FORT LAUDERDALE BUSINESS LITIGATION: LAWSUITS FOR ACCOUNTING

A claim of accounting is a useful tool to trace funds or establish claims and liabilities in a fiduciary relationship. To obtain an equitable accounting, the plaintiff must prove the following elements: a fiduciary relationship exists between the parties or the transaction at issue is complex, and (2) the remedy at law is inadequate. Tracfone Wireless, Inc. v. Simply Wireless, Inc., 275 F. Supp. 3d 1332 (S.D. Fla., August 29, 2017). A plaintiff in a lawsuit for an accounting must show that they have some right to the funds involved in the accounting, such as the profits of a partnership. Bernardele v. Bonorino, 608 F. Supp. 2d 1313 (S.D. Fla., March 30, 2009). The plaintiff must also allege some fraud or wrongdoing committed by the fiduciary. Id. 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.

The type of transaction is not relevant to the inquiry (assuming the transaction is sufficiently complicated). This is demonstrated by the entry of accounting orders in many different types of transactions. See Scott v. Caldwell, for Use and Benefit of Bay County, 37 So. 2d 85 (Fla. 1948) (affirming grant of accounting where account involved “approximately six hundred bond estreatures . . . .”). Courts may even award an accounting in a long series of separate transactions.  R.O. Holton & Co. v. Hull, 192 So. 220 (Fla. 1939).

A plaintiff in a lawsuit for an accounting must prove that they lack an adequate remedy at law, or that the claim “involve[s] extensive or complicated accounts and it is not clear that the remedy at law is a full, adequate and expeditious as it is in equity.” F.A. Chastain Const., Inc. v. Pratt, 146 So. 2d 910 (Fla. 3d DCA 1962). Therefore, a plaintiff possessing an ability to recover money damages cannot asset an accounting action because that plaintiff has an adequate remedy at law. See Chiron v. Isram Wholesale Tours & Travel Ltd., 519 So. 2d 1102 (Fla. 3d DCA 1988) (affirming dismissal of claim of accounting because the claim involved an uncomplicated contract and money damages resulting from breach of that contract).

A suit for an accounting is a two-step process. First, the plaintiff must establish the right to an accounting. In “suits for an accounting, where the answer does not admit the allegations of the complaint and there is no consent to entry of a decree, the proper practice is for the court to determine the initial question of plaintiff’s right to an accounting, and an accounting may be decreed if the finding is in favor of plaintiff upon the preliminary issue.” Charles Sales Corp. v. Rovenger, 88 So. 2d 551 (Fla. 1956). After the court determines the right to an accounting and issues a decree, the parties then proceed to the actual accounting step. A-1 Truck Rentals, Inc. v. Vilberg, 222 So. 2d 442 (Fla. 3d DCA 1969). During this second phase, the parties may engage in discovery of financial records and other relevant records to determine the accounting. Harris v. Zeesman, 445 So. 2d 680 (Fla. 4th DCA 1984). A court has the power to appoint a magistrate to oversee the accounting. Childs v. Boots, 152 So. 212 (Fla. 1933) (“A reference to a master in a case like this, for an accounting to be taken before such master is, no doubt, the approved procedure and one generally commended as the proper course of procedure to follow.”)

If a business is involved in a complex transaction involving suspected fraud, or if the business suspects fraud by a fiduciary, the business should consider an equitable claim of accounting. 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.