Remedies For Real Property Disputes 05 30 12 DOCXx FLA 1201 W Salzman Remediesfor 053012

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Remedies for Real Property

Disputes in Florida

May 30, 2012 ©

by

GARY S. SALZMAN, ESQ.

GRAYROBINSON, P.A.

Attorneys and Counselors at Law

301 E. Pine Street, Suite 1400

Post Office Box 3068

Orlando FL 32802-3068

Office: (407) 843-8880

Fax: (407) 244-5690

email: gsalzman@gray-robinson.com

website: www.gray-robinson.com

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I. DEFAULTS UNDER PURCHASE AND SALE CONTRACTS

A. Nature of Defaults.

A default under a contract for the sale and purchase of real estate in Florida

must be material to be legally justified. If a material default occurs, the contract for

sale, if enforceable under Florida law, generally governs the parties’ rights and

remedies. Although there can be numerous grounds to declare a default, they

generally fall within two categories: monetary and non-monetary defaults.

1. Monetary Defaults.

A monetary default is where a party, usually the buyer, fails to meet a financial

obligation due the other party, usually the seller, under the contract for sale. Typically,

this occurs when a buyer fails or refuses to pay a deposit or pay the final purchase price

for the property. A seller can also cause a monetary default, although it is less common

and depends on the terms of the contract for sale. For example, a contract for sale

could provide for the seller to pay for agreed upon repairs or improvements to the

property and to provide evidence of such payment before closing. The seller’s failure to

do so would arguably constitute a monetary default under the contract for sale. A

monetary default is almost always considered material, although the timing of the

default may or may not be material depending on whether the contract for sale provides

that “time is of the essence.”1

2. Non-Monetary Defaults.

Non-monetary defaults under contracts for sale can be more problematic. For

example, a seller could fail to disclose known, material, latent defects to the property

prior to closing, such as termite infestation or roof leaks. A title search could also reveal

a title defect which the seller is unwilling to cure, despite the terms of the contract

requiring such a cure. The contract for sale could require the seller to actually perform

repairs or improvements to the property, but the seller fails to do so prior to closing.

The seller could fail to sufficiently maintain a minimum level of tenants before closing.

The ways in which either party could cause a non-monetary default are only limited by

the obligations set forth in the contract for sale and to the extent that the default is

material. In general, a non-monetary default will be judicially enforced provided there is

evidence that the non-defaulting party has been materially prejudiced.

B. Notice of Default and Right to Cure.

Most contracts for sale require one party to give the other party notice of a

material default and a reasonable opportunity to cure the default. Such notice is a

1Sun Bank of Miami v. Lester, 404 So. 2d 141, 142 (Fla. 3d DCA 1981).

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condition precedent to the non-defaulting party enforcing his or her rights under the

contract for sale.

C. Waiver of Notice and Default.

By closing on any sale with knowledge of a default under the contract, the non-

defaulting party may be deemed to have waived any right to enforce the default, unless

such rights are expressly reserved in a writing signed by all parties. However, many

contracts for sale include “anti-waiver” provisions to prevent the assertion of a

continuing waiver. The following is one example of such a provision:

Either party’s forbearance or waiver of any breach or

violation of this contract shall not be construed as a

continuing waiver or consent to any subsequent breach or

violation and shall not bar any party’s right to demand strict

compliance with that provision or any other provision of this

agreement. No course of dealing between the seller and the

buyer shall constitute a waiver of any of the seller’s rights or

any of the buyer’s obligations as due hereunder.

Notwithstanding a similar provision, a party’s conduct of accepting a cure of a

default could still be deemed a waiver of the default and similar types of future defaults.

For example, the seller may accept a deposit that is untimely made under the contract.

Even though the contract for sale may provide that time is of the essence for all

obligations, the seller may have thereby waived this requirement to refuse a future

untimely deposit. For a court to make that determination, it would have to conclude that

the default from the first untimely deposit was waived, along with the anti-waiver

provision itself.

Florida’s parol evidence rule may provide some protection against a party to a

contract alleging that its terms were modified or waived by an oral agreement. The rule

is that, if the terms of a contract are unambiguous and the contract is a complete

agreement, those terms are not subject to modification, variance or contradiction by

parol (oral) evidence.2If the contract for sale is ambiguous as to the parties’ intent on

any matter, parol evidence will be admissible on the issue.3“The parol evidence rule

serves as a shield to protect a valid, complete and unambiguous written instrument

from any verbal assault that would contradict, add to, subtract from it, or affect its

2See Titusville Assocs., Ltd. v. Barnett Banks Trust Co., 591 So. 2d 609, 611 (Fla. 1991); see also

Co & Co Enter., Inc. v. Robertson, 761 So. 2d 1179, 1179 (Fla. 4th DCA 2000); Newbern v. Am.

Plasticraft, Inc., 721 So. 2d 351, 352 (Fla. 2d DCA 1998); Polk v. Crittenden, 537 So. 2d 156, 159

(Fla. 5th DCA 1989); Rodriguez v. Tombrink Enter., Inc., 870 So. 2d 117, 119 n. 2 (Fla. 2d DCA

2003).

3See 3679 Waters Ave. Corp. v. Water St. Ovens, Ltd., 779 So. 2d 349, 351 (Fla. 2d DCA 2000).

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construction.”4Since the rule only applies if the parties’ agreement is unambiguous and

complete, it is important that the contract is clear in its terms and expressly states that it

is “the entire agreement between the seller and the buyer and all other oral or written

understandings and agreements are merged into the contract and are deemed void.”

D. Excuse of performance.

Florida law excuses performance of a contract, if performance is either

impossible or the contract purpose has become commercially frustrated.5However, the

performance must be more than difficult or burdensome.6The defense of impossibility

of performance refers to the occurrence of an event that is beyond the parties' control

which, given the purpose for which the contract was made, renders one side's

performance to be impossible.7Supervening impossibility of performance based upon

an event which occurs after inception of a contract is not an excuse for non-

performance of a contract.8Likewise, an unexpected impediment to the performance of

a contract will not relieve a party from his contractual obligations, unless his

performance is rendered impossible by an “act of God.”9Such an “act of God” must be

so extraordinary and unprecedented that human foresight could not anticipate or guard

against it, and the effect of which could not be prevented or avoided by the exercise of

reasonable prudence, diligence, and care.10

Further, a party’s performance will not be excused if the other party has fully

performed or if the impossibility or frustration of purpose was foreseeable at the time

the contract was formed.11 Even an “act of God” will not excuse non-performance

under a contract where one party has substantially or fully performed under the

contract.12

4Crittenden, 537 So. 2d at 159 (quoting Sears v. James Talcott, Inc., 174 So. 2d 776, 778 (Fla. 2d

DCA 1965)).

5Home Design Ctr.-Joint Venture v. County Appliances of Naples, Inc., 563 So. 2d 767, 769-70

(Fla. 2d DCA 1990); see also Florida Dep’t of Fin. Servs. v. Freeman, 921 So. 2d 598, 608 (Fla.

2006) (Cantero, J., concurring).

6Home Design Ctr.–Joint Venture, 563 So. 2d at 769-70.

7Crown Ice Mach. Leasing Co. v. Sam Senter Farms, Inc., 174 So. 2d 614, 617 (Fla. 2d DCA

1965).

8Metro. Dade County v. Babcock Co., 287 So. 2d 139, 142 n.1 (Fla. 3d DCA 1973).

9Enid Corp. v. Mills, 101 So. 2d 906, 908-09 (Fla. 3d DCA 1958).

10Seaboard Airline Ry. Co. v. Mullin, 70 So. 467 (Fla. 1915); see also Fla. Power Corp. v. City of

Tallahassee, 18 So. 2d 671, 675 (Fla. 1944); Norris v. Savannah, F&W Ry. Co., 1 So. 475, 478

(Fla. 1887) (stating that an extraordinary flood is an act of God).

11Home Design Ctr.–Joint Venture, 563 So. 2d at 769; see also Valencia Ctr., Inc. v. Publix Super

Mkts., Inc., 464 So. 2d 1267, 1269 (Fla. 3d DCA 1985); Moon v. Wilson, 130 So. 25, 27 (Fla.

1930).

12Moon, 130 So. at 27.

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II. SELLER’S REMEDIES

Should the buyer breach a material term of a contract for sale, the seller has

several alternative remedies.13 The seller may choose to retain the property and sue

for breach of contract or the seller may elect to sue in equity for specific performance.14

In other words, the seller may sue for actual damages caused by a default, or request a

court, under limited circumstances, to order specific performance and require the buyer

to complete the sale.15 As a practical matter, however, courts generally do not grant

specific performance against a buyer who refuses to complete any sale in the absence

of evidence that the buyer has the financial ability to close.

A. Compensatory, Incidental and Consequential Damages.

If the seller chooses to retain the property and sue the buyer for damages, the

proper measure of actual damages is the difference between the agreed purchase price

in the contract and the fair value of the property at the time of the breach, less any

money received by the seller under the contract for sale.16 Unless expressly precluded

by the contract for sale, the seller may also recover such incidental and consequential

damages that were reasonably contemplated by the parties at the time the contract was

executed and which directly and proximately result from the buyer’s default.17 A seller’s

incidental and consequential damages may include title search expenses, closing fees

or broker’s fees which would not have otherwise been paid, but for the buyer’s default.

B. Liquidated Damages.

Most contracts for sale provide that the seller may retain, as liquidated damages,

all deposits made by the buyer in the event of a material breach. The amount of

liquidated damages, however, must be reasonably related to: (i) the actual damages

incurred by the seller; (ii) other facts and circumstances known to the parties as of the

date the contract was signed; and (iii) with due regard to future expectations. The sum

for liquidated damages cannot be disproportionate to any compensatory damages that

may have been reasonably expected to result from a breach at the time the contract

was executed.18 Further, the liquidated damages may not be a penalty, otherwise the

13Clements v. Leonard, 70 So. 2d 840, 842 (Fla. 1954); see also Miller v. Rolfe, 97 So. 2d 132,

134 (Fla. 1st DCA 1957).

14Miller, 97 So. 2d at 134.

15Clements, 70 So. 2d at 842; see also Frank Silvestri, Inc. v. Hilltop Developers, Inc., 418 So. 2d

1201, 1203 (Fla. 5th DCA 1982).

16Buschman v. Clark, 583 So. 2d 799, 800 (Fla. 1st DCA 1991); see also Frank Silvestri, Inc., 418

So. 2d at 1203.

17Buschman, 583 So. 2d at 800.

18See Valenti v. Coral Reef Shopping Ctr., Inc., 316 So. 2d 589, 592 (Fla. 3d DCA 1975); see also

Hooper v. Breneman, 417 So. 2d 315, 317 (Fla. 5th DCA 1982).

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contract provision will not be enforced.19 The enforcement of a liquidated damages

clause may also be called into question if the seller has the express contractual option

to recover actual compensatory damages in excess of the amount of liquidated

damages.20

C. Specific Performance.

The obligations for performance under the contract for sale must be clear,

definite and certain for a court to order specific performance in the event the buyer fails

or refuses to close.21 The seller must also be ready, willing and able to complete the

sale in accordance with the contract terms.22 Ultimately, the court has discretion

whether to grant specific performance, even where all other elements of the claim are

proven.23

If an adequate remedy at law exists, it is error for the court to grant specific

performance.24 Whether a monetary judgment is collectible is not to be considered by

the court in determining whether the movant has an adequate legal remedy.25

D. Rescission.

A seller seeking rescission of a contract for sale must be able to return the buyer

to the status quo prior to the execution of the contract for sale. To do so, the seller

must return to the buyer all amounts paid to the seller or paid into escrow. However,

the seller may deduct any financial damage sustained, along with any amount of

19Hutchison v. Tompkins, 259 So. 2d 129, 132 (Fla. 1972); see also Berndt v. Bieberstein, 465 So.

2d 1264, 1265 (Fla. 2d DCA 1985).

20See Lefemine v. Baron, 573 So. 2d 326, 328 (Fla. 1991); see also Crosby Forrest Prods., Inc. v.

Byers, 623 So. 2d 565, 568 (Fla. 5th DCA 1993); Ropiza v. Reyes, 583 So. 2d 400, 401 (Fla. 3d

DCA 1991); Hackett v. J.R.L. Dev., Inc., 566 So. 2d 601, 603 (Fla. 2d DCA 1990); Haisfield v.

Fleming, Haile & Shaw, P.A., 819 So. 2d 182, 186 (Fla. 4th DCA 2002).

21Our Savior Lutheran Church v. Tom Jones Enter., Inc., 421 So. 2d 738, 739 (Fla. 4th DCA

1982).

22Bay Club, Inc. v. Brickell Bay Club, Inc., 293 So. 2d 137, 138 (Fla. 3d DCA 1974); see also

Muniz v. Crystal Lake Project, LLC, 947 So. 2d 464, 469 (Fla. 3d DCA 2006).

23Mann v. Thompson, 100 So. 2d 634, 637 (Fla. 1st DCA 1958); see also Campbell v. A.B. Taff &

Sons, Inc., 519 So. 2d 1039, 1041 (Fla. 1st DCA 1988).

24Vagabond Travel & Tours, Inc. v. Universal Inns of Am., Inc., 440 So. 2d 482, 483 (Fla. 2d DCA

1983); see also Terex Trailer Corp. v. McIlwain, 579 So. 2d 237, 241 (Fla. 1st DCA 1991).

25Employee Benefit Plans, Inc. v. Radice Corporate Ctr. I, Inc., 593 So. 2d 1125, 1127 (Fla. 4th

DCA 1992).

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financial benefit the buyer received if he or she was in possession of the real property

prior to the default.26

E. Reformation.

A court may equitably reform an executed agreement to effect the intent of an

agreement previously entered into by the parties, but which by mistake of the

draftsman, does not fulfill the parties’ mutual intent. In short, if a written instrument

fails to express the mutual intent of the parties, a court in equity may reform the

instrument, although the failure may have resulted from a mutual mistake as to the legal

meaning and operation of the terms used in the writing. Reformation will not be

permitted if only one party is mistaken as to the legal meaning, scope and effect of the

agreement he or she has signed.27 Also, the statute of frauds is not a bar to

reformation of a land contract.28

III. BUYER’S REMEDIES

Where a seller wrongfully fails or refuses to perform under a contract for sale or

to convey the quality of title agreed to be conveyed to the buyer, the buyer has several

legal and equitable remedies against the seller.29 One of those remedies is for the

buyer, under certain circumstances, to bring an action for specific performance of the

contract for sale. If the buyer is unsuccessful in an action for specific performance, the

buyer may be precluded from bringing a subsequent suit for damages based upon the

doctrine of res judicata.30 For this reason, a buyer should bring a multiple count lawsuit

for specific performance and, in the alternative, damages should the court decline to

grant specific performance. Consideration should be given to any controlling contract

provisions for liquidated damages or a limitation of liability.31

A. Specific Performance.

As with a seller requesting specific performance, a buyer may only seek specific

performance if the obligations for performance under the contract for sale are clear,

26See Braman Dodge, Inc. v. Smith, 515 So. 2d 1053, 1054-55 (Fla. 3d DCA 1987); see also

Niesz v. Gehris, 418 So. 2d 445, 447 (Fla. 5th DCA 1982).

27Jacobs v. Parodi, 39 So. 833, 836 (Fla. 1905); see also Smith v. Royal Auto. Group, Inc., 675

So. 2d 144, 150 (Fla. 5th DCA 1996).

28Miley v. Miley, 402 So. 2d 557, 558 (Fla. 2d DCA 1981); see also Genarro v. Leeper, 313 So. 2d

70, 72 (Fla. 2d DCA 1975); Royal Auto., 675 So. 2d at 153.

29See John Ringling Estates, Inc. v. White, 141 So. 884, 885 (Fla. 1932).

30Greenstein v. Greenbrook, Ltd., 443 So. 2d 296, 297 (Fla. 3d DCA 1983); see also Alvarez v.

Nestor Salesco, Inc., 695 So. 2d 941, 942 (Fla. 4th DCA 1997).

31Miller, 97 So. 2d at 134.

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definite and certain.32 The buyer must also be ready, willing and able to complete the

sale.33 Again, the court has discretion whether to grant specific performance even

where all other elements of the claim are proven.34 If the buyer has an adequate

remedy at law, the court may not grant specific performance.35

B. Notice of Lis Pendens.

If a buyer desires to pursue specific performance of a contract for sale, the buyer

needs to consider recording a notice of lis pendens against the property to prevent the

seller from transferring title to a subsequent buyer pending the outcome of the lawsuit.

Florida’s lis pendens statute governs when that can be done, which states in part:

When the pending pleading does not show that the action is founded on

a duly recorded instrument or on a lien claimed under part I of chapter

713 or when the action no longer affects the subject property, the court

shall control and discharge the recorded notice of lis pendens as the

court would grant and dissolve injunctions.36

In order for a notice of lis pendens to be filed and recorded by any party without

first posting a bond, the lawsuit must be “founded on” a duly recorded instrument or

upon a lien claimed under part I of Chapter 713, Florida Statutes. If the action is

“founded on” an unrecorded document, such as a contract for sale, the proponent of

the lis pendens should consider first obtaining leave of court before filing and recording

the lis pendens. The court must then determine whether to require the posting of a

bond to secure the opposing parties’ damages, interest thereon, and attorneys’ fees

and costs that may be incurred to dissolve the lis pendens.37 For any lawsuit to be

“founded” upon a duly recorded instrument, the primary rights asserted by the

proponent of the lis pendens must have “arose from the recorded instrument.”38

The Florida Supreme Court has addressed whether it is mandatory under Florida

Statute §48.23(3) for a trial court to require a lis pendens bond where the action is not

based upon a recorded instrument or a construction lien.

32Our Savior Lutheran Church, 421 So. 2d at 739.

33Harrison v. Baker, 402 So. 2d 1270, 1273 (Fla. 3d DCA 1981).

34Mann, 100 So. 2d at 637.

35Vagabond Travel & Tours, Inc., 440 So. 2d at 483.

36Fla. Stat. § 48.23(3) (2011) (emphasis added).

37See Avalon Assocs. of Del., Ltd. v. Avalon Park Assocs., Inc., 760 So. 2d 1132, 1134 (Fla. 5th

DCA 2000); see also Suarez v. KMD Constr., Inc., 965 So. 2d 184, 187-88 (Fla. 5th DCA 2007).

38Avalon Assocs. Of Del., Ltd., 760 So. 2d at 1134-35; see also Feinstein v. Dolene, 455 So. 2d

1126, 1127 (Fla. 4th DCA 1984); Hough v. Bailey, 421 So. 2d 708, 708 (Fla. 1st DCA 1982).

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[I]t is within the trial court’s discretion to determine whether

to require the lis pendens proponent to post a bond when

the property-holder defendant can show that damages will

likely result to that defendant in the event the notice of lis

pendens is unjustified.39

The Florida Supreme Court stated that the amount of the bond is also within the

discretion of the trial court, but should bear a reasonable relationship to the amount of

damages the seller proves are likely to result if the lis pendens is unjustified.40

In addition, the lis pendens may be dissolved where the buyer does not establish

a “fair nexus between the apparent legal or equitable ownership of the property and the

dispute embodied in the lawsuit.”41 A fully executed contract for sale establishes a fair

nexus between a buyer’s claim for specific performance and ownership of the real

property for purposes of defeating a seller’s motion to dissolve a lis pendens. This is

because any order dissolving the notice of lis pendens could jeopardize the rights of

subsequent buyers or lienors and could also jeopardize the buyer’s unrecorded claim

against the property, should the buyer prevail in his action for specific performance.42 It

has been held that it would be error for a trial court to not require the posting of a bond

to maintain a lis pendens for an equitable lien claim where the lawsuit is not founded

upon a duly recorded instrument.43

C. Equitable Liens.

Equitable liens arise from two sources: (a) a written contract which shows

an intention to charge some particular property with a debt or obligation,

and (b) when declared by a court of equity out of general considerations

of right and justice. . . .44

39Med. Facilities Dev., Inc. v. Little Arch Creek Props., Inc., 675 So. 2d 915, 916 (Fla. 1996); see

also Nickerson v. Watermark Marina of Palm City, LLC, 978 So. 2d 187, 189 (Fla. 4th DCA 2008).

40Med. Facilities Dev., Inc., 675 So. 2d at 918 n. 2.

41Chiusolo v. Kennedy, 614 So. 2d 491, 492 (Fla. 1993).

42Christian v. Sanderhoff, 731 So. 2d 804, 805 (Fla. 4th DCA 1999); see also Von Mitschke-

Collande v. Kramer, 869 So. 2d 1246, 1249-50 (Fla. 3d DCA 2004).

43See Baghaffar v. Story, 515 So. 2d 1373, 1374 (Fla. 5th DCA 1987); see also Mohican Valley,

Inc. v. MacDonald, 443 So. 2d 479, 480-81 (Fla. 5th DCA 1984); Roger Homes Corp. v. Persant

Constr. Co., 637 So. 2d 5, 6 n.1 (Fla. 3d DCA 1994); Porter Homes, Inc. v. Soda, 540 So. 2d 195,

195 (Fla. 2d DCA 1989).

44Carter v. Suggs, 190 So. 2d 784, 787 (Fla. 1st DCA 1966) (citing Tucker v. Prevatt Builders,

Inc., 116 So. 2d 437, 439 (Fla. 1st DCA 1959)).

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For example, a written contract containing an agreement for a property owner to

grant a mortgage at some time in the future as security may create a right to an

equitable lien.45

A buyer under an executory contract for sale who is not in default is entitled to

rescind the contract and recover all purchase money paid with interest, along with other

expenses incurred by reason of the seller’s default. The buyer further has a claim to an

equitable lien against the property to secure such damages.46 If the buyer chooses to

proceed with a specific performance claim, the fact that he or she may be entitled to

record a notice of lis pendens has the same effect as creating an equitable lien on the

property subject to the final determination of the claim for specific performance.

D. Compensatory, Incidental and Consequential Damages.

If the seller’s default was in good faith and the property has not been sold, the

buyer’s measure of damages is the buyer’s “out-of-pocket” damages, such as any

money paid to the seller, interest on that sum and any other actual damages incurred

as a result of the default.47 If the default was in bad faith and the property has not yet

been sold, the buyer is entitled to recover its “benefit of the bargain” damages, which

are measured as the difference in the purchase price in the contract for sale and the

fair market value of the property at the time of the breach.48 Bad faith is determined by

the intent of the seller and is deemed present where the seller knew or should have

known that the seller could not perform under the contract for sale, or where the seller

simply refuses to close on the sale without legal justification.49

Should a seller default under a contract by failing to close and later sells the

property to another buyer, the initial buyer may pursue the seller for “benefit of the

bargain” damages, measured by all monies paid to the seller, interest on that amount,

special damages and any profit made by the seller on the subsequent sale.50 The

foregoing is the rule regardless of whether the seller’s default was in good faith or bad

faith.

In the event a seller defaults under the contract by failing to disclose a material,

known, latent defect and the buyer closes on the sale, the buyer’s damages are

measured by the lesser of:

45Meyer v. Schwartz, 391 So. 2d 310, 311 (Fla. 4th DCA 1980).

46Sparks v. Charles Wayne Group, 568 So. 2d 512, 515 (Fla. 5th DCA 1990) receded on other

grounds by Chiusolo v. Kennedy, 589 So. 2d 420, 421 (Fla. 5th DCA 1991); limitation on other

grounds recognized by Chiusolo v. Kennedy, 614 So. 2d 491, 492-93 (Fla. 1993).

47Avellone v. Mehta, 544 So. 2d 1122, 1123 (Fla. 3d DCA 1989).

48Port Largo Club, Inc. v. Warren, 476 So. 2d 1330, 1333 (Fla. 3d DCA 1985).

49Wolofsky v. Behrman, 454 So. 2d 614, 615-16 (Fla. 4th DCA 1984).

50Coppola Enter., Inc. v. Alfone, 531 So. 2d 334, 335 (Fla. 1988).

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1. Diminution in fair value; or

2. The cost of repairing or restoring the property to its condition prior

to the defect.51

Damages for the cost of restoration are limited to the value of the property in its

original condition.52 However, the restoration rule is not applicable where: (a) the cost

of restoring the property exceeds the value of the property in its original condition; (b)

the restoration would result in a depreciation in the value of the property; (c) the cost of

restoration is more than the actual damage sustained by the buyer; or (d) where the

restoration is impracticable.53

E. Rescission.

For a buyer to rescind a contract for sale, the buyer must reconvey the real

property if the sale has already closed and return all benefits received from the sale. In

return, the buyer is entitled to a refund of all purchase money paid to the seller and the

rescission of any purchase money note and mortgage held by the seller or others who

are not good faith purchasers for value, such as holders in due course.54

A buyer, who in good faith has made improvements to the property, is also

entitled to receive the reasonable value of those improvements upon rescission of the

contract for sale.55 A trial court is not permitted to rescind a contract for sale and a

deed where it is proven that rescission will not return the parties to their status quo prior

to the sale, particularly where one party has made improvements to the property for

which no compensation is or can be received.56 This rule may not be applicable if the

improvements were made by a party in possession, but after suit was instituted.57

F. Reformation.

Reformation is proper to equitably reform an executed agreement to effect the

mutual intent of an agreement previously entered into by the parties, but which by

mistake of the draftsman, does not fulfill the parties’ mutual intent. However,

51Davey Compressor Co. v. City of Delray Beach, 639 So. 2d 595, 596 (Fla. 1994); Am. Equity

Ins. Co. v. Van Ginhoven, 788 So. 2d 388, 391 (Fla. 5th DCA 2001).

52Davey Compressor Co., 639 So. 2d at 596.

53Samples v. Conoco, Inc., 165 F. Supp. 2d 1303, 1317 (N.D. Fla. 2001).

54Niesz, 418 So. 2d at 447-48.

55Walker v. Galt, 171 F.2d 613, 615 (5th Cir. 1948).

56Royal v. Parado, 462 So. 2d 849, 856 (Fla. 1st DCA 1985).

57See Walker, 171 F.2d at 615.

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reformation will not be permitted if only one party is mistaken as to the legal meaning,

scope and effect of the agreement he or she has signed.58

G. Injunctions.

A temporary injunction is an extraordinary remedy. The movant must prove all

essential elements for a temporary injunction with competent, admissible evidence.59

Those elements are as follows: (1) the likelihood of irreparable harm; (2) the

unavailability of an adequate remedy at law; (3) a clear legal right to the relief requested

and a substantial likelihood of success on the merits; and (4) the injunction is in the

public interest.60

A prospective irreparable injury must be more than a remote possibility; it must

be imminent and probable.61 There must be a reasonable probability, not a bare

possibility, that a real irreparable injury will occur.62 If the irreparable injury is doubtful

or contingent, injunctive relief may not be granted.63

Irreparable harm and the lack of an adequate remedy at law are not established

where any potential loss can be adequately compensated by a monetary judgment.64

The irreparable injury must be of a peculiar nature, so that monetary compensation will

not be adequate.65 Similarly, collectability of a monetary judgment is not to be

considered by the court in determining whether the movant has an adequate legal

remedy.66

IV. MEDIATION

A. The Mediation Process

Mediation is a process whereby a neutral third person encourages and

facilitates the resolution of a dispute between two or more parties in an

58Jacobs, 39 So. at 837.

59State Agency for Health Care Admin. v. Cont’l Car Servs., Inc., 650 So. 2d 173, 175 (Fla. 2d

DCA 1995).

60Richard v. Behavioral Healthcare Options, Inc., 647 So. 2d 976, 978 (Fla. 2d DCA 1994).

61City of Coral Springs v. Florida Nat’l Prop., Inc., 340 So. 2d 1271, 1272 (Fla. 4th DCA 1976).

62Miller v. MacGill, 297 So. 2d 573, 575 (Fla. 1st DCA 1974); see also A1A Mobile Home Park,

Inc. v. Brevard County, 246 So. 2d 126, 128 (Fla. 4th DCA 1971).

63Sanstrom v. Garren, 187 So. 2d 366, 367 (Fla. 3d DCA 1966); see also First Nat’l Bank in St.

Petersburg v. Ferris, 156 So. 2d 421, 424 (Fla. 2d DCA 1963).

64B.G.H. Ins. Syndicate, Inc. v. Presidential Fire & Cas. Co., 549 So. 2d 197, 198 (Fla. 3d DCA

1989).

65First Nat’l Bank in St. Petersburg, 156 So. 2d at 423.

66Employee Benefit Plans, Inc., 593 So. 2d at 1127.

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informal proceeding to help the parties reach a voluntary binding

agreement.67

The mediator does not make any rulings or decisions for the parties.68

The mediator may not give the parties any legal advice, but the mediator

may discuss the possible outcomes of the lawsuit or arbitration if not

settled, as well as the potential strengths and weaknesses of the parties’

positions in the case.69 The process is conducted in an informal non-

adversarial manner. The objective of the mediation is to reach a mutually

acceptable agreement.70

A circuit or county court is required to order the parties to a civil lawsuit to

mediation if one party requests mediation and the lawsuit is for monetary

damages, provided the requesting party is willing and able to pay the

costs of the mediation or the costs can be equitably divided between the

parties, unless:

a. The action is a landlord and tenant dispute that does not

include a claim for personal injury.

b. The action is filed for the purpose of collecting a debt.

c. The action is a claim of medical malpractice.

d. The action is governed by the Florida Small Claims Rules.

e. The court determines that the action is proper for referral to

non-binding arbitration.

f. The parties have agreed to binding arbitration.

g. The parties have agreed to an expedited trial.

h. The parties have agreed to voluntary trial resolution.71

67Fla. Stat. § 44.1011(2) (2011); Fla. R. Med. 10.210.

68Fla. R. Med. 10.310.

69Fla. R. Med. 10.370.

70Fla. R. Med. 10.410.

71 Fla. Stat. § 44.102(2)(a) (2011).

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B. Agreements to Mediate through AAA

If the parties wish to require mediation with the American Arbitration

Association (“AAA”) for all future disputes relating to a contract before any

arbitration or litigation can be commenced, the following mediation clause

may be added to the contract:

If a dispute between the parties arises out of or relates to this contract, the

breach thereof, or any performance or obligation due hereunder, and if

the dispute cannot be settled through direct negotiation, the parties agree

first to try in good faith to settle the dispute by mediation administered by

the American Arbitration Association under its Commercial Mediation

Rules before resorting to arbitration, litigation, or some other dispute

resolution procedure.

If the parties wish to mediate an existing dispute, they may enter into the

following agreement, independent of any contract:

The parties hereby submit the following dispute to mediation administered

by the American Arbitration Association under its Commercial Mediation

Rules: (describe dispute).

C. Selection of the Mediator

The parties may agree on the appointment of any person to act as the

mediator for any mediation conference. As long as the parties agree, the

mediator does not need to be certified.72 Depending on the level of

“reality checking” the parties would like the mediator to undertake, the

parties should consider the substantive experience of the mediator.

In the absence of the parties’ agreement, the court may only appoint a

certified mediator to conduct a mediation conference.73 The chief judge of

each judicial circuit is required to maintain a list of certified mediators who

have registered for appointment in that circuit.74

72Fla. R. Civ. P. 1.720(f)(1)(B).

73Fla. R. Civ. P. 1.720(f).

74Fla. Stat. § 44.102(4) (2011).

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D. Appearance at the Mediation Conference

Unless permitted by court order or the parties’ written agreement, a party

is deemed to appear at a mediation if the following persons are physically

present:

a. The party or the party’s representative having full authority to

settle without further consultation; and

b. The party’s counsel of record, if any; and

c. A representative of the insurance carrier for any insured

party who is not such carrier’s outside counsel and who has

full authority to settle up to the amount of the plaintiff’s last

demand or policy limits, whichever is less, without further

consultation.75

Thus, the mediator does not have the authority to excuse any

attorney, party or insurance carrier representative from attending

the mediation in person, unless the parties have agreed in writing.

Full authority to settle means that the person attending the mediation is

the final decision maker with respect to all issues presented by the case

and who has the legal ability to execute a binding settlement agreement.76

As a result, it may be extremely difficult for most insurance carriers and

large corporations to strictly comply with this rule. However, this rule does

not require any party to actually enter in a settlement agreement.77

Appearance by a public entity under Chapter 286, Florida Statutes, only

requires the party’s representative to physically appear at mediation with

full authority to negotiate on behalf of the entity and recommend

settlement to the decision-making body of the entity.78

Unless otherwise agreed upon by the parties, each party must, 10 days

prior to the mediation, file and serve a written notice identifying the

persons who will be attending the mediation as a party representative or

as an insurance carrier representative and confirm that those persons

have full authority as required under the rule.79

75Fla. R. Civ. P. 1.720(b).

76Fla. R. Civ. P. 1.720(c).

77Id.

78Fla. R. Civ. P. 1.720(d).

79Fla. R. Civ. P. 1.720(e).

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If a party fails to appear at a “duly noticed mediation without good cause,”

the court, upon motion, shall impose sanctions against the party failing to

appear, including the mediator’s fees, attorney’s fees and costs. The

failure to file a certification confirming the representative’s authority or the

failure of the person identified in the certification to actually appear at the

mediation creates a rebuttable presumption of the party’s failure to

appear.80

E. Conduct of and Communications during the Mediation Conference

At all times, the mediator shall be in control of the mediation and the

procedures to be followed in the mediation.81 For the most part, the

mediation conference is conducted in at least two stages.

a. Joint Session: Initially, the mediator will conduct a joint

session in which the mediator and then each attorney will

give brief opening statements. Each party should be

advised by their attorneys prior to the mediation that they will

hear statements from the opposing attorney with which the

party may disagree. Nevertheless, each attorney and his or

her client, if they desire, are typically given the full

opportunity to be heard without interruption. Each person

attending the mediation is expected to act in a civil,

respectful manner to all other persons present.

b. Private Caucus: After the joint session, the mediator will

separate the parties and their respective attorneys into

private sessions or caucuses in which they may feel more

free to candidly discuss other aspects of the dispute and

how it may be resolved.

There are times when the mediator may not conduct a joint session, such

as when emotions are at extreme levels and the parties are in a state of

high conflict. These situations should be weighed against the need for the

parties to have their opportunity to address each other directly or through

counsel so that they will be able to move past their conflict towards

resolution. A joint session is also a valuable time saving tool for the

exchange of information directly between the parties, rather than the

mediator shuttling the information between private caucuses.

Each party at mediation has the privilege to prevent any person present at

the mediation from disclosing communications made during the

80Fla. R. Civ. P. 1.720(f).

81Fla. R. Civ. P. 1.720(2)(d).

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mediation.82 However, Section 44.102(3), Florida Statutes, should not

preclude evidence supporting a claim that a mediated settlement

agreement contained a clerical error so as to lead the court to an

unreasonable conclusion.83

Although attendance at any court ordered mediation is mandatory,

participation in settlement negotiations is completely voluntary. It is a

party's right to refuse to compromise or settle any claim and to have their

day in court.84

“Decisions made during a mediation are to be made by the parties. A

mediator shall not make substantive decisions for any party. A mediator

is responsible for assisting the parties in reaching informed and voluntary

decisions while protecting their right of self-determination.”85

Indeed, the mediation conference is an opportunity for the parties to

control the outcome of the case and to fashion a resolution to the dispute

which is certain and may encompass terms which an arbitrator or a court

may not otherwise be able to award.

F. Mediation Impasse

There may be various reasons for impasse. A party may truly evaluate

claims and defenses based upon significantly different criteria, making the

potential settlement ranges too far apart to broach. In that instance, the

parties may feel they would be better served having a third party, such as

a judge, jury or arbitrator decide the dispute. It is important for the parties

in such a case to fully understand the range of possible outcomes, along

with the costs of going forward, including all legal fees, expert fees,

deposition costs and other court costs.

Sometimes the parties are not able to reach a compromise because one

or more parties are emotionally vested in their case or the events that led

up to the dispute. In that instance, the emotional party often needs to feel

they had the opportunity to tell their story, whether at the mediation or at a

hearing. This need cannot be underestimated as a prerequisite for

settlement, especially where an apology can be given.

82Fla. Stat. § 44.102(3) (2011).

83DR Lakes, Inc. v. Brandsmart U.S.A. of West Palm Beach, 819 So. 2d 971 (Fla. 4th DCA 2002),

quoting Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984); but see Feldman v. Kritch, 824 So. 2d 274,

276 (Fla. 4th DCA 2002) (no exception for “unilateral mistake”).

84Fla. R. Civ. P. 1.730(a).

85Fla. R. Med. 10.310(a) (emphasis added).

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V. ARBITRATION

A. The Arbitration Process

As opposed to mediation, arbitration results in a binding or non-binding

decision of the dispute. The arbitrator or panel of arbitrators consider the

evidentiary presentations of the parties and then render(s) an award,

which may then be confirmed by a court of competent jurisdiction.

B. Arbitration Agreements

The following is a sample clause for the arbitration of all future disputes

between the parties before the AAA:

Any controversy or claim arising out of or relating to this contract, or the

breach thereof, shall be resolved and determined by binding arbitration

administered by the American Arbitration Association under its

Commercial Arbitration Rules, and judgment on the award rendered by

the arbitrators shall be entered in any court having jurisdiction thereof.

Arbitration through the AAA for existing disputes may be accomplished by

use of the following agreement, independent of any contract in question:

We, the undersigned parties, hereby agree to submit to binding arbitration

administered by the American Arbitration Association under its

Commercial Arbitration Rules the following controversy: (describe the

dispute).

We further agree that we will faithfully observe this agreement and the

rules, that we will abide by and perform any award rendered by the

arbitrators, and that a judgment of any court having jurisdiction thereof

shall be entered on the award.

To expedite matters, any arbitration clause can expressly adopt the

summary procedures of Chapter 51, Florida Statutes, or customized

expedited summary procedures set forth in AAA’s rules or the clause

itself. The arbitrators and the administrator of the proceeding are

mandated to comply with those procedures, provided they are

fundamentally fair to all parties.

The arbitration clause may provide for emergency interim relief by

incorporating the AAA’s optional rules for emergency measures of

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protection or other applicable emergency rules, such as applicable Florida

Rules of Civil Procedure.

In order for any party to avail itself of any statute of limitations defense,

the agreement to arbitration must expressly provide for the application of

the statute to any arbitration proceeding brought in connection with the

agreement.86

Subject to due process considerations, arbitration clauses may expressly

provide for:

a. The number of arbitrators;

b. The specific minimum qualifications for the arbitrators;

c. The method of and responsibility for payment for the fees

and costs associated with the arbitration;

d. The locale for all hearings and the use of any discovery

tools, including depositions under the Florida Rules of Civil

Procedure;

e. Any other item of concern to the parties.

A customized arbitration clause can be drafted with the foregoing in mind.

In that regard, the following is a sample arbitration clause tailored for a

real estate contract for purchase and sale of commercial property:

Except for an injunction or specific performance, any and all other claims,

controversies and disputes between Seller and Buyer relating to or arising

out of this agreement or the parties’ performances due hereunder shall be

resolved by binding arbitration administered by and in accordance with the

national employment rules of the American Arbitration Association, and

any court of competent jurisdiction shall enter final judgment on any such

final arbitration award.

The final arbitration hearing shall be conducted in the county in which

Seller’s principal place of business is located no sooner than sixty (60)

days and no later than one hundred twenty (120) days after any demand

for arbitration is served upon the respondent for the proceeding. The

arbitration proceeding shall be conducted by a panel of three neutral and

impartial arbitrators. Said arbitrator panel shall be comprised of

arbitrators who shall be members in good standing with the state bar

86Raymond James Fin. Servs., Inc., v. Phillips, No. 2D10-2144, 2011 WL 5555691 (Fla. 2d DCA

Nov. 16, 2011).

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association for the state in which the final arbitration hearing shall be

conducted with at least fifteen (15) years of substantial experience in real

estate law.

The parties to the arbitration proceeding shall be permitted to take no

more than three (3) depositions, not to exceed five (5) hours each, without

good cause shown and leave of the arbitrators. The parties shall also be

entitled to discover documents through the use of requests for production.

No other forms of formal discovery shall be permitted by the arbitrators.

All permissible discovery shall be governed by the applicable Federal

Rules of Civil Procedure. The arbitrators shall be bound by and shall

follow the choice of law provision set forth in this Agreement for the

rendering of any final award. All defenses and claims which would

otherwise be available to the parties in any court proceeding shall also be

available in arbitration, including, without limitation, all applicable statutes

of limitations.

Any final award shall reflect the reasoning for the award, but shall not be

required to state findings of fact and conclusions of law. The arbitrators

shall have the authority to award any and all relief which a court of

competent jurisdiction could otherwise award. Seller shall be responsible

to pay for all arbitration filing fees and arbitrator compensation. However,

such fees and compensation may be awarded to Seller in the event it is

determined to be the prevailing party in the arbitration proceeding.

The arbitrators and the parties shall maintain in the strictest confidence

the arbitration proceeding, the final arbitration hearing, all papers filed

therein and the substance of the underlying dispute for the arbitration

proceeding, unless otherwise required to disclose same pursuant to

applicable law.

While courts are mindful of the “liberal policy favoring arbitration

agreements,” the Supreme Court has also made clear that arbitration is

only appropriate “so long as the prospective litigant effectively may

vindicate [his or her] statutory cause of action in the arbitral forum”

allowing the statute to serve its purposes.87

The Supreme Court acknowledged that “the existence of large arbitration

costs could preclude a litigant ... from effectively vindicating her federal

87Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991), quoting Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 (1985).

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statutory rights in the arbitral forum.”88 However, the Court noted that the

“possibility” that the plaintiff would “be saddled with prohibitive costs is too

speculative,” and “[t]o invalidate the agreement on that basis would

undermine the ‘liberal federal policy favoring arbitration agreements.”89

The party seeking to avoid arbitration due to excessive costs “bears the

burden of showing the likelihood of incurring such costs.”90

When considering the cost sharing language in an employment

agreement, however, the case-by-case analysis offers little guidance in

calculating a numerical figure that would be categorically shielded from

attack. In Morrison, the former employee’s cost splitting rule in her

arbitration agreement detailed her exposure to the greater of $500 or 3%

of her annual salary.91 The court, applying a case-by-case analysis,

concluded that this provision was unenforceable with respect to her

claims.92 The court supported its decision by emphasizing that an

employee’s resources can be scarce, and a substantial number of

similarly situated persons would be deterred from seeking to vindicate

their statutory rights under these circumstances.93

Based upon the current state of the law, it appears virtually impossible to

draft any arbitration clause providing for fee splitting for a consumer or

employment dispute that is completely insulated from any challenge.

Thus, providing for the non-consumer or employer to bear all filing fees,

mediation fees, arbitration costs and arbitrator compensation is advisable

until a safe harbor is established by binding case law.

C. Commencement and Submission to Arbitration to AAA

A party to an existing dispute may commence an arbitration under the

AAA’s rules by filing two copies of a demand for arbitration, signed by the

party or its attorney with AAA’s regional office. (See www.adr.org for

various forms and rules). The demand must contain a statement of the

nature of the dispute, the names and addresses of all parties, the amount

of the claim, if known, the remedy sought, the hearing locale requested

and the name and address of the respondent. The demand must also

attach a copy of the arbitration clause in question.

88Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 90 (2000).

89Id. at 91.

90Id. at 92.

91Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 669 (6th Cir. 2003).

92Id.

93Id. at 670.

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Under AAA’s Commercial Arbitration Rules, the respondent to the

arbitration demand is not required (but is encouraged) to file an answer to

the claims. If the respondent desires to assert a counterclaim, then it

must comply with substantially all requirements as those for a demand for

arbitration.

D. Enforceability of the Arbitration Agreement

After the plaintiff sued the defendant for breach of contract, the parties

agreed to arbitrate “with respect to the allegations in the complaint.”

When the plaintiff amended his claim during arbitration, the defendant

moved to terminate the arbitration proceedings. The arbitration panel

denied the motion, and as a result, the defendant moved to terminate in

circuit court. The trial judge granted the motion, but the appellate court

reversed because the amended claim did not exceed the scope of the

agreement to arbitrate as it was based upon the facts alleged in the

original complaint.94

Under Florida law, to prevail on a defense that an arbitration agreement is

unconscionable and therefore unenforceable, a party must establish that

the agreement is both procedurally and substantively unconscionable.95

Procedural unconscionability “relates to the manner in which the contract

was entered and it involves consideration of such issues as the relative

bargaining power of the parties and their ability to know and understand

the disputed contract terms.”96 A contract is substantively unconscionable

if its terms are so “outrageously unfair” as to “shock the judicial

conscience.”97

Where an arbitration clause is valid and not interdependent with the

remaining clauses of an agreement, any offending or unlawful provision

contained therein could be severed without affecting the intent of the

parties or the agreement to arbitrate.98

94Bates v. The Betty & Ross Company, 46 So. 3d 615 (Fla. 3d DCA 2010).

95See Golden v. Mobil Oil Corp., 882 F.2d 490, 493 (11th Cir. 1989); see also Murphy v. Courtesy

Ford, LLC, 944 So. 2d 1131, 1134 (Fla. 3d DCA 2006); Voicestream Wireless Corp. v. U.S.

Commc’ns., Inc., 912 So. 2d 34, 39 (Fla. 4th DCA 2005).

96Powertel Inc. v. Bexley, 743 So. 2d 570, 574 (Fla. 1st DCA 1999).

97Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278, 285 (Fla. 1st DCA 2003).

98Healthcomp Evaluation Serv. Corp. v. O’Donnell, 817 So. 2d 1095 (Fla. 2d DCA 2002).

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If a contract containing an arbitration clause is challenged as void ab

initio, it is submitted to arbitration, unless the challenged is to the specific

arbitration clause.99

An action to rescind a contract in its entirety may be subject to arbitration

where the contract contained an arbitration clause and the validity of that

clause was not specifically attacked, as opposed to the whole contract.100

E. Arbitration with non-signatories to agreement.

A party may be bound to arbitrate a dispute even though the party did not

physically sign a written contract to arbitrate.101

On the other hand, courts have refused to require non-signatories to

arbitrate in various circumstances.102

A party who personally guaranteed the obligations of another under a

written agreement containing an arbitration clause was bound as a matter

of law to arbitrate the dispute regarding the guarantee.103

Where a party was appointed as the agent for a principal who was bound

to a contract containing an arbitration clause, the agent must arbitrate all

disputes relating to the contract.104

Arbitration provisions are binding on third-party beneficiaries of a contract

that contains an arbitration provision, provided that the contract clearly

expresses an intent to primarily and directly benefit the third party.105

99Buckeye Check Cashing, Inc. v. Cardegna, 126 S.Ct. 1204 (U.S. Feb. 21, 2006).

100Sanchez v. Criden, 899 So.2d 326 (Fla. 3d DCA 2005).

101See, e.g.,Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1074 (5th Cir. 2002) (agency

required non-signatory to arbitrate); see also Qubty v. Nagda, 817 So. 2d 952 (Fla. 5th DCA 2002)

(investors suing stockbrokers compelled to arbitrate under thirty-party beneficiary theory);

Employers Ins. of Wausau v. Bright Metal Spec., Inc., 251 F.3d 1316 (11th Cir. 2001); Thomson-

CSF, S.A. v. American Arbitration Ass’n, 64 F.3d 773, 776 (2d Cir. 1995); Gottfried, Inc. v.

Paulette Koch Real Estate, Inc., 778 So. 2d 1089 (Fla. 4th DCA 2001); Pritzker v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 7 F.3d 1110 (3d Cir. 1993).

102See, e.g., Benasra v. Marciano, 112 Cal. Rptr. 2d 358 (2001) (president of corporation who

signed contract in corporate capacity could not be compelled to arbitrate individually); see also

Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64 F.3d 773 (2d Circ. 1995) (corporate parent not

required to arbitrate on claim relating to subsidiary’s arbitration agreement).

103Berti v. Cedars Healthcare Group, Ltd., 812 So. 2d 580 (Fla. 3d DCA 2002).

104Koechli v. BIP Int’l, 870 So. 2d 940 (Fla. 1st DCA 2004).

105Technical Aid Corp. v. Tomaso, 814 So. 2d 1259 (Fla. 5th DCA 2002).

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In the absence of a signature, a party may be bound by an arbitration

clause contained in a contract if the party’s conduct indicates that the

party agreed to be bound by the contract in question.106107 One’s intention

to be bound by a contract containing an arbitration clause may be

evidenced by one’s performance under other provisions of the contract.108

Even if not joined in the arbitration, a surety on a construction bond can

be bound by the results of an arbitration.109

F. Waiver of Right to Arbitrate

The right to arbitration under an agreement may be waived by taking

actions inconsistent with the arbitration provision. The court (not the

arbitrator) determines whether a party to an arbitration agreement has

waived its contractual right to arbitration by its subsequent conduct.110

Where one party actively participates in litigation which is the subject of an

arbitration agreement before moving to compel arbitration, that party is

deemed to have waived any right to compel arbitration.111

Such a waiver will be found where the party files an answer or affirmative

defenses, takes discovery or files any claim for affirmative relief in a

lawsuit, including a counterclaim before moving to compel arbitration.112

106Thomson-CSF, S.A., 64 F.3d at 776.

107This rule of law appears to be an outgrowth of the general principle that one may be deemed to

have accepted a written contract, which otherwise requires acceptance by a signature, by

performing pursuant to its terms. See, e.g., Bryan, Keefe & Co. v. Howell, 109 So. 593 (Fla.

1926).

108Chanchani v. Salomon/Smith Barney, Inc., No. 99 CIV 9219 RCC, 2001 WL 204214, at *3 (S.D.

N.Y. March 1, 2001); see also Fyrnetics (Hong Kong) Ltd. v. Quantum Group, Inc., No. 99 C 4704,

2001 WL 40900, at *4 (N.D. Ill. Jan. 11, 2001) (party’s attempts to comply with other terms of the

contract bound the party by the arbitration provision in the same contract); In the Matter of the

Arbitration Between John Thallon & Co., Inc. and M&N Meat Co., 396 F.Supp. 1239 (E.D. N.Y.

1975) (party’s participation in performance under other provisions of a contract evinced such

party’s intention to be bound by the contract’s arbitration provision).

109Fewox v. McMerit Constr. Co., 556 So. 2d 419, 425 (Fla. 2d DCA 1989).

110Florida Educ. Ass’n/United v. Sachs, 650 So. 2d 29 (Fla. 1995).

111Hansen v. Dean Witter Reynolds, Inc., 408 So. 2d 658 (Fla. 3d DCA 1982), rev. den., 417 So.

2d 328 (Fla. 1981); see also Ojus Indus., Inc. v. Mann, 221 So. 2d 780 (Fla. 3d DCA 1969).

112Coral 97 Assocs., Ltd. v. Chino Elec., Inc., 501 So. 2d 69 (Fla. 3d DCA 1987); see also Winter

v. Arvida Corp., 404 So. 2d 829 (Fla. 3d DCA 1981); but see Avid Eng’g, Inc. v. Orlando

Marketplace Ltd., 809 So. 2d 1 (Fla. 5th DCA 2001) (motion for arbitration and counterclaim at

same time does not waive right).

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G. Selection of Arbitrators for Non-AAA Arbitrations

If an agreement for arbitration provides a method for the appointment of

arbitrators, that method must be followed as long as it is fundamentally

fair.113

If there is no agreement regarding the appointment of the arbitrators or if

the agreement fails, the Court, on application of a party, shall appoint one

or a panel of three arbitrators.114 Each of the arbitrators must either: (a)

be a member of The Florida Bar, with the chief arbitrator being a member

of The Florida Bar for at least five years; or (b) serve on the arbitration

panel with the written consent of all parties.

H. AAA Arbitrator Selection Process

Following the demand for arbitration, the AAA typically sends each party a

specially prepared list of proposed arbitrators to resolve the controversy.

In compiling the list, the AAA draws from the applicable panel of

arbitrators, considers geographical factors and is otherwise guided by the

nature of the dispute. Biographical and fee information for each arbitrator

is also enclosed with the list.

The parties are allowed a specified time period to study the list, strike

names for good cause and then rank the remaining names in the order of

preference.115 The AAA administrator uses the parties’ returned lists to

select the top arbitrators based upon the parties’ rankings. Additional

information about the proposed arbitrators is available through the

administrator.

If there are not a sufficient number of names from which to select the

arbitration panel or individual arbitrator, the AAA may send out a second

list or may make appointments without submitting additional lists.

However, no arbitrator whose name was properly stricken by either party

may be appointed in that event.

I. Arbitrators’ Jurisdiction and Scope of Submission

An arbitrator exceeds his or her power when he or she goes beyond the

authority granted by the parties through the operative document and

113Fla. Stat. § 682.04 (2011).

114Fla. Stat. § 682.04 (2011); Fla. R. Civ. P. 1.810(a).

115While no authority can be found, the author suggests that good cause should be limited to

similar grounds for disqualifying an arbitrator under the AAA’s rules, as well as grounds for striking

a prospective juror for cause.

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decides an issue not within the scope of the arbitration clause or not

pertinent to the resolution of the issues submitted to arbitration.116

J. Discovery in Arbitration

The parties may provide in the arbitration agreement for certain forms of

discovery, either greater or less than those found in the Court’s rules of

discovery. The parties may also stipulate to discovery after the arbitration

action is filed.

An arbitrator may permit a deposition to be taken for use at a hearing

when a witness cannot be subpoenaed or is unable to attend the hearing.

In absence of the parties’ agreement, their incorporation of specific rules,

such as the AAA’s rules, or the demonstrated unavailability of the witness,

there is no authority for the arbitrator to permit parties to take

depositions.117

K. Final Arbitration Hearing

The hallmark of the arbitration hearing is its informality. One purpose of

an agreement to arbitrate is to avoid the formal requisites of a court

proceeding. Each party must be given an equal and fair opportunity to be

heard and present evidence.

While the order of the proceedings is at the arbitrator’s discretion, the

hearing generally begins by each party giving an opening statement to

clarify the issues. The complaining party presents evidence first, followed

by the defending party’s presentation of evidence. Each party also has

the opportunity to cross-examine opposing witnesses.118

The technical rules of evidence do not apply to arbitration hearings.

Hearsay evidence is admissible, leading questions may be asked, the

best evidence rule is irrelevant and witnesses need not be qualified as

“experts.”119

L. The Arbitration Award

At a minimum, an arbitration award must be:

116Chandra v. Bradstreet, 727 So. 2d 372 (Fla. 5th DCA 1999), rev. den., 741 So. 2d 1134 (Fla.

1999); see also Applewhite v. Sheen Fin. Res., Inc., 608 So. 2d 80 (Fla. 4th DCA 1992).

117Fla. Stat. § 682.08 (2011).

118Fla. Stat. § 682.06(2) (2011).

119Fla. R. Civ. P. 1.820(c).

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a. In writing;

b. Signed by the arbitrators joining in the award; and

c. Delivered by the arbitrator to each party, personally or by

registered or certified mail (unless otherwise agreed, such

as set forth in the AAA’s Commercial Arbitration Rules).120

The arbitrators are not required to make specific findings of fact and

conclusions of law, unless the arbitration agreement expressly requires

them to do so or a Court remands the matter to the arbitrators for express

findings to be made before any confirmation of the award will be

entered.121

Where an arbitration agreement does not expressly grant the arbitrators

the jurisdiction to determine entitlement to and assessment of attorney’s

fees to the prevailing party, they have no jurisdiction to do so and this is a

matter to be determined by the court in any confirmation proceeding.122

M. Post-Arbitration Proceedings

Modification. Pursuant to Florida Statute § 682.14, a binding arbitration

award may be modified upon application made within 90 days after

delivery of a copy of the award to the applicant, where:

a. There is an evident miscalculation of figures in the award;

b. There is an evident mistake in the description of any

property referred to in the award; or

c. The award was based upon a matter not submitted to the

arbitrators and the award may be corrected without affecting

the merits of the decision upon the issues submitted.

Vacation. A binding arbitration award may be vacated where an

application to the court is made within 90 days after the delivery of a copy

of the award to the applicant upon one of the following grounds:

a. The award was procured by corruption, fraud or other undue

means.

120Fla. Stat. § 682.09 (2011).

121Fla. R. Civ. P. 1.820(g)(3).

122Fla. Stat. § 682.11 (2011).

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b. There was evident partiality by an arbitrator who was

appointed as a neutral arbitrator or there was corruption in

any of the arbitrators or misconduct prejudicing the rights of

any party.

c. The arbitrator exceeded his/her powers (i.e., jurisdiction).

d. The arbitrators refused to postpone the hearing upon

sufficient cause being shown or refused to hear evidence

material to the controversy or otherwise substantially

prejudiced the rights of a party.

The fact that the relief was such that it could not or would not be

granted by a court of law or equity is not a ground for vacating or

refusing to confirm the award.123

Appeal. An appeal may be taken from:

a. An order denying an application to compel arbitration.124

b. An order granting an application to stay arbitration.125

c. An order confirming or denying confirmation of an award.126

d. An order modifying or correcting an award.127

e. An order vacating an award without directing a rehearing.128

f. A judgment or decree entered pursuant to Florida Statute §

682.20.129

Upon application of a party to the arbitration, the Court shall confirm an

award unless, within the statutory time limits, sufficient grounds are

asserted for vacating or modifying or correcting the award. Except where

123Fla. Stat. § 682.13(1) (2011).

124Fla. Stat. § 682.20(1)(a) (2011).

125Fla. Stat. § 682.20(1)(b) (2011).

126Fla. Stat. § 682.20(1)(c) (2011).

127Fla. Stat. § 682.20(1)(d) (2011).

128Fla. Stat. § 682.20(1)(e) (2011).

129Fla. Stat. § 682.20(1)(f) (2011).

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the Court finds that one of the enumerated grounds apply to vacate an

award, the Court has no authority to overturn an award.130

VI. VOLUNTARY BINDING TRIAL RESOLUTION

A. The VTR Process

Florida Statute § 44.104, entitled “Voluntary binding arbitration and

voluntary trial resolution” provides for private attorneys to be appointed

with the parties’ agreement to decide their legal disputes.

Parties may enter into a voluntary trial resolution (“VTR”) agreement to

have most disputes determined by a private attorney.131 The private

attorney acts as the trial court judge for the case, subject to most of the

same rules of Court and with appellate review of legal issues.

Pursuant to the VTR agreement, the Court appoints a private lawyer as

the Trial Resolution Judge (“TRJ”) to conduct the proceedings of an action

and determine the case on its merits generally as if litigated before the

Court.132

B. The VTR Agreement

To be enforceable, the VTR agreement must be in writing and signed by

the parties. The legal dispute may not involve any constitutional issue,

child custody, child support or visitation issues.133

The VTR agreement may be signed before or after litigation is

commenced and should provide for the compensation of the TRJ.134

The following is a sample contract clause for submitting all permissible

controversies that may arise between the parties to an agreement to

voluntary trial resolution:

Any controversy or claim arising out of or relating to this contract, or the

breach thereof, shall be resolved and determined by binding voluntary trial

resolution pursuant to Chapter 44, Florida Statutes, including, without

limitation, the procedures set forth in Florida Statute § 44.104, and final

130Am. Reliance Ins. Co. v. Devecht, 820 So. 2d 378 (Fla. 3d DCA 2002).

131Fla. Stat. § 44.104(1) (2011).

132Fla. Stat. § 44.104(2) (2011); Fla. Stat. § 44.104(8) (2011).

133Fla. Stat. §§ 44.104(1), 44.104(14) (2011).

134Fla. Stat. § 44.104(2) (2011).

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judgment on the decision rendered by the trial resolution judge shall be

entered by any court having jurisdiction thereof.

Subject to the exceptions stated in Florida Statute § 44.104, the parties to

an existing dispute or pending lawsuit may also submit their controversy to

voluntary trial resolution by use of the following agreed application to the

Court:

We, the undersigned parties, hereby jointly agree and apply to the Court

for binding voluntary trial resolution pursuant to Chapter 44, Florida

Statutes, including, without limitation, the procedures set forth in Florida

Statute § 44.104, for the following controversy: (Describe the dispute or

identify an existing lawsuit), and final judgment on the decision rendered

by the trial resolution judge shall be entered by any court having

jurisdiction thereof.

We further agree that (Insert name and address of trial resolution judge)

shall be appointed by the Court as the trial resolution judge for the above-

described controversy, who shall be compensated in accordance with that

certain agreement between the parties, a copy of which is attached hereto

as Exhibit “A.”

C. The Trial Resolution Judge

The TRJ must be a licensed member of The Florida Bar in good standing

for more than five (5) years.135 If the VTR agreement does not specifically

identify the TRJ and the parties cannot otherwise agree, the Court will

appoint the TRJ as the case requires.136

D. Benefits of VTR

The parties may jointly appoint a TRJ who is a qualified, experienced

specialist (Florida Bar Board Certified) in the area of the legal dispute.

Only attorneys certified by The Florida Bar are allowed to identify

themselves as “Florida Bar Board Certified” or as a “specialist.”

Certification is the highest level of recognition by The Florida Bar of the

competency and experience of attorneys in the areas of law approved for

135Fla. Stat. § 44.104(2) (2011).

136Fla. Stat. § 44.104(2) (2011).

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certification by the Supreme Court of Florida. Not all qualified lawyers are

certified, but those who are board certified have taken the extra step to

have their competence and experience recognized.

The parties’ rights to procedural due process, rules of Court and appellate

rights (except for findings of fact) are preserved as with most litigation.

The filing of an application for VTR tolls the applicable statute of

limitations.137

The TRJ must follow the applicable law; failing which he or she may be

reversed on appeal.138 However, the harmless error doctrine is applicable

for any appeal from a final determination rendered by a TRJ for a dispute

submitted to VTR.139

The parties have full availability to discovery and motion practice.140

The parties should have greater flexibility for hearings and trials before the

TRJ.

E. Burdens/Costs of VTR

The fees of the TRJ can become sizable for any large, complex case.

There is no limitation on discovery as in arbitration.

VII. COLLECTION ISSUES

A. Attachment, Garnishment & Levy.

A writ of attachment creates a lien against the non-exempt real or personal

property before or after a debt becomes due. A writ of attachment may be obtained

when a debt is due where the debtor:

1. Will fraudulently part with the property before judgment can be

obtained against him or her.

2. Is actually removing the property out of the state.

3. Is about to remove the property out of the state.

137Fla. Stat. § 44.104(6) (2011).

138Fla. Stat. § 44.104(10)(a) (2011).

139Fla. Stat. § 44.104 (12) (2011).

140Fla. R. Civ. P. 1.710(c).

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4. Resides out of the state.

5. Is actually moving himself or herself out of the state.

6. Is about to move himself or herself out of the state.

7. Is absconding.

8. Is concealing himself or herself.

9. Is secreting the property.

10. Is fraudulently disposing of the property.

11. Is actually removing himself or herself beyond the limits of the

judicial circuit in which he or she resides.

12. Is about to remove himself or herself out of the limits of such

judicial circuit.

Any creditor may have an attachment on a debt not due, when the debtor:

1. Is actually removing the property out of the state.

2. Is fraudulently disposing of the property to avoid the payment of his

or her debts.

3. Is fraudulently secreting the property to avoid payment of his or her

debts.141

Once the writ is issued and served, the creditor must complete the lawsuit and

then execute upon the property through a sheriff’s sale.142 Before any writ of

attachment will issue, the creditor must post a bond equal to double the debt

demanded. This bond will be security for the debtor should the court later determine

the writ was improperly obtained.143

After a monetary judgment is obtained, a writ of garnishment is available to a

creditor to collect non-exempt money owed to a buyer by a third-party.

After judgment has been obtained against the defendant but before the

writ of garnishment is issued, the plaintiff, or the plaintiff’s agent or

attorney, shall file a motion (which shall not be verified or negative

141Fla. Stat. § 76.05 (2011).

142Fla. Stat. § 76.14 (2011) et seq.

143See Fla. Stat. § 76.12 (2011).

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defendant’s exemptions) stating the amount of the judgment. The motion

may be filed and the writ issued either before or after the return of

execution.144

Even before a monetary judgment is obtained, a writ of garnishment is available to a

creditor to collect non-exempt money owed to the debtor by a third-party upon

compliance with the following procedure:

(2) To obtain issuance of the writ, the plaintiff, or the plaintiff’s agent or

attorney, shall file in the court where the action is pending a verified

motion or affidavit alleging by specific facts the nature of the cause of

action; the amount of the debt and that the debt for which the plaintiff

sues is just, due, and unpaid; that the garnishment is not sued out to

injure either the defendant or the garnishee; and that the plaintiff believes

that the defendant will not have in his or her possession, after execution is

issued, tangible or intangible property in this state and in the county in

which the action is pending on which a levy can be made sufficient to

satisfy the plaintiff’s claim. The writ of garnishment shall set forth a notice

to the defendant of the right to an immediate hearing for dissolution of

such writ pursuant to s. 77.07. Upon issuance of the writ of garnishment,

the clerk of the court shall provide by mail a copy of the writ to the

defendant.

(3) Except when the plaintiff has had an attachment writ issued, no writ

of garnishment before judgment shall issue until the plaintiff, or the

plaintiff’s agent or attorney, gives a bond with surety to be approved by

the clerk payable to the defendant in at least double the amount of the

debt demanded, conditioned to pay all costs, damages, and attorney’s

fees that the defendant sustains in consequence of the plaintiff’s

improperly suing out the writ of garnishment. A garnishment bond is not

void or voidable because of an informality in it, nor shall the obligors be

discharged because of the informality, even though the garnishment is

dissolved because of the informality.

(4) The motion or pleading need not negative any exemptions of the

defendant.145

A continuing writ of garnishment is similarly available to collect a debtor’s non-exempt

wages, provided the debtor is not considered the “head of household.”

Notwithstanding any other provision of this chapter, if salary or wages are

to be garnished to satisfy a judgment, the court shall issue a continuing

144Fla. Stat. § 77.03 (2011).

145Fla. Stat. § 77.031 (2011).

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writ of garnishment to the judgment debtor’s employer which provides for

the periodic payment of a portion of the salary or wages of the judgment

debtor as the salary or wages become due until the judgment is satisfied

or until otherwise provided by court order….146

B. Fraudulent Transfers & Tracing Assets.

A corporate buyer may go out of business and default on its contract for sale

with the seller. The seller may then obtain a monetary judgment against the corporate

buyer only to learn that the corporation no longer has any assets to satisfy the

judgment. If the corporation had substantial assets at one time, it is prudent for the

seller to learn how those assets were disposed of by the buyer. Given the right facts,

the individual principals of the corporate buyer and other persons who received the

corporate assets may be liable for the seller’s judgment.

Several statutory tools are available to attack a fraudulent transfer, including

setting aside the transfer and levying upon the assets transferred or other substitute

property of the transferee. The following are the operable fraudulent transfer statutes:

56.29. Proceedings supplementary.

(6)(a) When, within 1 year before the service of process on

him or her, defendant has had title to, or paid the purchase

price of, any personal property to which the defendant’s

spouse, any relative, or any person on confidential terms

with defendant claims title and right of possession at the

time of examination, the defendant has the burden of proof

to establish that such transfer or gift from him or her was not

made to delay, hinder, or defraud creditors.

(b) When any gift, transfer, assignment or other

conveyance of personal property has been made or

contrived by defendant to delay, hinder or defraud creditors,

the court shall order the gift, transfer, assignment or other

conveyance to be void and direct the sheriff to take the

property to satisfy the execution. This does not authorize

seizure of property exempted from levy and sale under

execution or property which has passed to a bona fide

purchaser for value and without notice. Any person

aggrieved by the levy may proceed under ss. 56.16-56.20.147

726.105. Transfers fraudulent as to present and future creditors.

146Fla. Stat. § 77.0305 (2011).

147Fla. Stat. § 56.29(6) (2011).

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(1) A transfer made or obligation incurred by a debtor is

fraudulent as to a creditor, whether the creditor’s claim arose

before or after the transfer was made or the obligation was

incurred, if the debtor made the transfer or incurred the

obligation:

(a) With actual intent to hinder, delay, or defraud any

creditor of the debtor; or

(b) Without receiving a reasonably equivalent value in

exchange for the transfer or obligation, and the debtor:

1. Was engaged or was about to engage

in a business or a transaction for which the

remaining assets of the debtor were

unreasonably small in relation to the business

or transaction; or

2. Intended to incur, or believed or

reasonably should have believed that he or

she would incur, debts beyond his or her ability

to pay as they became due.

(2) In determining actual intent under paragraph (1)(a),

consideration may be given, among other factors, to

whether:

(a) The transfer or obligation was to an insider.

(b) The debtor retained possession or control of the

property transferred after the transfer.

(c) The transfer or obligation was disclosed or concealed.

(d) Before the transfer was made or obligation was

incurred, the debtor had been sued or threatened with suit.

(e) The transfer was of substantially all the debtor’s assets.

(f) The debtor absconded.

(g) The debtor removed or concealed assets.

(h) The value of the consideration received by the debtor

was reasonably equivalent to the value of the asset

transferred or the amount of the obligation incurred.

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(i) The debtor was insolvent or became insolvent shortly

after the transfer was made or the obligation was incurred.

(j) The transfer occurred shortly before or shortly after a

substantial debt was incurred.

(k) The debtor transferred the essential assets of the

business to a lienor who transferred the assets to an insider

of the debtor.148

726.106. Transfers fraudulent as to present creditors.

(1) A transfer made or obligation incurred by a debtor is

fraudulent as to a creditor whose claim arose before the

transfer was made or the obligation was incurred if the

debtor made the transfer or incurred the obligation without

receiving a reasonably equivalent value in exchange for the

transfer or obligation and the debtor was insolvent at that

time or the debtor became insolvent as a result of the

transfer or obligation.

(2) A transfer made by a debtor is fraudulent as to a

creditor whose claim arose before the transfer was made if

the transfer was made to an insider for an antecedent debt,

the debtor was insolvent at that time, and the insider had

reasonable cause to believe that the debtor was insolvent.149

In addition to setting aside a fraudulent transfer, a corporation’s shareholders

may be liable for the corporation’s debts to the extent that they received any

distributions of the corporation’s assets at a time when they knew or should have known

that the corporation had the outstanding debts. “[T]he properties of a corporation are to

be deemed a trust fund for the payment of the debts of the corporation, so that the

creditors have a lien upon it or right of priority out of it in preference to any shareholder

of the corporation.”150 A corporation is required to maintain a sufficient amount of its

funds to pay the claims of its creditors, including its contingent creditors.151

Similarly, Florida Statutes will hold the directors of a corporation personally liable

for any distributions to shareholders that the directors affirmatively authorize in violation

148Fla. Stat. § 726.105 (2011).

149Fla. Stat. § 726.106 (2011).

150Beach v. Williamson, 83 So. 860, 863 (Fla. 1919); see also U.S. Fire Ins. Co. v. Morejon, 338

So. 2d 223, 224 (Fla. 3d DCA 1976), cert. den. 345 So. 2d 426 (Fla. 1977).

151See U.S. Fire Ins. Co., 338 So. 2d at 224; see also Diamond Int’l Corp. v. SJH Enter., Inc., 487

So. 2d 1089, 1091 (Fla. 5th DCA 1986).

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of Florida law. The directors of a corporation may be personally liable for distributions if

the effect of which precludes the corporation’s ability to pay its debts as they become

due. “No distribution may be made if, after giving it effect: (a) The corporation would

not be able to pay its debts as they become due in the usual course of business; or (b)

The corporation’s total assets would be less than the sum of its total liabilities. . . .”152

Any director who votes for or assents to a distribution made in violation of Florida

Statutes is personally liable for the amount of the distribution that exceeds what could

have been distributed in accordance with Florida law.153

C. Piercing the Corporate Veil.

One of the advantages of doing business though a corporation is that its

shareholders are not liable for the corporation’s debts. Nevertheless, this corporate

shield or veil may be pierced under limited circumstances.

Florida courts will hold a corporation’s shareholders liable for the corporation’s

debts where the corporation was organized or used to mislead its creditors, to

perpetrate a fraud on the corporation’s creditors or the corporation has been used for

some illegal purpose.154 The mere ownership of a corporation by one or a handful of

shareholders, however, is an insufficient reason to pierce the corporate veil.155

“A critical issue in the determination of whether the corporate veil will be pierced

for the imposition of personal liability is whether the corporate entity was organized or

operated for an improper or fraudulent purpose.”156 Unless there is a showing that a

corporation was formed or employed for an unlawful or improper purpose, such as

subterfuge to mislead or defraud creditors, to hide assets, to evade the requirements of

a statute or some betrayal of trust, the corporate veil cannot be pierced.157

The rule of law to hold a parent corporation liable for the debts of its subsidiary is

similar to the above rules. “[T]o pierce the corporate veil under Florida law, it must be

shown not only that the wholly-owned subsidiary is a mere instrumentality of the parent

152Fla. Stat. § 607.06401(3)(a)-(b) (2011) (emphasis added).

153Fla. Stat. § 607.0834(1).

154Advertects, Inc. v. Sawyer Indus., 84 So. 2d 21, 23 (Fla. 1955); see also Gershuny v. Martin

McFall Messenger Anesthesia Prof’l Ass’n, 539 So. 2d 1131, 1133 (Fla. 1989); Gen. Builders

Corp. of Ft. Lauderdale, Inc. v. Sisk, 461 So. 2d 104, 104 (Fla. 1984); Dania Jai-Alai Palace, Inc.

v. Sykes, 450 So. 2d 1114, 1121 (Fla. 1984); Aztec Motel, Inc. v. State ex rel. Faircloth, 251 So.

2d 849, 852 (Fla. 1971); McFadden Ford, Inc. v. Mancuso, 766 So. 2d 241, 242 (Fla. 4th DCA

2000).

155Advertects, Inc., 84 So. 2d at 23.

156Kanov v. Bitz, 660 So. 2d 1165, 1166 (Fla. 3d DCA 1995).

157See Aztec Motel, Inc., 251 So. 2d at 852; see also Munder v. Circle One Condo., Inc., 596 So.

2d 144, 145 (Fla. 4th DCA 1992).

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corporation but also that the subsidiary was organized or used by the parent to mislead

creditors or to perpetrate a fraud upon them.”158

VIII. BUSINESS PRACTICES TO AVOID (AND WIN) DISPUTES

Legal disputes are won and lost based upon various factors, including the quality

and persuasiveness of the evidence. Although a seller’s or buyer’s termination of a

contract for sale must comply with the pre-requisites of the contract for sale and Florida

law, proving the presence of lawful grounds to terminate the contract is a separate

issue of concern.

At a minimum, sellers and buyers should prepare contemporaneous memoranda

or telephone logs of all substantive conversations regarding the negotiation and

performance of contracts for sale. Even better, confirming letters create a stronger

evidentiary position in the event of a dispute.

This practice serves two functions. First, a confirming letter provides a written

instrument for the parties to refer back to in the event of a good faith misunderstanding.

Second, a confirming letter, log or memorandum is physical evidence of the facts at the

time they occurred. This physical evidence, if made contemporaneous with the

conversation and in the normal course of business, is generally admissible in court.

When faced with a “he said, she said” claim or defense, the party who also has a

contemporaneous document evidencing the conversation will more often than not

prevail in the dispute. Some examples of these practices are reflected in the Appendix.

IX. DISCLAIMER

This commentary is for informational purposes only, is not legal advice and does

not establish an attorney-client relationship. You should seek appropriate legal

advice from a licensed attorney before making any decision based on these

comments. The hiring of a lawyer is an important decision that should not be

based solely upon advertisements.

158Ocala Breeders’ Sales Co. v. Hialeah, Inc., 735 So. 2d 542, 543 (Fla. 3d DCA 1999); see also

USP Real Estate Inv. Trust v. Disc. Auto Parts, Inc., 570 So. 2d 386, 390 (Fla. 1st DCA 1990).

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APPENDIX

Memorandum

To: XYZ file

From: ABC

Date: June 15, 2001

Re: Conference with John Doe, Broker for XYZ Corp.

This morning, I met with John Doe, broker for XYZ corp. We discussed the fact that XYZ has

failed to make its deposit for the contract for sale on the Zoomer Property. He stated that his

client, Jason Roe of XYZ Corp., did not have any good reason for not making the deposit,

which was now over 90 days past due. I told John that, if the deposit was not made within 10

days, I would declare a breach of the contract.

John assured me that the payment would be made by that date.

ABC's signature

June 15, 2004

ABC Corp. Telephone Log

ABC Employee Name: ABC

ABC Account: XYZ corp.

Date Name of Caller Log of Discussion

6/15/01 ABC I called John Doe today about XYZ’s failure to make the

deposit due on the contract for sale. I told him that the

deposit was over 90 days past due and the matter

would be turned over to our lawyer, unless we received

the deposit within ten days. John assured me that the

payment would be made by that date. I told John that I

could not give his client any further extensions. John

acknowledged this. Nothing further was discussed.

ABC’s signature

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ABC's Letterhead

June 15, 2004

John Doe, Broker for XYZ Corp.

Address

Re: XYZ Corp's account number with ABC

Dear Mr. Doe:

Thank you for meeting with me this morning. As we discussed, XYZ has failed to make its

deposit for the contract for sale on the Zoomer Property. I appreciate your candid statement

that your client, XYZ Corp., did not have any good reason for not making the deposit, which

is now over 90 days past due. I told you that, if the payment was not made within 10 days, I

will be forced to declare a breach of the contract. In response, you advised that the payment

would be made by that date. Please allow me to reiterate that I cannot give your client any

further extensions on this matter.

Very truly yours,

ABC's signature

Print Name and Title

cc. Gary S. Salzman, Esq.