FLORIDA: An Introduction to Litigation: General Commercial

FLORIDA: An Introduction to Litigation: General Commercial

Mark Migdal & Hayden (a team effort)

As the Financial Times recently opined, Miami – “a frivolous, regulation-free, climate-doomed tax haven dominated by hot microcelebrities” – is (for now) the most important city in America.  And in large part, some of south Florida’s most attractive elements are equally applicable to the rest of our great state; a cure for northeasterners looking to escape winter during COVID, for Californians looking to be liberated from backbreaking taxes, and for Midwesterners looking to retreat from … the Midwest. Florida is a state that is bedeviled by climate change and deadly infrastructure collapses. Yet it simultaneously swats away legislation intending to address either malady, in the ostensible name of freedom. And people love it.

The legal community is small and sophisticated, imbued with the sharp elbows of the Northeast and a veneer of the Southern genteel spirit. To be sure, in recent months, commercial litigation has taken on a more “New York” flavor: higher stakes, higher dollars and higher fees as the tech industry, real estate moguls and financiers find their footing throughout the state. As such, law firms throughout the country are quickly recognizing that it’s not a matter of if their clients will be involved in litigation in Florida; it is a matter of when, leading to an influx of law firms opening offices throughout the state. And Florida has risen to the challenge. Despite an ever increasing caseload, over the past two years, Florida was quick to embrace remote technology to improve access to justice during the pandemic. There is every reason to believe that, particularly in the state courts, Zoom hearings are here to stay, leading to increased efficiencies for clients and law firms. Further, with dedicated “business courts” in our most populous counties, our judiciary remains committed to providing a fair forum for complex disputes.

One can certainly make the case that there has never been a more exciting time to be part of Florida’s legal community. Here are three trends to watch for over the next year:

1. Crypto, crypto and more crypto 

While most of the world turned inward during the past two years, Florida kicked open its doors and invited tech innovators to come to Florida and enjoy our sunshine. From Miami Mayor Francis Suarez’s tweet “heard around the world” in which he openly asked the crypto community “How can I help?” to Florida Governor Ron DeSantis’s announcement that the state plans to explore the feasibility of accepting crypto as payment for taxes, Florida has rolled the red carpet out to crypto. Tech hubs have popped up around the state, from Tampa to Delray to Miami, sparking development in a wide array of financial, cyber security, real estate and commercial sectors, reshaping Florida’s economy along the way.

While crypto may be viewed as nascent in other jurisdictions, it is relatively established in Florida.  Florida’s judiciary has revised its rules as a result, including now requiring parties in family law cases to disclose all virtual currency transactions that took place within the past twelve months. See Fla. Supreme Court November 12, 2020 Amendments to the Florida Family Law Rules of Procedure. Florida’s legislature has similarly had to jockey to keep pace. As just one example of many, in March 2022 the Florida Legislature approved a bill (CS/HB 273) in record time that will make it easier to buy and sell cryptocurrency without fear of repercussions from pre-existing anti-money laundering laws that limit unregistered two-party crypto transactions. Of course, where money flows, fraud follows, and consequently, Florida has played host to some of the most high profile, industry-defining crypto litigation to date. See, e.g. Kleiman v. Wright, U.S. Dist. Court., S.D. Fla. Case No. 18-cv-80176-BLOOM/Reinhart ($140 million jury verdict in favor of plaintiff in crypto IP dispute).

From its use in cross-border transactions to down payments for real estate transactions to securities trades and NFT art sales, crypto has entered the mainstream in Florida. For better or worse, Florida’s civil litigators now practice in the crypto capital of the world, and those of us who are conversant both in the ways of the courts and in this technology are taking the lead in crypto and Web 3.0 commercial disputes across the globe.

2. A proliferation of 1782 actions 

The foreign discovery statute – often referred to simply as “Section 1782” – is a federal statute that allows litigants in foreign proceedings to obtain evidence in American courts. It is a powerful tool for non-US litigants to acquire an advantage by accessing broad, “American style” discovery that is not typically available in their jurisdictions. The use of this tool has become particularly relevant for south Florida in recent years as Miami has continued to lure Latin Americans to its shores.

Miami offers the benefits of being in the United States, but provides a familiar language, culture and roots. And Miami has embraced the cultural diversity, along with the economic prosperity Latin Americans have helped to create in their adopted home. It therefore is no surprise that Miami is the repository of large amounts of capital and assets from Latin America. Ask any Latin American living abroad, and they likely will tell you about the condo they own in Miami for when they visit, the safe deposit box they keep in Miami to protect their prized possessions, or the bank account they keep in Miami “por si las moscas” (“just in case”).

Using Section 1782, litigants in the foreign jurisdictions can access full blown US discovery for their home forum “civil law” proceedings that do not offer any such relief. Whether it is gaining access to hidden bank accounts of a cheating spouse in a Brazilian divorce, to financial records from US subsidiaries in a Chilean corporate break up, or to uncover assets derived from an Argentinian fraudulent transfer scheme, foreign litigants can obtain evidence that they likely never would have been able to obtain through their local judicial systems.

And in a few short months the US Supreme Court may extend the benefits of Section 1782 to foreign litigants even further. While Section 1782 traditionally has been used in aid of foreign litigation, the Court is presently considering whether the statute should apply equally to foreign international arbitration tribunals given the similarity of their purpose to that of traditional judicial and quasi-judicial tribunals. Recent studies have shown that international arbitration is by far the preferred method of resolving cross-border disputes. If the Court holds that private international arbitrations are covered by Section 1782, parties to such arbitrations will have unprecedented access to evidence throughout the United States, increasing exponentially the number of Section 1782 cases that will be filed in federal courts, and especially in Miami with respect to Latin American-based arbitrations.

3. Continued pressure to revise laws governing condominiums

In the wake of the tragic Champlain Towers South collapse, a combination of new legislative efforts, cautious (and now proactive) condominium associations, and market forces are driving significant changes to Florida’s condominium safety regulations. Concern is paramount among south Florida’s coastal condominiums, which face an amalgamation of rain, wind, sun, sand, and saltwater and a greater threat of deteriorating and corroding conditions. This past legislative session, the state Senate and House considered a bill that would have drastically altered the current laws governing condominiums by, among other things, requiring associations to maintain minimum reserves to fund repairs and subjecting condominiums to rigorous statewide inspection and recertification requirements. Ultimately, the bill died in the house due to a rift in the legislature regarding the minimum reserve requirement; but clearly widespread reform is inevitable – and rightfully so.

In the interim, associations and insurers will surely take measures into their own hands to mitigate risk of life safety hazards pending formal legislative change. Notably, these changes are occurring alongside post-pandemic price escalations and supply chain issues, which will directly impact the costs of condominium construction, expert oversight, maintenance, and repairs. Given the above and unyielding momentum of condominium development in the state, we can expect the next several years to profoundly reshape the construction, management, and regulation of condominiums in Florida.