Professional Services Industry Legal Blog

By: Harry M. Wilson, IV, Esq. and James D. Stone, III
Everyone knows that economic times are hard right now. Collection lawsuits are on the rise and, as a result, courts are issuing more judgments. A judgment may be just a piece of paper but it transforms a “Plaintiff” into a “judgment creditor” with unique powers to try to collect the debt he or she is owed.

Today’s labor market can be generally characterized by high job turnover. Nationwide, in November 2010, over four million employment positions were filled and nearly an equal number of employment relationships were severed. Understanding the relationship between employers and their current and prospective employees is very important in a national labor market with a job turnover rate of approximately two percent of the labor force per month. The predominant and default employment arrangement in the United States is “Employment-at-Will. In Florida, an employment agreement that does not provide for a specified duration of employment, in the absence of surrounding facts that could be construed as a durational restriction, is recognized as an agreement to employment at will. See Savannah, F. & W. RY. CO. v. Willet, 31 So. 246, 314 (Fla. 1901). Employment-at-will allows for the termination of employment at any time by either the employer or employee. See e.g. Demarco v. Publix Super Markets, Inc., 360 So. 2d 134, 136 (“The established law is that where the term of employment is discretionary with either party or indefinite, then either party for any reason may terminate it at any time and no action may be maintained for breach of the employment contract.”)

In a labor market with high job turnover, employers and employees are constantly creating new employment relationships and severing previous employment relationships. When an employee makes a transition from an existing employer to a new employer, they usually give notice to their existing employer and effectively sever the employment relation with their existing employer. The at-will doctrine allows employees the flexibility to do this. The drawback to this flexibility comes when the employee relies on an offer for new employment and then the offer is rescinded by the prospective employer. This situation has received varied treatment across jurisdictions.

This post describes how this situation is treated in Florida courts.

Though Florida was one of the first states to enact legislation permitting the organization of a limited liability company (“LLC”), usage of LLCs as a corporate form is still a relatively new thing. With the Florida Limited Liability Company Act of 1999 and the passage of certain taxation legislation, LLCs are a very favorable business organization form for small and mid-sized businesses. Nearly every LLC maintains a separate written or oral operating agreement, which is generally defined as the agreement governing the LLCs business, and member’s financial and managerial rights and duties. LLCs operating without an operating agreement are governed by the state’s default rules contained in the relevant statute and developed through court decisions interpreting those laws. In Florida, the LLC statute is Fla. Stat. Chapter 608.

Often in a small, member-managed LLC, managerial and financial disputes arise among the members regarding business affairs of the company or distribution of company assets. Clients often come to our firm to analyze and litigate issues regarding one or more fellow members who have committed breaches of the operating agreement, common law or statutory duties or in some cases have gone as far as violating criminal laws. In analyzing the aggrieved member’s rights against these rogue members practitioners must first turn to the LLC operating agreement before utilizing Fla. Stat. §608 and case law to fill in the gaps. As a case study for expulsion, we will analyze a scenario where a member is diverting company assets.

By: Emily C. Williams, Esq.

Due to the transient nature of individuals in today’s society, attorneys are frequently being employed to collect judgments that were obtained elsewhere. This is especially true for multi-licensed attorneys who practice in a state in close proximity to the state line of another. For the purposes of this discussion, I will analyze the procedural steps necessary to enforce a Florida Judgment in Georgia, and explain the difference in enforcing a foreign judgment under the Uniform Enforcement of Foreign Judgments Law and through domestication.

By: Emily C. Williams, Esq.

Employers and employees, alike, are often unaware of the repercussions associated with how they are characterized in the workplace. When two persons agree that one will perform work for the other, the parties should be concerned with the legal significance of whether or not the arrangement creates an employer/employee relationship or an independent contractor relationship. Whether one arrangement exists can result in the following consequences: tax obligations — withholding, social security, and sales, prevailing wage rate obligations, indemnity and liability obligations for wrongful activities, insurance obligations and coverage issues and licensing. Furthermore, an employer is not held liable for the negligent acts of its independent contractors, except where the contractor injures someone to whom the employer owes a non-delegable duty of care, such as where the employer is a school authority and the injured party a pupil. An employer can also be held liable for the negligent selection of an independent contractor.

By Harry M. Wilson, IV, Esq.

Documentary stamp tax is levied on documents as provided under Chapter 201, Florida Statutes. Documents subject to the tax include deeds, bonds, notes and written obligations to pay money and mortgages, liens, and other evidences of indebtedness. The rate of the tax differs depending on the kind of document subject to the tax.

Frequently our clients ask us general questions regarding the day-to-day operations of their business. In order to prepare a client for how to form corporate policies reacting to sexual harassment claims, we first had to educate them on the process of how an aggrieved employee goes about pursuing a claim. What follows is an overview of the claim filing process. Knowing the process of how employee complaints are made will help your business in formulating a defense if that time should ever come.

As the economy continues to tank and dead beat debtors begin to pass more and more bad checks, I have found it to be a prudent time to revisit the laws pertaining to writing bad checks in Florida. In general, the term ‘check’ means a draft, other than a documentary draft, payable on demand and drawn on a bank or a cashier’s check or teller’s check. An instrument may be a check even though it is described by another term, such as ‘money order.’ Fla. Stat. § 673.1041(6). A ‘draft,’ in reference to a check, is a three-party instrument by which the drawer order the drawee to pay money to the payee, and the drawee is a bank.

Fla. Stat. §68.065 (for civil actions to collect worthless checks, drafts, or orders of payment) allows for recovery of treble damages, service charges, attorneys’ fees, and costs if its provisions are not followed. Before litigation is initiated, the form of notice set forth in Fla. Stat. §68.065 must be delivered by certified or registered mail, or by first-class mail, evidenced by an affidavit of service of mail, to the maker or drawer of the check, draft, or order of payment. If notice is properly provided, the maker or drawer will be liable to the payee for, in addition to the amount owing on the check, damages of triple the amount owing, a statutory service charge based on the check amount, reasonable attorneys’ fees, and court costs. If the notice is sent via certified mail and the recipient refuses to claim the notice or sign the postal receipt, the statutory notice requirement is satisfied.

When making business decisions on behalf of a corporation, it is presumed that corporate directors act in compliance with the above-referenced statute, by acting on an informed basis, in good faith and with ordinary care. This presumption is judicially created and is known as the business judgment rule. The business judgment rule is based on the premise that directors, for the most part, are more capable of making business decisions than are judges. Thus, where the rule is applicable, corporate directors will not be held liable for decisions made when conducting the business and affairs of a corporation.

Florida case law provides four elements which must be present for the business judgment rule to act as a shield to director liability: (a) the decision under review must be a business decision; (b) the director must not receive a personal benefit from the transaction ; (c) the director must exercise due care; and (d) the director must exercise good faith. F.D.I.C. v. Stahl, 854 F. Supp. 1565, 1570-1571 (S.D. Fla. 1994).

Therefore, the business judgment rule only protects directors only when they are carrying out their duties as directors, (e.g., making decisions and analyzing issues as directors). The business judgment rule is also inapplicable when the director furthers his self-interest. “A director is considered interested where he or she will receive a personal financial benefit from a transaction that is not equally shared by the stockholders, or will suffer a detrimental impact from the proposed transaction.” McCabe v. Foley, 424 F. Supp. 1315 (M.D. Fla. 2006).

A contract of guaranty is the promise to answer for the payment of some debt or the performance of some obligation by another, such that if the original debtor is unable to pay the debt or satisfy the contractual obligation, for whatever reason, the guarantor is himself liable on the default of the primary obligor. The guarantor’s knowledge of the execution or delivery of a guaranty is irrelevant, where the contract of guaranty speaks for itself and where the guarantor has not disclaimed knowledge of the guaranty. See Chris Craft Industries, Inc. v. Van Valkenberg, 267 So.2d 642 (Fla. 1972).

In a typical case, a President, CEO, or other officer signs a personal guaranty for the debts of his corporation and becomes personally liable for the debt upon the corporation’s default. Florida case law demonstrates that a simple, but well-drafted personal guaranty, which specifically enumerates the personal nature of the debt assurance, is adequate to form a legal and binding personal guaranty.