FORT LAUDERDALE BUSINESS LITIGATION: INTEGRATED CONTRACTS AND COUNTERCLAIMS

Just because parties sign two separate documents or contracts does not mean Florida law actually views these contracts separately. This is significant because rights and liabilities arising from one document may extend to the other. Many business litigation cases in Florida deal with business sales involving actions on a promissory note that usually involve a number of intertwined contracts (such as the purchase agreement and pledge agreements). 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.

In Clayton v. Howard Johnson Franchise Sys., Inc., 954 F.2d 645 (11th Cir. 1992), the United States Court of Appeals for the Eleventh Circuit explained that, “where two or more documents are executed by the same parties, at or near the same time and concerning the same transaction or subject matter, the documents are generally construed together as a single contract.” Similarly, in Quix Snaxx, Inc. v. Sorensen, 710 So. 2d 152, 153 (Fla. 3d DCA 1998), Florida’s Third District Court of Appeals stated that, “Where a writing expressly refers to and sufficiently describes another document, the other document, or so much of it as is referred to, is to be interpreted as part of the writing.” Quix Snaxx involved a settlement agreement between parties requiring them to enter into two distinct agreements: (1) a license agreement with an arbitration clause that outlined geographic limitations as to rights to sell certain vending machines and (2) a purchase order agreement without an arbitration clause that required a party to purchase a certain number of vending machines. One party sued for a breach of the purchase order agreement and the other sought to compel arbitration based on the license agreement’s arbitration clause. The court compelled arbitration. It reasoned that the agreements “were all executed with a span of days, as part of an orchestrated effort to settle pending federal litigation” while the license agreement made reference to the purchase order agreement and its terms. In the same vein, Collins v. National Fire Insurance Co., 105 So. 2d 190 (Fla. 2d DCA 1958), held that where a written contract refers to and sufficiently describes another document, that other document or so much of it as is referred to may be regarded as a part of the contract and therefore is properly considered in its interpretation.

Because Florida courts can view related contracts that as part of an integrated transaction, this can affect whether an aggrieved party should be filing a compulsory counterclaim. Florida’s compulsory counterclaim rule, Florida Rule of Civil Procedure 1.170(a), requires claims arising out of the same “transaction or occurrence” to be brought together. The Supreme Court of Florida’s precedent in Londono v. Turkey Creek, Inc., 609 So. 2d 14 (Fla. 1992), held that courts should apply the “logical relationship test” to determine whether claims arise from the same “transaction or occurrence.” The measuring stick for “logical relation” is whether the claim “arises out of the same aggregate of operative facts.” The consequence of failing to assert compulsory counterclaims can result in waiver of a compulsory counterclaim. Claims arising from documents “construed as a single contract” would likely satisfy the “logical relationship test,” because such claims would naturally have the same aggregate of operative facts. Integrated contracts involve the same parties, having been executed around the same time, and relate to the same transaction. Accordingly, disputes relating to transactions involving multiple related agreements (such as many business sales) must be analyzed and litigated diligently to avoid waiving rights and to ensure all remedies are pursued.

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