Circumstances could propel you to decide to close out your corporation’s business operations.  The way to properly dissolve your corporation is to follow the procedures that are prescribed under the Florida Business Corporation Act.

We will go over the basic steps which you’d need to take to dissolve a Florida corporation.

Dissolving the Corporation

The first step the corporation must take to dissolve itself is to have the action approved.  An action to approve the dissolution of the corporation may be done by the board of directors and shareholders.  Or, the dissolution can be accomplished by a written consent of the shareholders without the board.

Dissolution by the Board & Shareholders.  To approve the dissolution of the corporation, the Board must adopt a resolution that proposes to dissolve the corporation.  Once the Board has adopted the resolution, the proposal to dissolve the corporation must then be submitted to the shareholders for a vote.  Approval will require a majority of the votes entitled to be cast on the proposal.  Thus, for example, if 60% of the total voting interests of the shareholders approved the action to dissolve the corporation, the action is effective.

Dissolution by the Shareholders Only.  Alternatively, the corporation may be dissolved by the written consent of the shareholders.  A written consent does not require any formal board meeting or shareholders’ meeting.  To properly dissolve the corporation, a valid written consent must describe the action so taken, and be dated and signed by the approving shareholders.  To approve the action a majority of the total shareholder votes who are entitled to vote must sign the consent.

Once approved, a notice must be given to those shareholders who have not consented in writing to the dissolution, or who were otherwise not entitled to vote on the action.  The notice must summarize the action so taken by the shareholders.

Filing Articles of Dissolution   

Once the dissolution of the corporation has been approved, the next step is to file articles of dissolution with the department of state.  The articles of dissolution is essentially a written statement that is filed with state of Florida.  The corporation will also have to pay a state filing fee.  Once the articles are duly filed with state the corporation has been formally dissolved.

What is the effect of a corporate dissolution?    

There may be some confusion as to what status the corporation holds after it is dissolved.  Does the dissolution mean that the corporation cannot do anything, or that it cannot perform any function?  Actually, no.

A dissolved corporation will hold a limited capacity to do certain things.  Generally, a dissolved corporation is not allowed to carry on its normal business.  However, the dissolved corporation is statutorily permitted to wind up and liquidate its business affairs.  For instance, the corporation can proceed to collect its assets, dispose of its properties, discharge and pay off its outstanding debts, and, if any assets remain, disburse the remaining assets to the shareholders.

What about creditors’ claims?

When dissolving a corporation one of the things the principals should think about are creditors’ claims.  The principals may wish to address any potential claims against the corporation.  Claims against the corporation fall into one of two categories:  known and unknown claims.

Known Claims

Florida statutes allow the dissolved corporation to dispose of known claims by submitting to a notice process that is governed by section 607.1406.  This “notice” process will require the dissolved corporation to send written notice to any known claimants within 3 years after the effective date of dissolution.  The notice requirement must contain certain specific information.  The claimant must be given at least 120 days after receipt of notice to submit a claim.  Ultimately, the claim against the dissolved corporation will be barred if the claimant does not timely respond to the claims process.

Unknown Claims

Florida law allows two alternative procedures in which to dispose of an unknown claim.  The procedure is governed by section 607.1407.  The first method is to file a notice of dissolution with the department of state and make request in the notice to address any potential unknown claims.  The notice must contain certain information, including the name of the corporation and the information which must be included in the claim. If the corporation complies the notice requirements, the claim will be barred within 4 years after the filing of the notice.

Alternatively, the dissolved corporation can dispose of unknown claims through the publication of a “Notice of Corporation Dissolution” in a newspaper in the county of the state in which the corporation’s principal office is located.  The notice must be published once a week for two consecutive weeks.

If the corporation satisfies one of the above two methods any potential unknown claims may be barred by law.

If you need assistance to dissolve your Florida corporation, or other entity, please contact our office for a reasonable quote.

EUO’s and Property Insurance Policies

The requirement of an insured to submit to an examination under oath, or EUO, is often found in a residential property insurance policy. In short, the purpose of an EUO provision in an insurance policy is to obtain information from the insured so that the insurer can assess its obligations under the policy, and also protect itself from potential false claims.

EUO’s and Depositions

The format of an EUO is similar to that of a civil deposition. In both instances, the subject, for instance, must take questions from the insurer, or the insurer’s representative, in a rather formal setting in which the subject is testifying under oath. Conceptually, however, an EUO and deposition are different things. First, an EUO is based on the policy contract. That is, the insurer’s right to examine the insured in an EUO is contractual in nature. In contrast, a litigant’s right to depose a party or witness in a deposition is based on the rules of civil procedure. Secondly, EUO’s are normally taken before civil litigation is commenced; and they are part of the insurer’s claims investigation process. Depositions, by their nature, are taken only after litigation has commenced.

Because an EUO and deposition are distinctly, separate examinations, it is quite conceivable that an insured may have to submit to an EUO; and then, if there is litigation later on, he or she could be subjected to a deposition with regard to the same claim.

What happens if an insured fails to attend an EUO?

Generally speaking, it is not a good idea for an insured to ignore the insurance company’s request to conduct an EUO. If an insured patently refuses to attend an EUO, or if he or she does not make any good-faith effort to comply, such failure could potentially lead to the forfeiture of the insured’s rights under the policy. The courts in Florida have sometimes reached different results where an insured has failed to comply with a policy’s EUO provision. In Goldman v. State Farm Fire General Insurance Co., 660 So.2d 300 (Fla. 4 th DCA 1995), the insureds’ home was burglarized. As part of its investigation of the claim the insurance company demanded in writing that the insureds submit to an EUO. Ultimately, the insureds filed suit but did not submit to an EUO at the insurance company’s request. The trial court granted the insurance company’s motion for summary judgment against the insureds based on their failure to attend the EUO’s.

The appellate court (Fourth DCA) agreed with the trial court’s ruling. The Court stated that a policy which requires the insured to attend an EUO is a condition precedent to filing suit against the insurance company. The Goldman Court, in affirming summary judgment in favor of the insurance carrier, declined to permit the insureds to comply with the policy’s EUO provision some two years after the suit had been filed.

However, in Southgate Gardens Condominium Assoc., Inc. v. Aspen Specialty Ins. Co., 622 F.Supp.2d 1332 (S.D. Fla. 2008), a case out of the Southern District of Florida, the court adopted a more lenient approach than did the court in Goldman. In Southgate, the insured, a condominium association, advised the insurance carrier it had certain supplemental claims for property damage that it was going to pursue. As part of its investigation the carrier requested to take EUO’s from representatives of the insured. The EUO’s were initially scheduled, but then they were later cancelled. The insured eventually filed suit. During the course of the litigation, the insured offered to submit to the EUO’s, but the carrier rejected this offer.

The court in Southgate reiterated the principle that the requirement for an insured to submit to an EUO is a condition precedent to filing suit. However, the court chose not to dismiss the case with prejudice. Significantly, the court pointed to two important sets of facts. First, only nine months had elapsed since the carrier requested the insured to submit to the EUO’s. Secondly, the court noted that the carrier had waited two years to request the EUO’s from the insured in the first instance. Accordingly, the court dismissed the case without prejudice to permit the insureds to belatedly comply with the policy’s EUO provision.

In Nunez v. Universal Property Casual Insurance Co., 325 So.3d 267 (Fla. 3d DCA 2021), the insured completely failed to attend an EUO. The court’s analysis in that case followed a two- part approach in addressing whether the insured had forfeited her rights to coverage under the insurance policy. Sometime after her claim for damage was filed, Ms. Nunez, the insured, was requested by the carrier to submit to an examination under oath. Despite multiple requests from the carrier to attend an EUO, Nunez failed to comply. Nunez eventually filed suit against the carrier without having complied with her EUO obligation.

The appellate court (3rd DCA) agreed with the trial court’s ruling that Nunez had breached the insurance contract when she failed to attend the requested EUO. It also agreed with the trial judge’s decision to order a new trial on whether Nunez’ breach of the contract had prejudiced the insurer. In other words, the court in Nunez followed a two-part analysis in this case. That is, the court stated that a finding of prejudice against the insurance company must be made if the insured is found to have breached a post-loss obligation in the policy.

If you are an insured in Florida and have been requested by your carrier to attend an examination under oath feel free to call our attorney for legal assistance.

Notice of Damage Claims

Generally speaking, property insurance policies in Florida require the insured, or homeowner, to promptly notify the carrier when there is a property loss. Timely notice of the damage claim is important because the carrier must have an opportunity to investigate and adjust the loss. Accordingly, notification of the claim is an insured’s contractual obligation.

If the homeowner fails to give timely notice it could be a basis for denial of coverage under the policy.

The Prejudice Rule in Florida & Late Notice

Even if the insured fails to give prompt notice of a damage claim, it does not necessarily mean that coverage is lost or voided. When notice of the claim is late or untimely, the courts will presume that the carrier has been prejudiced by the late notice. But that is not the end of the inquiry. The homeowner will still have an opportunity to rebut this presumption by demonstrating to the court that the carrier was not prejudiced by the late notice. It will be the homeowner’s burden, though, to prove lack of prejudice.

A case that aptly illustrates the prejudice rule is Stark v. State Farm Florida Insurance Co., 95 So.3d 285 (Fla. 4th DCA 2012). In this case the owner’s roof was damaged by Hurricane Wilma when that windstorm struck South Florida in 2005. However, the owner did not notify the carrier until 2009, over three years later. After the carrier investigated the loss, it denied the claim based in part upon the owner’s late notification. At trial, the carrier filed a motion for summary judgment against the owner, which the trial court granted.

The appellate Court ultimately ruled against the carrier’s motion, stating that there were triable issues of material fact on the issue of prejudice. In particular, the Court was persuaded by the owner’s presentation of affidavits from his engineer and public adjuster that were submitted in response to the carrier’s trial motion. Those affidavits essentially asserted that, even if notice of the claim had been late, the carrier could still ascertain that the owner’s roof was damaged by the hurricane.

Whether a carrier has been prejudiced by an insured’s late notice of a claim is ordinarily a question of fact.

Representation of Insurance Claimants

If you have sustained a property damage loss in the Palm Beach County area, and you are having trouble with your insurance carrier, please call our office for legal assistance. Attorney Joseph Rosen is accessible to his clients and will personally take on your claim.

Fort Lauderdale life insurance lawyer summarizes ERISA-based life insurance claims

In this article we discuss life insurance claims which are based on ERISA.

What is ERISA?

ERISA is a federal law which governs employer-based benefit plans. It stands for the Employee Retirement Income Security Act of 1974 (“ERISA”). ERISA is codified under 29 U.S.C. §1001 of the US Code.

In the practical world, many individuals who are employed receive critical benefits through their employers. These benefits may come in the form of health insurance, disability, and life insurance. These employer-based benefits will normally be administered through a “plan” that is established or maintained by the employer. The law of ERISA generally governs these employee benefit plans, as well as the manner in which benefit claims will be processed by the plan administrator.

Let’s say your family member has been employed with XYZ Company in Broward County for many years. As an employee, this family member is a participant in XYZ’s employee benefit plan. One of the benefits provided for under the plan is life insurance. Assume you are the beneficiary of the life insurance given under the plan. If the family member passes away, you, as the beneficiary, would submit a claim for the life insurance benefit to the plan’s administrator. In such a scenario, ERISA would most likely govern the claims process.

Importantly, ERISA does not govern all life insurance claims. Generally speaking, life insurance policies which are not employer-based will be governed by state contract law, such as Florida law.

ERISA Benefits Claims Procedure

We now turn to some of the nuts and bolts of the ERISA claims procedure. ERISA regulations generally require employee benefit plans to establish and maintain reasonable procedures by which benefit claims are to be administered. The process starts with the filing of a benefit claim with the plan administrator. The “plan administrator” is generally the person or entity who administers the claims process. Typically, the plan administrator is the insurance carrier who is ultimately responsible for paying out the life insurance benefit.

If the claim is denied, the plan administrator must notify the claimant of the plan’s adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim. However, according to ERISA regulations, the 90-day period may be extended by the plan administrator if special circumstances require an extension of time for processing the claim.

Assuming the initial claim is denied, the plan administrator must provide written notice of the denial to the claimant. The notice must contain, among other things, the specific reason for the adverse determination, a reference to the plan provisions on which the determination is based, and a description of the plan’s administrative claim review procedures.

Once the claim has been denied the claimant has an opportunity to file an appeal with the plan administrator. Per ERISA regulations, an employee benefit plan is required to provide the claimant with a full and fair review of the adverse benefit determination. The claimant will have at least 60 days following his or her receipt of the claim denial within which to submit the appeal.

It is very important for the claimant to go through the appeals process. Otherwise, if the claimant ignores the appeals process, he or she could potentially lose his or her substantive right to file suit in Court later on.

During the appeals process, the claimant will have an opportunity to make his or her case to the plan administrator. The claimant will be permitted to submit a written statement, documents and other records to the plan administrator for the latter’s review and consideration. Upon review, the plan administrator must notify the claimant of the plan administrator’s decision on appeal. If the plan administrator affirms the denial of the claim, the plan administrator must give written notice to the claimant which includes the specific reason for the adverse determination, reference to the specific plan provisions on which the determination was based, and a statement that the claimant has the right to bring action in court under the statutory provisions of ERISA.

Filing Suit under ERISA

Let’s assume that your appeal was not overturned. Once the claims procedure has been exhausted the only alternative available to the claimant is to file suit. Essentially, the claimant is seeking to recover an unpaid benefit. ERISA law provides for a statutory basis under which the beneficiary can sue the plan administrator to recover the unpaid benefit, that is, the life insurance. As we discussed above, the plan administrator is typically the insurance company. Specifically, under 29 USC §1132(a)(1)(B) of ERISA, a beneficiary may sue to recover benefits which should have been paid under the terms of the employee benefit plan.

In a nutshell, the beneficiary’s case theory would be that the plan administrator (probably the insurance company) wrongfully denied the claim; in so doing, the plan administrator violated the terms of the employee benefit plan.

ERISA actions are usually heard in federal court. Even if an ERISA action is filed in state court, which can be done, the attorneys for the defendant will normally remove the case to federal court anyway. Thus, if the claimant resides in Dade, Broward, Miami or Fort Lauderdale, the claimant’s case will likely end up in the United States District Court for the Southern District of Florida, which is federal court.
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ERISA Legal Standard

Let’s assume your ERISA claim ends up in court. How does the Court review the case? What is the legal standard that will be applied by the Court?

There are two differing legal standards which could be applied by a court in an ERISA case: the de novo standard of review and the deferential standard of review. Each standard of review will allow a different level of evidence that can be admitted in your case. From the claimant’s point of view, generally speaking, the more evidence he or she can admit to the court the better.

The de novo standard of review is usually more favorable to the claimant. This standard allows the court to review the case with a “clean slate” so to speak. The de novo standard is not limited to the administrative record, but allows the claimant to present facts which are outside of the administrative record for the court’s review. The “administrative record” is the material that was developed during the claims process. More specifically, it refers to the information and materials which were compiled and presented to the plan administrator for his or her decision during the appeals procedure. The administrative record will close at the conclusion of the appeals process.

As stated, de novo review will allow the court to consider facts that were not necessarily before the claims administrator. So, this openness to the admission of evidence will afford wider latitude to the claimant to make his or her case. In addition, the de novo standard of review involves a more simplified legal analysis for the court. The court will determine, under the de novo standard, whether the plan administrator’s decision was “wrong”. If the plan administrator’s decision was wrong, the judicial inquiry is over, and the court will reverse the decision in favor of the claimant.

The de novo standard of review will be applied by the court, unless the court determines that the plan documents have vested the plan administrator with discretion to determine eligibility for benefits or to interpret the plan’s terms. If the plan administrator has been vested with such discretionary authority, then the deferential standard of review will apply to the case.

The deferential standard of review is generally less favorable to the claimant. This standard of review essentially requires a more rigorous six-step analysis which must be applied by the court to assess the claim.

Why is this standard of review considered “deferential”? Because, in practical terms, the court will give wider latitude, or “defer”, to the plan administrator’s decision which was made during the appeals process, that is, before the lawsuit was filed.

The court in Capone v. Aetna Life Insurance Company, 592 F.3d 1189 (11 th Cir. 2010) lays out the six factors which are considered by a court in applying the deferential standard of review. The six steps are summarized as follows:

First step: The court applies a de novo standard of review to determine, at first blush, whether the claim administrator’s decision to deny benefits was wrong. In this step, the court will assess whether it agrees or disagrees with the administrator’s decision after the court reviews the plan documents and the administrative record. If the court agrees with the administrator’s decision, based upon the court’s review of the administrative record, the court will end the inquiry and affirm the prior decision.

Second step: If the court determines that the claim administrator’s decision was, in fact, wrong, the court must proceed to the second step. Here, the court must determine whether the claim administrator, under the plan documents, was vested with discretionary authority to review claims. If the court concludes that the plan administrator was not vested with such discretionary authority, the court will end the judicial inquiry and reverse the claim administrator’s decision in favor of the claimant.

Third step: If the court determines that the claim administrator, based upon the plan documents, was vested with discretionary authority to make claims decisions, the court will then act more like an appellate tribunal than a trial court. In such a situation, the court will evaluate whether the administrator’s decision was “reasonable” in light of the administrative record. Importantly, the court’s inquiry in this instance will be limited to the facts known to the claim administrator at the time that their decision was made.

Fourth Step: If the court determines that the claim administrator’s decision was not reasonably based, then the court will end the inquiry and reverse the administrator’s prior decision. If, however, the court determines that there were reasonable grounds to support the administrator’s decision, even if the court disagreed with it, the court must then determine if the administrator operated under a conflict of interest. The plan administrator operates under a “conflict of interest” when he is essentially acting in a dual role. Accordingly, if the plan administrator both makes the claims decision and is also responsible for paying the benefits claim from out of its own pocket, then there is a conflict of interest. In practical terms, a conflict usually arises where the plan administrator is the insurance company.

Step Five: If the court determines that the administrator has no conflict of interest, then the court will end the inquiry and affirm the administrator’s decision.

Step Six: If the court determines that the administrator had a conflict of interest, case law in the Eleventh Circuit provides that the claimant may attempt to prove that the conflict improperly influenced the administrator’s decision. If the participant is able to prove to the court that the administrator’s conflict improperly influenced the decision, the court will reverse the administrator’s decision. Otherwise, the decision will be upheld by the court.

As discussed above, whether or not the de novo or deferential standard of review applies in a life insurance ERISA case will depend upon a careful review of the plan documents. But, even if the “less friendly” deferential standard will apply to a claimant’s case, it does not mean that the claimant will lose their case. Rather, it could mean that the claimant will be faced with some more challenges along the way to, hopefully, a successful result.

If you have any questions, please contact Fort Lauderdale life insurance lawyer Joe Rosen for a thorough, no cost consultation about your life insurance matter.

If you are an owner or part owner of a limited liability company (“LLC”) then you should be generally familiar with the principle of a charging order.

In short, a charging order is a remedy which is available to a creditor of an owner of an LLC membership interest. If a creditor obtains a personal judgment against an owner of an LLC (i.e., the LLC owner is legally liable to pay a money judgment to the creditor) Florida law, pursuant to the Florida Revised Limited Liability Company Act, gives the creditor the right to make application with the court to compel the LLC to pay over the LLC owner’s distributions (profits) to the creditor so that the creditor can collect on his unsatisfied judgment. That is what a charging order does. A charging order does not give the creditor the right to foreclose on the LLC owner’s membership’s interest. This rule is codified under section 605.0503(1), Florida Statutes.

The charging order statute provides a certain level of protection to multi-member LLC’s (that is, LLC’s which are owned by two or more members). According to Florida law, 605.0503(2), F.S., a charging order is the sole and exclusive remedy for a judgment creditor of a multi-member LLC.

What does this mean? That means that a judgment creditor does not have the legal right to ask the court to order a foreclosure sale against an LLC owner’s membership interest, but this is only true if the LLC owner is a member of a multi-member LLC. However, under the charging order statute, an owner of a single-member LLC is not immune from protection against the foreclosure and sale of his membership interest if there is a personal judgment against him. An owner of a single member LLC, if there is a judgment against him personally, could potentially lose his ownership interest in the LLC through the legal process of execution and sale.
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It’s important to note—a charging order does not give the creditor the right to force the sale of an LLC owner’s membership interest. Rather, the charging order only gives the creditor the right to secure the collection of any distributions from the LLC in order to satisfy his money judgement against the LLC owner. With a charging order, the judgment creditor does not have the right to secure ownership of the LLC.

In the big scheme of things, one of the benefits of owning a multi-member LLC is the exclusivity of charging order protection which is afforded to the LLC’s owners. Owners of corporations and single-member LLC’s do not have this same level of charging order protection.

Our Boca Raton contract lawyer discusses independent contractors in this blog.

If you’re an operating business or an employer you’ll eventually need to hire help. You may need an individual or another entity to provide you with certain services or goods on an ongoing basis. There are obvious benefits to hiring someone to help run or service your business, such as greater efficiency, faster production, and lower long term costs. But, should you choose to hire help you could be faced with the prospect of more liability exposure.

What if the person or entity you hire causes injury to a third party? Will you be liable to that third party as well?

This question invokes the law of principal-agent liability. Generally, a principal is not vicariously liable for the negligence of its independent contractor. But the principal is liable for the negligence of its agent or employee. As a general matter, if you hire someone as an “independent contractor” you are not generally liable for the acts or omissions of this person. Accordingly, as a business, you could significantly reduce your potential liability exposure if you hire an individual as an independent contractor.

According to the courts in Florida, whether or not an individual is an independent contractor or employee/agent of your business is generally a question of fact. Notably, the most important factor which the courts examine in making this determination turns on the question of control. More particularly, it is the right of control, and not actual control, which determines the relationship between the parties.

To get even deeper, it is the manner of control which is critical in assessing whether someone is an independent contractor. The court will examine whether the employer’s control over the individual is exercised over the “results to be obtained” or the “means to be employed”. Control exercised by the employer over the individual that is directed toward the “means” points to an employment relationship. In contrast, control which is directed toward the “results” of the individual’s work points to an independent contractor relationship. Harper ex. rel. Daley v. Toler, 884 So.2d 1124 (Fla. 2 nd DCA 2004).
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The Florida Supreme Court has adopted a nonexclusive list of factors to assist a court in rendering a judgment on whether an individual is deemed an agent or independent contractor for vicarious liability purposes. This list of factors is set forth, for instance, in the Toler case cited above. As pointed out earlier, the court’s decision on the nature of the employment relationship rests heavily on the specific facts of each case.

That being said, an employer has some level of control over its set of circumstances. In particular, the employer can take affirmative action to help insulate itself from potential liability by utilizing an agreement which endeavors to create the status of an independent contractor relationship.

If there is such an agreement in place, the courts would initially look to the agreement itself to determine whether the parties had created an independent contractor relationship. However, even if the parties intend to create an independent contractor relationship under an agreement, a court may not be persuaded by such expressed intention if other provisions of the agreement, or the parties’ actual practice, belie the intended status created by the parties. What all this means is that, as an employer, you should make sure that any written agreement which serves to create an independent contractor relationship is crafted with care. If it is not, you may unwittingly establish an employer-agent relationship that could subject your business to greater liability exposure.

For this reason, it is important to consult a trained business attorney to handle your drafting needs. If you need to prepare or review a contract, or if you are involved in a contract dispute, please call Boca Raton-West Palm Beach attorney Joe Rosen for your legal needs.

A “waiver of liability” or “release” is a clause in a contract which just about every person is familiar with. In simple terms, a release in a contract calls for one contracting party to agree, for better or worse, to release the other party from liability based upon the latter party’s commission of certain acts. Typically, such a release is designed to free, or “exculpate”, the other party from liability in the event that the injuring party causes harm to the releasing party during the course of some conduct or activity.

There are a myriad of examples in which release language will be found in a contract. Most common is the contract where one party is being invited to use another party’s facilities in order to engage in an activity. So, for instance, the owners of health clubs, amusement parks, storage facilities, race tracks, dog shows, and the like might well utilize release language in their contracts before allowing the invited participant to use and enjoy their facilities, it being the objective of these owners to insulate themselves from “any and all” liability in the event the participant gets injured or loses his property when using their facilities.

The question arises, is such release language enforceable under Florida law? Generally speaking, exculpatory (i.e., limitation of liability) clauses in contracts are valid in Florida. That said, these clauses are subjected to a decent level of scrutiny by the courts.

Upon our review of the case law, the Florida courts have generally set out the following principles or rules when it comes to evaluating the enforceability of an exculpatory clause:

• While exculpatory clauses are not looked upon with favor, they will be deemed valid and enforceable when clear and unequivocal.
• Exculpatory clauses are disfavored and will be strictly construed against the party claiming to be relieved of liability.
• Exculpatory clauses will be enforceable only where and to the extent that the intention to be relieved from liability was made clear and unequivocal and the wording must be so clear and understandable that an ordinary and knowledgeable person will know what he is contracting away.

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The above principles, as generally outlined by the courts in Florida, strongly suggest that exculpatory clauses that seek to waive a party’s liability are enforceable, but only if they are clearly worded and precisely written. Otherwise, the court may choose not to enforce it.

When a party seeks to release itself from liability based on negligence, the appellate courts in Florida appear to be split on the approach. The district courts in Florida, except for the Fifth DCA, take a “bright line” position on the issue of negligence. Accordingly, if a party seeks to release itself from liability for its own negligence, most courts will require the party to clearly state in its contract that it releases itself from liability for its own negligence. The term “negligence”, these courts indicate, must be clearly stated in the release for the exculpatory clause to be effective. Murphy v. YMCA of Lake Wales, Inc., 974 So.2d 565 (2 nd DCA 2008). In the Fifth DCA, however, the courts have indicated that a release need not literally use the term “negligence” in order for it to be effective to bar a negligence action against the party seeking to enforce the release. Cain v. Banka, 932 So.2d 575 (5 th DCA 2006).

We hope that you found this article informative. If you are in need of an affordable commercial litigation attorney in Boynton Beach please contact our Firm for a free consultation.

A contract for the sale of “goods” is governed by Florida’s Uniform Commercial Code, Chapter 672. Technically, this governing chapter is known as the “Uniform Commercial Code: Sales”. Since that name is sort of a mouthful, it is usually just referred to as the UCC. Notably, a contract which is not related to the sale of goods, for instance, service contracts, is not governed by the UCC, but is governed by the common law of contracts.

This article will focus on sale contracts for goods. Accordingly, this discussion will provide an overview of Florida’s UCC governing the sale of goods contracts.

What is a “good”?

The UCC applies to all transactions in “goods”. A “good” is generally defined in 672.105 as any movable item other than money, investment securities and things in action. A good has to be identified and existing. It has to be a tangible thing, such as cell phones, watches, clothes, cattle, fruit and other physical items or personal property.

Writing Requirement/Statute of Frauds

A contract for the sale of goods, generally speaking, has to be put in writing. The UCC, section 672.201, states that a contract for the sale of goods for a price of $500 or more will not be enforceable unless it is under a written agreement. The contract must also be signed by the party against whom enforcement is sought. However, there are some exceptions to the writing requirement. One exception, for instance, is that if the goods have been paid for and accepted, and/or have been received and accepted, then the writing requirement is not applicable.

Acceptance of Goods, Rejection, Revocation of Acceptance

The UCC has specific rules on how goods are deemed accepted by the buyer. Pursuant to 672.606, the basic rule is that a buyer is considered to have accepted goods sold by a seller when, after having a reasonable opportunity to inspect the goods, the buyer signifies to the seller that the goods are conforming, or that the buyer will take the goods anyway in spite of their nonconformity. Once the goods are accepted, the buyer must pay the contract rate for any goods accepted.

Upon delivery, if the buyer is faced with nonconforming goods, he would have two options available to him. He could either reject the goods (before they are accepted) or, after he has already accepted the goods, the buyer can return the goods by way of revocation of acceptance. In order for the buyer to “reject” the goods he must do so within a reasonable time after the goods have been delivered or tendered. Also, the buyer must seasonably notify the seller of his rejection of the goods. If the buyer fails to properly reject the goods, he is deemed to have accepted them under the UCC, subject, however, to his revocation of acceptance.

Once the buyer has “accepted” the goods he could still revoke his acceptance of the goods. The buyer may revoke his acceptance of the goods if the nonconformity in the goods substantially impairs their value. However, the buyer’s revocation of acceptance of the goods must occur within a reasonable time after the buyer discovers, or should have discovered, the grounds for it. Finally, the buyer must notify the seller of his revocation of acceptance. Otherwise the revocation of acceptance will not be legally effective. 672.608.

In B.P. Development and Management Corp. v. P. Lafer Enterprises, Inc., 538 So.2d 1379, the buyer purchased a Christmas decorations package from the seller. The decorations were delivered prior to the Thanksgiving holiday and were to be used by the buyer during the Christmas season. The buyer refused to pay the full price of the decorations package, contending that the decorations were of poor quality. The buyer then sought to rescind the contract some 6 months after the holiday season ended. Since the buyer kept the goods and used them throughout the entire Christmas season, however, the Court ruled that the buyer had “accepted” the decorations package pursuant to the UCC. In other words, the buyer did not properly “reject” the goods. The Court also ruled that the buyer did not “revoke its acceptance” of the goods because its notification to the seller was untimely.

Risk of Loss: Shipment vs. Destination Contracts

What happens anytime a man has an erectile sale on viagra dysfunction? You should know what happens when he does have an erection. It is accessible in mint, apple, chocolate, strawberry and other flavors. viagra pfizer canada Potent herbs in NF Cure capsules and Vital M-40 capsules rejuvenate and http://www.tonysplate.com/help.php buy generic cialis strengthen your exhausted reproductive organs. This version was as popular as viagra for sale cheap treatment. A dispute that often arises between a buyer and seller of goods involves risk of loss. The situation looks something like this: The seller delivers the goods to the buyer through a carrier, and the goods are then lost or destroyed in transit. In this situation, who is responsible for the goods? In short, who bears the risk of loss? The answer to this question will depend upon whether the sales contract involved is a “shipment contract” or a “destination contract”.

The two (2) types of sales contracts under the UCC wherein a carrier is used to transport goods sold are a shipment contract and destination contract. A “shipment contract” is considered the default contract used by sellers and buyers. In a shipment contract, the seller is required under the contract to send the goods by carrier to the buyer, but the seller is not required to guarantee delivery of the goods to a particular destination. Once the seller has put the goods sold in the possession of the carrier, and satisfies other certain requirements, the risk of loss will then pass to the buyer when the goods sold are duly delivered to the carrier for shipment.

Put in other terms, once the goods are effectively delivered to the carrier by the seller, the buyer “owns” the goods and will therefore be responsible for their loss. In a destination contract, however, the seller will specifically agree to deliver the goods sold to the buyer at a particular destination. Accordingly, in a destination contract, the seller will bear the risk of loss for the goods until tender of delivery of the goods at the designated place of destination. The risk of loss will only pass to the buyer when the goods sold are duly tendered to the buyer at the place of destination. A destination contract could be signified by such a delivery term as “F.O.B. Miami”. Pursuant to the UCC, the parties must expressly agree to a destination contract. Otherwise, the contract will be deemed a shipment contract.

In Pestana v. Karinol Corporation, 367 So.2d 1096, a Mexican resident, the buyer, agreed to purchase electronic watches from an exporting company, Karinol, the seller. The contract for sale stipulated that the watches were to be delivered by air transport from Miami to Mexico. But there was no provision in the contract which allocated the risk of loss on the goods sold while in transit with the carrier. There were also no special delivery terms in the contract as recognized under the UCC.

Karinol, the seller, delivered the watches to its freight carrier in Miami. The watches were then transported by air to be delivered ultimately to the buyer in Mexico. However, during the course of the transport, the watches went missing and were not successfully delivered to the buyer at his location in Mexico. A lawsuit was then filed by the buyer’s representative against the seller due to the lost shipment of goods. Since there was no provision in the contract defining the allocation of the risk of loss, the Florida Appellate Court ruled that the contract in question was a shipment contract. And since the seller, Karinol, had effectively delivered the goods to the carrier for shipment, the risk of loss had then passed to the buyer. Accordingly, the seller was not held liable to the buyer for the loss of the watches while they were in transit.

Warranty and Breach of Warranty

There are three types of warranties that are recognized under the UCC. They are (1) express warranty, (2) implied warranty of merchantability, and (3) implied warranty of fitness for a particular purpose. All of these warranties provide certain protections to a buyer who purchases goods from a seller or merchant.

An express warranty can be created by the seller in three ways: (1) the seller makes an affirmation of fact or promise to the buyer relating to the goods that the goods will conform to the seller’s affirmation or promise; (2) the seller furnishes a description of the goods that is made a part of the basis of the bargain that the goods will conform to that description; or (3) the seller uses a sample or model which is made part of the basis of the bargain that the goods will conform to the sample or model. In these three specific circumstances an express warranty may arise under the sales contract, and the seller will potentially be liable for violation of the warranty if breached. Notably, the reason it is referred to as an “express warranty” is because, for the warranty to arise under the contract, the seller must perform some affirmative act to give rise to the express warranty. Otherwise, there is no express warranty under the sale of goods contract.

The implied warranty of merchantability is an implied warranty which arises under the contract of sale where the seller is a merchant with respect to the goods sold. In short, this implied warranty requires the merchant to sell merchantable goods. In order for the goods to be merchantable, the goods must be fit for the ordinary purposes for which the goods are used, as well as other requirements as laid out by statute. R.A. Jones & Sons v. Holman, 470 So.2d 60. The implied warranty of fitness for a particular purpose is an implied warranty which is more limited in scope. It only arises where the seller has reason to know a particular purpose for which the goods are required and the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods. Royal Typewriter Co. v. Xerographic Supplies Corp., 719 F.2d 1092.

Under these circumstances, an implied warranty arises that the goods sold are fit for such particular purpose. When a buyer sues a seller or merchant for breach of an express or implied warranty under the UCC, the buyer must generally plead and prove the following elements: (1) the buyer must allege facts relating to the sale of goods; (2) the buyer must identify the type of warranty and allege those facts establishing its creation; (3) the buyer must allege facts relating to the breach of the warranty; (4) the buyer must give notice to the seller of the breach; and (5) the buyer must allege the injuries sustained as a result of the breach of the warranty. Dunham-Bush, Inc. v. Thermo-Air Serv., Inc., 351 So.2d 351.

If you are a buyer or seller of goods in Florida, and you are in need of legal assistance please feel free to call our office for a consultation.

Most people are generally familiar with what a contract is. The notion of a contract is this: two people, or entities, will come together and form an agreement. The agreement will have a set of respective terms to which each party is respectively bound. That is, essentially, a contract. But what happens if a term of the contract is breached by one party? What consequence does the breach have to the other (non-breaching) party? And what does Florida law have to say about all that?

In Florida, to prevail in a cause of action for breach of contract, a party must establish and furnish evidence of the following elements: (1) a valid contract; (2) a material breach of the contract; and (3) damages. Putting aside the other elements of the claim, in this article we are going to focus our attention on the second element, that is, a “material breach” of the contract.

So what is a “material breach”?

In simple terms, a material breach of contract means that one party has violated the terms of the agreement to such an extent that the other party is no longer under the obligation to fulfill his or her end of the agreement. In other words, the non-breaching party, as a result of the other party’s breach, will be discharged from his or her contractual obligations. In Focus Management Group USA, Inc. v. King, 171 F. Supp.3d 1291, the federal district court described a “material breach” in this way:

The general rule is that a material breach of the Agreement allows the non-breaching party to treat the breach as a discharge of his contractual liability.

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To establish a material breach, the party alleged to have breached the contract must have failed to perform a duty that goes to the essence of the contract and is of such significance that it relieves the injured party from further performance of its contractual duties.

In other words, when a party commits a material breach of the contract the other party has no further obligation to perform his required contractual duties. Accordingly, if you find yourself in a situation where the other party is “breaking” the agreement you would have the right to suspend your performance. Further, if a party decides to sue you for breach of contract because you have allegedly failed to fulfill your duties, you could potentially assert his “prior breach” as an affirmative defense if the party had indeed breached your agreement with him in the first instance.

Bear in mind, though, that not every violation of a term of the contract will be material. For instance, the violation of a minor or technical term of the contract will not be material. Generally, whether or not a party has committed a material breach of the contract is usually an issue of fact. Typically, a “material breach” of the contract will be established when the injured party has sustained a substantial injury due to the breach.

If you have any questions about your Florida contract please contact our Firm.

Often times, consumers will buy life insurance products from insurance agents. Generally speaking, insurance agents will represent a particular insurance company, or group of insurance companies, in the sale of the carriers’ insurance products. While most insurance agents are ethical, you could run into a “bad apple” agent who sells you a life insurance product under false pretenses.

If you buy a life insurance product from an agent who misleads you about the product that you’re buying the costs to you could end up being enormous. The typical situation is where the agent might mislead the consumer concerning, for example, the amount of premium or the timetable under which premium payments are required to be paid by the consumer to the carrier. Alternatively, the agent might represent to the consumer (falsely) that the insurance product contains a term or feature which it does not, in fact, have, thus inducing the consumer to purchase a product which he or she would not have purchased had all of the pertinent information been accurately disclosed.

Ultimately, it could take a few months or even a few years before the consumer has discovered the fraud that was perpetrated on him or her. By that time, the transaction has been consummated, the insurance agent has received his or her commission, and the consumer is already under contract with the carrier.

This basic fact pattern raises two (2) important legal questions:

The first question is whether the consumer has legal recourse against the insurance agent for the alleged fraud in the sale of the insurance product.

The second question is whether the consumer has legal recourse against the insurance company for the alleged fraud in the sale of the insurance product.

Insurance Agent Liability

First, we’ll address whether the consumer has legal recourse against the agent. The answer to that question, in very simple terms, is yes. Under Florida law, a consumer may have an actionable tort claim against an insurance agent who makes a material misrepresentation in the sale of a life insurance product at the point of sale. However, while legal recourse may be available, the consumer should be aware of the legal parameters within which a viable legal claim can be made against the agent.

At the outset, the consumer will be required to assert and prove a viable cause of action against the agent. The causes of action that may be hurled at the tortious agent are typically fraud or negligence. To prove a claim in fraud the following elements must be established under Florida law: (1) a false statement concerning a material fact; (2) the maker’s knowledge that the representation is false; (3) an intention that the representation induces another’s reliance; and (4) consequent injury by the other party acting in reliance on the representation. Ward v. Atlantic Sec. Bank, 777 So.2d 1144, 1146 (Fla. 3d DCA 2001). A claim based upon negligent misrepresentation has very similar elements to fraud except that, in a negligence misrepresentation claim, it is not required that the agent intend that his or her statement be falsely made, rather, it must be shown that the agent should have known that the statement was false under the circumstances in which the statement was made. Wallerstein v. Hospital Corp. of America, 573 So.2d 9 (Fla. 4 th DCA 1990).

Ultimately, the key issue in a fraud action against the agent will invariably be whether the agent made a false statement of material fact to the consumer. Of course, it is rare that the insurance agent will admit his or her misconduct. The agent will probably claim that he or she said nothing wrong and/or that the consumer must have misunderstood what was said. Accordingly, to make your case, it is helpful to be precise about what the agent allegedly told you. Statements in writing will always be helpful, such as email correspondence, but, as is often the case, any potentially false statements made by the agent will have never been formalized in writing.

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Insurance Carrier Liability

The issue of the insurance carrier’s liability for the agent’s misconduct is a little more complicated. Usually, it is not the insurance carrier who has actively committed the fraud; rather, it is the agent who sold the policy. Therefore, it is usually not possible to hold the carrier directly liable for the misconduct alleged. Legally, therefore, the avenue you will need to pursue in order to hold the carrier liable for the agent’s misconduct is through some theory of “vicarious” liability.

In general terms, an insurance carrier will be held vicariously liable for the actions of its agent if the agent in turn had the requisite authority to act for and on behalf of the carrier. If the requisite authority is absent, however, the carrier cannot then be held liable vicariously. In short, the carrier’s liability for the agent’s conduct turns on the critical issue of “agent authority”.

To our knowledge, under Florida law there are three (3) potential ways in which an insurance company can be held vicariously liable for the agent’s fraud. Vicarious liability of the insurance company can be established if there is: (1) an actual agency relationship, (2) an apparent agency relationship, or (3) a statutory agency.

An actual agency relationship exists between the carrier and the agent under circumstances where the carrier formally gives authority to the agent to act on the carrier’s behalf. Legally, the elements necessary to establish “actual agency” are: (a) acknowledgment by the principal that the agent will act for him; (b) acceptance by the agent of the undertaking; and (c) control by the principal over the agent’s actions. Amstar Insurance Co. v. Cadet, 862 So.2d 736 (Fla. 5 th DCA 2003). Evidence of an actual agency relationship between the carrier and the agent can be established, for instance, through an appointment or agency agreement between the carrier and the agent. Nonetheless, if the carrier has imposed any specific limitations on the agent’s authority to act for or on behalf of the carrier, those limitations could be invoked by the carrier in defense against liability.

If there is no actual agency relationship between the carrier and agent, an apparent agency could be proved to establish vicarious liability. An apparent agency exists where: (a) there is a representation by the principal, i.e., the insurance carrier; (b) the injured party, i.e., the consumer, relied on that representation; and (c) the injured party changed position in reliance on that representation and suffered detriment. Almerico v. RLI Ins. Co., 716 So.2d 774 (Fla. 1998). In essence, to establish apparent agency, the consumer would have to prove that the insurance company had made a representation, either directly or indirectly, to the consumer that the agent had authority to act for the carrier. This often can be a difficult road to take and may have to involve the use of circumstantial evidence.

Lastly, there could be a statutory agency relationship between the agent and the carrier. Under Florida Statute and case law, a statutory agency relationship can arise which could subject the insurer to liability for an agent’s misconduct even if the agent does not have “actual authority”. Pursuant to 626.342(2), Florida Statutes, if the insurance company furnishes to the un-appointed broker/agent company materials, such as blank forms, applications, stationery, or other supplies used in soliciting or negotiating insurance contracts, and the insurer accepts or writes business from that agent/broker, the insurance company can be civil liability to the same extent as if the agent/broker had been an appointed agent.

Accordingly, the acts of the agent could then make the insurance company civilly liable to the insured. However, Florida case law indicates that liability can potentially be avoided by the insurer where the insured knew or was put on notice of inquiry as to limitations on the agent’s actual authority. Almerico, 716 So.2d 774. In the end, cases involving the issue of an agent’s authority to act on behalf of the insurance company will come down to rather detailed, factual questions.

We hope that you found this article helpful and informative. If you believe that you have been defrauded by an insurance agent in the purchase of a life insurance policy, feel free to contact our office for a consultation.