Liquid

We sure do hear a lot about liquid these days - stock markets, personal investment portfolios, the Everglades water table, county water restrictions. This liquid theme inspired me to discuss the liquidated damages provision found in many contracts (based solely upon word association).

Many service contracts contain a liquidated damages provision. It typically provides that unwarranted termination or breach will result in the breaching party paying an agreed to amount as liquidated damages to the other party instead of suing for breach of contract and trying to otherwise ascertain the damages occasioned by the breach.

Why would a contract contain such a provision? Well, as I pointed out above, these clauses are usually found in service contracts where (unlike contracts for the sale of 4,000 widgets at $5.00 a piece) ascertaining the exact value obtained from the provision of a service can be difficult to calculate. In fact, that's the hallmark of a liquidated damages provision- the difficulty, if not impossibility, of determining what the true value of any damages caused by a breach would be.

Agreeing to such a provision assists in lending predictability to the parties' contractual dealings. If something goes wrong, both parties know exactly what the outcome should be down to the penny.

There is, however, an important limitation to the liquidated damages provision. Because it is intended to streamline the parties' relationship and provide predictability where there might otherwise be none, the value of the liquidated damages cannot be tantamount to a penalty. It is improper to insert a liquidated damages that would penalize the breaching party for breaching the contract instead of trying to approximate fair compensation.

Let's give an example. Suppose you have a contract to paint Bob's house. You can fairly estimate that it will cost $2,000 in paint and supplies and about 15 hours of labor (at $35.00 per hour) to paint Bob's house. This is a contract that would be perfect for a liquidated damages provision. You could, in the interest of expediency, include a liquidated damages provision for $2500 (the cost of paint, supplies and estimate of labor). You could not include a provision for $100,000 - this would clearly be a penalty wholly out of proportion to the contract's value.

Beware the Indemnity Clause!

I'm glad I'm not the one who has to explain this to the client - and, for the sake of the lawyer's sanity and my ethical obligations, I will not say whose client it is or who is about to the wind knocked out of their sails.

If you take a look at your business agreements - especially those of you who recently re-modeled any part of your home - you will likely find and indemnity provision. It basically provides that you will pay the other contracting party the value of any judgment (usually including costs and attorneys' fees) entered as a result of some liability arising because of the other guy's contractual performance for you.

Example: you hire a contractor to remodel your bathroom and the contract has an indemnity provision. Contractor breaks the water main while performing the work, which floods the neighbor's house, as well as yours. Not surprisingly, the neighbor sues you and the contractor. Under the indemnity provision, you get to pay for the judgment against the contractor, plus his attorneys' fees and costs. Neat, huh?

Now, this example is somewhat academic since the reality of the situation is that your liability is not likely to be very different from the contractor's and the damages imposed against one won't be any different than from the other. So, you two will share a single liability.

Now, on to today's problem for my anonymous attorney acquaintance. She/he represents a large company defending a lawsuit for significant money. Her/his client provides a service, which is delivered by party B and billed for by party C. The client's contracts with B and C each have indemnity provisions. All three got sued. The client believes it can win its suit against the unhappy customer. B and C do not. B and C are about to settle their claims with the customer and try to recover their few million in settled exposure from the client under the indemnity provisions. The law seems to support the idea that they can do this under the type of claims asserted.

I think this is the wrong result under public policy, even if it is the right result under the law. That said, the provisions are enforceable and the client is about to learn the unfortunate consequences of spreading its risk and losing control of the consequences.

Fee Fi Fo Fum

Living in Florida, the land of hurricanes, uninsured drivers, unlicensed doctors and wildfires, it's likely that you've had to make a claim at some time to one of your many insurance carriers - auto, home, umbrella, health, disability, dental - and the list goes on.

Despite these cushions of insurance that surround us, I find that a great many of you are hesitant to make claims. I'll give you a perfect for instance. A client/friend of mine recently had her entire apartment wiped out by a flood occasioned by a broken water pipe (which carried sewage). Her clothes, shoes, purses and papers were ruined by the water. Most of her furniture was damaged. I told her that she needed to make her claim right away (against her renter's policy). In the end, she decided to just move and call it a day.

She explained that she didn't want to go through the hassle of negotiating with the insurance company because they never pay the value of what was lost and she didn't want to spend the money to have to sue the company.

I was dumbstruck. Seriously? Is this what we've come to? People spend a fortune on insurance and decide not to recover their contractual benefits for fear that they will have to hire and pay an attorney to recover for them?

Let me try to sort out both major points. First, I don't grant the premise that insurance companies don't pay what's fair. What you receive back is often a limitation of the policy or coverage you purchased. Like I said a few weeks back, when you see these policies- read them. They will tell you exactly what you are entitled to recover. Make sure that the policy you bought will properly compensate you for the risk you intend it to insure. Insurance companies actually DREAD screwing people over because their exposure on the back end is potentially huge (that's a story for a different day).

Second - and the reason for the title of this entry - YOU don't have to pay an attorney to recover against your insurer in those instances where you do hire one to recover from the insurance company. Florida has a statute that expressly states that, if you have to sue your insurer and you prevail, you get attorneys' fees back. That's right, the insurance company has to pay your fees!!!!

Please- before you start making these decisions- consult with someone who has knowledge of the insurance industry and the legal system before you decide to just walk away.

Have a great Turkey Day!!!

Long time - and sometimes too long

I have been gone two weeks. Sorry about that, but I was almost called to trial and had to scramble to get all of the out of town witnesses in line and the experts lined up to testify. It always takes longer than imagined and things go wrong that you never suspected could. That said, I am back.

So, let's talk about lapses in time. The law here in Florida (and everywhere else, as far as I can tell) requires you to timely bring your action or lose it forever. Different theories are subject to different time frames, but they are all pretty clearly spelled out in statutory law. They are called statutes of limitation and we touched on this subject once before - briefly.

What am I talking about? Well, if you slip and fall in the grocery store and want to sue Publix for negligence, you better do it within four years of your accident or you will be barred. If there is a breach of your contract, you have 4 or 5 years, depending on whether it's an oral or written agreement. If your doctor amputates the wrong foot, you have a very, very short window of time to bring suit.

Why does the law require this? Because we want things resolved while the greatest body of evidence is still around to be examined and used to support the claims and defenses. We don't want witnesses disappearing or document to go missing or have them destroyed as part of the ordinary document retention policies. It's designed to maximize the use of evidence.

So, what's so big about limitations periods that I needed to bring them up again? Well, there appear to be an ever increasing number of investors who want out of their real estate deals because the market has gone south. Whether they have a claim has a lot to do with when their deal closed, when the terms of that deal may have adversely changed and when the market went south. So, if you might be one of these people, you should check carefully to see when you first closed on your faltering investment.

Severability - legal surgery

Well, it's Monday again. I hope everyone enjoyed the weekend. As promised, it's back to business.

Today- severability. Let's suppose you have a contract. A real one, a nice one with page numbers and topic headings and actual terms and conditions. You know, a contract you paid your lawyer to draft up for you and the kind that you tell your friends has all sorts of "legal mumbo jumbo" in it. Well, today's topic is some of that legal mumbo jumbo.

If you have a contract like this somewhere in your possession, take a look at it. Somewhere above the signature line - but not too much above it, is likely a heading entitled "severability." Essentially, it provides that if there ends up being a problem with the contract or the law changes in some way that makes some part of the contract or the underlying deal illegal, the rest of the contract is still enforceable.

Does this sound hypertechnical? Well, it's intended to limit litigation. You see, in the common law, there is an old defense to contractual performance based upon illegality. It's sort of common sense, right? If the contract becomes illegal or the stuff sold under it is illegal, then the contract is not enforceable.

The idea with a severability clause is that it helps draw a line between the illegal and the legal. If, for instance, you have a contract to sell 100 widgets to someone who will pay for them in 6 installments at 18% interest and the law changes to reduce the maximum interest rate to 12%, you probably don't want your whole contract voided. With a severability clause, the contract will expressly provide for the illegal interest provision to be disregarded (or severed out) but it would leave the rest of the contract in place. Neat, huh?

So, sure things like severability clauses may be "mumbo jumbo" but it's handy mumbo jumbo.

Thank You

Hello, all. I just wanted to thank those of you who attended my seminar last night on minimizing litigation exposure and risk ("An Ounce of Prevention...."). I think the information was well received during its test run and so....if you or someone you know may be interested in having me present the same seminar, I will be glad to do so. It is free of charge and I am happy to come to you. I'm just interested in getting the word out.

I hope you all have a great weekend and we'll get back to business on Monday.

They All Look The Same To Me

So, it happened again yesterday. Someone (who agreed to let me tell this story on the condition I withheld the name - like I'm writing for the WSJ or something) came to me with a contract problem. The story goes like this: Client X is a widget distributor here in Florida. He buys his widgets from Supplier A, who is in Arkansas. The parties have a contract that Client X will serve as Supplier A's exclusive distributor in Florida. Client X's business is driven almost entirely by the revenue generated from its sales made on behalf of Supplier A.

Guess what happens? Supplier A finds someone else he likes better as a distributor and starts using Distributor B. Understandably, Client X is furious and scared. The prospect of losing an entire line of work is an awful prospect whether these be good times or bad. As a result, I get a phone call. I want to sue and I want it to be painful, Client X tells me. They knowingly breached my contract. I want damages for the loss of my business, the headache they caused me and the emotional distress. Translation: drive Supplier A into the ground.

This is tricky territory. Telling a client they can't have everything they want tends to make unhappy people even unhappy- er (assuming that's some kind of word). Of course, Client X has a cause of action for breach of contract. Of course, Client X can recapture lost revenue for the present and for some time into the future even. The whole purpose of a breach of contract action is to give you back the benefit of the bargain you made

The bad news - it doesn't matter that Supplier A did what it did with intent or on purpose. One breach is no worse or better than the other. They are all the same. In fact, the law honors the efficient breach of contract. If Supplier A found out that Distributor B could offer the same or better service for less, there might be perfectly good reasons to go with Distributor B. The law, however, says that Supplier A has to make things right with Client X.

By the same token, Supplier A may have no reason at all to choose Distributor B. The result, from a legal perspective, is the same. No extra points for malice here.

Uber-What?

As I mentioned last time, there is a new decision on a concept of marine insurance that applies to all you boat owners and commercial vessel operators - uberrimae fidei. Just a few weeks ago, a federal appeals court confirmed that the concept of uberrimae fidei was a federal legal concept and applied to marine insurance.

Why in the world do you care, is what you are probably asking yourself? What could something I have never heard of and can't even tell what language it heralds from possibly have to do with me? I'll tell you - and it may be more important than you think.

Literally translated, the phrase means "the most abundant good faith" and that's what you, the insured, are charged with as an obligation when you apply for marine insurance. In practice, it means you must disclose everything and hide nothing when seeking marine insurance and submitting a claim. It is a very high standard of conduct - very high.

And when I say "everything," I mean it. In the case mentioned above, the insured applied for marine insurance and claimed that the vessel was worth $600,000. When it sank, the insurer learned that the vessel was actually sold for $400,000 in a financed transaction and denied the claim. Even better, the insurer then sued the insured to void the policy dating back to the date it was formed on the grounds that the insured's misrepresentation as to the vessel's value violated the concept of uberrimae fidei. The insurer won and the policy was voided. Try getting insurance after that happens.

You may be thinking, $200,000 in value is a misstatement of value by a third. That's almost like fraud.

True enough, but here's the real kicker- the concept of uberrimae fidei does not require that you intentionally lie or hide something. In fact, the concept of making an intentional misrepresentation doesn't count for anything. The only thing that matters is that the misrepresentation is material. In the recently decided case, there was contradicting evidence as to whether the vessel owner really believed the lost yacht to be worth $600,000. The court said that whether or not he misstated the value was irrelevant - and he lost.

Marine insurance, unlike a lot of contractual relationships, imposes a very high standard on the insured to be truthful. The consequences are potentially dire for those who don't take it seriously.

It's The Little Things

Happy Tuesday. I was going to use today to discuss an insurance concept that recently got some attention in the federal courts, but I found something that I think may be of interest to all of you. Now that we've all kissed our retirement funds good-bye and watched easy money go out the window as easily as it seems to have come in during the era of overstated earnings and inflated balance sheets, I present you with a list of things you should consider before you hire a lawyer.

It's a little long for this blog, I'll admit, but I believe that the information is very helpful. You may wonder why I would send out something like this, since I make money based upon your questions and problems. The answer is simple: I want you to come back. If you use me to solve a $500 problem and spend $2000, that is not a good use of your resources. I want you to have enough information at your fingertips that you can properly make your own decision as to whether you should pick up the phone.

So, without further ado, then, I present the following:

Ask. Ask yourself this very important question before you do anything: Do you need a lawyer? The best way to save money on legal expenses might be to keep lawyers out of the equation. This definitely isn’t right for every legal matter, but it could be right for yours. Consider:
If there is very little money at stake, hiring a lawyer may not be cost effective. You may be able to identify a paralegal or consultant with the needed expertise.

Go to small claims court. Small claims court exists for a reason. It helps people have their day in court to resolve small disputes. The precise rules and requirements vary by jurisdiction, but it can be a cheap option to litigate a monetary claim. You can generally pursue amounts up to a few thousand dollars in small claims court. The filing fees are usually a small amount. You typically do not hire a lawyer in these cases; you pursue the case on your own.

Buy unbundled services. Perhaps you need a lawyer for part of a matter, but you can handle some things on your own. Unbundled legal services could be the frugal solution. This innovation breaks down legal services into discrete parts, letting clients purchase only what they need. Under this model, you could hire an attorney to just give advice on a certain situation. Or you could hire someone to review contracts for you. Unbundled services can be a win-win deal for clients and lawyers. The client gets exactly the needed services and only has to pay a minimum amount. And the lawyer can work on discrete matters for a variety of interesting clients.

Educate yourself. Regardless of the legal option you choose, you need to educate yourself. Even if you hire an attorney for all your legal needs, you should make sure you understand what’s going on. One simple thing you can learn is legal terminology. Your attorney should be able to speak to you in plain English, but there are still legal terms involved. If you take the time to find definitions for things, you save your attorney’s time in explaining them to you. In most arrangements, saving time for your attorney saves you money.

Provide all the details. After you have decided to hire a lawyer, you have to communicate with him. To help your lawyer work as efficiently (and cheaply) as possibly, get all your details together. If you’re prepared to answer the lawyer’s questions, you can make the most of any meetings you have. In today’s computer age, it’s easy to keep records and documents handy. You could just create a Google Doc of information about your case. When something happens, or a memory resurfaces, make a note of it. You could share this Doc with your attorney through Google or just email it to him.

Group your questions. If your attorney is billing by the hour, you want to minimize the time he has to spend on your matter. Most attorneys bill in six-minute increments, so even a quick phone call to your attorney will cost 1/10th of an hour (possibly $25). This doesn’t mean you shouldn’t contact your attorney. But you should be efficient in that contact. Don’t call your attorney five times during the day. Make a list of things you’d like to talk about and call once. The same applies to email.

Ask for alternative billing. Lawyers don’t have to bill by the hour all the time. In fact, many lawyers are using different billing methods precisely to lower the cost of legal services. If you want to lower your attorney’s fees, ask about alternate billing arrangements:
Contingency fees are a popular method of billing in cases like personal injuries. You pay your attorney a percentage of the amount you recover.
Attorneys use flat rate billing when the amount and nature of work is predictable. If you have a routine traffic court matter, a flat rate might make your cost easy to foresee. Flat rates can also help you get a simple will drafted and signed.

Stay focused on the goal. A wise business attorney once said that the client is truly in trouble when they’re fighting “for the principle of the matter.” If you’re fighting for principles, your costs will likely skyrocket. That doesn’t mean you shouldn’t stand up for your beliefs, but sometimes fighting in the legal arena can be a bad business decision. The same rationale applies to people who want to harass people through the courts. An unscrupulous attorney might help you, but it will likely be expensive. Do you think an attorney who will simply harass your adversary will turn around and bill you fairly? Always keep your focus on the end goal, and make sure your attorney knows that goal as well. Ask yourself how certain decisions might affect reaching that goal. If you get off course, talk it over with your attorney and get back on track. You’ll save money in the end.

Consider This

Everyone, please take note, I will gladly discuss any topic you recommend to me. Just send me an e-mail with a question or recommended topic and I will put something together. I say this because I write a lot about contractual relationships and get most of my requests to discuss matters relating to contracts. If, however, you have something else you would like for me to discuss, let me know and I'll get on it.

For today- consideration. Every contract must have consideration, which is defined as "the inducement to a contract" or "the cause, motive, price, or impelling influence which induces a contracting party to enter into a contract." Well, that was easy - or was it?

Despite how it reads, consideration is not the clearest concept in the world and has definite problems in it application to the real world. In essence, consideration requires that there be a bargained for deal that flows to both parties in a contract. You can't just have things running one way. The most basic example I can offer is this: you do not have a contract if all you have is a one-sided promise. A piece of paper promising to deliver 1,000 widgets by Fed Ex on November 1 at 2:00 p.m. is not an enforceable contract.

Why? Because, although you have a number of specific and distinct promises that lay out in detail what is being promised by one party, you do not have any explanation as to what the inducement for those promises is (the consideration). For instance, will you be paying money for these promises? Will you be giving something else?

To have a real contract, then, you have to lay out what the bargain is on each side of the table. A simple promise by someone to do something is not an enforceable contract. Consider it.

Consideration and Single Party Promises

As predicted, yesterday's entry seems to have gotten people looking at the contractual arrangements and following up. I'm glad and you'll be better off in the long run - believe me.

Along the same vein as yesterday, let's "talk" about those papers that are signed by only party. The most common example -promissory notes. I have a lot of clients who sign promissory notes - and a lot of them want to know why they have an enforceable agreement if they are the only ones who signed.

Without getting into an explanation that ate up $20,000 of the $90,000 of tuition spent on law school, here's the briefest possible explanation. Agreements are full of promises (which the Old English thought sounded stupid, so they called them "covenants"). Each promise has to either be bilateral (meaning each of you promises something) or a promise has to be supported by consideration (I am giving you something of value in exchange for your promise). So---when you sign a promissory note, you are promising to pay X dollars in exchange for the x dollars that the person who loaned it to gave. That's consideration for the money.

If that makes your head swim (you should have seen me in contract class 18 years ago trying to get my head around that), try this - you can enforce a written promise so long as whatever it is was signed by the person against whom you are seeking enforcement.

Counterparts

For those of you reading along for the last few months, you know that I harp on the idea of ensuring the regularity of your relationships by putting together written contracts whenever possible.

A corollary to my rule requiring you to memorialize your relationships is that contracts require signatures. Let me say that again, contracts require signatures. I know you won't and don't believe me when I tell you that over half of the cases I litigate include contracts where one (or even both parties) did not sign the contract. I wish I were making this up. Clients way too often spend time and money setting up a written arrangement and think that signatures are just formalities or, as I have also learned, get so enthusiastic about the new relationship that they charge full speed ahead without dotting all the "i"s or crossing all the "t"'s.

Logistics also plays a part in why clients don't get signatures. I hear often that Party A doesn't want to send its signed contract original to Party B in Lithuania for signature. Why? Because it's the original contract. Somehow, having an incomplete document is better than sending the original off to make sure the whole thing is fully executed.

Well, guess what? You have no excuse. The law permits signatures in counterparts. In fact, if you look at the vast majority of your contracts, you will find that there is an express provision in your agreement that allows for execution in counterparts. What does that mean? It means, you can sign your copy of the contract and the other side can sign their copy and it counts as a single, fully executed agreement. Just be sure to have them send you a copy of the signed signature page and you send them one. Now, everyone has a fully executed copy of the agreement.

Believe me, if you spend the two minutes it takes to do this, you can save yourself thousands of dollars in litigation fees. I've got no less than thirty people I can refer you to to confirm this.

You Get What You Give

So, let's suppose you don't have a regular relationship with some business that would allow you imply the existence of a contract. Suppose you are the same widget seller you were yesterday.

Also suppose that Company A said it had a great opportunity to build a Whatchamacallit if only it had 5,000 widgets. So, being the savvy businessman you are, you send over 5,000 widgets with the idea that you will get paid for them. Because of the urgency surrounding the need for the widgets, there are no contracts, purchase orders, invoices or shipping documents. And then guess what? Company A doesn't send you the money for the widgets.

What now? Are you out of luck?

Nope. Believe it or not, even this lack of an express document to protect your rights still has some protection for you - and maybe even more. In Florida, you have a cause of action for unjust enrichment. Essentially, if you confer a benefit on someone and they knowingly accept it (the widgets), you get to recover the value of the benefit. When supplying products and goods, this is almost always the ordinary sales price. So, in our example, you would be able to claim that the ordinary sales price was the value of the benefit conferred and that's the amount that Company A should pay to you. Nice, eh?

What I find a little spookier is this weird twist that can sometimes allow you to recover more. This actually happened to me. I was representing a company who was sued by an intermediary claiming that he helped my client form a valuable distributor relationship and as a result of his introduction, my client was greatly enhanced. We argued that there was no contract to pay this intermediary and, in fact, we had proof of our failed contractual negotiations. By the way, under the proposed contract, the intermediary would have received $100,000 for putting the parties together. So, despite the lack of a contract, the intermediary sued and claimed unjust enrichment. Guess what? He was able to show that the value of his benefit exceeded $200,000 - and he was awarded that amount. That's a pretty insane result for a situation wherein the intermediary was unable to negotiate a contract. Instead, equity was his best friend. But, please, that's a one in a thousand scenario and should not justify you foregoing the sanctity of reducing your business relations to writing whenever possible. It's just an unusual story and one that illustrates the example of unjust enrichment's potential quirkiness.

What Are You Implying?

Last week, before the financial world fell down all around us, I promised to "talk" about your rights in those situations involving something other than a written contract. What if, for instance, you do business with Company A over and over again. For weeks, months or years, you sell "widgets" to Company A at a price of $2.50 a piece, you buy 1000 at a time and Company A pays within 30 days of delivery.

As a regular practice between you and Company A, a series of norms and expectations has developed. It is reasonable to expect that you will need to make provision for having a 1000 widgets in your inventory every week, month or year for Company A. It is also reasonable to expect that Company A will place its regular order and that you will sell the widget for $2.50. It is also reasonable to expect that you will be paid within thirty days.

Although the law does not view this as a preferred method of doing business, you do appear to be in a situation in which the law could find that you had a contract implied in fact. Correct - a contractual existence implied by the facts of your relationship with Company A. It's a little more costly and time consuming to prove than a clean, written contract that plainly states the terms of the parties' relationship, but it can be done.

Now, before you run off thinking you can save a fortune by skipping out on written contracts or forms, bear in mind a few things. First, a contract implied in fact only exists to the extent that the potential terms can actually be proven. Second, such a contract will only have the "essential" terms (price, quantity, delivery). The details and caveats that can afford you greater protection if you negotiate for their inclusion are not made part of an implied contract. Third, any dispute over the terms of an implied contract is likely to be more protracted, simply because there are no written, regular terms for the parties to rely on and be governed by.

The fun continues tomorrow.

Jane, Stop This Crazy Thing!

For those of you that did not catch my reference to the Jetsons made in the title, I am changing my intended discussion about implied contractual theories to a quick point about the stock markets and banks.

For those of you holding accounts at banks, your money is insured up to $100,000. If you have more than $100,000 at any bank in any one account, I applaud you. For those of you have trusts at a bank, the beneficiaries of the trust account are EACH insured up to $100,000. They do not have to split a $100,000 FIDC insurance payment amongst themselves.

If you have SIPC-insured accounts (as opposed to ordinary bank accounts backed by the FIDC), you are insured up $300,000.

Now, let's just hope that you do not need any of this information and it becomes useful only for cocktail party conversation. Keep your eyes and ears open and hope that the Congress can get together to reach a deal. While many perceive a proposed bailout as paying off Wall Street, we need to also keep in mind that without AIG, Fannie Mae or Freddie Mac, nearly half of the homeowners in this country will not qualify for a mortgage or any other type loan/credit arrangement. That's a staggering potential loss to the economy, one which many of the talking heads say this country would not recover from in our lifetimes and would move the center of the financial markets away from New York and to the European or Asian exchanges. Imagine, if you will.

What Are You Implying?

If you've been reading along for the last few months, you have probably picked up on the fact that I am big on trying to get all of you to read, know, update and understand your contracts. More than that, you have undoubtedly figured out that I want you all to properly document all of your business transactions so that the law and predictability will be on your side.

But what if you have some business dealings and there is no written expression of the terms? What if there were some very specific circumstances where you had to disregard the things you've picked up here and had to fly without a net? Well, fret not, there is hope.

The law, in addition to protecting those who have express contracts, also protects those who don't. There are a number of theories and reasons behind each. I'll give you some details about each over the course of the next few days- just to keep you reading.

As a general rule, these various theories are known as implied contracts. Get ready, because you're going to hear all about unjust enrichment, quantum meruit, open account/account stated and oral contract. I bet that'll occupy your time much better than ESPN.com or TMZ.com. Stay tuned.

Supreme Influence

This entry applies mostly to those of you who do business overseas or are yourselves foreign nationals. Yesterday, the New York Times reported that the influence of the US Supreme Court overseas is waning. In the past, foreign courts looked to the US Supreme Court and its legal interpretation/analysis as guidance for their own decisions. The instances of this, however, have been cut in half in the last decade.

The reasons for this are the subject of debate and varied. Some say that the US' shift to the right politically is out of step with the constitutional advances made by other countries, particularly in the areas of privacy, human rights and advanced in gay rights. Others argue that the simple fact that we helped set up these constitutional courts in other countries have allowed them to develop their own model of constitutional jurisprudence and that these courts no longer need or want to rely on us. Yet others argue that the waning influence of American power and the unpopularity of the current presidential administration makes other courts hesitant to rely on American decisional law.

Whatever the cause, there is a lot of hard evidence to support the proposition that the highest courts in Canada and South Africa are making great headway in the international arena. Other countries are looking to the decisions from these tribunals as beacons in the areas of human rights, immigration and foreign trade. The European Court of Justice is also gaining significant ground in the areas it oversees.

So, my question to you, then, is this - Is this a good thing or a bad thing? Should American jurisprudence be the guidepost for other nations' constitutional matters or are they best served by interpreting their own laws according to their own legal standards and traditions? For what it's worth, the US does not typically cite to or rely on the decisions of other countries proceeding instead from the proposition that what goes on in other nations has nothing to do with what the Founding Fathers intended our Constitution to mean.

Look It Over

For whatever reason, I was unable to log into my blog site yesterday to send out my update. My apologies. I did not forget about you all.

For today, I have a reminder for all of you. Please look at your agreements and contracts to see if there is any provision in there that permits or the requires the payment of attorneys' fees in the event of litigation arising out of the agreement or contract. I know this sounds basic, but it is the cornerstone of any particular litigation.

Whether or not you have the right to recover fees or, conversely, could be responsible for the payment of someone else's fees if you lose is often the life or death distinction between filing suit and settling. I do not think it is news to any of you that lawsuits and lawyers cost big money. Worse, that big money becomes huge money if you end up on the hook for the other guy's fees.

So, before you start assessing your rights and dreaming of all the things you're going to do to the other guy for screwing up your contract, you want and need to see just how much it could cost you to realize your vision.

Please, please, please look it over.

You Have Immunity This Round

Any of you who watch reality television game shows are probably familiar with the title of this entry. Survivor, that design show on Bravo and no less than 340 shows on MTV all have immunity from disqualification for each round of the show.

For all of you frustrated reality tv wannabes, rejoice! You share something in common with the attention-mongers of your favorite programming - immunity. Yours, however, is a little different. You have immunity respecting statements you make about others or events in the course of a lawsuit as part of the proceedings.

Frequently, clients read or hear things in the course of a lawsuit that they think are outrageous and maliciously wrong. I (as do nearly all lawyers) get phone calls from incensed clients who want to know whether we can bring a claim for libel, slander, defamation, tortious interference, fraud and what have you for the horrific falsehoods made by the opponent.

You can imagine that the rage does not much subside when I tell them "no." As a matter of law, statements made as part of a legal proceeding have a qualified immunity from being actionable. Thus, statements that might open one up to some kind of slander, libel or invasion of privacy in the real world are not necessarily improper if made in the course of legal proceedings. Even if you win the lawsuit against the bad-mouther, you can't go after him or her after the case for the statement.

But, just like reality tv, there are limits and qualifications. You may have greater freedom to render opinions and personal thoughts in the course of a lawsuit without fear of legal consequence, but you cannot say things that subject you to perjury. You cannot lie. If you do, you don't have to worry about the tribe or Heidi Klum telling you you're out. You get to worry about the judge sending you to jail, where you might get to be on MSNBC's show about prison life, Lockup.

Guilt

Ok, so yesterday I was waffling on whether I should forego the usual legal discussion and let you know about organizations that are out there to help those whose lives and property were impacted by Hurricanes Gustav and Ike. Guess where I landed.....

MONETARY DONATIONS: JEWISH SOLIDARITY, a 501.C.3 not for profit organization with a license to secure donations for Cuba relief. You can send your donation check to: JEWISH SOLIDARITY, attention: Maricusa, 100 Beacon Boulevard, Miami, FL 33135. Check should be marked "humanitarian relief".
CATHOLIC CHARITIES/Caritas Cubanas, a not for profit agency of the Catholic Church who also holds a license to provide aid to Cuba. Checks should be made out to Catholic Relief Services and sent to Catholic Relief Services, P.O. Box 17090, Baltimore, MD 21203-7090. Checks should be marked: "For Cuba Gustav Relief".
Or you can click here to make a donation online, please specify "CRS Severe Weather Fund Cuba" in the space under "Do you have any additional requests for your contribution?" on the donation page.
ITEM DONATIONS: For those of you in the Miami area who would prefer to take food items in lieu of a check donation, you can do so by taking these to The Daughters of Charity at 500 NW 63 Avenue in Miami. They also have a license to send aid to Cuba and are sending two containers in the next few days. The organization has particularly identified the following high-need items: powdered milk, evaporated milk, canned little hot dogs, lentils in packages, black and red beans in packages.

Tomorrow, the lessons resume.

This Is Just Between Us

Everybody tired of worrying about Ike? Me, too. Now, we get to worry about whether all of our neighbors to the south will have clean water, food, medical care and shelter and otherwise if there will any kind of humanitarian aid to help them out. Anyway...I am not here to plead the causes of Caribbean nations in need. There are plenty of websites and blogs for that. We're apolitical here. That said, now I feel a need to check out some sources of help and maybe I'll pass them on to you.

For now, let's talk about one of the few bastions of confidentiality - the settlement communication. Just so you know, communications made by you and your attorney in an effort to avoid or settle a lawsuit or legal dispute are confidential. The communications themselves and their contents cannot be used against you as evidence.

Why? So that there is free exchange of information and ideas that allows the party to properly decide whether to settle and to identify the terms of such settlement. This is important because you want to be able to discuss the issues of a case, evaluate the evidence and even identify the shortcomings in your own case. A good and honest evaluation of a matter may be just the thing the parties need to get a case over and done with - and anything you can do to save on attorneys' fees is a good thing.

For instance, it can be useful to fess up to the other side that you know witness X will hurt your claim, but that proving it at trial will be costly and time consuming. You could never tell the other side that you think you're own witness is lousy if there was a chance that such communication could be used against you at trial. Imagine the opening statement that includes "Ladies and gentlemen of the jury, even the defendant's lawyer thinks witness X is not credible. He told me so himself." Case closed, malpractice insurance carrier notified.

So, tomorrow I'm either going to discuss qualified immunity as it relates to statements made as part of a legal proceeding or provide you with information about humanitarian aid. See what you've done?

I Don't Like Ike

It's been nearly a decade since there were four named storms in the Atlantic Ocean/Gulf of Mexico. Obviously, Gustav decided not to stop in, Hanna has a track commitment problem and Josephine seems content to wander in open water. It's Ike, the one with the explosive personality, we need to watch.

You are correct if you are thinking to yourself, "Hey, this is no weather blog." So, why am I pointing this out to you? Because you have homeowners insurance and every time a storm approaches I'll bet you calculate how much money you spent on premiums and even secretly revel in the fact that you should have protection in the event we get whacked by a category 4 hurricane that seems to know what a straight line looks like a whole lot better than his sister, Hanna.

Ok, so here's the legal part. As the insured person under the policy, you have some obligations you have to fulfill. First, READ the policy. Having litigated insurance matters now for nearly 10 years, I can tell you that people think the simple fact they own a policy means they have coverage for whatever may happen. WRONG. Insurance policies are full of limitations and exclusions that you need to be aware of. Also, pay attention to your deductible amount. I was horrified to see how high mine was. That's right, homeowners has a deductible and it's an amount of money way higher than the $500 deductible you probably have on your car insurance.

Second, keep your policy and insurance company contact information with you during a hurricane. Almost all policies require that your promptly notify the insurance company of any claim. What constitutes "promptly" is defined differently by different insurance policies, so check to make sure what your policy says. Your friends and neighbors may tell you one thing, but they may be insured by someone else and have different obligations.

Third, do whatever you can to minimize potential damage. I know this sounds obvious and basic, but you have a duty to mitigate your possible damages. You cannot, for instance, refuse to put up your hurricane shutters because you want the insurance company to pay to remodel your house. Put up the shutters if you have them. Bring in the plants and anything else that could be a projectile. Your chances of putting in a smooth-sailing claim will increase greatly.

Hopefully, all of this information is wasted space and the 2008 hurricane season will bypass us.

Mark You Calendars! October 30

Today, we shift focus away from our usual discussions about the law to, once again, make room for some of my self-promotion.

I am pleased to announce that on October 30, 2008 at 5:30 p.m., I will present a seminar here in the firm's Miami office called "An Ounce of Prevention." It will focus on small things you can do to limit or minimize your risk of exposure to litigation irrespective of whether you are an employer or employee.

I expect to focus on personal and business tools that impact everyone - e-mail and computer networks, employee manuals/policies, customer lists and business forms. These areas are not industry specific, but meant to be geared towards everyone.

I promise to make the event as entertaining as possible and will take great pains to avoid making this like a law school lecture. I may even get fancy and have a powerpoint presentation with pictures and everything. You don't want to miss this.

In a down economy, everything you can do to limit your risks is a plus. I invite all of you and hope you can come. After all, you may just learn something you can use.

Survivor (not the t.v. show)

Monday......again.

For many, many, many years, it was the law that you had certain rights of recovery in life that would be lost upon death. Frequently, defendants to lawsuits would do their best to wait out or delay such causes of action brought by elderly plaintiffs knowing that potential liability died with them.

Well, no more. The law was changed some years back to provide that no cause of action dies just because the plaintiff does. Typically, the decedent's probate estate will step in and continue the lawsuit. This process is known as substitution.

I was told to keep it short today...and so I will. Have a great day and I'll "see" you all tomorrow.

Liquid

Happy Friday, everyone. For those of you sick of watching tv coverage of T.S. Fay and are looking forward to a reprieve, please be advised that you will get no such thing. There are two more disturbances out in the Atlantic, the closest of which appears to be ripe for significant development over the weekend. Just what the doctor ordered. Details are at www.weatherunderground.com.

On to the news.....Today, liquidated damages provisions. Now, I'm sure most of you are thinking that this has nothing to do with you and something that sounds so strange has no bearing upon you or your life. I'm willing you bet you are wrong. Take a look around at many of the same documents I referenced in my last blog entry- (contracts for goods and services, mostly). Many of those same documents will have a liquidated damages provision, which provides for an exact amount of money to be paid by a party breaching the contract to the party that didn't.

Yes, these things are legal but they are surrounded by a fuzzy halo of qualifiers and requirements that are entirely dependent upon the language of your contract and your particular circumstances. For instance, a liquidated damages clause is inserted in agreements (in theory, anyway) to cover the costs or best guess-timated costs to compensate the non-breaching party. This is supposed to save time and money figuring out what the actual costs would be and allow all the parties to move on as quickly, as possible.

Such clauses cannot be penalties. You cannot have a provision that provides for you to pay $1,000,000 for terminating an agreement in which you are only buying $50,000 worth of merchandise or services. It has to be proportionate to the actual expenses involved and what the circumstances of your situation or industry properly value the loss to be sustained.

The reality, there tends to be a lot of fighting about whether a particular clause is reasonable or constitutes an illegal penalty. It helps to review these clauses in advance of signing an agreement and getting some written clarification from the other contracting party as to what the basis for calculating this number was. Such information can be very useful if your agreement goes south later on.

Have a great weekend!

On My Way To The Forum

I trust everyone's dried out and back to normal after Fay's interruption of our week. Hey, speaking of the law...... Today, it's forum selection clauses. For those of you who buy or sell goods or service (that's all of you, in case you didn't pick up on the sarcasm), this pertains to you.

When you buy a t.v. or your company buys 5 million widgets, there was some paper that documented that transaction. Among the invoices, receipts, bills of lading, service agreements and other possible paperwork was likely buried a forum selection clause. Forum selection clauses say that, if there is a dispute about the t.v. or the widgets, that dispute shall or may be resolved in a particular place or before a particular tribunal. In other words, you may live in Miami-Dade County and think that any problem with the t.v. or widgets will be resolved here and in court, but you could be wrong. All those papers may include a provision that says that you will litigate in the state courts of New Jersey, located in Bergen County or even that you will submit to arbitration.

These provisions are generally enforceable. I can't tell you how many calls I get from clients (actual and prospective) telling me about a problem and that we need to file suit only to receive the client's papers and find out that I have to refer the matter to someone in Texas because that's what the forum selection clause says.

So, what am I telling you? Read. Many people think "fine print" is just there for lawyers and that it doesn't mean anything. Yes, it does - it means your rights are being decided and delineated. You should read these things or bring them to someone who does so for a living. You don't want to solve a $40,000 out in Leavenworth, Kansas if you don't have to, right?

I Don't Know If I'm Coming Or Going

Welcome to Tuesday in the post-Fay hysteria.

The big storm proved to be quite a letdown, but it did cause a few people to ask me the following question: If my office is open just before a storm and something happens to one of my employees while commuting to work, am I liable?

Strangely, I did not have the definitive answer right in my head (which, those of you know me well, is not all that unusual). But, I do have excellent resources and more than adequate research skills. So, for those of you who asked or think that this answer may bear upon you or your working situation, pay attention.

Employers' liability for injuries occurring in connection with a job are covered by the workers' compensation laws. You employers get charged an annual premium by the state to keep coverage in place for workplace related injuries. Well, guess what is not covered? Commuting back and forth to work. It's called the "coming and going rule" and exempts from workers' compensation the time an employee spends driving to and from work. So, there is no day to day problem or liability associated with an employee's commute to work.

Now, there are three (3) generally recognized exceptions and these matter. The first is the "dual purpose" rule - if the employee was commuting AND the drive was also part of some other business purpose for the boss. For instance, if you drive home with a booth for a job fair that you will attend the next day for your employment, you are covered by the workers' compensation laws.

The second is the "traveling employee rule" which covers employee travel attendant to performing one's job duties. Pretty straightforward.

The third is the "special errand exception" and covers employees who have to leave the workplace on an errand for the employer.

But what about hurricanes? Well, there is also something known as the "special hazard" exception to these exceptions. This rule says that "If an accident is deemed to have occurred off-premises, an employee's injury is compensable if it is caused by a special hazard on a normal and customary route used by the employee as a means of entry to and exit from the employee's place of business." What does that mean? Well, if you are using your regular work route and there is a "special hazard," you may be able to obtain workers' compensation coverage for the injuries you sustain. The law seems to include hazards created by hurricanes as falling within this exception.

So, not only is the storm a potential problem, but the messes it leaves behind can also be sources of workers' compensation liability. For instance, there is one case I saw in which a bridge tender was able to claim workers' compensation benefits because he tripped and fell on a pile of debris cause by Hurricane Wilma.

Let me know if this raises any other questions for any of you. Have a good Tuesday and stay dry.

Experts and Hot Tubs

For any of you ever involved in litigation, you may have been required to hire expert witnesses to assist with a damages calculation or to testify about medical issues. If you have been following along for the last few months, you know that I previously discussed (assuming me writing and you reading counts as a discussion) the general use of experts and that they are the only trial witnesses who can render opinion testimony.

As a quick refresher, experts are people who have a specialized knowledge or expertise about some matter at issue in your suit and can help the jury understand some special or technical issue that might be beyond the day to day information people know. The most typical examples- doctors. They often testify about the extent and permanency of a particular injury or medical condition.

I'm sure you were delighted to find out that, in addition to paying me, you got to pay for the use of an expert witness. That aside, you also came to learn that the other side had an expert witness and so we had to bolster our expert and discredit their expert because even though both experts had access to the same information, they came to exactly opposite conclusions. So, in an effort to make out expert more believable, we attacked credibility and try to prove bias.

With expert witnesses, this is done by trying to show that they are hired guns for one side and that, by taking money for their testimony, they are biased. Now, it doesn't take a genius to figure out that this methodology applies to every single lawsuit in which expert witnesses are used and seems more than a little stupid to attack someone for following the established rules for the retention and use of expert witnesses.

Well, apparently some folks are tired of this idea that a party to a lawsuit hires, retains and largely controls expert witnesses. There are proponents for and studies out there about the possibility of using expert witnesses as they do in other countries. In Australia, for example, the parties still get to hire whatever expert they like, but the judge conducts the expert witness examination by getting the experts together and having more of a collaborative discussion. The Aussies refer to this as "hot tubbing" and many believe allows for a more honest assessment of the information. In other countries, expert witnesses are appointed by the courts and owe their fidelity to the process, not a party.

In fact, America appears to be one of the few hold outs of the idea that parties get to select, hire, prepare and examine their own expert witnesses.

I would be interested in hearing what any of you think about this. As a lawyer, I have my own very distinct ideas about expert witnesses, but would like to hear what those whose cases actually rely on them have to say about the issue. Feel free to post your thought.

I got to watch the guy, too?

A few months back, I posted some information about the liability you guys can incur if you hire someone you shouldn't or who is unfit for the job. The cause of action was called negligent hiring and it put you employers in the hot seat for hiring child molesters as baby sitters or known sexual harassers to run the office.

I have more good news for you. Your obligations don't end there. As an employer, you have to properly supervise your employees. There is a cause of action for negligent supervision that was first recognized about 50 years ago that allowed plaintiffs to sue an employer and the negligent employee. It wasn't used all that much, but it recent years plaintiffs (particularly those alleging claims of employment discrimination) have latched on to it as another theory to get to the employer.

Essentially, as the employer, you have a continuing duty to ensure that your employees remain fit for the position they were hired to fill. If you become aware that they are acted outside the scope of the law or the course of their employment and doing these that subject you or your business to liability, you have a duty to do something about it. If you don't.....you know how that story ends.

So, now we come to the part where I ask "So, what am I talking about?." You run ABC, Inc. You hire John to run the accounting department at your office. A few months into the job, customers start to complain that their invoices are overstated and you notice that the money doesn't seem to flow in quite like it used to. But, instead of checking in with John, you figure it's an economic cycle, things will turn around and it's just best to let things run their course.

Bad choice. Turns out, John has been overstating customer invoices and threatening them if they don't pay the overstated amount. Worse, John has fraudulently induced customers to buy many more of your widgets in exchange for all sorts of crazy promises.

In addition to the fact that John is an extortionist and civilly liable for fraud, guess who could get tagged for failing to properly keep an eye on John?

Water, water everywhere

Happy Monday again.

Sorry I was out of touch for the better part of last week, but the host service for this blog was just not cooperating with my computer. In other words, I got locked out of my own blog site. Anyway.....

Pools. Just about everyone has one and many fail to appreciate that the law acknowledges that your ownership does not make you a bank account for people who use it or are hurt in it. Some clients are very concerned that their ownership of a pool is a real potential liability. After all, people could drown in there.

Welcome to the decision of Longmore v. Saga Bay Property Owners Association, Inc. a case reported a few years ago (2004 to be exact). In that case, the decision to dismiss a wrongful death based upon a minor's drowning in a community's man-made lake was affirmed. The part you care about is the part in which the court went through and cited to a number of cases that supported its general proposition that "there is no liability for a child's drowning in a body of water, natural or artificial, unless there is some unusual danger not generally existing in similar bodies of water or the water contains a dangerous condition constituting a trap."

The things that constitute an unusual danger are pretty extreme. Guillot v. Fisherman's Paradise, Inc., 437 So.2d 840 (La.1983)(no liability for two-year-old's drowning even though pond's sides went straight down and surface covered with thick, green algae, trash and debris); Corcoran v. Village of Libertyville, 73 Ill.2d 316, 22 Ill.Dec. 701, 383 N.E.2d 177 (1978)(no liability where drainage ditch had deceptively steep slope, irregular embankment, an “unnaturally pocketed” bed causing excessive accumulation of water, rubbish and debris). Kinya v. Lifter, Inc., 489 So.2d 92 (Fla. 3d DCA 1986) (artificial bank's slope not so different from natural bodies of water); Hendershot v. Kapok Tree Inn, Inc., 203 So.2d 628 (Fla. 2d DCA 1967)(sudden drop-off two feet from shore); Howard v. Atlantic Coast Line R.R. Co., 231 F.2d 592 (5th Cir.1956)(applying Florida law; straight sides do not constitute hidden danger); Cortes v. Nebraska, 191 Neb. 795, 218 N.W.2d 214 (1974)(public recognizes that bodies of water vary in depth and that sharp changes can be expected); Plotzki v. Standard Oil Co., 228 Ind. 518, 92 N.E.2d 632 (same).

And you thought alligators were the big problem in the water.

Gone to the dogs

Monday again. The phrase "gone to the dogs" seems to be prevalent these days and has application to so many things going on. The housing market, gas prices, the economy generally, the election- all of it, I've heard, has gone by way of the canine. We're even considered to be in the dog days of summer.

Ok, now that I've beaten this stupid pun/metaphor/simile to death, let's get down to business. Like the myriad of other matters in our lives, our dogs are also subject to regulation and, in some legal respects, are extensions of ourselves. In this case, I'm referring to the Florida law that makes owners personally responsible for the damage done by dogs to other people, other pets and their livestock:

767.01 Dog owner's liability for damages to persons, domestic animals, or livestock.--Owners of dogs shall be liable for any damage done by their dogs to a person or to any animal included in the definitions of "domestic animal" and "livestock" as provided by s. 585.01.

I hate to point out the obvious, but your dog can't be sued for the things he or she does wrong. You, on the other hand, can. So, you know the drill- leashes, fences, vaccinations. Keep up with all of it.

What's a venue?

Ok, so here is something that confuses lawyers a lot. Here's the best part - they don't know they are confused.

The concept is called "venue" and it has to do with where the lawsuit is brought. You know, like a concert is held at a "venue" (at least that's what they call it on the radio). What court you use is the venue for your dispute.

It was meant to be practical. If you live in Dade, your defendant lives in Broward, you have to decide where the lawsuit will be brought, right? Well, under the law, "Actions shall be brought only in the county where the defendant resides, where the cause of action accrued, or where the property in litigation is located. This section shall not apply to actions against nonresidents."

Sounds pretty easy, right? Oh, you should see the fights about this stuff. It's easy if you and the defendant live in the same county. Once you guys live in different counties, the fun begins. Ordinarily, you would have to sue in the county where the defendant lives. But, some people like to litigate at home for whatever reason (convenience, familiarity, expense, the feeling of a home court advantage- real or perceived). So, some will argue that their claim "accrued" in their home county. This is where the fuzzy logic comes into play and things get confusing.

There is a large and complicated body of law about where a cause of action accrues and it, of course, has a lot to do with what cause of action you bring. Breach of contract is different from negligence which is different than declaratory judgment. Good luck sorting that all out in five minutes.

It gets even more fun when you have more than one defendant and they each live in different counties. Under ordinary application of the law, the plaintiff gets to pick any county in which any defendant resides in to bring suit.

Venue is messy. Where lawyers trip up is that they often confuse it with concepts of jurisdiction, which is the principal of which court can hear what matters and whether it has control over the parties actually before it.

Fun, right?

TSA Probably Made You Aware Of This Already

In researching a constitutional issue about privacy for a client, I came across some very interesting case law that impacts everyone very directly. As you know, our Constitution is a very broad document, expressly and impliedly conveying many of our most important rights (many of which were never known to the citizens of any civilization until the framers committed them to writing). We have freedoms of speech, assembly, religion, to be free from unlawful searches and seizures, of due process, to equality under the law, to confront witnesses, to be free of cruel and unusual punishment and to elect our representatives. We also have these broad rights to "life, liberty and the pursuit of happiness."

Now, how you codify or regulate something like life, liberty and happiness is pretty hard, to say the least. Plato, Aristotle, Descartes, Locke and other great thinkers had trouble even defining these concepts, much less making them points of law.

But, fear no more!! The legal system is on the case and it has, in at least one instance, decided what these terms do NOT mean. You do not have the constitutional right to....travel.

Correct. We have rules and laws on interstate commerce, highways, roads, waterways, airplanes, airlines and sidewalks. You do not, however, have a constitutional right to travel (and neither does your pet, says the cases I read). So, when you watch CNN and see the story about the minimally intelligent, rowdy drunkard who was removed from the Southwest flight screaming that this is a free country and the airline violated his rights you can be safe in the knowledge that none of his constitutional rights were harmed in the forcible removal of his unwashed body from the plane.

Stay tuned. I'll bet this issue ends up going somewhere.

More dumb laws

As a respite from discussions about courts, jurisdictions and all manner of serious legal issues, I thought I would remind you all that this is an imperfect and, sometimes, a just plain weird system. As proof, here are some more strange and stupid laws enacted to protect our revered citizenry from itself:

Women may be fined for falling asleep under a hair dryer, as can the salon owner.
A special law prohibits unmarried women from parachuting on Sunday or she shall risk arrest, fine, and/or jailing.
If an elephant is left tied to a parking meter, the parking fee has to be paid just as it would for a vehicle.
It is illegal to sing in a public place while attired in a swimsuit. Men may not be seen publicly in any kind of strapless gown.
Having sexual relations with a porcupine is illegal.
It is illegal to skateboard without a license.
When having sex, only the missionary position is legal.
No one may not fart in a public place after 6 P.M. on Thursdays.
It is considered an offense to shower naked.
It is illegal to break more than three dishes per day, or chip the edges of more than four cups and/or saucers.
Oral sex is illegal.
Husbands may not kiss their wife's breasts.
Penalty for horse theft is death by hanging.
One may not commit any "unnatural acts" with another person.
Unmarried couples may not commit "lewd acts" and live together in the same residence. Corrupting the public morals is defined as a nuisance, and is declared a misdemeanor offense. Doors of all public buildings must open outwards.
It is illegal to sell one's children.
The state constitution allows for freedom of speech, a trial by jury, and pregnant pigs to not be confined in cages.

That's right, this is your tax money at work making sure we enact and then enforce these laws. Money well spend, wouldn't you say?
Have a great Tuesday!

Closed Circuit

Oh, boy, Monday…..again. Here we go.

This is the last installment of my little tutorial on the Florida’s state courts. We finish with the Circuit Court, the big one – so to speak.

Circuit Court is sort of the center of the universe for our state court system and does double duty. First, it acts as an appeals court for decisions rendered in county court that the parties may not be happy with. Second, it acts as a trial court for all disputes involving claims that exceed $15,000.

Circuit Court is also the place where the probating of estates and will contests is held and real estate boundary disputes are resolved.

When acting in its criminal capacity, the Circuit Court is empowered to adjudicate felonies.
It also has the authority to issue injunctions, which are not based on law but notions of equity and fairness.

Chances are, if you have a legal dispute, you will end up here in Circuit Court.

There are twenty Circuit Courts serving Florida’s sixty-seven counties. Miami-Dade has its own Circuit Court (the Eleventh), as do Broward (the Seventeenth) and Palm Beach Counties (the Fifteenth).

Here is a link to the website that links to all of the Circuit Courts. http://www.flcourts.org/courts/circuit/circuit.shtml

County Courts

So, I've told you about Small Claims Court. Now, it's on to County Court.

Like Small Claims, County Court is also a trial level court. It's primary function is to resolve lawsuits involving damages of $15,000 or less. So, typically, your smaller disputes will be conducted here in County Court.

County Court is also the place to hear and resolve landlord-tenant eviction matters and homeowners' association disputes. So, all you landlords out there wake up. When you evict a tenant, you have to bring suit in County Court. When you sue for the unpaid rent, you can only sue in County Court if the amount due is less than $15,000. That's right, you could end up with two different lawsuits - one to evict in County Court and one for unpaid rent in Circuit Court. Naw, that won't be expensive or anything.

As far as its criminal jurisdiction goes, County Court is the place where misdemeanors (crimes involving sentences of less than one year in jail) are tried.

So, what can't County Court do? County Courts cannot adjudicate felonies, issue injunctions or probate an estate. That's for Circuit Court - and that's another discussion.

Interestingly (well, at least from my perspective), the law on County Courts is a little antiquated. It provides that County Court judges are also coroners unless otherwise provided for by law. I don't know about you, but no one I went to law school with took Embalming Basics or Autopsy 101 as a class. Interesting division of labor. I guess the folks in old time Florida had to take on more than one job.

Have a great weekend.

The Small Stuff

Today is back to basics Tuesday, just because I feel like it. Some time ago, I described the difference between the American federal and state systems. I did not get into much, if any, detail about the state court system which has its own divisions and jurisdictions. Why does this impact you? Because which court you are before determines (among other things) how much is at stake and typically impacts the length of the proceedings.

So, let's start with the small fry, Small Claims Court. To proceed here, you need an amount in controversy less than $5,000. This makes Small Claims Court the real People's Court, so to speak. You don't need all the bells and whistles you require for the larger disputes, as most of the Court filings and papers are standard forms and service can be made by registered letter (as opposed to hiring a process server to come out and deliver the papers to you personally, which isn't the least bit harassing or embarrassing). When it comes to Small Claims Court, a lot of people choose to represent themselves.

Here, things move pretty quickly. There is typically just one hearing before the Court to schedule a trial and make sure you got the proper paperwork. At that one hearing, the Court will figure out how long the trial will take, who will be the witnesses, what evidence the parties will try to present and figure out the scheduling of a mediation before the trial. If you don't recall what a mediation is, you can check my prior postings (kaijacobs.blogspot.com).

Once you get past this pre-trial conference, you are set for trial. It rarely lasts more than an hour and the judge tends to expedite things as much as possible (at least that's my experience in Miami-Dade County). I have not encountered someone who spent days or weeks in trial in Small Claims Court.

Justice moves pretty swiftly here. You are typically in and out of Small Claims Court in 90 days or less. Many people choose to represent themselves here because the disputes are small, the procedures pretty simple, the disputes are mostly consumer or service transaction problems and have a simple factual predicate to sort out. Not a lot of discovery, expert witnesses, subpoenas, offers of judgment, motions for summary judgment, depositions or requests for referral to arbitration here in this division.

Small Claims Court has its own set of rules separate and distinct from County or Circuit Court (which we will discuss tomorrow and Thursday). You can find them at www.flabar.org.

Some Folks Like Restraints

In Florida, you can properly have an employment contract that prevents a particular employee from leaving your business (or, if you're the employee, from leaving your current job) and working for a competing concern. Are you shocked, horrified, dumbstruck by the idea that we live in a free market, rife with capitalism and open competition but tolerate this sort of behavior?

It's true. The covenant not to compete is well entrenched in our system of law. It's also not universally applied. There are, as you know, rules or I would have nothing to occupy my days and my parents would wonder why I went to law school.

First, the covenant not to compete has to be in writing. Laugh now, but you would be surprised to find out how many employers don't bother with this formality.

Second, the agreement has to be signed by the person who is not supposed to compete with you if they leave their employment. This, too, sounds pretty basic until you stop and realize that you want to prevent the employee from taking the new job without preventing the competitor who is hiring him or her from competing with you (Yes, believe it or not, this appears to be how we preserve the idea that notions of competitive openness are being served).

Third, the reason you are restricting the employee from leaving and working for someone else has to be to protect a legitimate business interest. You know - trade secret protection, customer good will. The law enumerates what these interests are, just in case you think "employee loyalty" or "the other guy builds a lousy widget" are credible interests.

Fourth, the restriction has to be reasonable in time and duration. You cannot prevent your district area manager from taking any job worldwide for twenty years. As a matter of law, a restriction lasting between six months and two years is presumed to be reasonable and anything longer is presumed to be unreasonable. Geographic scope is frequently limited to the area of your direct competition.

Covenants not to compete are sticky wickets and are frequently litigated. Lots of fun for me, not so much for you. So, be careful when preparing one or if you're asked to sign one. Always check with your counsel on these things.

Hope your weekend was good.

I Do Declare!

Sorry for the delay, folks, but I had an injunction hearing in Palm Beach County today and just got back. Back to our regularly scheduled programming....

Declaratory judgments. What, you say, is that? It's an interesting creature of the law designed to allow judicial resolution of disputes about the meaning or impact of a contract or law. Ok, maybe it only seems unusual or interesting to us lawyers, but try to appreciate the fact that every other type of lawsuit requires that there be some sort of action for damages or cause of action seeking an affirmative recovery.

Example time: you have an insurance policy that has all kinds of exclusions and other provisions, among which is a right to be paid for covered claims. Now, let's suppose that your insurance company pays you for your claim, but relies on an exclusion or some other language in the policy to pay you less than you believe the claim is worth. You think that the same exclusion does not require payment of a lesser amount. By bringing a declaratory judgment action, you get to ask for a judicial reading of the policy and present the evidence that supports your reading and understanding of the contract (as, of course, will your insurance company). A declaration is then made as to the meaning.

So, what's so special about that? Two things: 1) you get to try and have the declaration rendered on a more expedited basis than an ordinary breach of contract action; and 2) you don't necessarily have to engage in a lot of the discovery and proof that would come with a breach of contract action.

Now, the declaratory judgment proceeding does not apply to all situations. It has to do with situations where the parties are in doubt as to their rights under an agreement or statute only. If someone defrauds you or interferes with your advantageous business relationships, you can't go this route. It is also not a substitute for the breach of contract action. Sometimes, the language of a contract will be clear to everyone and the dispute will be whether or not there was a failure to perform in accordance with the terms.

Have a great weekend.

A Little Shameless Self-Promotion

Today, I am here in a shameless bit of self-promotion. Recently, the Second District Court of Appeal cited to not one, but two of the cases I have brought in Florida's appellate courts to uphold two separate lines of reasoning applicable to insurance cases. Nice!

In State Farm Mut. Auto. Ins. Co. v. O'Hearn, 975 So. 2d 633 (Fla. 2d DCA 2008), the Second District Court of Appeal relied on my reported decision (GEICO Gen. Ins. Co. v. Hoy, 927 So. 2d 122, 126 (Fla. 2d DCA 2006)) to confirm that "[a]n allegation that an insurer has paid a portion, but not all, of the damages that it allegedly owes does not constitute a legally sufficient allegation that the amount of damages has been finally determined."

The Court also relied on two of my decisions to affirm that it is not proper to require an insurer to turn over its claim file as part of an insurance coverage dispute (but only after coverage has been determined and a cause of action for bad faith claims handling has become ripe) - GEICO Gen. Ins. Co. v. Hoy, 927 So. 2d 122; Gov't Employees Ins. Co. v. Rodriguez, 960 So. 2d 794, 795 (Fla. 3d DCA 2007).

I know, I know, these are sort of technical issues that have to do with insurance coverage. But, these are relatively important points.

Happy Tuesday.

The Public Counts

If you want to know what it's like to be a lawyer or what the day to day practice of law is like, do not watch any tv show or movie about the profession. If tv shows were some accurate barometer of the form or nature of my practice, I would expect to make about ten times as much money as I do, have a much bigger home, a much nicer office with wood floors and lots of old books and a dowdy but reliable secretary who was always there to save the day and me from my own follies. Oh, and I would always win.

I will say, though, that tv and movies do seem to tacitly capture one aspect of the law that gets overlooked a lot and is rarely at the forefront of any case: public policy. As I hope I have made clear to you over the last few months, the law is rife with technicalities and specifics. Legal disputes are veritable minefields where a misstep could spell disaster. In the movies and on tv, truth, justice and the American way always seem to take the day.

But the law doesn't operate in a vacuum. It is not a cold computer, applying uncolored facts to a legal standard and filtering it through a jury for approval to reach a result- just or unjust. Believe it or not, the law honors this concept of public policy.

The American Heritage Dictionary defines public policy as "The basic policy or set of policies forming the foundation of public laws, especially such policy not yet formally enunciated." It's an undercurrent in the thinking of the people, the recognized norms, goals and desirable mores of our society.

And, as much as a I tell you there are set guidelines for things or technicalities and exceptions that have to be respected, the legal system acknowledges and follows the public policy. Sometimes it does so tacitly, other times it does so expressly. Our common law, or the law that evolves by decisions rendered in the courts, is all about the tacit recognition of public policy. Judges, juries, witnesses, everyone - they all bring to the process their values, judgments, ideas and beliefs about the world at large. These undoubtedly influence the process and the decisions that are ultimately rendered.

On the other hand, when the courts are asked to simply act equitably because there is no legal remedy for a particular problem, the courts want express assurances that their actions are in line with public policy. For example, if I apply to the court for an injunction, I must affirmatively prove that the issuance of the injunction will not disserve public policy.

So, whether you believe it or not, your set of values, ideas and beliefs is part of a greater idea that very much shapes the law and the decisions rendered by our courts.

Have a great weekend.

He's a Bad Character- So, What?

Time for another Perry Mason moment to go down the tubes. Many, many, many times, I meet with clients or prospective clients who try to lend credibility to their side of the case by seeking to destroy the credibility of the "other guy." People constantly want to show me what a dirt bag the other guy is to make sure I know just how badly they have been wronged. It is not uncommon to hear accusations that the "other guy" must have bribed county employees or stolen the money to make the deal or set up corporations to commit a fraud. Look, they, tell me, he's done this dozens of times.

If you are one of these people - as most of us are, I have terrible news for you. It doesn't matter. No, seriously, it doesn't matter. Bad character is not admissible in court to prove that the "other guy" did something wrong to you. In fact, even specific bad acts, including most crimes, are not admissible "when the evidence is relevant solely to prove bad character or propensity."

There are two exceptions to this. If you commit a crime of dishonesty or any felony, those prior bad acts can be levied against you to attack your credibility as a witness. But that's about it.

If it sounds frustrating, that's because it is. The idea of holding someone accountable for their history or apparent predisposition is what we, as people, do every day in the regular course of our lives. Of course, this tendency is leads to some very subjective conclusions and inaccurate results, but there are very few consequences for just thinking something in your head. In a court of law, there are very real consequences for putting meaning to thoughts or predispositions that have no objective means of verification. Sure, your sister stole some candy bars from the drug store when she was 15, but that doesn't mean she cleaned out your bank account. Allowing people to make those kinds of connections leads to some very dangerous places.

Independence Day

So, like you, I took off the 4th of July to celebrate the declaration of our independence from the rule of King George III and status as subjects of the British realm. I did this, of course, by sleeping late, going to the gym and the beach and hosting a barbecue. This, I know, is what the Forefathers did and what they would want me to do. They just did it in powdered wigs.

In reality, we tend to forget, ignore and take for granted the historical fact that there was, indeed, a Declaration of Independence and that it was a staggeringly important document not just to Americans, but to everyone. Never before in history was a war so courteously declared and written notice given to the world that an entire grouping of people of different social, economic and educational status unanimously declared that there are certain self-evident truths, inalienable rights and that thirteen states unilaterally decided that they were going to be a single, sovereign nation. Today, we take these as assumed facts. Yet, at the time, women were little more than property (who couldn't vote) and anyone who arrived here from Africa was, in fact, property.

Perhaps most mind blowing, Thomas Jefferson was only 34 years old when he wrote the Declaration (well, we credit him with writing it, but it's pretty clear there were a couple of other folks who may have had a thing or two to say about the final version. You know, Ben Franklin, John Adams, Samuel Adams, ).

So, take a look at the partial text that allowed us all to take Friday off and live the life of the free:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

****

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

How About Grounding Me Instead

Yesterday, I explained that the legal system can only redress civil wrongs by awarding money. I also explained that the primary function of the legal system was to make people whole again after suffering some form of loss be it by breach of contract, someone else's negligence, an unjustified interference with a business relationship, etc.

But the legal system also serves as a public policy tool. In addition to trying to make litigants whole, it can also impose awards that are purely meant to punish and deter specific types of conduct. That's right, the legal system is not only a tool of justice, but your mom and third grade teacher.

The conditions and details of what are called punitive damages are specifically laid out in a statute. Suffice it to say here that, to make punitive damages part of your case, the thing your suing for (or being sued for) has to arise from some form of intentional misconduct (such as fraud) or from a form of negligence so gross that it could practically be considered intentional conduct (think Exxon Valdez). That's a relatively narrow set of rules, so it won't apply to most cases. But it is a very powerful tool.

The whole purpose of punitive damages is to punish and deter. It's a message to the offending party and the world at large that certain behaviors are against the greater good of the order and should be penalized to prevent their recurrence. What am I talking about? Well, suppose you have a guy on your staff who just can't seem to keep his hands to himself or express every primal urge he has to all of his female co-workers. Let's suppose you know about it and do nothing about it. That's likely to qualify for punitive damages. Why? because your pervert employee will be sued for intentional misconduct (sexual harassment) for which you will also be liable as the employer. Additionally, you were negligent to hire him (which does NOT qualify for punitive damages), but you became aware of his misconduct and did nothing about it (which just might qualify). At a trial, not only would the jury get to determine the value of actual damages sustained by these staff members, but would get to determine an additional amount of damages that would serve purely as a penalty.

How much would this be? That depends on your financial condition. Once you can establish to the Court that you qualify for punitive damages (the Court has to allow you to pursue them), your adversary gets to poke around in your financials to see just how much hurt you can take without bankrupting you. Fun, right?

The good news is, punitive damages apply only to a small subset of civil actions - those involving intentional misconduct or gross negligence. You won't see it in a foreclosure suit, breach of contract or an insurance coverage action.

Damage, Damn It

As you may or may not know, we have a legal system rooted in the English common law and Roman civil justice systems. As a result, America has an adversarial legal system. You want to know why you complain about lawyers and lawsuits being so contentious? Well, there's your answer- the system is built that way. (Well, that and the simple fact that a lot of litigators were nerdy kids who got beat up a lot on the playground and are now exacting their revenge on the world).

Now, in addition to being adversarial, the purpose of civil litigation is to right a wrong. It is designed to make people whole again for losses they suffered. And by making whole, we mean paying money. Money is the only means by which the legal system can make reparation. It cannot restore a severed limb, but it can calculate how much your life has been impacted by such loss. Specifically, it can calculate the loss of salary you suffer, medical expenses and the other hard costs that you can come up with by simply taking out a calculator. That's the easy part.

But it also has to account for the intangibles, which are things we do not ordinarily ascribe a dollar value to but which the legal system has no other means to value and lacks the power to restore. I am referring to things like pain and suffering, loss of goodwill, damage to reputation and loss of consortium. There is no invoice, bill or handy reference you can rely on to measure the value of these things. That's why jury trials are so hard on everyone involved (the parties and the jury), because they have to take the evidence presented and somehow come up with a dollar value for these things.

Sounds pretty rotten when get right down to it, doesn't it? Having the personal aspects of your life not only revealed to strangers because you have a claim for loss of consortium and then having it reduced to a distinct dollar value. I can tell you, there are few things in this business I would less like to do than inquire into the details of someone's life behind closed doors (I'm putting this delicately). I can also tell you that I would less like to be the person being asked these questions and then have to have my life reduced to a dollar value. Yuck.

But, that is the best the system has to offer. It can't restore your marriage or your life to what it used to be, it can only try to compensate you in some way.