Quick Note: So You Want to Appeal an Injunction Entered Against You…

Posted by David Adelstein on January 17, 2017
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So you want to appeal the issuance of an injunction entered against you. (There are numerous reasons why injunctive relief may be entered by the court in a civil context – check out this article as an example.) “If the injunction rests on factual findings, then a trial court’s order must be affirmed absent an abuse of discretion; but if the injunction rests on purely legal matters, then an injunction is reviewed de novo.” Nipper v. Walton County, Florida, 42 Fla. L. Weekly D171a (Fla. 1st DCA 2017). Stated differently, there is an abuse of discretion standard of appellate review if the injunction is based on factual findings by the trial court. But, assuming the facts are not in dispute and the injunction is based on a matter of law, there is a de novo standard of appellate review.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Do I or Do I Not File a Reply to Affirmative Defenses?

Posted by David Adelstein on January 13, 2017
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I’ll be the first to tell you that I seldom file a reply to affirmative defenses unless I am truly looking to avoid an affirmative defense – I have a defense to the defense. When I do file a reply, it is typically specific and catered to a specific defense (again, a specific defense to a specific affirmative defense). This is an important consideration and not filing a reply and specifically avoiding a defense (when you have a defense to the defense) can be problematic as an insured recently found out in an insurance coverage dispute.  Thus, if you have an avoidance to a specific affirmative defense, raise it in a reply!

The insured filed an insurance coverage dispute and the insurer relied on an exclusion in the policy. The insured, however, never filed a reply to the affirmative defense. When the insurer moved for summary judgment on the exclusion, the insured tried to argue waiver, that the insurer’s conduct waived its right to this affirmative defense. Well, this is an avoidance of the defense (a defense to a defense) and should have been raised in a reply. But, it was not. The trial court granted the summary judgment in favor of the insurer and on an appeal the appellate court agreed – the insured failed to preserve its waiver argument because it never raised its waiver defense to the insurer’s affirmative defense through a reply:

We reject Gamero’s [insured’s] argument that Foremost [insurer] waived its right to rely upon the marring exclusion [in the insurance policy] by its pre-suit conduct in initially acknowledging coverage and paying a portion of the claim. Moreover, even if such actions by Foremost amounted to a waiver, Gamero failed to preserve the issue below. After Gamero filed suit for breach of the insurance contract, Foremost answered and asserted, as an affirmative defense, that Gamero’s claim was excluded from coverage because the loss constituted marring. Gamero, however, failed to reply to, or avoid, this affirmative defense by alleging, as he does in this appeal, that the affirmative defense was waived by Foremost’s conduct in initially acknowledging coverage and paying a portion of the claim. Instead, Gamero raised this issue, for the first time, in opposition to Foremost’s motion for summary judgment. The trial court was correct in not considering this issue, raised for the first time in opposition to Foremost’s motion for summary judgment.

Gamero v. Foremost Ins. Co., 42 Fla. L. Weekly D158b (Fla. 3d DCA 2017).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Appealing Entitlement to Attorney’s Fees

Posted by David Adelstein on January 08, 2017
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After a party prevails in a lawsuit, the next issue to consider is attorney’s fees, and this is oftentimes a driving issue because attorney’s fees can be fairly significant depending on the nature of the dispute. For example, assume you lost a trial and the other side moved for attorney’s fees. You challenged entitlement to attorney’s fees and lost – the trial court granted the other side’s motion for attorney’s fees. An evidentiary hearing was held and an attorney’s fees judgment was entered. Alternatively, assume you moved for attorney’s fees and the trial court denied your motion. Are these issues relating to entitlement to attorney’s fees appealable? Yes.

 

“‘A party’s entitlement to an award of attorney’s fees under a statute or procedural rule is a legal question subject to de novo review.’” Newman v. Guerra, 2017 WL 33702 (Fla. 4th DCA 2017) quoting Nathanson v. Morelli, 169 So.3d 259, 260 (Fla. 4th DCA 2015).

 

For instance, in a recent case, an owner established that a contractor’s lien was fraudulent. The contractor, however, prevailed in its breach of contract claim. The owner moved for his entitlement to statutory attorney’s fees since he prevailed in the contractor’s lien action. The trial court denied the owner’s motion for attorney’s fees because after considering all of the claims asserted in the case found that the contractor prevailed on the significant issues in the case. The owner appealed the trial court’s denial and this issue was subject to a de novo standard of appellate review.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Quick Note: An Ambiguous Agreement will Lead to Admissibility of Parol Evidence

Posted by David Adelstein on January 01, 2017
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In an earlier article I explained that parol evidence (extrinsic evidence) is inadmissible to determine the intent of an unambiguous agreement. The corollary is that parol evidence is admissible to determine the intent of an ambiguous agreement. Naturally, parties want their agreements to be clear—crystal clear—to avoid any argument regarding an ambiguity. For example, in a recent case, a commercial lease was deemed ambiguous regarding the tenant’s lease rate. As a result, the landlord could not ram its commercial eviction claim through the court due to what it claimed to be the tenant not paying the right lease rate. Instead, evidence needed to be considered regarding the intent of the parties, particularly as it pertained to the paragraph in the lease regarding the lease rate. Clearly, this is not what the commercial landlord wanted and, perhaps, could have been avoided by specific and unambiguous language regarding the lease rate. Remember, an ambiguity regarding a material portion of an agreement is bad–it just leads to the inevitable dispute.  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Recoverability of Expert Witness Fees in Federal Court

Posted by David Adelstein on December 24, 2016
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Many litigants are unaware that testifying expert costs are not automatically recoverable in federal court like they are in state court.   Expert witness fees / costs are not an automatic taxable costs.   28 U.S.C. s. 1920 discusses taxable costs. 28 U.S.C. s. 1821 discusses a witness’ per diem costs of $40/day for each day’s attendance. See 28 U.S.C. 1821(2)(b) (“A witness shall be paid an attendance fee of $40 per day for each day’s attendance. A witness shall also be paid the attendance fee for the time necessarily occupied in going to and returning from the place of attendance at the beginning and end of such attendance or at any time during such attendance.”).

The Eleventh Circuit in Primo v. State Farm Mutual Automobile Ins. Co. , 2016 WL 5436821, *5 (11th Cir. 2016) explained that, “[u]nder 28 U.S.C. § 1821(b), [a] witness shall be paid an attendance fee of $40 per day for each day’s attendance. The Supreme Court has held that when a prevailing party seeks reimbursement for fees paid to its own expert witness, a federal court is bound by the limit of § 1821(b), absent contract or explicit statutory authority to the contrary.” (internal quotations omitted).

In order to recover more than the standard per diem witness fee, either the contract needs to authorize expert witness fees or a specific federal statute needs to authorize the recovery of testifying expert costs. See Troche v. City of Orlando, 2015 WL 631280 (M.D.Fla. 2015) (“[A]bsent explicit statutory or contractual authorization for the taxation of the expenses of a litigant’s [expert] witness as costs, federal courts are bound by the limitations set out in 28 U.S.C. § 1821 and § 1920. Section 1920 does not provide for costs for experts unless they were court-appointed.”) (internal quotations omitted).

When drafting a prevailing party attorney’s fees provision in a contract, I always like to include that the prevailing party is entitled to recover their testifying expert witness fees.  This way if the lawsuit is filed in federal court there is a contractual basis to recover expert witness fees. 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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(Extract on) Business Judgment Rule

Posted by David Adelstein on December 12, 2016
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Directors that serve on a board owe a fiduciary duty to their company and members. Directors are generally protected from personal liability for decisions they make by what is known as the business judgment rule. See Fla. Stat. s. 607.0830 (“(5) A director is not liable for any action taken as a director, or any failure to take any action, if he or she performed the duties of his or her office in compliance with this section.”); see also Florida Statute s. 617.0834 (regarding directors that serve on a nonprofit board).   These are very important statutes (607.0830 and 617.0834) for directors that serve on for profit and not for profit boards and their discharge of duties and decision-making.

The business judgment rule, however, is not absolute meaning directors are not automatically immunized from personal liability if they do not at in good faith, as set forth below. Directors needs to remember this point!

Under the business judgment rule, a court presumes that corporate directors acted in good faith. The rule prevents a court—which may possess less business expertise than the corporate directors—from calling upon directors to account for their actions, no matter how poor their business judgment, absent a showing by the plaintiff of abuse of discretion, fraud, bad faith, or illegality. The rule also prevents a factfinder from using hindsight to second-guess directors’ business decisions.

Kloha v. Duda, 246 F. Supp.2d 1237, 1244-45 (M.D. Fla. 2003) (internal citations omitted); accord Raphael v. Silverman, 22 So.3d 837, 838 (Fla. 4th DCA 2009) (nonprofit condominium association directors “are immune from liability in their individual capacity absent fraud, criminal activity, or self-dealing/unjust enrichment.”); Hollywood Towers Condominium Ass’n, Inc. v. Hampton, 40 So.3d 784, 787 (Fla. 4th DCA 2010) (“In applying the business judgment rule to condominium association decisions, courts have generally limited their review to two issues: (1) whether the association has the contractual or statutory authority to perform the relevant act, and (2) if the authority exists, whether the board’s actions are reasonable.”).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Trial Court’s Responsibility is NOT to Rewrite a Contract

Posted by David Adelstein on November 25, 2016
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Many business disputes involve the interpretation and the application of a contract. This is because business transactions typically involve a contractual relationship governing the rights, liabilities, risks, and recourse relating to the transaction.   When there is a dispute regarding the transaction, this gives rise to a breach of contract claim.  

It is important to understand that a trial court’s responsibility is NOT to rewrite the terms of a contract so that the risks are allocated differently.  As explained:

[C]ourts are ‘powerless to rewrite [a] contract to make it more reasonable or advantageous to one of the parties…or to substitute [their] judgments for that of the parties to the contract in order to relieve one of the parties from the apparent hardships of an improvident bargain.  

Underwater Engineering Services, Inc. v. Utility Board of the City of Key West, 194 So.3d 437, 444 (Fla. 3d DCA 2016) quoting Fernandez v. Homestar at Miller Cove, Inc., 935 So.2d 547, 551 (Fla. 3d DCA 2006).

For this reason, a trial court’s interpretation of a contract is reviewed on appeal with a de novo standard of appellate review – the appellate court will refer to the record in the trial court anew (de novo) without giving deference to the trial court’s findings.

For example, in Underwater Engineering Services (a case I discussed here), the trial court found that a contractor defectively constructed a portion of its work and awarded damages to the owner for replacing the defective work. On appeal, however, the appellate court looked at the underlying contract between the owner and the contractor that required the owner to give the contractor notice before replacing defective work. (The trial court’s final judgment did not reference this contractual provision or provide any application of the provision). The trial court’s record established that such notice was never given to the contractor so the contractor was never in a position to replace the defective work. Based on this contractual provision–remember, courts are not there to rewrite parties’ contracts–the appellate court reversed the trial court’s findings / judgment in favor of the owner because the owner never provided the contractor the required notice per the unambiguous language in the contract.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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What Constitutes an Enforceable Contract?

Posted by David Adelstein on November 17, 2016
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An enforceable or valid contract requires an offer, acceptance of that offer, consideration, and sufficient specification of material terms. Jericho All-Weather Opportunity Fund, LP v. Pier Seventeen Marina, 41 Fla. L. Weekly D2565a (Fla. 4th DCA 2016). Whether a contract actually constitutes an enforceable contract is subject to a de novo standard of appellate review; this is the same appellate standard of review pertaining to an appeal of a trial court’s interpretation of a contract. See id.

The case in Jericho All-Weather Opportunity Fund exemplifies a party suing on the wrong contract and, thus, an appellate court reversing a judgment in favor of a plaintiff and remanding for the trial court to enter judgment in favor of the defendants. As you can imagine, this is a harsh outcome in an appeal – winning a trial only for the appellate court to reverse and mandate judgment for the party that lost during the trial.

In this case, the plaintiff (borrower) was seeking a construction loan. It entered into a second loan commitment with the defendant (lender) whereby the defendant agreed to loan the plaintiff money for the refinancing of property and constructing the project. The court explained that a loan commitment is “a lender’s binding promise to a borrower to lend a specified amount of money at a certain interest rate, usually within a specified period and for a specific purpose (such as buying real estate).” Jericho All-Weather Opportunity Fund, supra, quoting Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So.2d 665, 673-74 (Ala. 2001).

The plaintiff and defendant then entered into a construction loan. The loan agreement was contingent on the actual closing of the loan—the closing of the loan was the consideration for the loan agreement. The loan agreement did not require the defendant to fund the loan as the agreement was predicated on the funding having occurred. However, the loan never closed and the plaintiff sued the defendant for breach of the loan agreement. The plaintiff prevailed at trial. The defendant appealed arguing that the loan agreement was not an enforceable contract as it never became a valid contract because the funding never occurred. The appellate court agreed stating that the plaintiff should have sued for breach of the second loan commitment and not the loan agreement. (Notably, the plaintiff had strategic reasons for not suing on the second loan commitment since it precluded the plaintiff from pursuing certain damages based on a waiver of consequential damages provision.  Unfortunately, by not suing under the second loan commitment, the plaintiff did not sue on an enforceable contract.)

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Prevailing Party for Purposes of Attorney’s Fees in Breach of Contract Claims

Posted by David Adelstein on November 03, 2016
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To be entitled to attorney’s fees, there needs to be a contractual or statutory basis to recover attorney’s fees (absent serving a proposal for settlement). There is oftentimes the misconception in breach of contract cases that the party that recovers a positive net judgment will automatically recover their attorney’s fees. While, certainly, sometimes this is the case, this is NOT what you should be banking on. The law has tried to progress to a point where it does not want certain cases to be driven solely by the prospect of recovering attorney’s fees just because you won $1.  

The Florida Supreme Court in Moritz v. Hoyt Enterprises, Inc., 604 So.2d 807 (Fla. 1992) held that in a breach of contract action the significant issues test applied to determine the prevailing party for purposes of awarding attorney’s fees.  A party prevails on the significant issues if the party prevails on any significant issue in the case that achieved a benefit sought by the parties in the action.

A year later, the Florida Supreme Court in Prosperi v. Code, Inc., 626 So.2d 1360 (Fla. 1993) addressed this significant issues test in the context of a construction lien action where the contractor received a net judgment in its favor but did not prevail on its construction lien (that provided a statutory basis for fees).  In this case, the owner prevailed on the contractor’s lien claim but the contactor prevailed in a breach of contract action and, therefore, recovered a net judgment in its favor.  For purposes of the case, a net judgment was “when the claimant fails to foreclose a mechanic’s lien but obtains a judgment for the underlying claim which exceeds any claim of the owner.”   Prosperi, 626 at n.1.   Here, the Court explained that recovering a net judgment is a significant factor to determine the prevailing party for purposes for purposes of attorney’s fees, but was NOT the only consideration. The equities of the case must be considered at the trial court’s discretion to determine the party that prevailed on the significant issues to be deemed the prevailing party for purposes of attorney’s fees.

Years later, this issue was brought up again to the Florida Supreme Court in Trytek v. Gale Industries, Inc., 3 So.3d 1194 (Fla. 2009), as to whether the significant issues test applied when a contractor obtained a net judgment against an owner on its lien even though the lien amount was reduced by the owner’s claim for repair costs.  In finding that the significant issues test applied, the court further explained that the trial court has discretion to examine all factors including issues litigated, claim amount, amount recovered, and counterclaims, and can determine that neither party was the prevailing party for purposes of attorney’s fees

As you can see, the trend to determine the prevailing party for purposes of attorney’s fees in a breach of contract action is to apply the significant issues test. Because the trial court has the discretion to examine the equities to determine the party that prevailed on the significant issues in a given case, there is not any objective or bright-line rule to refer to in order to determine whether your situation will deem you the prevailing party for purposes of attorney’s fees.   This component makes it challenging to predict how a trial judge or arbitrator may rule and whether a party will be deemed the prevailing party for purposes of attorney’s fees. Recovering a net judgment is still an important factor, but it will not be the sole deciding factor because the prospect of a party recovering $1 and being deemed the prevailing party for purposes of attorney’s fees may prevent that party from becoming reasonable with their settlement terms.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Prejudgment Interest and Post-judgment Interest

Posted by David Adelstein on October 26, 2016
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Prejudgment interest is routinely a component of a claimant’s monetary damages.   The claimant wants prejudgment interest on the principal amount due and owing. If no interest rate is set forth in the claimant’s contract, then the interest will accrue at the statutory rate. Then, once a judgment is entered, post-judgment interest will accrue on the judgment until it is paid.   See Florida Statute s. 55.03.

Florida’s statutory interest rate is set by the Chief Financial Officer and published here.

For instance, the current statutory interest rate is 4.75% per annum (and it has been 4.75% for numerous years). This translates to a daily rate as a decimal of .000130137.   Say you are owed $100,000 for 125 days. The calculation could be made two ways to determine the statutory interest rate on this amount for 125 days:

  1. $100,000 x 4.75% / 365 days in a year= $13.01 per day x 125 days = $1,626.25;

OR

  1. $100,000 x .000130137 = $13.01 per day x 125 days = $1,626.25.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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