 (Fla. 4^th DCA 2003). In Davenport, the moving party claimed that arbitration award was obtained through fraud in the arbitration proceeding. Davenport, however, affirmed the trial court’s denial of the motion because the motion on its face failed to “set out a case for fraud” under Section 682.13(1)(a) of the Florida Statutes.

In the case of Regalado v. Cabezas, 959 So. 2d 282 (Fla. 3d DCA 2007), the defendant agreed to arbitrate, lost in the arbitration, then filed a motion with the trial court to vacate, change or modify the arbitration award. The defendant contended that the award was procured by fraud and the arbitrator had exceeded his authority and jurisdiction. The trial court refused to conduct an evidentiary hearing and denied the motion. The defendant immediately appealed.

Arbitration is a method of dispute resolution which parties may agree to through a pre-dispute contract.  Often, a plaintiff will attempt to avoid the contractual agreement to arbitration because the plaintiff believes that arbitration puts him or her at a strategic disadvantage.  A plaintiff may argue that he or she did not have the capacity to enter into the agreement to arbitrate.  Normally, contracts with children are voidable at the discretion of the child.  A recent case held that a child could be bound by an arbitration agreement, even though he did not have the capacity to be bound by the agreement, because the child fraudulently represented that a legal guardian agreed to a contract with an arbitration agreement.  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 arbitrate.

A party cannot be compelled to arbitrate his or her disputes without having agreed to arbitration.  A previous article explored the required consent in arbitration and apparent authority.  A party that does not have the capacity to enter into an arbitration agreement generally cannot be bound by that contract.

Children do not have the same capacity to enter into contracts that people over the age of 18 have.  Particularly, children often have the discretion to rescind a contract.  “The right of an infant to avoid his contract is one conferred by law for his protection against his own improvidence and the designs of others; …. It is the policy of the law to discourage adults from contracting with infants.” Putnal v. Walker, 61 Fla. 720 (Fla. 1911).

Arbitration can provide Florida businesses with a swift and less costly resolution to a dispute in comparison to litigation.  Arbitration generally benefits the party accused of wrongdoing more than the plaintiff.  Accordingly, a plaintiff will usually have the incentive to try to find a way to avoid the application of an arbitration clause while a defendant will have the incentive to enforce the arbitration clause.  A plaintiff attempting to avoid arbitration may claim that the party entering into the contract with the arbitration clause did not have the authority to enter into an arbitration agreement.  Savvy defendants can Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale 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.

Normally, “[t]he intent of the parties to a contract, as manifested in the plain language of the arbitration provision and contract itself, determines whether a dispute is subject to arbitration.  Courts generally favor such provisions, and will try to resolve an ambiguity in an arbitration provision in favor of arbitration.”  Jackson v. Shakespeare Found., Inc., 108 So.3d 587 (Fla. 2013).  “Where an agreement to arbitrate has been formed, the court must treat the agreement as ‘valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’” Larsen v. Citibank FSB, 871 F.3d 1295 (11th Cir. 2017), quoting 9 U.S.C. § 2.  However, a party in business litigation may challenge the enforceability of an arbitration clause by claiming that the party who executed the agreement with the arbitration clause did not have authority to enter into the arbitration agreement.

Generally, a party in business litigation cannot be compelled to arbitrate a dispute without actually agreeing to a contract containing an arbitration clause.  “However, an exception to this general rule exists when the signatory of the arbitration agreement is authorized to act as the agent of the person sought to be bound […].”  Stalley v. Transitional Hosps. Corp. of Tampa, Inc., 44 So. 3d 627 (Fla. 2d DCA 2010).  “Non-signatories may be bound by an arbitration agreement if dictated by ordinary principles of contract law and agency.”  Martha A. Gottfried, Inc. v. Paulette Koch Real Estate, Inc., 778 So.2d 1089 (Fla. 4th DCA 2001).

Florida law concerning a claim of civil theft is a double-edged sword.   A company that prevails on a business litigation claim of civil theft can be awarded treble damages and attorneys’ fees.  However, a company claiming civil theft risks having to pay the opposing side’s attorney’s fees for failure to prove the required element of “criminal intent.”  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderale, 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.

Florida’s civil theft statutes provide a tempting cause of action in business litigation.  A cause of action for civil theft can provide an opportunity for a litigant to be awarded remedies not found in most other causes of action.  Particularly, a party prevailing on its claim of civil theft may recover three times the amount which was stolen as well as the attorneys’ fees expended pursuing the civil theft claim.  § 772.11(1), Florida Statutes (“Any person who proves by clear and convincing evidence that he or she has been injured in any fashion by reason of any violation of [theft statutes] has a cause of action for threefold the actual damages sustained and, in any such action, is entitled to minimum damages in the amount of $200, and reasonable attorney’s fees and court costs in the trial and appellate courts”).

In business litigation, it may often seem as if the opposing party is a thief for what they did.  Civil theft requires that a party prove more than something was wrongfully taken.  To prevail on a claim of civil theft, a plaintiff must prove that the opposing party had the criminal intent to steal.  Rosen v. Marlin, 486 So. 2d 623 (Fla. 3d DCA 1986) (“Under Florida law, a necessary element for establishing the crime of theft is that the defendant had, prior to the commission of the act, an intent to commit a theft”).  This legal principle was discussed in a previous article.  Proving what a person is thinking can be exceptionally difficult.

Parties to a contract with an arbitration agreement will often litigate the issue of whether the arbitration provision covers the parties’ dispute.  Because arbitration is a different method of dispute resolution than court litigation, the distinguishing traits of arbitration can tactically benefit one party more than the other.  Parties will often have the incentive to challenge whether arbitration is proper.  Whether a dispute should be arbitrated is generally governed by the particular wording of the arbitration agreement.  Accordingly, the scope of the arbitration agreement can have a significant impact on the ultimate resolution of the case.  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.

Parties involved in business litigation often challenge whether the dispute is properly arbitrable.  While federal and state law governs the interpretation and enforcement of arbitration agreements, arbitration is fundamentally a creature of contract.  Which disputes are arbitrable is ultimately controlled by the provisions found in the parties’ contract.  “The intent of the parties to a contract, as manifested in the plain language of the arbitration provision and contract itself, determines whether a dispute is subject to arbitration.  Courts generally favor such provisions, and will try to resolve an ambiguity in an arbitration provision in favor of arbitration.”  Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013).  A previous article explored how courts will evaluate contract provisions that agree to arbitrate disputes “arising out of” or “related to” the agreement.  Another article described how third-party beneficiaries to a contract may seek to compel arbitration of a dispute.

“Disputes arise in many and varied contexts and the mere coincidence that the parties in dispute have a contractual relationship will ordinarily not be enough to mandate arbitration of the dispute.” Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999).  “An agreement to arbitrate, arising out of a contractual obligation, is essentially a question of law regarding the construction of that contract.”  Steritech Group, Inc. v. MacKenzie, 970 So. 2d 895 (Fla. 5th DCA 2007).  “[T]he determination of whether an arbitration clause requires arbitration of a particular dispute necessarily ‘rests on the intent of the parties.’” Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999). “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).   “Only those claims which the parties have agreed are arbitrable may be subject to arbitration.”  Regency Group, Inc. v. McDaniels, 647 So. 2d 192 (Fla. 1st DCA 1994).

Consumers who receive an inferior product or service than what was advertised are certainly harmed by false advertising, but they may not have the incentive to sue or take action against the company issuing false advertisements.  False advertising can have a far greater impact on competitors.  A business that engages in false advertising can damage its competitors by using false advertising to portray itself as a better value.  An aggrieved business can initiate business litigation against its competitor for false advertising under the Lanham Act, common law unfair competition, and the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).  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.

Advertising can be an effective method for companies to show potential consumers the qualities of their products.  Businesses have the incentive to present their products in the best possible light and may exaggerate the traits of their product. In business litigation over the legal effect of “opinion statements,” such as the qualifier that something is the “best value,” “finest,” and “high quality,” Florida courts generally consider such terminology as being lawful puffery.  A previous Mavrick Law Firm article discussed lawful puffery in greater detail.  By contrast, statements about specific qualities of a product which are demonstrably false can be unlawful.

Each of these laws requires that the plaintiff show a deceptive act by a competitor.  Specifically, to prevail on a Lanham Act claim for false advertising, an aggrieved business must show that “(1) the ads of the opposing party were false or misleading, (2) the ads deceived, or had the capacity to deceive, consumers, (3) the deception had a material effect on purchasing decisions, (4) the misrepresented product or service affects interstate commerce, and (5) the movant has been—or is likely to be—injured as a result of the false advertising.”  Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242 (11th Cir. 2002).  “Unfair competition under Florida common law requires ‘deceptive or fraudulent conduct of a competitor and likelihood of consumer confusion.’”  Webster v. Dean Guitars, 955 F.3d 1270 (11th Cir. 2020).  To prevail in business litigation under FDUTPA, a plaintiff must also show that a “deceptive act or unfair practice” caused damages.  City First Mortg. Corp. v. Barton, 988 So. 2d 82 (Fla. 4^th DCA 2008).