Articles Posted in Business Litigation

Published on: May 15, 2020

MIAMI BUSINESS LITIGATION: CONTRACTS AND UNILATERAL “MISTAKE”

Florida businesses often enter into contracts that define the rights and responsibilities of the contracting parties. Each contracting party is presumed to understand the terms of the contracts that they agree to. Courts will generally enforce contracts as they are written; however, complications can arise when a party to a contract recognizes that he made a mistake when agreeing to the contract. In limited circumstances, Florida law provides relief to parties that make unilateral mistakes when entering into contracts. 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.

For a contract to be formed, the parties must first express their mutual agreement to the essential terms of the contract. State v. Family Bank of Hallandale, 623 So. 2d 474 (Fla. 1993) (stating that there must be a “meeting of the minds” as to all essential terms). Once the parties come to an agreement concerning these essential terms, the contract becomes enforceable. A breach of that contract can subject a party to damages.

Sometimes, a party to a contract will notice that he made a mistake when entering into the contract. Florida legal precedent is clear that a party cannot avoid its obligations under a contract simply because it is a bad deal. As Miami’s Third District Court of Appeal explained in the seminal case Int’l Expositions, Inc. v. City of Miami Beach, 274 So.2d 29 (Fla. 3d DCA 1973), “courts may not rewrite, alter, or add to the terms of a written agreement between the parties and may not substitute their judgment for that of the parties in order to relieve one from an alleged hardship of an improvident bargain.” However, in certain circumstances, a party to a contract that made a mistake about the substantive terms of the contract may have that contract rescinded.

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Published on: May 11, 2020

BOCA RATON NON-COMPETE AGREEMENTS: HOW FLORIDA COURTS ADDRESS “BALANCING OF HARMS”

By Mavrick Law Firm

Courts generally have discretion as to whether to grant an injunction to enforce a non-compete agreement. That discretion, however, does not allow courts to avoid enforcing a valid non-compete agreement which has been breached. Peter Mavrick is a Boca Raton non-compete attorney and business litigation attorney who has substantial experience with non-compete litigation, including injunction proceedings. The Mavrick Law Firm also practices non-compete litigation and business litigation in Fort Lauderdale, Palm Beach, and Miami.

An example of this occurred in Sarasota Beverage Co. v. Johnson, 551 So. 2d 503 (Fla. 2d DCA 1989), where the trial court denied a motion for temporary injunction because enforcement of the non-compete agreement would cost the former employee his livelihood. Sarasota Beverage Company (SBC), was a wholesale beer distributor in Sarasota and Manatee Counties and employed Donald Johnson (Johnson) as a route deliveryman. When Johnson began his employment with SBC, he signed a non-compete agreement, which applied to Sarasota and Manatee Counties. After Johnson resigned his employment, he accepted similar employment with Robert Blaikie & Sons, Inc. (Blaikie), a competitor wholesale beer distributor operating in Sarasota, Charlotte, and Lee Counties. Johnson’s initial delivery route with Blaikie was in Sarasota County. Because SBC sent a certified letter to Blaikie advising it that Johnson was in violation of the non-compete agreement. Blaikie ignored SBC. SBC filed a lawsuit seeking to enforce the non-compete agreement and moved for a preliminary injunction. At the evidentiary hearing on the motion for preliminary injunction, there was undisputed evidence that Blaikie assigned Johnson a delivery route primarily located in Charlotte County, but only after SBC filed the lawsuit. Johnson continued to service an account in Sarasota County in direct violation of the non-compete agreement.

The trial court denied the motion for preliminary injunction and made factual findings, which stated, in pertinent parts:

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Published on: May 8, 2020

MIAMI BUSINESS LITIGATION: CONTRACTS MAY SOMETIMES BE ORALLY MODIFIED EVEN WHEN PROHIBITED

By Mavrick Law Firm

Contracts often prohibit parties from changing the contract terms unless it is in writing and signed by the parties. The purpose of this clause is to establish proof that the parties agreed to the modification of the contract. Parties will often ignore or forget about these clauses. So, when parties appear to have modified the contract by their conduct, the oral modification may be enforced because to do otherwise may cause an inequitable result. Peter Mavrick is a Miami business litigation attorney, 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.

Parties choose the terms of the contracts they enter, and those terms will generally be enforced unless the contract is illegal or otherwise unenforceable. Pol v. Pol, 705 So.2d 51 (Fla. 3d DCA 1997) (“[A] court cannot rewrite the clear and unambiguous terms of a voluntary contract”); Int’l Expositions, Inc. v. City of Miami Beach, 274 So.2d 29 (Fla. 3d DCA 1973) (“[C]ourts may not rewrite, alter, or add to the terms of a written agreement between the parties and may not substitute their judgment for that of the parties in order to relieve one from an alleged hardship of an improvident bargain”). This right to freely contract is right under the Constitution. Nw. Nat’l Life Ins. Co. v. Riggs, 203 U.S. 243 (1906) (explaining that the right to contract is constitutionally protected). Parties are free to modify their contracts if they agree to do so. “It is well established that the parties to a contract can discharge or modify the contract, however made or evidenced, through a subsequent agreement.” St. Joe Corp. v. McIver, 875 So. 2d 375 (Fla. 2004). An oral agreement to modify a written contract may be enforceable if the written contract does not have any clause that prevents oral modification. Schroeder v. Manceri, 893 So.2d 603 (Fla. 4th DCA 2005) (oral extension of default date was enforceable as it was not required to be in writing by statute or terms of contract).

The freedom to modify a contract can be restricted by a clause that prohibits any modification of the contract except under certain circumstance. One such term is a “no-oral-modification” clause, which requires any modification to the written contract to be performed in a particular way, i.e., in writing and signed by the parties. When complied with, these no-oral-modification clauses help limit the risk that one party believes the terms of the contract had changed, while the other party believes that they have not. Courts are wary of entertaining arguments that the contract was orally modified when the contract has a no-oral-modification clause. It can be very easy for an unscrupulous litigant to claim that there had been an oral modification of an agreement when one had not actually occurred. Conversely, it would be unjust for courts to enforce a contract as written when a party can show that the other party acquiesced to a modification.

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Published on: April 30, 2020

MIAMI BUSINESS LITIGATION: DISPUTES OVER “LOST PROFITS”

By Mavrick Law Firm

Recovery of business losses for another party’s wrongful actions can often be insufficient without recovery of “lost profits.” Lost profits consist of the amount of profit a business would have earned, absent the breach of contract. Proof of lost profits must be based on evidence that is reasonably certain and not based on speculation. Proof of income and of the expenses of the business for a reasonable time before the breach occurred is often required. 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.

To estimate the amount of profit which was lost arising from a breach of a duty or a contract, one must necessarily compare what actually happened with what hypothetically should have happened as asserted by the plaintiff claiming damages. Lost profits are, by their nature, estimates and not subject to an exact calculation. As a result, Florida courts are wary of awarding lost profit damages unless the aggrieved business can show with evidence that the estimation of lost profits is not mere speculation.

In estimating damages, profits that are speculative or conjectural are not generally regarded as elements. Such profits are rejected, not because there is anything in their nature per se which demands their rejection, but in obedience to the well-established common-law rule that all damages recovered for a breach of contract must be proven with certainty, and not left to speculation or conjecture.

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Published on: April 24, 2020

MIAMI BUSINESS LITIGATION: ENFORCEABILITY OF CONTRACTS THAT DISCLAIM ALL LIABILITY

By Mavrick Law Firm

Contracts often include exculpatory provisions, usually known as “limitation of liability” clauses. An exculpatory clause typically relieves one party of liability for damages they may cause to the other party during the execution of the contract. A party will usually limit its liability to the amounts it would have been paid under the contract. When a party includes an exculpatory clause that disclaims all liability from its failure to perform the contract, it raises a question of whether the clause is enforceable. Because the party has no enforceable obligation to perform its contract, then it has not really agreed to do anything. Courts may find this clause renders the entire contract to be “illusory” and unlikely to be enforceable. Peter Mavrick is a Miami business litigation attorney, 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 infringment litigation, and other legal disputes in federal and state courts and arbitration.

In Pier 1 Cruise Experts v. Revelex Corp., 929 F.3d 1334 (11th Cir. 2019), Pier 1 Cruise Experts (“Pier 1”) hired Revelex Corp. (“Revelex”) to build a customized website. The parties entered into a service agreement. The service agreement had an exculpatory clause, which stated, in pertinent part:

Revelex shall not be liable … for any direct, special, indirect, incidental, consequential, punitive, exemplary or any other damages regardless of kind or type (whether in contract, tort (including negligence), or otherwise), including but not limited to loss of profits, data, or goodwill, regardless of whether Revelex knew or should have known of the possibility of such damages…. Customer waives any and all claims, now known or later discovered, that it may have against Revelex and its licensors and vendors arising out of this agreement and the services.

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Published on: April 22, 2020

DEFENDING FLORIDA EMPLOYERS: DEFEATING OVERTIME AND MINIMUM WAGE COLLECTIVE ACTIONS – PART TWO

By Mavrick Law Firm

This article is part two of a three-part series discussing how employers may successfully challenge class certification of lawsuits seeking overtime and minimum wages. The federal Fair Labor Standards Act (FLSA) sets forth a unique procedure of “collective actions,” instead of “class actions.” A collective action requires cumbersome procedures to get putative plaintiffs to join the lawsuit and person seeking to join the case must file with the court a written consent to join the case. 29 U.S.C.A. § 216(b) (“No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought”). Peter Mavrick is a Fort Lauderdale employment attorney and a Miami employment attorney who defends the interests of businesses and business owners in employment law disputes, including lawsuits demanding wages and damages from alleged employment discrimination and retaliation.

At the initial stage of an FLSA collective action, a court will consider whether to grant “conditional certification.” Conditional certification is a legal decision that will allow a plaintiff’s lawyer to seek discovery of other possible plaintiffs, and invite potential plaintiffs to join the lawsuit. This is a very important threshold legal decision, and strategically an employer will want to work to persuade the Judge to refuse conditional certification. A court will grant conditional certification if a plaintiff demonstrates a reasonable basis to believe that: (1) there are other employees of the Defendant who desire to opt-in and (2) that these other employees are “‘similarly situated’ with respect to their job requirements and with regard to their pay provisions.” Dybach v. State of Fla. Dep’t of Corrs., 942 F.2d 1562 (11th Cir.1991); see Calderone v. Scott, 838 F.3d 1101 (11th Cir. 2016) (“To maintain an opt-in collective action under § 216(b), plaintiffs must demonstrate that they are ‘similarly situated”). The employee-plaintiff has “the burden of demonstrating a reasonable basis for crediting [his] assertions that aggrieved individuals existed in the broad class that [he] proposed.” Haynes v. Singer Co., Inc., 696 F.2d 884 (11th Cir.1983). Opt-in plaintiffs “need show only that their positions are similar, not identical, to the positions held by the putative class members.” Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001). While there is no bright line test in determining whether plaintiffs are sufficiently similar, the more legally significant differences that exist among the opt-in plaintiffs, the less likely it is that the court will determine that the group of employees is similarly situated. Anderson v. Cagle’s, 488 F.3d 945 (11th Cir. 2007).

A plaintiff must also show that there are other employees who wish to opt-in to the suit before a collective action may be certified. Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562 (11th Cir.1991). In making this showing, a plaintiff cannot rely on speculative, vague, or conclusory allegations. Alvarez v. Sun Commodities, Inc., 12-60398-CIV, 2012 WL 2344577 (S.D. Fla. June 20, 2012). An employer may prevail and avoid conditional certification by providing affidavits which are not sufficiently rebutted by the plaintiff’s affidavits. Grayson v. K Mart Corp., 79 F.3d 1086 (11th Cir.1996); Kubiak v. S.W. Cowboy, Inc., 2014 WL 2625181 (M.D. Fla. June 12, 2014) (an employer may prevail on decertifying the class by showing that only a relatively small proportion of members of a class wish to opt-in). The Mavrick Law Firm has successfully defended attempted collective actions by proving to federal and state Judges that the plaintiffs have not presented sufficient evidence that there is a true class of similarly situated plaintiffs.

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Published on: April 20, 2020

FLORIDA NON-COMPETE AGREEMENTS: COURTS HAVE DISCRETION IN SETTING BOND AMOUNTS

By Mavrick Law Firm

Florida law generally requires that a party post a “bond” before a Judge will enter an injunction order that prohibits the opposing party from competing in violation of a non-compete agreement. The purpose of requiring a bond as a condition to issuance of a temporary injunction is to provide a sufficient funds to cover the adverse party’s damages, including attorney’s fees and costs, in the event the court later determines that the injunction was wrongfully issued. Richard v. Behavorial Healthcare Options, Inc. 647 So.2d 976 (Fla. 2d DCA 1994). Generally, the court hears the former employee’s testimony providing a good faith estimate of what his or her foreseeable damages would be if the injunction is later found to be wrongfully entered. The bond amount generally constitutes the limits of the adverse party’s recovery if the injunction is found to be wrongfully entered, therefore, the bond initially set by the court constitutes the court’s determination of the foreseeable damages based on the good faith representations of the parties. Parker Tampa Two, Inc. v. Somerset Dev. Corp., 544 So.2d 1018 (Fla.1989). Peter Mavrick is a Fort Lauderdale, Miami, and Palm Beach non-compete attorney and business litigation attorney who has substantial experience with non-compete litigation, including injunction proceedings.

In Montville v. Mobile Medical Industries, Inc., 855 So.2d 212 (Fla. 4th DCA 2003), Phyllis Montville (“Montville”) and Maxine Starnes (“Starnes”) signed a non-compete and non-solicitation agreements with their employer Mobile Medical Industries, Inc. (“MMI”) (the “non-compete agreements”). The non-compete agreements provided that after their employment was terminated, Montville and Starnes were prohibited from competing with MMI and soliciting MMI’s personnel or referral sources for a twelve-month period. Subsequently, Starnes resigned, and Montville was fired, allegedly for cause.

MMI filed a lawsuit against Montville and Starnes for an injunction to enforce the non-compete agreement and for damages. MMI alleged that both Montville and Starnes assisted a competitor in forming a new, competing home health care business in Palm Beach County, and solicited MMI’s personnel and its referral sources. At the bond hearing, Montville testified she earned approximately $300,000 per year while working for MMI, but she had not worked since being fired. Montville also testified that she continued to receive her base salary from MMI. Starnes testified that she was earning $75,000 per year in her new position as Administrator for the competitor. The trial court granted a temporary injunction that enjoined Montville from competition and solicitation for the twelve-month period of her agreement, and enjoined Starnes from competition for a period three months, and from soliciting MMI’s personnel or referral sources for a period of six months. The periods ran from the date of the order. MMI was required to post a $50,000 bond. Montville and Starnes immediately appealed.

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Published on: April 17, 2020

MIAMI BUSINESS LITIGATION: STRATEGIC USE OF OFFERS JUDGMENT

By Mavrick Law Firm

Florida law permits parties in litigation to issue offers of judgment and demands for judgment/proposals for settlement to their adversaries in litigation. If the opposing party accepts the offer, this will typically conclude litigation between the parties. If the opposing party refuses, and the offering party prevails by more than 25%, then the offering party will be entitled to a judgment in its favor for the attorneys’ fees it has incurred since the date that the offer was made. Florida businesses that seek to take advantage of this rule must consider the nuances of the rule to make best use of it. Peter Mavrick is a Miami business litigation attorney who represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringment litigation, and other legal disputes in federal and state courts and arbitration.

Florida Statute 768.79 and Rule 1.442 of the Florida Rules of Civil Procedure set forth the applicable rules regarding offers of judgment/proposals for settlement. The award of attorneys’ fees is mandatory when the offer of judgment complies with both § 768.79, Florida Statutes, and Florida Rules of Civil Procedure Rule 1.442. See Anderson v. Hilton Hotels Corp., 202 So. 3d 846 (Fla. 2016) (“The mandatory language of section 768.79 reinforces the notion that a proper offer automatically creates that entitlement, unless the offer is made in bad faith […] [t]hus, an offer that complies with section 768.79 and Rule 1.442 creates a ‘mandatory right’ to collect attorneys’ fees”).

Section 768.79(1) Florida Statutes, provides:

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Published on: April 15, 2020

DEFENDING FLORIDA EMPLOYERS: DEFEATING OVERTIME AND MINIMUM WAGE COLLECTIVE ACTIONS – PART ONE

By Mavrick Law Firm

This article is part of a three-part series discussing the ways that employers may defend against measures taken by employee-plaintiffs who sue their employers to bring in additional plaintiff-employees into the lawsuit. Part one of this series defines and distinguishes between Fair Labor Standards Act (FLSA) collective actions and class action claims. Part two describes how an employer may defend against an attempt to bring an FLSA collective action. Part three describes how employers may counter an employee-plaintiff’s attempt to certify a class of employees for a class action suit. Peter Mavrick is a Fort Lauderdale employment attorney who defends the interests of businesses and business owners in employment law disputes, including lawsuits demanding wages and damages from alleged employment discrimination or retaliation.

Employees suing for their wages may attempt to sue on behalf of both themselves and other similarly situated employees. For claims under the FLSA, former employees sometimes file lawsuits seeking to sue on behalf of other employees as a “collective action.” In other words, the plaintiff seeks to bring other former or current employees into the lawsuit. For claims in other areas of law, such as under the Florida Minimum Wage Act, an employee may bring a “class action,” which is a process by which all similarly situated employees are included in the suit unless they choose to opt-out. The collective action and class action lawsuits seek to join more employee-plaintiffs into a lawsuit than would have otherwise joined it without the certification of a class. The more employees who are plaintiffs, the greater the exposure to the Florida business. A Florida business and their owners are not defenseless against a collective or class action because the employer can demonstrate to the court that the collective or class actions are not proper. The Mavrick Law Firm has successfully defended Florida businesses from their employees improperly bringing collective and class actions against them.

Both collective actions, under 29 U.S.C. 216(b), and class actions, under Fed.R.Civ.P. Rule 23(b)(3), give “plaintiffs the advantage of lower individual costs to vindicate rights by the pooling of resources” and allow for “efficient resolution in one proceeding of common issues of law and fact arising from the same alleged [unlawful] activity.” Hoffmann–La Roche, Inc. v. Sperling, 493 U.S. 165 (1989). Both collective and class actions accomplish this through different means. When a collective action is first certified under the FLSA, court allow the plaintiff-employee, under supervision of the Judge, to send to all potential members of the class an offer to opt-in to the litigation. This obviously makes it more likely that employee-plaintiffs will join the lawsuit. By contrast, in a Rule 23 “class action,” all qualifying persons automatically become members of the class unless they opt-out of the action. See Fed.R.Civ.P. Rule 23(c)(2)(B)(v). As the federal Eleventh Circuit Court of Appeals, which governs federal court decisions in the State of Florida, explained in the case Calderone v. Scott, 838 F.3d 1101 (11th Cir. 2016), “[t]his ‘opt-out’ requirement is what makes a Rule 23(b)(3) class action a ‘fundamentally different creature’ than a § 216(b) collective action, which depends for its “existence … on the active participation of [class members].”

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Published on: April 12, 2020

FLORIDA NON-COMPETE AGREEMENTS: ASSIGNMENT OF A NON-COMPETE AS PART OF A BUSINESS SALE

By Mavrick Law Firm

Florida law governing non-compete agreements imposes specific requirements for a contractual “assignment” provision to be considered valid. Florida Statutes Section 542.335(1)(f)(2) requires assignment of a non-compete provision to be expressly authorized by the contract in order to be enforced by an employer’s assignees or successors. Florida courts interpret the plain meaning of the wording of an assignment clause to determine whether the third-party’s rights to enforce the non-compete agreement are subsumed within the clause. Contractual assignment provisions are typical in the sale and purchase of business assets. A buyer of the assets of a business will typically demand a non-compete agreement restricting the seller or another key employee from competing in some limited way against the buyer of the business assets. Such a restrictive covenant is typically in tandem with a bargain for a higher selling price for the business assets. The parties to the asset sale transaction recognize that the non-compete agreement will enhance the likelihood of a successful and profitable business transition from seller to buyer. Accordingly, assignment clauses that allow the buyer to “stand in the shoes” of the seller of the assets regarding a non-compete agreement with a key employee are critical to buyer getting the benefit of the bargain. Peter Mavrick is a Fort Lauderdale, Palm Beach, and Miami non-compete attorney and business litigation attorney who has substantial experience with non-compete litigation, including injunction proceedings.

In Patel v. Boers, 68 So.3d 380 (Fla. 5th DCA 2011), David Boers, DDS (“Boers”) sold his dental practice to Yagnabala Patel, DDS (“Patel”), and assigned the Provider Agreement he entered with Thomas Cheng, DMD (“Cheng”). The Provider Agreement contained a non-compete covenant. Cheng continued to work for Patel for nearly one year after she purchased Boers’ dental practice. Cheng subsequently left Patel’s employment. Patel contended that Cheng committed numerous violations of the non-compete covenant. Patel filed a lawsuit against Cheng seeking, among other things, an injunction to enforce the non-compete provision.

Cheng filed a motion to dismiss the injunction claim, arguing that Patel lacked standing to enforce the restrictive covenant because the Provider Agreement did not comply with the requirements of Section 542.335(1)(f)(2), Florida Statutes. Section 542.335(1)(f)(2) provides in pertinent part:

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