People in various industries want to focus on their work, not settling disputes in court. Unfortunately, sometimes this does become necessary for various reasons—misunderstandings, another party failing to live up to their obligations, issues with contracts, poor work quality, fraud, internal issues (like shareholder disputes or partnership problems), and many other challenges. If you are dealing with such a situation, you may need the help from an experienced Florida business litigation attorney who may assist you in negotiating the dispute and argue your case in court, if necessary.
How Do I Know When I Need an Attorney?
In general, you should consult with a business lawyer if you believe you may be facing an issue with your business; such as, if your company is being sued for any reason, if a person or entity’s actions have cost you a significant sum of money, if you believe a contract with a person or entity has been breached, if you need to execute a non-compete agreement, you think your business has suffered tortious interference from another company, or if there is any kind of shareholder or partnership dispute.
In situations where the monetary loss is relatively small and you’re simply unhappy with the quality of a product or service, it’s usually not worth the time and money to sue another company. For example, if you feel your cleaning service overcharged you $300 last month and they say they didn’t, it’s going to cost more in legal fees to take them to court over it than you would recover. In these types of situations, you may be better served by appealing to customer service, calling the Better Business Bureau, or leaving a critical review and finding a new cleaning service. Notwithstanding, it may still be wise to consult with a Florida business litigation attorney to discuss whether there are other matters you may not be considering.
Florida Complex Business Litigation Rules
Certain counties in Florida have specific courts, judges, and rules relating to complex business litigation matters. Cases that are considered “complex” business litigation may be automatically transferred to Business Court in the district where they’re filed, and follow specific rules used to promote fast and efficient resolution of business litigation cases. For instance, one rule requires that parties meet and confer before any official court hearings. Your attorney will help you prepare for this meeting.
Under the Florida Rules of Civil Procedure, a “complex” business case involves “complex legal and case management issues requiring extensive judicial management” for the purpose of moving along the case, encouraging effective decision-making by the court, counsel, and parties, and for keeping costs at a reasonable level. The court decides complexity based on how many parties are involved, the number of witnesses or amount of evidence, and the novelty of issues.
If a case isn’t automatically transferred to the Business Court, any party in the case may be able to ask for the case to be declared complex. The court will make a decision whether or not to transfer the case based on the above complexity rules and other rules of each particular court. You can read more about the Complex Business litigation in Florida here.
Contract disputes can lead to Florida commercial litigation in many ways. Often, the problem comes down to a misunderstanding of the contract. One party thought a clause meant one thing while the other thought it meant something else, or wasn’t clear on all the ramifications. For this reason, we advise people to read contracts carefully and speak with a qualified business attorney to ensure they understand all the terms before they sign them.
How Can I Get Out of This Contract? Or, Can I Sue This Person/Business for Not Fulfilling the Terms of This Contract?
While under Florida law you may not be able to get out of a contract just because you made a mistake or misunderstood it, there may be some legal means to void a contract depending on other circumstances:
Is the contract impossible to fulfill? If there is some genuine reason you can’t fulfill the terms of the contract, the court may agree not to enforce the contract. For example, in a pandemic situation many people may find they can’t fulfill their obligations due to lockdown orders, travel restrictions, etc. You may not be able to sue someone for failing to perform an obligation if there was no reasonable way they could do it. However, if you prepaid a service, you may be entitled to a refund in some cases.
Was there fraud or misrepresentation? If you signed a contract because you were made to believe something false and would not otherwise have signed it, you may be able to argue the contract is invalid. For example, if you agree to purchase six new trucks for your company’s delivery business only to get them and discover there are signs of significant use and disrepair, you may be able to argue the other company misrepresented their product. You may also be able to claim fraud if a salesperson promised you a product or service would provide some result or benefit, but it didn’t.
Was the Person Who Signed the Contract of Sound Mind and Legal Age? In some cases, a contract dispute may be based on the claim that one party wasn’t of sound mind, or lacked capacity, to make that decision. For example, let’s say that your company employs door-to-door salespeople to sell siding and roofing services in Port St. Lucie and Stuart. One of them secures a large contract with Mrs. Smith to redo all her roofing and siding. The next week you get an angry call from Mrs. Smith’s nephew who says your company ruthlessly took advantage of someone suffering from dementia and there’s no way she’s paying for any siding and roofing. Your salesperson may not have knowingly taken advantage of Mrs. Smith—many people with dementia or other mental or cognitive issues can temporarily seem perfectly lucid, especially to a stranger. However, if Mrs. Smith’s lawyer can prove she lacked the capacity to sign the contract—especially if the nephew or another relative has been named her legal guardian or conservator—the judge may declare the contract void.
Contracts with minors under the age of 18 are usually not considered valid unless they are signed by the minor’s parent or guardian.
A Florida business litigation attorney should be able to discuss the circumstances of your case and assist you in evaluating the particulars of your business dispute.
Breach of Contract Lawsuits
If another party to a contract is able to fulfill their obligation but does not do so, you may have grounds for a lawsuit. A breach occurs if one party does not do what they agreed to, does something they’re not supposed to, or somehow prevents you from fulfilling your commitment.
Lawsuits should be based on material breaches. A material breach is something that has a significant effect on the main purpose of the contract. For example, if a company agrees to service your grocery store’s refrigeration units on the first of every month and they don’t show up in January or February, they may have breached the agreement. Your refrigeration units may be suffering from lack of maintenance and may even fail to work, leaving you with losses in stock. This could constitute a material breach. However, if the company comes on January 2 and February 3, but they still service your refrigeration units appropriately, this is likely an immaterial breach. Unless waiting one or two extra days for service seriously damaged the units, this breach may not really affect the heart of the contract.
Shareholder and Partnership Disputes
Unfortunately, disputes between co-owners of a company, or between its shareholders, are not uncommon. Sometimes, people simply have different ideas about how the business should be run. In other situations, one partner’s actions may have endangered the business. A partner or shareholder may have done something illegal or unethical, or you may simply have lost confidence in their ability to fulfill their role in the company. Here are some of the different types of disputes that may result in Florida commercial litigation:
Breach of Fiduciary Duty: An owner, partner, shareholder, or other executive of a company has a responsibility to act in the company’s best interest. If they make a decision that doesn’t further the company’s interests, or causes it harm, they may have breached their fiduciary duty. Everyone makes occasional mistakes in business, but reckless decisions or choices that cause severe setbacks or losses may be grounds for a lawsuit.
Shareholder Oppression: This is a situation where minority shareholders believe the majority shareholders are intentionally making decisions to harm or disadvantage the minority shareholders. For example, the majority may vote to change the voting rules so the minority shareholders have even less ability to contribute to company decisions. Or, the majority may make decisions that cause a disproportionate financial burden on the minority shareholders with little to no effect on the majority.
Deadlock Disputes: These can be challenging because there is no easy or clear solution. Either two partners have come to an impasse, or the shareholders have voted and reached a tie. In some cases, if efforts at mediation fail, a judge may have to step in, which may entail the company’s dissolution. Unfortunately, there may be another dispute looming in the future if the partners have very different opinions about how the business should be run. In some cases, the company’s owners may want to consider one or more of the owners being bought out by the other(s), selling the business to a third party, or splitting the profits and go their separate ways. Sometimes, one of these solutions may be best for the company in the long run, even if a judge has settled the most recent dispute in the short term.
Derivative Suits: Sometimes a company has a legitimate legal claim but the owners or majority shareholders refuse to do anything about it. In this case, a shareholder may file suit for the company. There are specific rules and precedent determining when specific lawsuits may have to be brought as derivative actions of the company, when others may be lawsuits that can be bought on the owner’s own name. A Florida business litigation attorney may be able to assist you in evaluating your corporate dispute.
Direct Suits: These are leveled against the company by a shareholder for damages suffered by the shareholder.
Self-Dealing Suits: These happen when a fiduciary uses their considerable power and influence in the company to advance their own interests. For example, if Tony makes a deal that benefits his personal finances but negatively impacts the company, this may be a self-dealing problem the shareholders want to deal with. Maybe he turns down lower contract bids and instead accepts a higher one from a company he owns a lot of stock in. Maybe he allows someone to extort or bribe him into revealing company secrets, at the company’s expense. These are all situations where Tony’s partners or the shareholders may want to file suit against Tony.
Is Going to Court the Only Way to Resolve This Dispute?
People often ask this question. It depends on the situation and parties involved but, in many cases, there are other alternatives we can try first such as demand letters, pre-suit mediations, and other alternative dispute resolutions. Mediation allows the parties to sit down with a neutral third party and try to work out their differences. Any agreements made in mediation are voluntary and non-binding. Arbitration works in much the same way as mediation but, in this case, agreements are binding and final. The arbitrator is a neutral third party who will oversee the process and come to a final decision as a judge would.
In many situations, it’s worth at least trying to work things out with mediation. If these attempts fail, you and your attorney may decide proceeding to court is the only option. Mediation and arbitration are often less time consuming and less expensive than a lengthy courtroom argument. They also allow you to work out your issues in a more private manner. An internal dispute battled out in court may attract media attention that you company doesn’t want.
If you need assistance with your commercial litigation case, or have questions about any potential legal matter, please contact Apfelbaum Law for a consultation. You can also check out our Business & Contract law Practice are for more information. We have offices in Port St. Lucie and Stuart, but provide legal services throughout the Treasure Coast and Florida.