Category: Tampa Business and Corporate Attorneys

We previously mentioned that the current pandemic was expected to bring a significant amount of insurance litigation over business interruption policies, even though most policies explicitly exclude coverage for pandemics and viruses. As of early May, a number of COVID-19 business interruption insurance lawsuits have already been filed. In addition, a number of legislative efforts to redefine coverage for those businesses impacted by the virus have been made, although this does not include Florida as of yet.

There is no question that the impact of the virus on businesses has been severe, with close to 80 percent expecting losses to be over $1 million and almost 40 percent expecting them to be more than $25 million–more than could possibly be covered by insurance companies and policies. Plaintiffs in lawsuits brought thus far include healthcare companies, nonprofit organizations, restaurants, service industry businesses, and more–in both class action and individual lawsuits—alleging breach of contract, bad faith, covenant of good faith and fair dealing, and unfair business practices claims, and seeking not only compensation for losses, but also punitive damages, in some cases; arguing that financial harm and injuries were suffered as a result of having their claims denied.

As commercial landlord and tenant attorneys, we frequently have clients approach us asking about how to handle a commercial eviction proceeding for tenants who have failed to pay rent. Commercial property lawyers can be especially helpful in not only helping you draft the right commercial lease before your tenants move in so that you have adequate safeguards in place in the face of a worst-case scenario, but also in helping to advise you on what your rights are, as well as managing irresponsible tenants, if that worst-case scenario occurs.

Landlords have to be careful when it comes to evicting commercial tenants because, if it is not done in accordance with what procedures the law dictates, you can get into significant trouble. Below, we describe some steps you can take – ideally with the assistance of a commercial landlord attorney – to address the issue of tenants not paying rent:

The documents that you set up with your tenants are one of the most important aspects of your rental (or lease) agreement with them, as well as the safeguard you have to ensure that you are protected. Therefore, you not only want to invest time and resources into making sure that document says what you want and addresses issues that may come up—such as what happens to those tenants if you need to move into or sell the property—you also want to spend some time rechecking those documents and records before you take formal steps to evict these tenants. This is because, where specific terms are not spelled out in the agreement, state-mandated terms apply. While Florida law does not mandate that landlords provide tenants with any grace period within which their rent can be late (even though some states do), it is common for landlords to offer a five-to-seven-day grace period after it is due.

The Court of Appeals for the Eleventh Circuit (which includes Florida) recently reopened a product liability case (involving a plaintiff who sued Ford for breach of an implied warranty of merchantability due to a seat belt coming undone during an auto accident) that could have tremendous implications for manufacturers, distributors, suppliers, and others in the stream of commerce.

Specifically, while the previous judge ruled in favor of the defendant (Ford) in an allegedly defective seatbelt case – finding that the seatbelt worked when the truck was sold 10 years’ prior and was “altered in the meantime,” which led to the subsequent accident and injury (through no fault of the manufacturer) –  the US Court of Appeals for the Eleventh Circuit vacated the trial court’s ruling (summary judgment for Ford), finding that a “reasonable person” could expect that a “seatbelt should not come undone in an accident 10 years later simply due to normal wear and tear.”

An important insurance litigation decided by the 11^th Circuit (Florida) during the second week of March laid the foundation for when insurance companies can determine whether they can indemnify their policyholders.

At Issue in the Case

The case involved an appeal of a district court decision finding that Mid-Continent Casualty Company (MCC)’s complaint for declaratory relief regarding whether it had a duty to indemnify one of its insureds in a pending lawsuit was not yet ripe for adjudication until the underlying lawsuit was resolved because the company’s duty to indemnify depends upon the resolution of that underlying lawsuit.

Rule, Analysis, & Conclusion

MCC had issued a number of insurance policies to a Florida construction company (Delacruz) that built single-family homes. As part of those policies, MCC was obligated to defend and indemnify Delacruz under certain conditions if they are sued for defective construction. Once the project was completed, a number of homeowners sued the general contractor that hired Delacruz for defective construction. The general contractor then turned around the sued Delacruz and its subcontractors for breach of contract, common law indemnity, contractual indemnity, Florida building code violations, and negligence. MCC sought a declaration in court that it is not obligated to indemnify Delacruz, claiming that the alleged defective construction claims fell outside of the policy limits they set on Delacruz, and the District Court ruled that the duty to indemnify was not yet ripe for adjudication because the underlying lawsuit (i.e. the general contractor’s lawsuit against Delacruz) was not yet resolved. In other words, before MCC’s motions can be resolved, Delacruz’ liability has to be established.