Inspired Capital, LLC v. Howell

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Inspired Capital, LLC, etc., et al., Appellants, v. Steven Howell, et al., Appellees.

No. 3D22-1220

Florida Court of Appeals, Third District

August 2, 2023

Opinion Not final until disposition of timely filed motion for rehearing.

An Appeal from the Circuit Court for Miami-Dade County Lower Tribunal No. 14-5578 Peter R. Lopez, Judge.

Wasson & Associates, Chartered, and Roy D. Wasson; Hernandez Lee & Martinez, LLC, and Eric A. Hernandez and Jermaine A. Lee, for appellants.

Boies Schiller Flexner LLP, and Bruce A. Weil and Laselve E Harrison, for appellees.

Before FERNANDEZ, HENDON and BOKOR, JJ.

BOKOR J.

Inspired Capital, LLC ("Inspired") appeals the trial court's entry of final summary judgment in favor of Steven Howell on Inspired's various derivative claims. Inspired contends that the trial court both improperly entered summary judgment based on a lack of evidence of out-of-pocket damages, and improperly disallowed amendment of the pleadings and discovery responses to specifically assert such damages. As explained below, the trial court correctly granted final summary judgment and didn't abuse its discretion in denying leave to amend. However, based on the record, the trial court erred in granting final judgment on the issue of nominal damages.

BACKGROUND

Inspired's complaint sought "economic damages" for all claims including a breach of contract claim based on an operating agreement. The operating agreement provided that Inspired would invest $500,000 in Inspired Food Solutions ("IFS") in exchange for a 15% interest in IFS and entitlement to royalty and cash return payments. During discovery, Inspired provided interrogatory responses stating that "[Inspired] has not calculated the extent of [Inspired]'s damages, which will be calculated by a damages expert, whose opinion will be timely disclosed," but that such damages would "likely" include "(1) the value of the investment in IFS, (2) the lost profits from the lost business opportunities, and/or (3) the value of the business."

Inspired's damages expert set forth in his report that Inspired can potentially either recover lost profits or lost business value damages, but not both.

Howell filed a motion for summary judgment claiming that damages set forth by the expert in his report were too speculative. Inspired filed an untimely^[1] opposition brief that did not address the lost profits or lost business value damages and instead asserted that Inspired would be entitled to out-of-pocket (i.e., the value of the investment in IFS) and nominal damages. Following Inspired's untimely opposition, Howell filed a motion to strike the opposition brief. The trial court granted both the motion to strike and summary judgment motion, but only granted partial summary judgment to the extent that Inspired's claims were for lost profits and lost business value damages.

Thereafter Howell filed another motion for summary judgment on Inspired's claims for out-of-pocket damages and nominal damages. The trial court again granted summary judgment, finding that Inspired waived these damages by not asserting them in their pleadings or interrogatory responses. In response, Inspired moved for rehearing and leave to amend the pleadings and discovery responses. The trial court denied the motion for rehearing and motion to amend. This appeal followed.

STANDARD OF REVIEW

We review de novo an order granting summary judgment. Fernandez v. Cruz, 341 So.3d 410, 412 (Fla. 3d DCA 2022). We review an order denying a motion to amend a pleading for abuse of discretion. Pangea Produce Distribs., Inc. v. Franco's Produce, Inc., 275 So.3d 240, 242 (Fla. 3d DCA 2019).

LEGAL ANALYSIS

Inspired argues that out-of-pocket damages are general damages and thus do not need to be specifically pled. See Fla R. Civ. P. 1.120(g); see also Hutchison v. Tompkins, 259 So.2d 129, 132-33 (Fla. 1972) (explaining that general damages are those damages that "naturally and necessary flow or result from the injuries alleged" and do not to be specifically pled). However, that argument confuses summary judgment with a motion to dismiss. While a motion to dismiss tests the sufficiency of the pleadings, here, we are dealing with a summary judgment, which tests the sufficiency of the evidence to determine if there's a triable issue of fact. See Fla. Bar v. Greene, 926 So.2d 1195, 1999-1200 (Fla. 2006) ("A motion to dismiss is designed to test the legal sufficiency of the complaint" while "[s]ummary judgment is designed to test the sufficiency of the evidence to determine if there is sufficient evidence at issue to justify a trial or formal hearing."). Therefore, the categorization of out-of-pocket damages as general or specific damages is irrelevant at the summary judgment stage. To overcome summary judgment, the party with the burden of proof, here, Inspired, the plaintiff below, must provide sufficient evidence to demonstrate a genuine issue of material fact.

Inspired would necessarily be bound by its responses to discovery, including its interrogatory responses. See Mana v. Cho, 147 So.3d 1098, 1100 (Fla. 3d DCA 2014) (finding that the respondent was bound by the damages theory set forth in his interrogatory responses preventing him from seeking other damages). Inspired's interrogatory responses provided that a damages expert would calculate the damages. In his report the expert provided only two ways of calculating the damages: lost profits and lost market value. For these models of damages, the trial court correctly concluded that the expert offered speculative evidence insufficient to support an award of damages on these bases. See Crain Auto. Grp., Inc. v. J &M Graphics, Inc., 427 So.2d 300, 301 (Fla. 3d DCA 1983) (noting that in order to recover lost profits the lost profits must be shown with a reasonable degree of certainty); see also Fid. Warranty Servs., Inc. v. Firstate Ins. Holdings, Inc., 74 So.3d 506, 514 (Fla. 4th DCA 2011) (determining lost market value cannot be used to prove damages if the data supporting those damages is speculative). The trial court correctly ascertained that the projections that the expert relied upon required "extraordinary assumptions" and "hypothetical conditions" to be correct and the companies used in the report to calculate the damages are, according to the expert's own admissions, "noncomparable." Additionally, the expert admitted that he did not review any of the documentation used to prepare the projections and that such projections are "never accurate." The trial court, therefore, correctly determined that the calculations provided by the expert constituted impermissibly speculative damages, insufficient to survive a motion for summary judgment.

The trial court also correctly disposed of Inspired's out-of-pocket or reliance damages theory. In the order granting summary judgment, the trial court noted that Inspired failed to dispute the pertinent statement of undisputed fact in the motion for summary judgment that "by November 26, 2013 (when Defendants first heard of IFS), Plaintiffs had already incurred, and spent, the entirety of the '$500,000 contribution' they now seek to recover from Defendants as out of pocket expenses." These purported out-of-pocket damages can't form the basis for reliance damages-even assuming the belated request to seek such damages were appropriate- where the undisputed facts at summary judgment establish that there was no such reliance. See Resort Int'l, Inc v. Charter Air Ctr., Inc., 503 So.2d 1293, 1296 (Fla. 3d DCA 1987) ("A party is entitled to recover, as against the breaching party . . . those expenditures made in reliance upon the performance of the contract."). Howell met its burden by showing an "absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Inspired then failed to "present affirmative evidence" setting forth "specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 25657 (1986).

Inspired also argues that the trial court erred by not allowing leave to amend the pleadings and discovery responses to defeat summary judgment. Although Florida encourages adjudication on the merits and liberal amendment, "there is an equally compelling obligation on the court to see to it...