HIRING EMPLOYEES WITH DISABILITIES-GOOD FOR THE COMMUNITY AND GOOD FOR BUSINESS

In July 2010, President Barack Obama issued an Executive Order setting a five year goal of hiring 100,000 people with disabilities into the federal government. The Obama administration exceeded its goal by hiring 109,575 part and full time employees with disabilities between fiscal years 2011 and 2015. In January 2017, the U.S. Equal Employment Opportunity Commission finalized a rule that set a hiring goal for all federal agencies. Pursuant to the rule, 12% of each entity’s workforce should be people with disabilities and 2 percent should be those with “targeted” conditions including intellectual and developmental disabilities. The applicability date of the rule was January 3, 2018 and it applies to all levels of the federal government. Moreover, the IRS offers employers incentives to hire qualified individuals with disabilities via the Work Opportunity Tax Credit.

On January 21, 2019, the Miami Herald published an article entitled “They live with autism. But it hasn’t prevented them from getting jobs in South Florida.”  The article talks about two businesses in South Florida and the wonderful opportunities they are providing to individuals with disabilities. The first business, The Chocolate Spectrum, is a family owned and operated artisan chocolate company in Jupiter, Florida. It employs two individuals with developmental disabilities and is training three more. Valerie Herskowitz opened The Chocolate Spectrum in 2013 to help provide her adult son living with autism with an employment opportunity. In 2016, she expanded the business and opened the storefront in Jupiter. Thanks to grants The Chocolate Spectrum has received, they have opened a Chocolate Spectrum Coffee and Pastry and Chocolate Satellite at Palm Beach Behavioral Health and Wellness in Jupiter and are able to provide 9-hour-a-week, six month apprenticeship opportunities to adults with autism and other special needs. The Rising Tide Car Wash in Parkland, Florida was also founded in 2013 by Tom D’Eri and his father John D’Eri to assist individuals with developmental disabilities in finding employment. Tom’s brother, Andrew is autistic. A second Rising Tide location was opened in 2017. The company reported to The Miami Herald that between the two locations, approximately 27,000 cars are washed each month and the business is profitable.

As the mother of a child on the spectrum, these business owners and their stories inspire me. MAS+ has become involved in autism awareness by sponsoring last year’s The Heart of Gold Fashion at Crystal Academy, a premium therapy center and school in Coral Gables, Florida and participating in other inclusion events sponsored by the school and the City of Coral Gables. I encourage our clients that are business owners to consider hiring individuals with disabilities because, while it is good for business, it is exponentially better for these individuals and our community.

To read the full Miami Herald article mentioned above, click here.

To watch Embracing Autism: A Coral Gables Story, click here.


PROXIMATE CAUSE-Why Liability for Negligence May Still Exist Even When You Are Not the Primary Cause of the Injury

The Supreme Court of Florida, in the matter of Ruiz v. Tenet Hialeah HealthSystems, Inc. quashed the decision of the Third District Court of Appeal affirming the entry of a directed verdict in favor of Respondent Arturo Lorenzo, M.D., holding that the Third District erred in its decision when it equated the proximate cause of an injury with the primary cause of the injury. In 2009, the Petitioner’s wife, Maria Elena Espinosa, noticed a large mass had developed on the back of her head. She consulted with her primary care physician who diagnosed the mass as a tumor and referred her to a neurosurgeon. The neurosurgeon did not order a biopsy of the tumor, but believed it to be an osteosarcoma and recommended immediate surgery to remove some of the tumor’s mass. The neurosurgeon asked Mrs. Espinosa’s primary care physician to order a battery of laboratory tests to ensure Mrs. Espinosa was medically fit to undergo surgery. An EKG and urinalysis were ordered. The automated interpretation by the EKG machine itself flagged Mrs. Espinosa’s test as abnormal, indicating her heart may have been enlarged and that she also had suffered two myocardial infarctions. The urinalysis results indicated the abnormal presence of protein in her urine. Despite these abnormal test results, Mrs. Espinosa’s primary care physician cleared her for the surgery.

The morning of surgery, Mrs. Espinosa arrived to the hospital. Her assigned anesthesiologist, Dr. Guillermo Velasquez, was running late and her pre-anesthesia evaluation had not yet been performed. As such, Dr. Lorenzo, who was present at the hospital that morning to assist with a different patient’s anesthesia decided to perform Mrs. Espinosa’s pre-anesthesia evaluation himself. Dr. Lorenzo asked Espinosa a series of questions about her medical history and present condition, recording the information she gave him on a pre-anesthesia form/moderate sedation evaluation form in her chart. Dr. Lorenzo also reviewed some, but not all, of the test results in Espinosa’s chart. Dr. Lorenzo read her EKG and, although the readout was blurry, he testified he was able to interpret the EKG with sufficient clarity to conclude her heart was functioning normally. He believed the abnormal result was caused by a malfunction of the EKG machine and not by any problem with her heart. He also reviewed the first page of her urinalysis results, but did not look at the second page of those results where the abnormal results (proteinuria) were displayed. During trial, Dr. Lorenzo admitted the proteinuria reading was something he “would want to know,” but also stated it would not have affected his determination of whether it was safe for Espinosa to undergo anesthesia. After Dr. Lorenzo had completed approximately half of the pre-anesthesia form, Dr. Velasquez arrived and took over from Dr. Lorenzo. Dr. Lorenzo then signed the pre-anesthesia form, introduced Dr. Velasquez to Espinosa, and told Dr. Velasquez, “There is nothing, no major medical problems whatsoever. You may want to look at the EKG.” Dr. Lorenzo then left the room and estimated he saw Espinosa for between three and five minutes. Dr. Lorenzo did not inform Espinosa’s surgeons about the abnormal EKG, which he had reviewed, or about the urinalysis results reflecting abnormal proteinuria, which he had not. Dr. Velasquez later testified that after taking over for Dr. Lorenzo he began the pre-anesthesia evaluation over again from the beginning. Dr. Velasquez reviewed the EKG and the urinalysis results, including the proteinuria reading, but also did not inform Espinosa’s surgeons of these abnormal test results. He also signed the pre-anesthesia form and cleared Espinosa for surgery.

During the surgery, Espinosa lost a large amount of blood and suffered a precipitous drop in blood pressure, which her physicians were unable to reverse. A little over an hour into surgery, she went into cardiac arrest and could not be resuscitated. An autopsy was performed and a pathology test of the tumor tissue revealed that, rather than being an osteosarcoma, the tumor was caused by a type of plasma cell cancer known as multiple myeloma.

Ruiz filed a medical malpractice action against each physician involved in Espinosa’s treatment, including Dr. Lorenzo. In part, Ruiz alleged Espinosa’s death was caused by the failure to correctly diagnose her condition as multiple myeloma. Ruiz argued multiple myeloma should only be treated through radiation or chemotherapy and that surgery was not appropriate in Espinosa’s case. Had Espinosa been correctly diagnosed at any point, Ruiz claimed, the surgery would have been canceled and Espinosa would have survived. With regard to Dr. Lorenzo, Ruiz alleged he breached the standard of care by (1) not reviewing all the available data in Espinosa’s chart, (2) not ordering a second EKG to reconcile the abnormal results of the first EKG, and (3) not reporting the abnormal lab results-some of which he did not review-to Espinosa’s surgeons. Ruiz contended that, had Dr. Lorenzo adhered to the standard of care, either Dr. Lorenzo or the surgeons would have realized Espinosa was suffering from multiple myeloma and the surgery would have been canceled.

The trial court granted a directed verdict in favor of Dr. Lorenzo, holding that, even assuming Dr. Lorenzo was negligent in his care of Espinosa, he did nothing more than place her in a position to be injured by the independent actions of third parties—namely, the surgeons. The trial court analogized Dr. Lorenzo to “the cab driver who drove [Espinosa] to the hospital.” Ruiz appealed and the district court affirmed the trial court’s ruling, concluding that no competent, substantial evidence in the record would allow a reasonable factfinder to conclude Dr. Lorenzo was the “primary” cause of Espinosa’s death. Ruiz v. Tenet Hialeah Healthsys., 224 So. 3d 828, 830 (Fla. 3d DCA 2017).

The Florida Supreme Court disagreed with the Third District Court of Appeal and explained that “the law does not require an act to be the exclusive or even the primary cause of an injury in order for that act to be considered the proximate cause of the injury; rather, it need only be a substantial cause of the injury.” Opinion at 8. The Supreme Court relied on its prior opinion, Sardell v. Malanio, 202 So. 2d 746, 746-47 (Fla. 1967) where the Court held that a young boy who threw a football to his friend could be held to have proximately caused the injuries sustained by a passerby with whom his friend collided as he tried to catch the ball. The district court in Sardell had reasoned that Malanio, who threw the ball, “had no ‘physical control over the pass catcher’ and had no reason to expect the collision with the plaintiff,” and therefore “held that the alleged negligence of the catcher effectively isolated the initial alleged negligence of the passer” such that Malanio’s act of throwing the football could not be the proximate cause of the plaintiff’s injuries. Id. at 747 (quoting Sardell v. Malanio, 189 2d 393, 394 (Fla. 3d DCA 1966). On that basis, the district court affirmed the trial court’s dismissal of the complaint against Malanio. Id. The Supreme Court quashed that decision, explaining that “[t]o preclude liability of the initial negligent actor, the alleged intervening cause must be efficient in the sense that it is independent of and not set in motion by the initial wrong.” Id. The Court reasoned that the act which injured the plaintiff-that is, the attempt to catch the ball-“was merely a direct, natural, and continuous sequel to the initial act of the passer Malanio.” Id. Indeed, the catcher “would not have acted at all had it not been for the initial act of Malanio, who threw the ball and thereby initiated the series of events which in natural sequence allegedly produced the ultimate injury.” Id. Thus, although the primary cause of the plaintiff’s injury was the collision with the catcher, Malanio substantially contributed to causing the plaintiff’s injury by throwing the football without due care.

The Supreme Court concluded the district court erred when it affirmed the trial court’s entry of a directed verdict on causation in favor of Dr. Lorenzo where the trial court found the record evidence established he was not the primary cause of Espinosa’s death. It further stated that its precedent makes clear that “Dr. Lorenzo cannot prevent Ruiz from establishing proximate cause merely by showing his actions or omissions were not the primary cause of Espinosa’s death. Instead to foreclose liability on the grounds of causation, Dr. Lorenzo’s acts or omissions must not have substantially contributed to Espinosa’s death as part of a natural and continuous sequence of events which brought about that result.” Opinion at 11. To obtain a directed verdict on this basis, Dr. Lorenzo must show there is no competent, substantial evidence in the record which would permit a reasonable factfinder to reach such a conclusion at all.” Id. (citation omitted).

To read the Supreme Court’s full opinion on the Ruiz case, click here.


Why Playing Hard Ball With Your Residential Real Estate Transaction May Backfire

Whether you are a first-time home buyer or a seasoned veteran, a recent ruling from the Third District Court of Appeal will make you think twice about your negotiation tactics and obligations when entering into an “As Is Residential Contract for Sale and Purchase”.

In June 2018, the Third District Court of Appeal affirmed the trial court’s entry of a summary judgment in favor of a seller in a failed residential real estate transaction and also affirmed the trial court’s award of attorney’s fees and costs to the seller.  Specifically, the Third DCA held that the buyer’s payment of the second deposit constituted a waiver of the buyer’s right to terminate the contract without penalty; the buyer’s anticipatory repudiation of the obligation to close on the sale triggered the seller’s contractual right to elect the option to retain the escrowed deposit; and the trial court did not abuse its discretion in awarding $850,000 in attorney fees and costs to the seller.  See Diaz v. Kosch, 2018 WL 2945390 (Fla. 3d DCA 2018).

In Diaz v. Kosch, the buyers and sellers entered into a printed form “As Is Residential Contract for Sale and Purchase” for a home in Coral Gables, Florida.  The buyers made a $50,000 deposit with the buyers’ broker serving as escrow agent. A second deposit of $235,000.00 was payable to the escrow agent by September 12, 2012, the date at which a ten-day right of inspection and right to cancel was to expire absent buyer termination.

During the ten-day inspection period, the buyers learned that there were open building permits and that unpermitted work might have been performed as part of the sellers’ renovations in 2009 and 2010.  The day before the inspection period was to expire, the buyers notified their broker by email that they had reviewed the permit history for the home and were very concerned that their visual inspection of the property did not coincide with the permit history.  However, the communication did not request an extension of the inspection period nor served as a termination of the purchase contract.  The following day, the buyers emailed these concerns to the Sellers and their broker.  On the last day of the inspection period, September 12, 2012, the buyers emailed the sellers a signed message with a legend, “This communication is sent for settlement purposes only,” accusing the Sellers of misrepresentations and claiming that the property had a significant diminished value than what the buyers offered to pay for it. Id. at 3.  Instead of invoking the right to cancel the contract, pursuant to the inspection period provision in the contract, the buyers made legal threats, argued for a significant price reduction, and demanded the sellers produce certain documents relating to the alleged open permits.  The buyers then sent a second email later that day advising they would tender the second deposit due under the contract, but reserving all rights under the contract.

The parties continued discussions regarding  the alleged permitting issues as well as earlier radon inspection reports with elevated readings in an upstairs bedroom; however, with no written or unwritten extension of the inspection/cancellation period. On September 24, 2012, with no resolution of the parties’ disagreements and before any financing commitment was due to be provided by the buyers to the sellers, buyers’ counsel notified the sellers’ attorney by email letter that the buyers were terminating the contract and instructed the escrow agent to return the $285,000 deposit to the buyers.  The notice of termination did not claim a breach by the Sellers or report an inability by the buyers to close the transaction based on their inability to procure a financing commitment..

Thereafter, the buyers commenced a lawsuit against the sellers and their brokers claiming breach of contract, conversion, fraud in the inducement, fraud in concealment, negligent misrepresentation, and conspiratorial fraud. The sellers counterclaimed for the buyers’ breach and for the deposit as damages for the buyers’ default.  After extensive discovery was undertaken, the sellers and other defendants moved for summary judgment.  The trial court granted summary judgment for the brokers and then for the sellers (as to the buyers’ claims and the sellers’ counterclaim for the still-escrowed deposit).  A final judgment awarding the sellers $850,000 in attorney’s fees and costs was subsequently entered.

The appellate court’s opinion in this case thoroughly analyzed the buyers’ appellate arguments and provided the legal bases supporting its decision to affirm the trial court rulings. As such, it is not my intent to regurgitate that analysis for this article. Rather, the purpose of this article is to make potential buyers and sellers aware of the pitfalls of residential real estate transactions and why is it so important to hire a lawyer who will become intimately familiar with the provisions of your residential sales contract and protect you from these pitfalls.   The “As Is Residential Contract for Sale and Purchase” contains several critical deadlines and obligations that may cause buyers and sellers serious repercussions if either side fails to comply.  It can be easy for parties to get caught up in trying to get the deal closed and trust that, if a critical deadline needs to be extended, that the other side will agree to it.  Never assume that will be the case. Otherwise, you could end up involved in protracted litigation and owing the prevailing party hundreds of thousands of dollars in attorney’s fees.

At Maspons Advisory Services, we can help guide you through the real estate transaction maze.  However, if you happen to get lost and find yourself on the courthouse steps, we can help get you back home safely, too.


Our Lawyers’ Well-Being Is Our Business And Good For Business

Shortly after I started at this firm, I was informed that all the lawyers would be participating, as a group, in a six month program with a life coach/executive business coach. Although I had heard the term “life coach” on trendy t.v. shows, I really did not know what a “life coach” did or how it would open my eyes to the endless benefits of mindfulness. “Mindfulness”-another loaded word I had heard a lot about, but did not truly understand how it correlated with the legal profession. Mindfulness is defined as the “quality or state of being conscious or aware of something; a mental state achieved by focusing one’s awareness on the present moment, while calmly acknowledging and accepting one’s feelings, thoughts, and bodily sensations.” Fast forward to six months later and, after a life changing program with our life coach, Fernanda Bressan, I was armed with the tools I needed to deal with the day to day stresses of life and this profession. We talked about meditation, journaling, establishing exercise routines, and saying yes to things that were effortless and that brought us ease and enjoyment. However, around that time, the South Florida legal community began to hear more and more about lawyers tragically ending their life and the Florida Bar’s initiatives to address and educate lawyers about mental health and wellness issues.

According to The National Task Force On Lawyer Well-Being, a task force conceptualized and initiated by the ABA Commission on Lawyer Assistance Programs, the National Organization of Bar Counsel, and the Association of Professional Responsibility Lawyers, 21-36% of lawyers are problem drinkers; 28% suffer from depression; 25% suffer from work addiction; and 23% have elevated stress. To further compound the problem, most lawyers avoid seeking help. In 2017, The Task Force published a report titled “The Path to Lawyer Well-Being: Practical Recommendations for Positive Change” where it discussed the current state of lawyers’ health and how the current state could not support a profession dedicated to client service and dependent on the public trust. The report wisely and succinctly stated “[t]o be a good lawyer, one has to be a healthy lawyer.” It further found that lawyer well-being contributes to organizational success in law firms because if cognitive functioning is impaired, legal professionals are unable to do their best work.

I am very proud of that fact that at this firm the well-being of the lawyers is just as important as the quality of work we provide to our clients each and every day. It is not uncommon to find us engaging in ten minute group mediations in the conference room or being gifted with the Time Special Edition “The New Mindfulness” magazine (Thanks, Mick!). On Friday afternoons, we gather around and praise co-workers for a job well-done, share struggles we may have faced throughout the week, but overcame, and always end with a gratitude exercise. On Monday mornings, we set our intentions for the week and every day we receive an inspirational message via e-mail to put a smile on our face.

With incivility on the rise within the legal profession, it becomes more and more difficult to amicably resolve cases and avoid protracted litigation. Here at Maspons Advisory Services, we know that arguing for the sake of arguing is not good for either us or our clients. We believe being effective is better than being right. We strive to apply that motto to every decision we make because when we can calmly, clearly and with an open mind analyze the problems before us, both as lawyers and individuals, we know that being effective is what we always want to be.

For more information regarding The National Task Force on Lawyer Well Being’s “The Path to Lawyer Well-Being: Practical Recommendations for Positive Change”, click on the link below.

https://www.americanbar.org/content/dam/aba/images/abanews/ThePathToLawyerWellBeingReportRevFINAL.pdf


PAY ATTENTION, FLORIDA BUSINESS OWNERS! WHAT FLORIDA BUSINESSES SHOULD KNOW ABOUT PROTECTING THEMSELVES AGAINST ADA CLAIMS

On July 1, 2017, Florida Statutes section 553.5141 came into effect and will potentially assist business owners in defending themselves against lawsuits for alleged violations of Title III of the Americans with Disabilities Act (“ADA”). Here is what Florida business owners should know if they intend to reap the benefits of this law.

Title III of the ADA prohibits discrimination on the basis of disability in businesses that are generally open to the public (such as restaurants, movie theaters, offices and commercial facilities) and requires them to comply with ADA Standards. Otherwise, a business owner can be subject to a lawsuit by a person suffering from a qualified disability, if the person has been denied access to the business’ facilities. Under section 553.4151, an owner of a place of public accommodation can attempt to avoid an ADA lawsuit, or mitigate its damages if one is filed, by requesting that a qualified expert inspect the owner’s facility to determine if it is ADA compliant. Depending on the qualified expert’s findings, he/she may prepare a certificate of conformity or a remediation plan.

If a certificate of conformity is prepared, it must indicate that such place of public accommodation conforms to Title III of the ADA. The certificate of conformity is valid for three years after the date of issuance and may be filed with the Department of Business and Professional Regulations. Any certificate of conformity filed with the Department of Business and Professional Regulations must include the date the place of public accommodation was inspected and the name of the qualified expert or any other person who inspected the place of public accommodation, proof of the expert’s qualification, in accordance with the statute, and a statement in writing by the expert attesting that the information contained in the certificate is complete and accurate.

If the property is not in compliance with Title III of the ADA, but the business owner plans to conform to Tile III of the ADA within a specified time period, the expert may prepare a remediation plan and can submit that plan to the Department of Business and Professional Regulations. Any plan submitted to the Department of Business and Professional Regulations must include a remediation plan to remedy the deficiencies, which includes a reasonable amount of time, not to exceed ten years, in which the plan must be completed. In addition, the plan must include the date the place of public accommodation was inspected; the name of the qualified expert or other person who conducted the inspection; identification of the specific remedial measures that the business owner will undertake, the anticipated date of initiation and completion date for the modifications that will be undertaken; proof of the expert’s qualification, in accordance with the statute, and a statement in writing by the expert attesting that the information contained in the remediation plan is complete and accurate.

Pursuant to the statute, the Department of Business and Professional Regulations is required to maintain a website accessible to the public which serves as an electronic registry of the certifications of conformity and remediation plans filed by business owners.

YOU COMPLIED WITH SECTION 553.5141, NOW WHAT?

If a lawsuit is brought in Florida against you as a business owner for violation of Title III of the ADA, after you have fully complied with section 553.5141 and filed a certificate of conformity or a remediation plan with the Department of Business and Professional Regulations, then the court must consider any remediation plan or certificate of conformity filed before the filing of the complaint, when it considers and determines if the plaintiff’s complaint was filed in good faith and if the plaintiff is entitled to attorney’s fees and costs. Accordingly, while the statute does not prevent a lawsuit from being filed against you for alleged violations of Title III of the ADA, it may protect you from having to pay the Plaintiff’s attorney’s fees and costs. Moreover, a remediation plan that is in effect before a Title III ADA lawsuit is filed may serve to moot the lawsuit.

If you are a business owner or operator and have questions about the ADA, please contact an attorney at Maspons Advisory Services. We would be happy to discuss your specific needs.

 


BATTLING LLC MEMBERS – Why the Company’s Operating Agreement May Prevent You From Suing Another Member of Your LLC

The Third District Court of Appeal, in the matter Tulga Demir v. Georg Schollmeier, recently reversed a trial court’s final order granting summary judgment in favor of Appellee Georg Schollmeier. The appellate court held that the agreement governing the financial contributions made by the parties’ to their company, Avrupa, LLC, precluded liability against Tulga Demir, individually, because the company’s operating agreement did not authorize a Member to bring a direct action against another Member for a breach of its terms.

Demir formed Avrupa in order to manage and operate a night club on Miami Beach known as “Club Sin.”  On January 3, 2007, Schollmeier, Demir’s personal friend, entered into an agreement with Demir and Demir’s brother titled the “Avrupa, LLC Contribution Agreement”, which contemplated that the three would become Members of Avrupa. Pursuant to the agreement, Schollmeier was to contribute $400,000.00 to Avrupa for a 20% interest in the company and Demir and his brother were to contribute $1,000,000 each for 40% interests in the company.  The agreement stated that “concurrently with the execution of this Agreement, the Members are making . . . contributions to [Avrupa] which will constitute capital of [Avrupa]” and that “contributions can be made to Avrupa’s LLC’s bank account.  The agreement also stated that “Schollmeier may decide to withdraw from ownership of [Avrupa], in which case Schollmeier’s contribution of $400,000.00 US shall be reimbursed.  Furthermore, the agreement, which was titled Limited Liability Company Agreement, stated “this Agreement is a limited liability agreement under and as provided in the Act.”  The Agreement was signed by Demir, his brother, and Schollmeier as “the Members” of Avrupa.

In January 2007, Schollmeier wired $375,000.00 into Avrupa’s bank account.  The nightclub opened in early February 2007, but was closed on March 29, 2007.  On May 31, 2007, Schollmeier exercised his election under the agreement to withdraw as a Member from the company and demanded that Demir wire $400,000.00 into Schollmeier’s bank account.  When Demir failed to wire Schollmeier the funds, Schollmeier filed a lawsuit against Demir and his brother seeking $400,000.00 in damages from breach of contract, breach of fiduciary duty, breach of statutory duty of loyalty and care, and accounting.  Demir denied the allegations against him and asserted affirmative defenses. Subsequently, Schollmeier filed a motion for summary judgment as to his breach of contract claim against Demir.  Demir filed a response in opposition to the motion asserting that factual disputes remained as to whether he was personally liable to Schollmeier for his contribution to Avrupa, thereby precluding the granting of Schollmeier’s motion for summary judgment.

The trial court granted Schollmeier’s motion for summary judgment finding that Demir was personally liable to Schollmeier for breaching the agreement. Final Judgment was subsequently entered against Demir personally on January 13, 2016 and an appeal followed.

The Third District Court of Appeal found that the trial court erred in determining that the agreement between Demir, his brother, and Schollmeier was not a limited liability company operating agreement under Florida’s Limited Liability Company Act, but rather, a personal contract solely governing the terms of Schollmeier’s contribution to Avrupa.  The record was clear that Demir, his brother, and Schollmeier set out the parameters of their relationship and its accompanying obligations through the creation of a limited liability company with a governing operating agreement.  Although the parties’ agreement was not titled an “operating agreement”, nor was it signed at the time Avrupa was established as a limited liability company, the agreement dictated the nature of the parties’ relationship and the obligations they owed to each other.  Moreover, the appellate court held that an operating agreement is a contract and governs “the relations among the members, the managers, and the limited liability company itself, as well as the effect of these relations on third parties.”  The Agreement at issue lead the appellate court to conclude that when Schollmeier withdrew from ownership in Avrupa, his capital contribution to company was to be reimbursed by Avrupa and not by the individual Members.  The appellate court further found that the agreement did not “contain any provision or language indicating that any Member of Avrupa would be personally liable to any other Member for the company’s obligations, including the reimbursement of capital contributions made to the company. If the parties intended such a result, the terms needed to be explicit.”

Therefore, if you are a Member of a limited liability company looking to sue another Member of the LLC in his/her individual capacity, make sure to review the company’s operating agreement to determine what duties and obligations, if any, each Member owes to the others.  Otherwise, you may find yourself in a similar situation.


SHOW ME THE BILLS! – Why Your Billing Records May Now Be Discoverable in an Attorneys’ Fees Dispute

The Florida Supreme Court, in the matter of Paton v. Geico Gen. Ins. Co. recently reviewed a decision of the Fourth District Court of Appeal quashing the trial court’s orders relating to attorney’s fees discovery propounded by Petitioner, Kelly Paton, subsequent to obtaining a favorable verdict against Respondent, Geico, in a bad faith action.  Paton moved for attorney’s fees and costs against Geico, pursuant to sections 624.155 and 627.428, Florida Statutes (2010) and sought discovery related to opposing counsel’s attorneys’ time records.  The request to produce requested Geico’s counsel provide any and all timekeeping slips and records regarding time spent defending Geico in Paton’s bad faith action; any and all bills invoices and/or other correspondence from payment of attorney’s fees for defending Geico in the Paton bad faith action; and any and all retainer agreements for defending Geico in the Paton bad faith action.  Geico objected to the request to produce on the basis that the information was privileged and irrelevant and relied on Estilien v. Dyda, 93 So. 3d 1186 (Fla. 4th DCA 2012) and HCA Health Services of Florida v. Hillman, 870 So. 2d 104 (Fla. 2d DCA 2003).  The trial court overruled Geico’s objections, but allowed Geico to redact privileged information from the responsive documents.

Paton also served Lodestar/Multiplier Fee Determination Interrogatories to Geico. One interrogatory requested Geico provide specific information regarding time spent by its attorneys prosecuting or defending the bad faith action.  Geico objected, once again relying on Estilien and Hillman. The trial court overruled the objection; however, the Court’s order did not reference redaction of any privileged information.

As a result, Geico filed a petition for writ of certiorari in the Fourth District requesting that the district court quash the orders relating to the request to produce and the interrogatory.  Geico alleged that Estilien and Hillman established that a party must make a special showing prior to the discovery of the billing records of opposing counsel and that Paton failed to make such a showing. Geico also alleged that the materials were privileged and irrelevant. The Fourth District granted the petition and quashed the circuit courts orders holding that Estilien controlled.  Paton sought review of the Fourth District Court of Appeal’s decision, alleging it conflicted with State Farm & Fire Casualty Co. v. Palma, 555 So. 2d 836 (Fla. 1990), a Florida Supreme Court case where the Court considered the billing records of opposing counsel to be relevant in an attorneys’ fee dispute involving a contingency fee multiplier.

The Florida Supreme Court granted Paton’s petition for certiorari and held that the billing records of opposing counsel were relevant to the issue of reasonableness of time expended in a claim for attorney’s fees and that their discovery falls within the discretion of the trial court when the fees are contested.  It further held that, where a party files for attorney’s fees against an insurance company, pursuant to sections 624.155 and 626.428, Florida Statutes, the billing records of the defendant insurance company are relevant.

Although the Paton case involves an attorney’s fee dispute pursuant to sections 624.155 and 626.428, Florida Statutes, it is likely that this case will be relied upon in many other attorney’s fees disputes across the state involving non-insurance matters. Therefore, Florida lawyers contesting an opposing counsel’s fees and costs in a matter not involving an insurance company should be judicious in objecting to discovery similar to that served in Paton, as the trial court may eventually order the objecting party to produce its attorney’s billing records.

To read the Florida Supreme Court’s complete opinion in the Paton case, click here.