Hall v. Sargeant

DANIEL HALL, BURFORD CAPITAL LLC, and DUNDROD INVESTMENTS LTD., Plaintiffs, v. HARRY SARGEANT, III, Defendant.

CASE NO. 18-80748-CIV-ALTMAN/Reinhart

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

March 30, 2020

OMNIBUS ORDER

Before the Hon. Roy K. Altman:

Al-Saleh won a big money verdict against Harry Sargeant III ("HS3") in state court. HS3 refused to pay. Al-Saleh hired Hall, a private investigator, to find HS3's money; Dundrod, a lender, financed the operation; and Burford supervised Hall's work. Tired of running, HS3 signed a settlement agreement with Al-Saleh. As part of that agreement, HS3 promised not to sue Burford, Dundrod, and (arguably) Hall. As the settlement was being negotiated, however, Hall traded for HS3's private emails, which included some of his sex tapes. Some time later, HS3 discovered the trade and sued Hall in federal court to recover the tapes. After an unfavorable ruling, HS3 voluntarily dismissed his federal case. Two weeks later, Hall, Dundrod, and Burford sued HS3 here for breaching the settlement agreement and for perpetrating a malicious prosecution against Hall. At the end of a long, hard-fought litigation, the parties filed their motions for summary judgment. This Order follows.

THE POSTURE

The Defendant, HS3, has filed his Motion for Summary Judgment ("HS3 Mot.") [ECF No. 320], the Plaintiffs¹ responded ("Pls. Opp.") [ECF No. 339], and HS3 replied ("HS3 Reply") [ECF No. 350]. The Plaintiffs have likewise filed their Motion for Partial Summary Judgment ("Pls. Mot.") [ECF No. 321], HS3 responded ("HS3 Opp.") [ECF No. 341], and the Plaintiffs replied ("Pls. Reply") [ECF No. 353]. The Court held a hearing on November 21, 2019, at which the parties presented their oral arguments. For the reasons that follow, the Motions are GRANTED in part and DENIED in part.

THE FACTS

In 2008, Mohammad Al-Saleh ("Al-Saleh") sued his then-business partner, HS3, for the unlawful diversion of Al-Saleh's share of the partnership's profits. See HS3's Statement of Undisputed Material Facts ("HS3 SOF") [ECF No. 323] ¶ 9. In 2010, Al-Saleh entered into an agreement with Dundrod, a Burford affiliate, to fund the litigation. See Plaintiffs' Statement of Undisputed Material Facts in Support of Motion for Partial Summary Judgment ("Pls. SOF") [ECF No. 324] ¶ 32. On July 27, 2011, a Florida jury returned a verdict in Al-Saleh's favor and directed HS3 to pay Al-Saleh $28.8 million in damages, plus costs and post-judgment interest. HS3 SOF ¶ 11; Pls. SOF ¶ 31. Although the Florida Supreme Court rejected HS3's appeal and affirmed the judgment, HS3 refused to pay. Pls. SOF ¶ 33.

As part of his efforts to collect the unpaid judgment, Al-Saleh filed lawsuits all over the world. Id. ¶ 34. In 2014, to help locate HS3's assets, Al-Saleh hired Focus Investigations Ltd. ("Focus"), an investigations firm co-owned by the Plaintiff, Hall. Id. ¶ 35. In 2015, a secondBurford affiliate, Burford Capital (UK) Ltd. ("Burford UK")—not a party to this litigation—bought Focus, making Hall a Burford UK employee, id. ¶¶ 36-37. During his time with Burford UK, Hall continued to work on the Al-Saleh investigation under the supervision of Aviva Will, a Burford lawyer. Id. ¶ 38.

In January of 2015, Hall met Daniel Sargeant—HS3's brother and former business partner—and learned that, after HS3 left the Sargeant Family Business in February of 2013, his emails remained on the business' server ("the Sargeant Server"). HS3 SOF ¶¶ 61, 67. After Hall expressed an interest in these emails, Charles Lichtman, Daniel Sargeant's English lawyer, gave Hall the first of what would be two batches of HS3's emails from that server. Id. ¶ 69. According to Hall, he and his team scanned these emails for information that might prove relevant to the location of HS3's assets. Pls. SOF ¶ 39. In August of 2016, Hall asked Daniel Sargeant for more of HS3's emails. Id. ¶ 40. On October 14, 2016, Hall met with Annette Perez, one of Daniel Sargeant's employees, and received a second batch of HS3's emails. Id. ¶ 41. Among the 168,158 emails in this second batch were several hundred private photographs, messages, and sex videos (the "HS3 Personal Materials"). Id.; HS3 SOF ¶¶ 88, 90, 125.

Al-Saleh and HS3 began their settlement discussions in September of 2016, HS3 SOF ¶ 12, which culminated in a settlement agreement that took effect on October 4, 2016, see Complaint for Declaratory Judgment, Injunctive Relief, and Damages ("Complaint") [ECF No. 1], Ex. A ("Settlement Agreement") [ECF No. 1-1]. In the Settlement Agreement, HS3 acknowledged that the total amount he owed Al-Saleh was $39.6 million, plus $7 million in attorneys' fees and costs. See id. at 1, 8-9. Al-Saleh, in turn, agreed to accept $33 million, which HS3 would pay as follows: an immediate payment of $20 million, followed by nine periodic payments—the last to take place on June 30, 2017. Id. at 8-9.

The Settlement Agreement also called for Al-Saleh, Burford, and Dundrod "to execute a release . . . in favor of the SA Parties," id. at 8—and for HS3, in turn, to execute releases in favor of Al-Saleh, Burford, and Dundrod, id. at 7. In January of 2017, Al-Saleh and HS3 delivered their respective releases with an effective date of October 28, 2016. See Complaint, Ex. C (the "Release") [ECF No. 1-3] at 2-4. They also executed an amendment to the Settlement Agreement, through which Al-Saleh and HS3 memorialized their exchange of documents (releases, judgments, and dismissal paperwork), and by which Al-Saleh agreed that, upon HS3's payment of the remaining balance, HS3 "will have fully performed [his] obligations pursuant to the Settlement Agreement." Complaint, Ex. B (the "Amendment") [ECF No. 1-2] at 2.

Unfortunately, after the Settlement Agreement was signed, HS3 discovered Hall's trade for the HS3 Personal Materials. HS3 SOF ¶¶ 94, 110. HS3 sued in federal court and, on February 20, 2018, filed his Second Amended Complaint (the "SAC") [ECF No. 1-4]. See Harry Sargeant, III v. Maroil Trading, Inc., et al., 17-CV-81070-BB (S.D. Fla.) (the "Related Federal Action"); Pls. SOF ¶ 51. In the SAC, HS3 brought three conspiracy claims against Hall—all premised on the alleged agreement between Hall and Daniel Sargeant to access HS3's emails through the Sargeant Server. Pls. SOF ¶ 51. Specifically—and as relevant here—Count II of the SAC averred that Hall had conspired to violate the federal Computer Fraud and Abuse Act ("CFAA"), while Count VIII alleged that Hall had conspired both to violate Florida's Computer Abuse and Data Recovery Act ("CADRA") and to invade HS3's privacy. Id. The Honorable Beth Bloom referred the defendants' Motion to Dismiss the SAC to Magistrate Judge Bruce R. Reinhart, who, on May 30, 2018, recommended that Counts II and VIII be dismissed without prejudice. See Complaint, Ex. E (the "SAC R&R") [ECF No. 1-5]. HS3 voluntarily dismissed the SAC on June 4, 2018. HS3 SOF ¶ 148. On June 21, 2018, HS3 refiled the two state claims he had asserted in the SAC in anew state-court action. See Sargeant v. Sargeant, No. 2018-CA-007932XXXXMB (15th Jud. Cir. Fla.) ("Related State Action"). HS3 did not refile his federal CFAA claim. See generally id.

Approximately two weeks after HS3 dismissed the SAC, the Plaintiffs filed their Complaint in this case. See generally Complaint. The Complaint levies three claims against HS3: Count I makes a claim for declaratory relief; Count II alleges that, by filing the SAC, HS3 breached his contractual obligations to the Plaintiffs; and Count III asserts that the SAC constituted a malicious prosecution against Hall.² Id. at ¶¶ 1, 47-50, 53-58, 60-66. On April 18, 2019, the Court dismissed as moot the Plaintiffs' claim for declaratory relief, leaving only Counts II and III. See [ECF Nos. 186].³

HS3 now moves for summary judgment on the two remaining counts. The Plaintiffs, for their part, seek only partial summary judgment on the liability aspects of Counts II and III. At a hearing on November 21, 2019, the Court challenged Burford and Dundrod's standing, see Transcript of Motion Hearing ("Mot. Hrg.") [ECF No. 388] at 59—a challenge to which both sides responded with supplemental briefing, see Plaintiffs' Supplemental Brief Regarding Standing ("Pls. Supp.") [ECF No. 378]; HS3's Supplemental Briefing Regarding Standing ("HS3 Supp.") [ECF No. 376]. Here, we now stand.

THE LAW

Summary judgment is appropriate when there is "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); FED. R. CIV. P. 56(a).⁴ In determining whether to grant summary judgment, the Court must consider "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." FED. R. CIV. P. 56(c). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). An issue of fact is "material" if it might affect the outcome of the case under the governing law. Id. at 248. A dispute about a material fact is "genuine" if the evidence could lead a reasonable factfinder to rule for the non-moving party. Id.

At summary judgment, the moving party has the burden of proving the absence of a genuine issue of material fact, and all factual inferences are drawn in favor of the non-moving party. See, e.g., Allen v. Tyson Foods Inc., 121 F.3d 642, 646 (11th Cir. 1997). Once the moving party satisfies its initial burden, the burden shifts to the non-moving party to come forward with evidence that a genuine issue of material fact precludes summary...