50 Feb 2013 FLCAJ

hat if someone uses an old contract for new work and forgets to change some of the “fine print?” What if you “borrow” a contract from a neighbor, thinking all you need to do is change the names and dates? And what if the old contract was not ever really reviewed, or is outdated as laws constantly change? Guess what? Borrowing something old may be good for a wedding, but in contracting where discussions without even a signed paper frequently have significant implications, the problems of using old contracts are rife. An old contract can leave you unprotected, and worse, subject you to being hauled into court clear across the country!

Contracts... Be Careful What You Ask For

W

floridalaw

Cut and Paste May Not Be a Good Defense

by Michael J. Gelfand, Esq.

FLCAJ Feb 2013 51

A clear example of relying on an old contract form in-volved an agreement, which stated that disputes over the contract had to be filed in an Illinois court. Despite the dis-tance from the Miami-Dade, Florida business location, and the added inconvenience and cost, a Florida appellate court recently ruled that they had no choice. The Florida busi-ness’ complaint had to be dismissed because of the contract’s details. In Espresso Disposition Corp. 1 v. Santana Sales & Marketing Group, Inc., 37 Fla. L. Weekly D 2643 (Fla. 3rd DCA, November 14, 2012), the parties agree-ment provided: The venue with respect to any action per-taining to this Agreement shall be the State of Illinois. The laws of the State of Illinois shall govern the application and in-terpretation of this Agreement. (Emphasis added.) When Santana Sales claimed Espresso did not perform under the contract, Santana sued Espresso in Miami-Dade County for breach of contract. Espresso argued that the contract pro-viding that claims had to be filed in Illinois, a “forum selection clause,” was a mis-take. Remarkably, Espresso asserted that it used an old contract form, and the con-tract should have changed “Illinois” to “Florida,” but they mistakenly did not do so. The appellate court ex-plained that to invalidate the contract clause, the clause must be proven to be unjust or unreasonable. This proof requires in this instance a showing that enforcement would result in no place for the lawsuit to be filed.

52 Feb 2013 FLCAJ

whether the person claiming a lien was a “laborer” or a con-tractor. In Barber v. Dahlia at Plantation Homeowner’s Asso-ciation, Inc., 37 Fla. L. Weekly D 2640 (Fla. 4th DCA, Nov-ember 14, 2012), the lienor did not serve notice of his claim on the property owner. The appellate court noted that Florida Statute §713.06 (2008) provides for a lien on real property where the lienor has served notice of his claim on the property owner. How-ever, an exception to the notice requirement is provided for “laborers.” Unlike a subcon-tractor, a laborer usually does not have to provide a Notice to an association to protect his or her lien rights. Thus, the appellate court reversed the judgment for the association, and directed the trial court to

Unfortunately for Espresso, this was an impossible task since Illinois has an extensive system of state and appellate courts. In a stern warning, the Court wrote, apparently not only for the litigants, but to businesses in general. “Today, the cut, copy, and paste functions contained in word processing software render unnecessary the use of scissors or glue. However, what has not been eliminated is the need to actually read and analyze the text being pasted, especially where it is to have legal significance. Thus, in reviewing the mandatory selection clause which Appellant seeks to enforce, we apply the legal maxim ‘be careful what you ask for’ and enforce the pasted forum.” The lesson to be learned from this decision is to clearly read and understand contracts before finalizing, and beware of merely recycling old material!

Mechanic’s Lien: Laborers Can Lien Property without Providing Notice Associations often have many people on-site providing labor for repairs, almost on a daily basis. What happens if one of these workers is not paid? Can the worker place a lien on the property? Yes, and you may not even know it. Normally, an association has notice of the basis for a lien, but there are exceptions for laborers, the men and women who actually under-take the physical labor at a job site. In a decision involving a Florida community association, a Florida appellate court recently reversed a final summary judgment in favor of a property owner based upon the finding that a genuine issue of material fact remained concerning

FLCAJ Feb 2013 53

determine whether the lienor was in fact a “laborer.” It is important for associa-tions to take preventative steps to protect against construction liens. The lesson: Keep your eye on the job! Confirm that all sub-contractors, material men, and laborers are properly paid before the final payment to the general contractor. This of course assumes that you have a proper contract requiring the general contractor to make proper payments, and you have a notice of commencement properly recorded and posted.

Annual Reports and Records The Florida Business Cor-poration Act and Florida Not for Profit Corporation Act re-quire that all Florida corpora-tions, including condominiums, cooperatives, and homeowners

associations, file an annual report and pay an annual fee. The Annual Report reminder card from the Florida Department of State, Division of Corpo-rations should arrive by the middle of January. Follow the instructions. The dangers of not timely paying and filing are many. Generally, a corporation cannot undertake business in Florida without paying and filing. This can lead to lawsuits filed by a corporation being dismissed, and contracts called into question. Do not let this simple effort cause great frustration, expense, and embarrassment. This is also the time for Florida community associations to update their records. Condominium and cooperative associations must annually up-date their required “Questions and Answers Sheet.” Similarly, Florida’s homeowners associations should have the “Disclosure Summary” on file. A Florida associations’ corporate filing and update disclosure docu-mentation are not just technical issues. These matters can impact closings. Especially in this environment, you would not want to have your com-munity association’s technical failure to delay or kill a sale, and result in potential liability for the association. In light of the legal interpreta-tions required for each type of disclosure, contact your association’s counsel for drafting these disclosures well before the last minute! Concerning the Department of State filing, most Florida associations will respond by e-filing through the Internet, but make certain the filing and payment are timely. Michael J. Gelfand is a partner in the law firm of Gelfand & Arpe, P.A., in West Palm Beach, Florida. You may reach him by e-mail at Michael@flcaj.com or by phone at (561) 655-6224. !