As a business owner, you will inevitably find yourself dealing with breaches of contracts. If the underlying contractual relationship is confidential or fiduciary in nature and/or the transactions involved are unusually complex, a simple claim for breach of contract may be insufficient to resolve the dispute. Instead, you may need to pursue an Accounting. To do that, you need to understand what the equitable remedy of Accounting involves and when one is allowed under Florida law.
What Is an Accounting?
Florida law allows for legal as well as equitable remedies. Legal remedies are ones that allow the non-breaching party to recover money, whereas equitable remedies involve resolution through non-monetary solutions. In other words, legal remedies result in a monetary award to the prevailing party. Equitable remedies often result in the court ordering a party to do something.
An Accounting is an equitable claim for relief made by the moving party that either has a confidential or fiduciary relationship with the non-moving party or where the parties are involved in an extensive or complicated transaction or financial relationship. In such situations, a court can order a detailed accounting of a party’s actions and allow for the recovery of any balance found to be due to the moving party.
An Accounting does not simply require the non-moving party to turn over books and records to the moving party. It involves a much more intricate analysis of financial records and transactions after which the court can determine if the moving party is owed a monetary award and, if so, in what amount.
In theory, the trial court could conduct the accounting on its own. However, typically a special master, such as a certified public account (CPA) is appointed. Of course, this can take months and be incredibly expensive.
When is an Accounting Needed?
In a typical breach of contract lawsuit, the moving party asks the court to find the non-moving party to be in breach and award a specific dollar amount in damages to the moving party. The amount of the damages sought by the moving party is directly related to the breach and should be easily explainable by the party seeking damages. Sometimes, however, the underlying relationship between the parties and/or transactions make it difficult – if not impossible – for the injured party to know the extent of the damages caused by the breach. When that is the case, an Accounting may be needed.
What Is Required to Obtain an Accounting in Florida?
To successfully pursue an Accounting the parties must have:
- A confidential or fiduciary relationship; OR
- Extensive or complicated transactions.
What is unsettled under current Florida case law is whether a party may bring an equitable claim for Accounting if it has an adequate remedy at law. In other words, the question is: If the breach could be resolved through a traditional breach of contract lawsuit, does an injured party have a right to bring an equitable claim for an Accounting? Florida courts answer this question differently.
The unsettled state of the law on Accountings makes it all the more important to consult with an experienced business law attorney when facing litigation in which it might be necessary.
Contact the Tampa Bay Business Attorneys at Lieser Skaff Alexander.