Trials in business disputes can often take two to four weeks, as opposed to several days.
COVID-19 may stall Florida Bar's push for a statewide business court system
Attorneys and businesses hail Florida’s four business courts. The Florida Bar is pushing for a statewide system — but its attempts could fall victim to COVID-19.
In 2004, Judge Belvin Perry issued an order creating Florida’s first business court in the 9th Judicial Circuit Court, which serves the Orlando area. The specialty court — which was the idea of Perry’s colleague, former Orange County Circuit Judge Thomas Smith — was popular among lawyers and businesses, and within a few years, Miami, Tampa and Fort Lauderdale followed suit with their own local business litigation divisions.
Today, those courts’ dockets are filled with an array of disputes involving everything from construction defects to commercial foreclosures to fights over trade secrets — and judges rely on no-nonsense strict scheduling to keep the cases moving along.
In Miami-Dade’s complex business litigation division, an ongoing dispute between a luxury condo hotel owner and its insurer has a trial date set for November. Carillon Hotel claims that Hurricane Irma caused $16.7 million in damages to its Miami Beach condohotel resort in 2017 and says Lexington Insurance hasn’t paid its claim. Lexington, meanwhile, argues that not all the damage is hurricane-related and that it hasn’t closed out the claim. But before the case gets to trial, the court will hold almost monthly case management conferences and the two sides will have to try to work things out with a mediator.
More often than not, cases settle — and more than a decade after business courts debuted in the Sunshine State, the Business Law Section of the Florida Bar is advocating for the creation of a statewide court system to handle business disputes.
“It would seem more appropriate to have businesses across the entire state afforded the same access to the same type of case management and judicial approach to get more consistency and predictability in the outcome of what are considered business cases,” says Jon Polenberg, a Fort Lauderdale attorney with Becker & Poliakoff and co-chair of the section’s Business Courts Task Force, which has been working on the issue for more than a year.
A proposal by the task force would amend the rules of judicial administration for Florida to create a business court in each of Florida’s five state appellate districts, with two judges in each district for a total of 10 new judges. Judges could qualify to sit on the bench if they have at least five years presiding over a civil court docket and have completed certain continuing legal education identified as helpful for presiding over business-related litigation. Newly elected judges may qualify to sit on the bench but would need at least a decade of prior exposure to business law to be selected. “To make it work, you really need a judge who knows what they’re talking about,” says Gill Freeman, a co-chair of the Florida Bar’s Business Courts Task Force and former business court judge.
The Florida Bar’s Business Law Section greenlit the plan in February. The next stop is the Florida Bar’s 52-member Board of Governors. If approved, it will then go to the Florida Supreme Court for consideration.
Mike Marcil, a business litigation attorney with the Gunster law firm in Fort Lauderdale, says business courts are “essential, especially in major metropolitan areas of Florida, because one-size just doesn’t fit all for civil cases.”
A large business case can require many more motions, hearings and depositions than a general civil litigation case — and trials in business disputes can often take two to four weeks, as opposed to several days. Keeping it all on track requires a tight case management process. In business court, he says, “your motions get heard, disputes don’t get held up for a long period of time” and “things just happen so much more smoothly.”
Business courts have a long history in the United States. Delaware’s Court of Chancery, a non-jury trial court established in 1792, was the nation’s first business court. It relies on skilled chancellors with expertise in corporate law to decide cases, the majority of which involve corporate, trust and estate matters. Today, at least two-dozen states (including Florida) have specialized courts dedicated to business litigation, with most of them having come about over the last three decades.
Circuit Judge Scott Stephens, a former finance professor who oversees complex business litigation in Florida’s 13th Judicial Circuit in Hillsborough County, says 25% to 30% of the cases he oversees involve non-compete agreements. Disputes over company ownership come in as a close second. “People title property in creative, fluids ways for who knows what reason” but when disputes arise, it can make things tricky because there’s “very little actual evidence of who owns” what, he says.
He also gets the occasional classaction lawsuit — such as the 2015 case against Kane’s Furniture that alleged the furniture retailer was selling defective “bonded leather” furniture that peeled and flaked and not honoring product warranties. Kane Furniture blamed its Mississippi manufacturer for the defects and settled the case in 2017 without admitting wrongdoing by offering full and partial refunds to thousands of impacted customers.
Stephens was unable to comment on the case at all, but court records show there are still ongoing legal disputes over how the settlement is being implemented.
Stephens says the business division doesn't have as many cases as the general civil division — "they have thousands" while the business court has "in the high hundreds"— but his cases require "more touching," and lots of the work happens behind closed doors. "People come in and talk to me for five minutes, and I've got five hours of reading and writing to do after that," he says.
Advocates say business courts save time and money. Nearly all business dispute cases settle, but business cases “settle faster because the case moves along faster,” says Freeman, who served for nearly 20 years on the Miami-Dade Circuit Court and was the first judge to preside over its complex business division. The courts are more predictable, too, which makes them more efficient. Freeman recalls lawyers having told her “after the fact” that they didn’t waste anyone’s time bringing various motions or issues before her when she was presiding over a business case because they knew from experience with her how she’d rule. “There’s a consistency — and the one thing that business people and lawyers like is consistency,” she says.
Polenberg says those attributes also make business courts a powerful economic development tool — but he’s worried that Florida is no longer on the leading edge compared to its “sister states.” Georgia passed a constitutional amendment in 2018 establishing a statewide business court that will start taking cases in August. “Florida shouldn’t be the last one to do it,” Polenberg says, especially since the state was an early adopter of business courts.
Gunster’s Marcil says business courts can influence not just where a business decides to locate, but also where it files suit and does business generally. He says businesses want to know “what type of shake are they going to get from the courts — are the judges going to be sophisticated in corporate law, securities law and some of these other areas and is it some place that’s fair enough to do business from a litigation standpoint.”
Some states have encountered resistance to business courts. Last year, Texas lawmakers introduced legislation in the state House and Senate that would create a business court and business court of appeals with judges appointed by the governor. Critics, including the Texas AFL-CIO, argued that the proposal would create a “separate, unelected court system for business giants and billionaires.” Both bills died in committee.
Marcil says the only downside he sees is occasional “judge shopping,” or attorneys moving to have a case declared complex “when it’s really not” so they can have a case moved from the general civil litigation unit to the business court. “So sometimes you have a dispute over whether it should be or should not be in the business court,” he says.
Securing funding for a new court in Florida will be a big challenge — particularly amid the economic wreckage of COVID-19. Polenberg says his task force has been working with the Legislature on the numbers and that “everything was on track” until the pandemic hit. He says the task force will continue to try to move the initiative forward but with “deference to the matters that are of critical importance to the state.”
Issues of how to allocate resources have taken a toll on business courts in the past. In 2018, Frederick Lauten, then-chief judge of the 9th Judicial Circuit, shut down Orlando’s business court so he could move a judge to the circuit’s family division, which was grappling with 25,000 open cases. Business cases were shifted back to the general civil division. At the time, the circuit hadn’t received funding for any new judges in a decade.
The move sparked a flurry of lobbying by Orange County’s business and legal community — and in 2019, Gov. Ron De- Santis signed a bill funding one additional seat on the 9th Circuit Court’s bench. Last October, the 9th Circuit reopened its business court in the Thomas S. Kirk Juvenile Justice Center, where it will remain until construction to expand the capacity of the Orange County courthouse in downtown Orlando is complete.
FLORIDA’S FOUR BUSINESS COURTS
- ORANGE COUNTY
Business Court, 9th Judicial Circuit Court of Florida
Presiding Judge: John Jordan
Background: Florida’s original business court handles complex cases, such as disputes over intellectual property, antitrust matters and unfair competition. The court was temporarily shuttered in 2018 to relocate a judge to the overtaxed family court but reopened last October. Ten types of cases — including those arising from commercial transactions, purchases and sales of businesses, insurance coverage disputes and malpractice claims — require a monetary “controversy” of at least $500,000. While the judge sits only in Orange County, parties from Osceola County can agree to have their case heard there if they desire.
- HILLSBOROUGH COUNTY
Complex Business Litigation Division, 13th Judicial Circuit of Florida
Presiding Judge: Scott Stephens
Background: Also known as Division L, the specialized unit was created in 2007 to resolve disputes involving internal affairs or governance, dissolution or liquidation rights, securities laws and antitrust statutes, shareholder derivative actions, franchisee/ franchisor relationships as well as disputes related to trade secrets, non-compete agreements, intellectual property and other matters.
- MIAMI-DADE COUNTY
Complex Business Litigation Division, 11th Judicial Circuit of Florida
Presiding Judges: Michael A. Hanzman, William Thomas and Jennifer D. Bailey (backup judge)
Background: Miami-Dade’s business court was created in 2006 to address an overwhelming number of complex business cases. In 2016, the court increased the number of judges in the division from one to three and required a minimum dispute level of $750,000. At the conclusion of that pilot project in 2017, the division went back to two judges, with one administrative judge as a backup.
Complex Business Division, 17th Judicial Circuit of Florida
Presiding Judge: Jack Tuter, chief judge of the 17th Judicial Circuit and division judge
Background: Victor Tobin, former chief judge of Broward County, established the complex business litigation unit in 2008 to increase the court’s efficiency. The busy division handles complex business matters, class-action cases and business breakups. Along with the court’s complex tort division, it manages cases that general civil division judges do not have the adequate time to devote.
Read more in Florida Trend's July issue.
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