Feb 10 2016

Resolving Business Disputes Between Shareholders


By: A. Starkey DeSoto

Dollarphotoclub_66181043Just like marriage, business partners enter into their relationship full of excitement and hope for the future. Starting, maintaining, and growing a business requires commitment and a lot of hard work and, as the business grows, changes, or struggles, ultimate success of the business often requires the partners to work together, and compromise on various issues relating to the business.  Unfortunately, many business partner relationships end up irretrievably broken, and the business partners find themselves in a situation where they must end their business relationship, but where there are business assets that must be accounted for and properly distributed.

Under Florida law, whether the business is a corporation, limited liability company, joint venture, or partnership, there are numerous ways to end a business relationship.  If the business is successful, but the business partners are not able to continue their business relationship any longer, the best option may be for one or more of the partner(s) to buy out the interest held by the other partner, and continue operation of the successful business.  It also may be a good option for one or more of the partner(s) to purchase enough of the interest held by the other partner to obtain controlling interest.  This option would permit the successful operation of the business, but would not require the “other” partner to completely forfeit or sell his rights to all future profits of the successful business.

Another option is dissolution of the business.  Under this option, the business entity would be dissolved, and the assets of the business would be distributed to each partner in accordance with his or its interest in the business (or in the particular asset).  Each business partner would share in the profits (or losses) of the company, and the business would cease to exist.  While this option could be utilized for a successful or unsuccessful business, it often makes most sense to dissolve an unsuccessful business.

A third option is sale of the business.  Quite simply, the business partners could sell the business, and all of its assets, to someone else, and split the profits or losses in accordance with their interest.

Finally, as a fourth option, the business partners may partition the business, where the assets of the business would be sold or distributed as necessary to ensure that each business received its proportionate interest of the assets.

The proper, or best, method of resolving irretrievable business disputes between partners that desire to end their business relationship is unique to each business, as many factors would require consideration, such as the type of business relationship, the purpose of the business, the success (or failure) of the business, and the assets owned by the business, to name a few.  Regardless of which method is chosen to terminate the business relationship, it is important to ensure that the sale, dissolution, stock-purchase, or partition of the business, and accounting of all business assets, is properly done under Florida law.

If you are a partner in a business relationship, for a business in any of Broward, Miami-Dade, or Palm Beach counties, that is irretrievably broken, and you need advice on the best method of legally ending the business relationship, please contact a Broward business lawyer for a consultation, or fill out the contact information on this page.

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Jan 26 2016

PACE: A Solution to the Prohibitive Costs of Sustainable Retrofits


By: A. Starkey DeSoto

Environmentally conscious town on green hills

Recently, the largest Powerball lottery (over $1.5 billion) in history was awarded to three “lucky” winners.  Regardless of one’s feelings on the lottery, there is no denying that the winners of that Powerball lottery will be able to purchase, or fund, pretty much anything they could ever need or want.  These lottery winners are not limited by cost.  Rather, their only problem is figuring out what they should buy next.

Unfortunately, when considering whether to implement sustainability improvements for their home or business, most property owners (residential and commercial) have the opposite problem.  Of course, in addition to the environmental benefits, the non-environmental benefits of retrofitting an existing building are well-documented: the building will increase in value, be less costly to maintain (as water and electricity bills decrease), last longer, and sustainability improvements will, overall, contribute to a better, healthier, more comfortable environment for people to live and work.  The overwhelming prohibitive factor is cost.  The upfront costs of sustainability improvements—such as solar panels, LED lighting, green roofs, or air-movement HVAC systems—are generally more expensive to install, yet they provide significant financial benefits down the road.

Property Assessed Clean Energy (“PACE”) is a federal program—recently approved by the Florida Supreme Court—that essentially allows property owners to finance the upfront costs of sustainability measures, and allows the property owners to pay back those upfront costs through a small tax assessment on the property.  PACE financing is available for nearly any property— commercial, industrial, single-family residential, condominiums, and non-profit.  Quite simply, PACE financing provides all the benefits of retrofitting a building with sustainability improvements, without the single-biggest obstacle: cost.

PACE financing pays for 100% of the upfront costs of the retrofit project, and is repaid by the property owner with a small assessment added to the property’s tax bill.  This assessment is often significantly less than the property owner was paying in utility bills.  For example, if a property owner typically pays $400.00 per month on its electric bill, and receives PACE financing to retrofit its building for energy efficiency in the amount of $40,000.00, the tax assessment on the property would be approximately $200.00 per month over a 20-year period.  The result is that the property owner’s electric bill would likely be reduced to $0.00, and the property owner would simply be paying for the tax assessment, with no electric bill whatsoever, thereby cutting its energy expenses in half.  Furthermore, because PACE financing stays with the building, rather than the property owner, any unpaid assessments would transfer upon sale of the building, or, for a commercial property, could easily be passed on to tenants.

Now that PACE financing has been approved by the Florida Supreme Court, there will likely be many PACE projects moving forward in both Broward County and Miami-Dade County.  If you own property in Broward, Miami-Dade, or Palm Beach, and you are seeking to determine whether PACE financing or retrofitting your property would be beneficial for you, please contact a Broward County sustainability lawyer by calling (954) 764-6766 or by completing the contact form on this page.

 

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Jan 19 2016

Enforcing Construction Liens: The Importance of Punctuality


By: A. Starkey DeSoto

“If you’re not early, you’re late.”Vince Lombardi

While there are many different variations of exactly what the great Vince Lombardi stated regarding punctuality, his message on the importance of punctuality cannot be overstated.  Punctuality is important in nearly every aspect of our lives.   Punctuality can set the tone for our relationships, both personally and professionally, and could, perhaps, make or break a business deal.  Punctuality has been said to be the “soul of business” (Thomas C. Haliburton).  However, it is important to remember that the concept of punctuality is not limited to simply arriving at a place at the right time (or early), but, rather, about taking actions at the right time.  For this reason, punctuality is, perhaps, most important in the legal realm, because failing to take specific actions at the right time could cause you to forfeit important legal rights.Calendar and Clock

In Florida, a contractor, subcontractor, or supplier has the legal right to place a lien on a project owner’s property when he or she doesn’t get paid; however, in order to preserve those rights, the contractor, subcontractor, or supplier must take certain actions at the right time.  For example, a contractor that has a direct contract with the project owner may be able to simply file a Claim of Lien within 90 days after completing its final work at the project.  But a subcontractor or supplier without a direct contract with the project owner must take additional steps, such as providing a Notice to Owner not later than 45 days after beginning work, or first supplying materials, at the project.  Similarly, when the project is bonded, the subcontractor or supplier must provide a Notice of Nonpayment to the surety in order to claim rights under the payment bond.  Failure to provide any of the notices within the required time periods, or to timely file a Claim of Lien, will cause the contractor, subcontractor, or supplier to forfeit their lien rights and, possibly, their ability to be paid for the work or materials provided to the project.

If you are a contractor, subcontractor, or supplier in Broward, Miami-Dade, or Palm Beach County, and would like to ensure that you are properly preserving your lien rights, then schedule a consultation with a Broward County construction lawyer by calling (954) 764-6766 or by completing the contact form on this page.

 

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Jan 12 2016

Understanding Your Rights Regarding OSHA Violations


By: A. Starkey DeSoto

It’s so frustrating.  As a contractor, you not only have to make sure you complete your scope of work on a project in accordance with the contract documents, design drawings, specifications, and building codes, while keeping track of all change orders, payments, and scheduling issues; you also have to ensure that all OSHA safety regulations are met, and that all of your employees are in strict compliance with the regulations at all times.  It only takes one mistake, shortcut, or oversight, and an OSHA Compliance Officer is lurking to pounce at the job site to write a citation.  Of course, barring injury, the penalty for the first citation is usually minor—a relatively small fine and some required OSHA training or continuing education classes.   After the first violation is on your company’s record, however, it’s the possibility of a second citation in the future that is worrisome, because the fines for a second violation can often exceed $10,000.00.

Due to the threat of significant punishment for a second violation, it is usuInjured construction worker fallen off ladderally in a contractor’s best interest to challenge the first citation to prevent even a single blemish on the company’s record.  Challenges to citations for what may initially seem like an open-shut OSHA violation can often be successful, because OSHA must prove that the violation actually occurred—rather, the mere fact that the contractor received a citation is not enough. In general, OSHA must prove the following: (1) the regulation that was allegedly violated is applicable; (2) the hazard actually existed; (3) an employee was exposed to the hazard; and (4) the employer knew, or should have known, of the violation.  If OSHA fails to prove even one of these elements, the citation will be dismissed.

Regarding the first element, it is possible that an OSHA compliance officer cited the wrong regulation.  For example, in a situation where a contractor bores a concrete core through a roof, and the core falls to the next lower level and injures someone, there may not be an OSHA regulation that specifically requires a contractor to take certain safety precautions to prevent the concrete core from falling through its own hole.  However, because someone was injured, an OSHA compliance officer may write the contractor a citation for failing to provide adequate fall protection (or a similar regulation).  Such a regulation would likely not be applicable, because fall protection regulations are intended to prevent objects from falling off the ledge of a higher level, not to prevent a concrete core from falling directly through the hole from which it was drilled.

Regarding the second element, if, for example, a contractor is cited for failing to provide cave-in protection, such as a trench box, after excavating a trench through rock or limestone, OSHA would not be able to prove its case, because the hazard of a potential cave-in does not actually exist.  Cave-in protection regulations are intended to protect excavation workers from the potential hazard of the sides of a trench caving in.  But where a trench is dug into solid rock or another type of extremely hard surface, the sides of the trench are also solid and not susceptible to any type of cave-in.

Regarding the third element, if, for example, an excavation includes a trench of varying depths, and the contractor failed to provide cave-in protection, OSHA would have to prove that an employee was actually in the portion of the trench that was greater than five feet in depth.  Thus, if OSHA could prove only that an employee was in the trench somewhere, but could not show that the employee was in the deeper areas of the trench, OSHA would fail to prove its case.

Finally, regarding the fourth element, if a contractor makes every effort to ensure that his or her company and employees are in compliance with all OSHA regulations, but one of the employees goes rogue and refuses (or forgets) to comply with a particular regulation while you are away from the job site, OSHA would likely not be able to prove that the contractor knew or should have known of the violation.

If you are a contractor in Broward, Miami-Dade, or Palm Beach County, and need legal representation to challenge an OSHA citation, then schedule a consultation with a Broward County construction lawyer by calling (954) 764-6766 or by completing the contact form on this page.

 

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Jan 05 2016

“My Word Is My Bond”: Are Oral Contracts Enforceable?


By: A. Starkey DeSoto

Speaking together social media concept as two crumpled pieces of paper shaped as human head with talk bubble icons taped as communication symbol for business compromise agreement

In general, a contract does not have to be in writing to be enforceable.  Of course, a written contract is usually best, because it clearly sets out the purpose of the contract and the obligations of each party under the contract.  However, in today’s business world, people often make oral agreements believing and intending that both parties to the agreement will honor their obligations.  Perhaps one of the parties to the agreement was highly recommended by a friend, and the other party didn’t believe a written contract was necessary. Or perhaps the agreement was so obviously beneficial to both parties, that neither party comprehended a potential breach of the agreement.  Regardless of the reasons why the agreement was not put into writing, an oral contract is equally enforceable as a written contract under most circumstances.

In Florida, the requirements of a valid contract, whether oral or written, are always the same: offer, acceptance, consideration and sufficiently specific terms.  Nevertheless, a written contract is usually preferable, because it is much easier to prove the existence of a valid written contract.  When one seeks to prove a valid oral contract, one generally needs to look at things such as letters and e-mails between the parties, the conduct and actions of the parties – e.g., payments made or services performed, and other aspects of the circumstances, such as the relationship of the parties.  Even so, some oral contracts are not enforceable under Florida law except under limited circumstances.  Examples of these types of oral contracts include: agreements made for the sale of land; residential leases for a period longer than one year; and contracts that will take more than one year to complete.  For these types of contracts, the agreement must always be reduced writing.

If you need assistance with enforcing an oral contract (in Broward, Palm Beach, or Miami-Dade County), please call our law firm in Fort Lauderdale at (954) 764-6766 to schedule a consultation with a Broward County business lawyer.

 

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Dec 29 2015

Florida Non-Compete Agreements: Is A Referral Source A Legitimate Business Interest?


By: A. Starkey DeSoto

Restrictive covenants in an employment contract, such as non-compete or non-solicitation clauses, are disfavored under Florida law.  Generally, Florida is a right-to-work state, and Florida courts have explained that any contract that attempts to restrain or limit a person’s right or ability to work must be strictly construed.  However, that does not mean that restrictive covenants limiting or prohibiting post-employment competition are not enforceable.  To the contrary, when a restrictive covenant is written in compliance with Florida law, it can be a very powerful tool for an employer to protect its legitimate business interests.

500_F_73789644_SZC7X8lEsB2TTltieaUl8iHTbY75WHMoSection 542.335 of the Florida Statutes provides that restrictive covenants prohibiting or restricting competition must be: (a) reasonable in time, area, and line of business; and (b) designed to protect the employer’s legitimate business interests.  While the Statute defines “legitimate business interests” as including (among other things) trade secrets, substantial relationships with specific prospective or existing customers, and specialized training, questions often arise as to whether the interests that the employer is trying to protect are actually “legitimate” under Florida law.

When interpreting and applying Section 542.335, one issue that occasionally arises is whether “referral sources” qualify as legitimate business interests entitled to protection in an employee non-competition or non-solicitation agreement.  While this issue is not entirely settled in Florida, a recent opinion by the Fourth District Court of Appeal (i.e., the appellate court presiding over Broward County and Palm Beach County) provides some insight.

In Infinity Home Care, LLC v. Amedisys Holding, LLC, 40 Fla. L. Weekly D 1929 (Fla. 4th DCA, Aug. 19, 2015), the Fourth District held that referral sources for home health services are a legitimate business interest entitled to protection under a non-compete and non-solicitation clause in an employment contract.  In so holding, the Court observed that the home health care industry depends on referral sources as a substantial source of business, and that the former employee was specifically hired because of her substantial relationships with particular referral sources.  Thus, the Court concluded that, with respect to the home health care industry, referral sources are protectable legitimate business interests.

Although the Infinity Home Care, LLC case specifically addressed Section 542.335 within the context of the home health services industry, the Court’s reasoning in that case can be applied to many other industries to determine whether a “referral source” is likely a legitimate business interest that is the proper subject of a non-competition/non-solicitation agreement. For example, where the industry relies on referral sources as a substantial source of its business, or where the employee was specifically hired, in large part, because of his or her connections, “referral sources” are likely a legitimate business interest that may be afforded protection under Section 542.335.

If you need clarification regarding whether a non-compete/non-solicitation clause in a Florida employment contract is enforceable in Broward, Miami-Dade, or Palm Beach County, please call our law firm in Fort Lauderdale at (954) 764-6766 to schedule a consultation with a Broward County business lawyer.

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Dec 22 2015

Repairing Construction Defects at Your Home


By: A. Starkey DeSoto

Whether you are building a home, adding on to your home, or repairing your home (such as replacing your roof), it is important to you that the construction is done properly.  There is nothing more frustrating than discovering that the construction was defective, and now, instead of enjoying your home, Worker repairing the broken stairsyou are left with more problems than you ever wanted.  As a Florida construction lawyer, and a homeowner, I understand how frustrating these situations can be.  If you are in a similar situation, it is important that you follow certain procedures under Chapter 558 of the Florida Statutes before you repair or fix the defective conditions.

First, you must provide the builders or contractors with written notice of the defective condition, and give them an opportunity to inspect the condition and possibly repair the defect.  Second, the builder or contractor may need to notify other subcontractors or suppliers to inform them of the defective condition.  Third, every person that has been notified of the defective condition at your property must respond to you within a certain amount of time.  In their responses, the builders, contractors, subcontractors, or suppliers may admit that they made a mistake and offer to repair the defect.  This is, of course, the best case scenario. However, more often than not, the builders or contractors may tell you that the defect was not their fault, and refuse to take any action to repair the defect.  This leaves you with a defective condition at your home that needs repair, but with nobody accepting the responsibility to actually repair or fix it.

If you have taken the proper steps under Florida law, then you should be able to hold the builder or contractor responsible for the repairs to your home.  You deserve to have the construction or repairs at your home completed properly, without defects.  If you live in Broward County, Miami-Dade County or Palm Beach County, and you need assistance with correcting or repairing a defective condition at your home, please contact a South Florida construction lawyer by calling (954) 764-6766.

 

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Dec 08 2015

Is a “Pay-When-Paid” Provision in a Construction Contract Enforceable?


By: A. Starkey De Soto

“I can’t pay you until I first get paid by the owner.”  This phrase, or something similar, is used too often in construction projects in South Florida, throughout Broward, Miami-Dade, and Palm Beach Counties, by general contractors seeking to avoid payment to a subcontractor before the general contractor has received payment from the project owner for work completed by the subcontractor.  Often, the general contractor will point out a clause or provision in the subcontract and claim it has the right to refuse payment to the subcontractor until it receives payment from the owner.  This type of subcontract clause is known as a “pay-when-paid” provision or “contingent payment” clause.

Under Florida law, “pay-when-paid” provisions are not always enforceable.  This is because Florida courts recognize that many subcontractors must receive payment for their work within a timely manner in order to remain in business. Simply put, the subcontractor has a direct contract with the general contractor, Close - up construction contract with pen and architectural rollnot with the project owner, and when the subcontractor performs work at the project, the subcontractor deserves to be paid for that work.  So, in circumstances where the project owner fails to pay the general contractor, the general contractor is often still required to pay the subcontractor.

In order for a “pay-when-paid” provision to be enforceable, and to effectively transfer the risk of the project owner’s nonpayment from the general contractor to the subcontractor, the subcontract terms must be absolutely clear that the subcontractor fully accepts the risk that the owner may not pay the general contractor, and understands that the subcontractor will be paid for its work only after the general contractor is paid.  Unless the subcontract terms and provisions are absolutely clear that payment to the general contractor by the owner is a condition to payment for work performed under the subcontract, the “pay-when-paid” provision is likely not enforceable.

If you are a contractor in South Florida (Broward, Miami-Dade, or Palm Beach), and you are wondering whether a “pay-when-paid” clause in a subcontract is enforceable under Florida law, please call our law firm in Fort Lauderdale at (954) 764-6766 to schedule a consultation with a Broward County construction lawyer.

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Jan 21 2014

First DCA Decision Affects Rights of Church Congregations to Take Church Property


By: E. Scott Golden

A recent decision by one of Florida’s five appellate courts has opened the door for religious denominations to claim that real estate originally purchased for the denomination should stay in the denomination.  This decision heralds a change in the way property purchased for religious purposes is viewed.

Background

In Florida (as in most states), churches (and other religious organizations) are divided into two categories for purposes of property issues.  They are either hierarchical (in which the denomination has a single, centralized government, such as the Roman Catholic Church, the United Methodist Church, and the Assemblies of God), or they are congregational (in which each local congregation is autonomous, such as Southern Baptist churches, Congregational churches, and most Jewish synagogues).

Hierarchical churches typically own the assets of the denomination through the trustees of the various churches.  In order to enforce that ownership, the denomination usually requires that deeds of land that are acquired for church purposes include language requiring the property to revert to the denomination in the event that the church leaves the denomination.  When the proper language is used, the denomination’s property is protected (for the use of the denomination).

Many hierarchical churches don’t enforce the use of such language, either because they don’t understand the need to do so or they don’t have attorneys that are aware of the denominational requirements to include the proper language in their deeds.  Failure to include such language can cause a problem regarding the ownership of the property in the event that the pastoral staff of a church leaves the denomination and attempts to take the land with it.

There are two major exceptions to the right of a denomination to claim property owned by one of its churches.  First, many denominations are congregational, not hierarchical.  Although their churches may share the mutual benefits of a denomination, each church is legally its own and is not subject to any oversight.  Whoever owns title to the church property for that type of church (either the trustees of an unincorporated religious association or the board of directors of a corporation) has authority over the church property.  The board of directors, often controlled by the pastoral staff, can leave the denomination and take the property.  The denomination has no rights in or control over the property.

The second exception to denominational control of the church property is when the property is placed in a corporation.  In that case, unless the deed to the property has the language that says that the property reverts to the denomination in the event that it is no longer being used for denominational purposes, the board of directors of the corporation has complete authority to control the property.  Again, because pastorals often have significant input over the members of the board of directors of the corporation that controls the church property, a pastor can decide to leave the denomination and take the property with him.

Recent decision

In the recent court decision, the church’s real estate was owned by a corporation that was controlled by a church that left its denomination.  Furthermore, the deed to the property did not include language that the property was to revert to the denomination in the event that the church left the denomination.  Notwithstanding these legal reasons to allow the church-controlled corporation to remove the property from the control and oversight of the denomination, the First District Court of Appeal for Florida (the appellate court for North Florida) ruled that, because the property was purchased by a church that was part of the denomination, and in agreement with the denomination’s right to the property when the property was originally purchased, it was the denomination’s property.  Therefore, when the church left the denomination and became independent, it had no right to retain control of the property.

Effect

Although the recent decision technically involves only one of the five appellate districts in the State of Florida, there are a couple of effects that are important.  First, if a church attempts to pull out of a hierarchical denomination, then, even if its deed does not contain the language causing the property to revert to the denomination, it is possible that the property may still be salvaged for the denomination.  Second, without this decision, it was very easy for incorporated churches to leave a denomination and take the property with them.  Denominations may now have the right to control the property even in those circumstances.  Therefore, although incorporation of churches is still not the best choice for property protection, and there is no certainty that this particular decision will be uniformly applied in every situation, the courts may be moving in a direction that would make it easier in the future for denominations to retain properties that were purchased with donations of the members of the denomination.

If you have any questions about the law affecting church property in Florida, contact a Fort Lauderdale church lawyer for church and charitable law questions online, or call us at 954-764-6766 to schedule an appointment.

 

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Oct 04 2013

Third District Clarifies Rights of Condominium Association at Conclusion of Bank Foreclosure


By: E. Scott Golden

A recent case in the Florida Third District Court of Appeal clarifies the rights and procedures of a condominium association at the conclusion of a residential foreclosure.  In that case, Ocean Bank v. Caribbean Towers Condo Ass’n, Inc., 38 Fla. L. Weekly D1726 (Fla. 3d DCA 2013), the Bank was foreclosing on a residential condominium and added the condominium association as a Defendant.  When the residential foreclosure was completed, the Association invoked the forum of the foreclosure court to seek past-due condominium assessments.  The Association sought to obtain payment from the Bank all of the past-due assessments, which totaled an amount far greater than the amount to which the Association was entitled under the Statute that governs the Association’s rights.  The Association may have had the right to sue the foreclosed owner for the full amount of the unpaid assessments, but it did not have the right to sue the Bank for the full amount.  The trial court ruled for the Bank, and the Bank then filed a motion for attorney’s fees.  The Association argued that the foreclosure court was not a proper forum to hear the issue of attorney’s fees.  The trial court denied the motion for attorney’s fees on the basis that a claim for attorney’s fees was not contained in the original foreclosure pleadings.  The Court of Appeal reversed the trial court on that issue.  The Appellate Court stated that, although the foreclosure pleadings did not request attorney’s fees regarding litigation over condominium assessments, the Association waived any right to contest the Bank’s right to seek attorney’s fees when the Association accepted, and did not appeal, the trial court’s jurisdiction over the issue of the past-due assessments.

The Court of Appeal narrowly ruled that, when the issue of condominium assessments is contested in the foreclosure court, the issue of attorney’s fees to the prevailing party may also be determined by the same court.  More broadly, this case raises implications that a court always has the right to consider attorney’s fees regarding all of the substantive matters raised and heard in that court.

If you need to consult with a Broward County real estate attorney regarding any aspect of real estate or real estate litigation, then please contact our firm at (954) 764-6766 to schedule an appointment.

 

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