Category: Business & Corporate Transactions
Just like a bride and groom entering into a marriage, many business partners, whether members of an LLC, shareholders of a corporation, or general partners of an actual partnership, enter into their new business venture with a high degree of optimism, believing that the partnership will be successful and that their partners will always be faithful to them and the partnership. As a Ft Lauderdale business lawyer focusing on business disputes, I know all too well that most partnerships eventually fail and that, while the partnership may last, many partners fail to deal with each other fairly. Indeed, there are often disputes over what should happen with the partnership assets, including its customers or clients, and how the company will operate prospectively, or if it will continue to operate at all. Is there a way to eliminate or reduce the likelihood of such a dispute? READ MORE
Earlier this month, the Fourth District Court of Appeal issued an opinion in Pro Finish, Inc. v. Estate of All American Trailer Manufacturers, Inc., — So. 3d —-,2016 WL 4132721 (Fla. 4th DCA 2016). Fort Lauderdale business lawyer Justin Carlin represented the appellant after handling the case at the trial level. The decision is important, because there is little case law on Chapter 727 assignment-for-the-benefit of creditors proceedings (so-called “ABCs”), and the proceedings have been widely used by debtors who don’t qualify for bankruptcy but who seek to evade creditors’ claims.
The opinion issued in the case can be found here. Here’s a portion of the Court’s ruling, which, for the first time in Florida, makes clear that the provisions of Chapter 727 are to be strictly construed and that the failure to adhere to those provisions renders the assignment void:
Chapter 727 “provide[s] a uniform procedure for the administration of insolvent estates, and . . . ensure[s] full reporting to creditors and equal distribution of assets according to priorities as established under [chapter 727].” § 727.101, Fla. Stat. (2013). Section 727.104(1), Florida Statutes, provides the form of the assignment and requires compliance with it. § 727.104(1), Fla. Stat. (2013); see Smith v. Effective Teleservices, Inc., 133 So. 3d 1048, 1050–51 (Fla. 4th DCA 2014). The June 11, 2013 Assignment did substantially follow the required form. “Section 727.104 . . . [also] requires the assignee to record the assignment in the public records as well as to file a petition and bond in the circuit court.” Moecker v. Antoine, 845 So. 2d 904, 910–11 (Fla. 1st DCA 2003). Subsection (2) requires that this be done within ten days after delivery of the assignment to the assignee. § 727.104(2), Fla. Stat.
Here, the record lacks evidence as to when the June 11, 2013 Assignment was recorded. The only record evidence of the June 11, 2013 Assignment is a copy attached to the ABC Proceeding petition. It does not indicate whether or when it was recorded. But, the creditor also argues the assignee failed to file the ABC Proceeding petition within the section 727.104(2) time limits. The creditor suggests the failure to timely petition the trial court for the ABC Proceeding “is in direct contravention of Chapter 727 and violates public policy, which favors the expedient payment of just debts to creditors and prompt notice to creditors of an assignment of the debtor’s assets.” We agree and reverse.
“There is little case law addressing chapter 727, and none addresses the issues presented here.” Lanier, 898 So. 2d at 144. However, “the provisions of an assignment which are inconsistent with the applicable statute are void, and the assignment as a whole is void where it fails to comply with such a statute, or is against public policy.” 21 C.J.S. Creditor and Debtor § 9 (footnotes omitted). Here, the assignee failed to file the petition in the circuit court within ten days of delivery of the assignment. The assignee petitioned for the ABC Proceeding on November 26, 2013, and signed the acceptance of the June 11, 2013 Assignment on July 15, 2013. Although the June 11, 2013 Assignment met the section 727.104(1) form requirements, the untimely filing invalidated the ABC Proceeding under section 727.104(2).
By: Justin C. Carlin
As a business litigator who depends on business litigation cases to sustain my business law practice, it may seem strange that I would write a blog post about how to avoid litigation. But my goal as a business attorney is to provide valuable services to people, so I’ve always made it a practice to assist my clients with avoiding litigation, even though I am a litigator. Here below are my top five strategies for avoiding business litigation in South Florida: READ MORE
By: Justin C. Carlin
At some point in their lives, many people will purchase a piece of real property with another person (or several other people), perhaps as part of a business venture, or perhaps to establish a marital residence. On other occasions, a person inherits a partial interest in property along with his or her family members. Many of these arrangements turn out badly because the interested parties disagree over how the property should be used. Disputes arise, for example, regarding who should be permitted to live in the property and whether the property should be sold. READ MORE
By: Justin C. Carlin
One of the most common types of business torts in Florida is the tort of defamation, which consists of the following elements:
1. A false and defamatory statement concerning another;
2. An unprivileged publication to a third-party;
3. Fault amounting at least to negligence on the part of the publisher; and
4. Either actionability of the statement irrespective of special harm the existence of special harm caused by the publication.
See Rapp v. Jews for Jesus, Inc., 944 So. 2d 460- 464-65 (Fla. 4th DCA 2006).
Despite being loaded with legal terms of art (e.g., “unprivileged,” “publication,” “negligence,” “actionability,” and “special harm”), the cause of action is actually fairly straightforward. Indeed, at least one court has explained the concept in rather simple terms: “To establish a cause of action for defamation, the plaintiff must show that: (1) the defendant published a false statement about the plaintiff, (2) to a third-party, and (3) the falsity of the statement caused injury to the plaintiff.” Mile Marker, Inc. v. Petersen Publishing, LLC, 811 So. 2d 841, 845 (Fla. 4th DCA 2002). There is a special Chapter in the Florida Statutes (Ch. 770) that governs defamation claims against newspapers that publish false information in writing, but that Chapter does not apply to causes of action against private individuals in business litigation cases. Rather, within the business context, a cause of action for defamation is typically governed by common law—i.e., so-called “judge-made” law beginning with court decisions rendered in the country of England during the 15th Century and continuing through the date of this blog post in a variety of jurisdictions, including the State of Florida. As a consequence, some of the law and the terminology relating to defamation may seem a bit archaic. Yet, as a practical matter, the law is actually quite functional, as evidenced by the distinction between defamation “per se” and defamation “per quod.” READ MORE
By: Justin C. Carlin
Those who know me even moderately well know that I am a huge Florida State football fan. So, I was obviously very pleased to learn that FSU’s contract with its preeminent coach, Jimbo Fisher, was extended for five years. Upon reading the contract extension, however, I was somewhat dismayed that the buyout for his early termination of the contract was “a mere” $5 million in 2016, $3 million between 2017 and 2018, and $1 million before 2019.
While buyouts in the low millions are properly considered “real money,” it’s conceivable that a competing university (or even an NFL team) could, at some juncture, pay the buyout money and lure Jimbo Fisher away from FSU. If Jimbo Fisher is considered so valuable to FSU, and FSU is offering Jimbo such a high salary (in terms of pay, the contract places Jimbo in the top five of all college coaches), why wouldn’t FSU require that the buyout be higher?
Rather than any inability of FSU to convince Coach Fisher to accept a higher buyout, I surmise that the buyout was mostly the result of Florida law, which prohibits so-called “penalty clauses” in contracts. Under Florida law,
parties to a contract may stipulate in advance to an amount to be paid or retained as liquidated damages in the event of a breach. The Florida Supreme Court has established a two-prong test to determine whether a liquidated damages provision will be stricken as a penalty clause. First, the damages consequent upon a breach must not be readily ascertainable. Second, the sum stipulated to be forfeited must not be so grossly disproportionate to any damages that might reasonably be expected to follow from a breach as to show that the parties could have intended only to induce full performance, rather than to liquidate their damages. READ MORE
By: Justin C. Carlin
Applying Florida law, the Eleventh Circuit Court of Appeals recently issued a decision (Kolodziej v. Mason, — F.3d —, 2014 WL 7180962) involving a fundamental question of contract law on somewhat interesting facts. A Texas criminal attorney (James Mason) handling a high-profile murder case asserted that it was impossible for his client to have committed certain murders in accordance with the prosecution’s suggested timeline. Specifically, he argued that his client would have had to get off a flight in Atlanta and travel to a La Quinta Hotel (several miles away) in only 28 minutes. Thus, Mason challenged the prosecution to prove that somebody could make that route and that he’d “pay them $1 million if they [could] do it.” Mason’s remarks were later featured in a television program on NBC, as follows: “I challenge anybody to show me—I’ll pay them $1 million if they can’t do it.”
A law student at the South Texas College of Law heard Mason’s (edited) remarks and interpreted the remarks as an offer to form a contract that could be accepted by performance. The law student from Texas went to Georgia and actually recorded himself traveling the route from the airport to La Quinta in less than 28 minutes. He then sent Mason a copy of the recording, along with the letter demanding payment of $1 million. Mason refused payment, and the law student sued both Mason and his law firm in federal court, alleging breach of contract. The trial court entered summary judgment in favor of Mason, and the law student appealed. READ MORE