Am. Sales & Mgmt. Org. v. Lopez

373 So.3d 1198

AMERICAN SALES AND MANAGEMENT ORGANIZATION LLC d/b/a Eulen America, Appellant/Cross-Appellee,

v.Luis Rodriguez LOPEZ, Appellee/Cross-Appellant.

No. 3D20-563

District Court of Appeal of Florida, Third District.

Opinion Filed March 22, 2023

An Appeal from the Circuit Court for Miami-Dade County, William Thomas, Judge. Lower Tribunal No. 14-17706

Greenberg Traurig, P.A., and Joseph Mamounas and Jay A. Yagoda, Miami, for appellant/cross-appellee.

Dorta Law, and Matias R. Dorta; Kula & Associates, P.A., Elliot B. Kula, W. Aaron Daniel, and William D. Mueller, Miami, for appellee/cross-appellant.

Before FERNANDEZ, C.J., and EMAS and LINDSEY, JJ.

EMAS, J.

I. INTRODUCTION

This appeal and cross-appeal arise out of the employment (and termination) of Luis Rodriguez Lopez (Rodriguez) as a manager and CEO of American Sales and Management Organization, LLC (ASMO), a Miami-based provider of aviation-services. After ASMO terminated Rodriguez in 2014, it sued him, alleging he breached his fiduciary duties to ASMO by conspiring, and acting in concert, with others to start a competing aviation-services business. Rodriguez filed a counterclaim for, inter alia, indemnification, contending he was entitled, under the terms of ASMO’s Operating Agreement, to be indemnified by ASMO for his attorney’s fees and other legal costs to defend himself against ASMO’s claims.

The case proceeded to trial, and the jury found that Rodriguez breached his fiduciary duty to ASMO and that ASMO suffered damage as a result of such breach; despite these findings, the jury awarded ASMO $0 in damages.

The trial court later granted ASMO’s posttrial motion for additur of $1 in nominal damages, and granted summary judgment in favor of Rodriguez on his claim for indemnification. On appeal, ASMO challenges the, trial court’s final summary judgment awarding Rodriguez indemnification and contends the trial court should instead have granted ASMO’s cross-motion for summary judgment on Rodriguez’s indemnification claim. Rodriguez cross-appeals, challenging the trial court’s order granting additur, as well as the order denying his motion for judgment in accor- dance with his motion for directed verdict on ASMO’s claim for breach of fiduciary duty.

For the reasons that follow, we reverse the additur award of $1 in nominal damages in favor of ASMO and remand for entry of final judgment for Rodriguez on the breach of fiduciary duty claim. We likewise reverse the trial court’s final summary judgment in favor of Rodriguez on his indemnification counterclaim, and remand for entry of final judgment in favor of ASMO on that counterclaim.

II. FACTUAL AND PROCEDURAL BACKGROUND

In July 2014, ASMO sued Rodriguez (and others) for breach of fiduciary duty, aiding and abetting, and civil conspiracy, alleging that Rodriguez and his codefendants conspired to, appropriate ASMO’s resources for their own use to start a business venture in direct competition with ASMO. In its complaint, ASMO sought damages—"including but not limited to nominal damages"—for Rodriguez’s alleged breach of his statutory duties of loyalty and care.

When ASMO filed its lawsuit, Rodriguez demanded (pursuant to ASMO’s Operating Agreement) advancement for the legal fees and costs he would expend in defending against the suit; ASMO denied this demand. Rodriguez then filed a counterclaim for breach of contract, maintaining that, under the terms of the Operating Agreement, ASMO was required to indemnify and advance the expenses incurred by Rodriguez in defending against ASMO’s lawsuit, upon an undertaking by, Rodriguez that he would repay ASMO if, ultimately, it was determined he was not entitled to indemnification. ASMO’s denial of Rodriguez’s demand for advancement and, indemnification upon being sued, he alleged, constituted a breach of ASMO’s Operating Agreement.

During the pendency of the lawsuit, the trial court granted Rodriguez advancement of legal fees and costs in defense of ASMO’s lawsuit, which ASMO appealed in American Sales & Management Organization, LLC v. Luis Rodriguez Lopez, et al., 217 So. 3d 230 (Fla. 3d DCA 2017) (ASMO I). In ASMO I, this court held that the "clear and unambiguous language" of ASMO’s Operating Agreement obligated ASMO to advance expenses to Rodriguez "in the defense of the underlying lawsuit." Id. at 230. In so holding, we made clear: "Advancement, as distinct from indemnification, involves the advance payment of litigation expenses regardless of whether indemnification is later determined." Id. at n.1.

In March 2018, the case proceeded to a jury trial on, ASMO’s claim against Rodriguez for breach of duty as manager, as well as claims for civil conspiracy and aiding and abetting by Rodriguez and other defendants. (Rodriguez’s counterclaim against ASMO for indemnification would await the outcome of the trial on ASMO’s claims.) In support of its claim that Rodriguez breached his duties of loyalty and care, ASMO presented evidence consisting primarily of emails, text messages and audio recordings in which Rodriguez discussed starting a competing business venture with funding from Carlos Alvarez (Rodriguez’s relative and a shareholder in ASMO’s parent company, Eulen S.A. (Eulen), located in Spain).¹ ASMO cited specific actions by Rodriguez and his co-conspirators to support its claim that Rodriguez breached his fiduciary duties to the company (e.g., causing ASMO to engage a sham subcontractor to generate "cash flow;" sabotaging ASMO bids; sharing confidential and proprietary business information; and generally using ASMO resources to benefit the nascent, competing business).

The jury returned a verdict for ASMO on the breach of duty claim, finding that Rodriguez breached his duty of care or his duty of loyalty,² and that such breach was the legal cause of damage to ASMO. Despite these findings, the jury awarded $0 in damages.³ The parties filed several posttrial motions, including Rodriguez’s motion to set aside the verdict and for entry of final judgment in accordance with his earlier motion for, directed verdict, as well as ASMO’s motion for additur of $1 in nominal damages. The trial court denied Rodriguez’s motion and granted ASMO’s motion for additur of $1 in nominal damages.

The trial court then addressed the parties’ competing motions for summary judgment on Rodriguez’s remaining counterclaim for indemnification. The trial court granted Rodriguez’s motion for summary judgment and denied ASMO’s cross-motion, finding that "despite the adjudication of liability but in view of the circumstances of the case"—i.e., the jury awarded $0 in damages and therefore the case did not warrant Rodriguez having to incur $1 million to defend against it—Rodriguez "is fairly and reasonably entitled to indemnity for such expenses which the Court shall deem proper."

The trial court entered final judgment for ASMO on its breach of fiduciary duty claim, awarding ASMO nominal damages of $1 (by way of additur), and entered final summary judgment in favor of Rodriguez on his counterclaim for indemnification.

ASMO asserts the trial court erred in granting Rodriguez’s motion for summary judgment on his counterclaim for indemnification and in denying ASMO’s cross-motion for summary judgment. In his cross-appeal, Rodriguez asserts the trial court erred in denying his motion for judgment notwithstanding the verdict on ASMO’s claim for breach of fiduciary duty, and further erred in granting ASMO’s motion for additur.

III. DISCUSSION AND ANALYSIS

A. The trial court erred in granting ASMO’s motion for additur of $1 in nominal damages,

We first address Rodriguez’s appeal of the trial court’s order granting ASMO’s additur motion, as our determination of this issue directly impacts our analysis of Rodriguez’s appeal of the denial of his motion for judgment in accordance with motion for directed verdict. To this point, because we reverse the additur order— and thereby reinstate the jury’s verdict awarding zero damages—we are also compelled to reverse the trial court’s denial of Rodriguez’s posttrial motion for judgment in accordance with his earlier motion for directed verdict, which was premised on ASMO’s failure to prove damages, an essential element of a breach of fiduciary duty claim. We first explain why, under the unique circumstances of this case, the trial court erred in granting ASMO’s posttrial motion for additur.

1. Inconsistent verdict or inadequate verdict?

On appeal, the parties frame this issue as whether the jury’s zero verdict is "inconsistent" or "inadequate." Rodriguez contends it is a legally inconsistent verdict and that it was thus incumbent upon ASMO to raise the issue of the verdict’s legal inconsistency before the jury was discharged. See e.g., Coba v. Tricam Indus., Inc., 164 So. 3d 637 (Fla. 2015). He concludes that, by failing to do so, ASMO waived any right to challenge the jury’s award of $0 in damages or to seek posttrial additur.

ASMO counters that the $0 damage award, following a finding of liability, did not render the verdict legally inconsistent, but merely inadequate. Francis-Harbin v. Sensormatic Elecs., LLC, 254 So. 3d 523, 525 (Fla. 3d DCA 2018). Because it was an inadequate verdict, ASMO continues, the company was not required to raise the issue prior to the jury’s discharge, and, instead, could raise it in a posttrial motion for additur or new trial. Id.

We conclude that neither party is correct—under the rather unique facts of this case, the verdict is neither inconsistent nor inadequate. We reach this conclusion as a result of the agreed-upon jury instructions, and the fact that the jury did precisely what the trial court said it could do.

[1, 2] The Florida Supreme Court has addressed the distinction between a legally inconsistent verdict and an inadequate verdict:

Courts have distinguished cases involving inadequate verdicts from those that are characterized as inconsistent. A verdict is not necessarily inconsistent simply because it fails to award

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