Deman Data Systems, LLC et al v. Schessel et al
Filing
165
ORDER granting in part and denying in part 106 DDS and FSS-FL's motion to dismiss; granting 107 Dobiesz's motion to dismiss. Signed by Judge Susan C Bucklew on 2/3/2014. (JD)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
DEMAN DATA SYSTEMS,
LLC, ET AL.,
Plaintiffs,
v.
Case No. 8:12-cv-2580-T-24 EAJ
MARC S. SCHESSEL, ET AL.,
Defendants.
____________________________
MARC S. SCHESSEL, ET AL.,
Counter-Plaintiffs,
v.
DEMAN DATA SYSTEMS,
LLC, ET AL.,
Counter-Defendants,
and
NORMAN R. DOBIESZ,
Third-Party Defendant.
________________________________/
ORDER
This cause comes before the Court on two motions: (1) Norman Dobiesz’s Motion to
Dismiss (Doc. No. 107), which Marc Schessel and Primrose Solutions oppose (“Primrose”)
(Doc. No. 133); and (2) Deman Data Systems (“DDS”) and Florida Software Systems, Inc.’s
(“FSS-FL”) Motion to Dismiss (Doc. No. 106), which Schessel and Primrose oppose (Doc. No.
134). As explained below, Dobiesz’s motion is granted and DDS and FSS-FL’s motion is
granted in part and denied in part.
I. Standard of Review
In deciding a motion to dismiss, the district court is required to view the complaint in the
light most favorable to the plaintiff. See Murphy v. Federal Deposit Ins. Corp., 208 F.3d 959,
962 (11th Cir. 2000)(citing Kirby v. Siegelman, 195 F.3d 1285, 1289 (11th Cir. 1999)). The
Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon
which he bases his claim. Instead, Rule 8(a)(2) requires a short and plain statement of the claim
showing that the pleader is entitled to relief in order to give the defendant fair notice of what the
claim is and the grounds upon which it rests. See Bell Atlantic Corp. v. Twombly, 127 S. Ct.
1955, 1964 (2007)(citation omitted). As such, a plaintiff is required to allege “more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id.
at 1965 (citation omitted). While the Court must assume that all of the allegations in the
complaint are true, dismissal is appropriate if the allegations do not “raise [the plaintiff’s] right
to relief above the speculative level.” Id. (citation omitted). The standard on a 12(b)(6) motion
is not whether the plaintiff will ultimately prevail in his or her theories, but whether the
allegations are sufficient to allow the plaintiff to conduct discovery in an attempt to prove the
allegations. See Jackam v. Hospital Corp. of Am. Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir.
1986).
II. Background
On November 14, 2012, DDS, Florida Software Systems Corporation (“FSS”), Florida
Software Systems, Inc. (“FSS-FL”) filed this lawsuit. They have amended their complaint twice,
and their Second Amended Complaint is summarized, in pertinent part, below. (Doc. No. 75).
In response, Schessel and Primrose filed an Amended Counterclaim and Third-Party Complaint,
2
which is also summarized below. (Doc. No. 89).
A. DDS, FSS, and FSS-FL’s Allegations
FSS contends that is the owner of certain proprietary software (“Software”) created for
use in the healthcare industry. FSS-FL contends that it is the developer of the Software under a
license from FSS, which allows FSS-FL to possess, utilize, and further license the Software to
DDS. DDS contends that it is the exclusive provider of certain data services utilizing the
Software, and DDS is authorized to and has granted limited, non-exclusive, non-transferable
licenses to certain specifically identified healthcare facilities, hospitals, and healthcare providers
throughout the United States (“DDS Customers”) to utilize the Software.
Dobiesz is the CEO, chairman, and currently 100% owner of the membership units of
DDS. Dobiesz is also the sole officer and 100% owner of FSS-FL. FSS-FL is the Manager of
DDS.
DDS, FSS, and FSS-FL contend that Schessel engaged in certain misconduct. Schessel
joined DDS and FSS-FL as an employee in 2003. In connection with his employment, Schessel
signed two employment agreements (in 2003 and 2009). The employment agreements both
provided that Schessel agreed that any invention that related to DDS’s business that he, alone or
with others, developed during the term of the employment agreement and for a period of one
year after the termination of his employment shall be exclusively assigned to DDS.
On or around July 30, 2012, DDS terminated Schessel’s employment for the following
proffered reasons: (1) Schessel’s resignation due to failure and refusal to report to work and
perform the substantial duties and responsibilities of his employment; (2) failure and refusal to
carry out the directions of DDS's chairman; (3) failure and refusal to follow the policies and
3
directives established by DDS; and (4) the revelation that Schessel had been convicted of
criminal acts for filing fraudulent or false tax returns. However, prior to and after his
employment was terminated, Schessel allegedly engaged in a pattern of misconduct, including:
(1) accessing the DDS servers to transfer and/or delete certain confidential information; (2)
contacting DDS Customers and partners to solicit their business on behalf of a company that
Schessel was going to form; (3) storing confidential information that he removed from the DDS
computer system and then permanently misappropriating and converting that information to his
own use and for the use and benefit of the company that he was going to form; (4) forming
Defendant Primrose on October 4, 2012 for the purpose of targeting and soliciting DDS
Customers and employees and utilizing DDS’s trade secrets and confidential information; (5)
actively targeting and soliciting DDS Customers; and (6) making multiple attempts, without
authorization, to access and actually accessing the computer systems of DDS and obtaining
confidential information. Additionally, Plaintiffs contend that Schessel withheld material
information from DDS and Dobiesz regarding: (1) the termination of Schessel’s prior
employment because he was suspected of being involved in fraudulent activities, (2) a fraud
investigation and Schessel’s guilty plea, (3) his statements at his sentencing that he was the sole
owner of DDS’s confidential information, (4) Schessel’s unpaid income tax obligations and IRS
levies, and (5) a lawsuit commenced against Schessel by his former employer.
As a result of the above, DDS, FSS, and FSS-FL assert ten counts in their Second
Amended Complaint: (1) violation of the Computer Fraud and Abuse Act, (2) misappropriation
of trade secrets, (3) enforcement of restrictive covenants, (4) civil theft, (5) tortious interference,
(6) civil conspiracy, (7) breach of fiduciary duty, (8) fraud, (9) breach of the 2003 and 2009
4
employment agreements, and (10) failure to pay promissory notes.
B. Schessel and Primrose’s Allegations
Schessel and Primrose filed a counterclaim against DDS and FSS-FL, as well as a thirdparty complaint against Dobiesz. Schessel alleges that he met with Dobiesz in 2002 and that
Dobiesz pressured him into forming a company together that they would equally own. DDS, a
limited liability company (“LLC”), was formed in December of 2002. When DDS’s January 2,
2003 Operating Agreement was signed, Schessel only owned 1/3 of the membership units of
DDS. The other 2/3 of the membership units of DDS were owned 1/3 by FSS-FL, as managing
member, and 1/3 by IHC, Ltd. Both FSS-FL and IHC, Ltd. are owned and controlled by
Dobiesz.
Schessel alleges that on August 30, 2011, Dobiesz, on behalf of FSS-FL, unilaterally
amended the January 2, 2003 Operating Agreement for DDS without the knowledge or consent
of Schessel. Schessel contends that the amendment purports to allow FSS-FL, as majority
member of DDS, to expel any minority member of DDS (i.e., Schessel), with or without cause.
Schessel contends that Dobiesz engaged in various improprieties with regards to DDS,
such as: (1) preventing Schessel from seeing DDS’s financial records, (2) employing Dobiesz’
unqualified family members, (3) diverting DDS’s funds, (4) slandering Schessel to DDS’s and
FSS-FL’s employees, as well as to DDS’s customers, and (5) terminating Schessel’s
employment and expelling him as a member of DDS.
As a result, Schessel and Primrose assert the following claims against Dobiesz, DDS, and
FSS-FL. In Count I, Primrose asserts a tortious interference claim against Dobiesz, DDS, and
FSS-FL with regard to their alleged interference with Primrose’s attempt to close contracts with
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ROI Healthcare (“ROI”) and FTI Consulting (“FTI”). In Count II, Primrose and Schessel allege
that Dobiesz, DDS and FSS-FL defamed them by contacting businesses that Primrose was
marketing its services to and telling the businesses that Schessel had stolen money from Dobiesz
and DDS and that both Primrose and Schessel could not be trusted.
In Count III, Schessel asserts a breach of fiduciary duty claim against Dobiesz and FSSFL based on the following conduct by Dobiesz (on his own behalf and on behalf of FSS-FL): (a)
taking money owed by DDS to Schessel for salary, distributions and expense reimbursements
and diverting it to himself; (b) causing DDS to employ Dobiesz family members and paying
them using DDS funds when the family members were not qualified for such employment and
did not contribute value to DDS equivalent to the money being paid to them; (c) purporting to
“expel” Schessel as an owner of DDS member units without any legal basis to do so; (d)
excluding Schessel from enjoying the profits of DDS while paying such profits to himself; and
(e) causing DDS to enter into contracts with entities owned directly or indirectly by Dobiesz and
paying money to them without receiving products or services with a value equivalent to the
payments made to them. In Count IV, Schessel asserts a breach of loyalty claim against FSS-FL
based on the same allegations set forth in Count III, plus the allegations that: (1) FSS-FL failed
to act in good faith and to deal fairly with Schessel, and (2) FSS-FL purported to amend the
January 2, 2003 Operating Agreement for DDS without the consent of Schessel.
In Count V, Schessel alleges that on August 30, 2011, FSS-FL unilaterally amended the
January 2, 2003 Operating Agreement for DDS without the consent of Schessel in order to allow
Dobiesz, who controlled FSS-FL (the majority member of DDS), to expel Schessel without
cause. Schessel contends that the amendment is invalid, and as such, Schessel asserts a claim for
6
the Court to declare the rights and obligations of FSS-FL, DDS, and Schessel under the
Operating Agreement and the amendment thereto. Thus, Schessel seeks a declaration that the
August 30, 2011 amendment is invalid and unenforceable. In Count VI, Schessel asserts an
alternative claim against DDS for breach of the August 30, 2011 amendment due to DDS’s
failure to pay Schessel for his membership units in DDS when he was expelled.
In Count VII, Schessel asserts a claim against FSS-FL for breach of paragraph 4.5 of the
January 2, 2003 Operating Agreement for DDS. Paragraph 4.5 of the Operating Agreement
provides that FSS-FL shall perform its duties in good faith, in a manner that it reasonably
believes to be in the best interests of DDS, and with such care as an ordinarily prudent person in
a similar position would use under similar circumstances.
In Count VIII, Schessel asserts an unjust enrichment claim against DDS due to DDS’s
failure to pay more than $175,000 in travel expenses that Schessel incurred for the benefit of
DDS. In Count IX, Schessel asserts an unpaid wages claim against DDS for its failure to pay
Schessel his agreed upon salary and bonuses during his employment.
Finally, in Count X, Schessel asserts a fraud in the inducement claim against Dobiesz
regarding the promissory notes that DDS is seeking to enforce in Count X of DDS’s Second
Amended Complaint. Specifically, Schessel alleges that Dobiesz fraudulently induced Schessel
into executing the promissory notes by promising that the promissory notes would represent
increased compensation in the form of monthly advances, and each $15,000 monthly promissory
note would be considered paid back by Schessel each month that he performed work for DDS.
Schessel contends that Dobiesz knew that his representations were false when Dobiesz made
them and that Dobiesz actually intended to demand double payment from Schessel (i.e., in the
7
form of Schessel’s performance of work for DDS and in the form of repayment of the money due
under the promissory notes).
III. Motions to Dismiss
Dobiesz moves to dismiss the third-party complaint, and FSS-FL and DDS move to
dismiss the counterclaims. Accordingly, the Court will analyze each motion.
A. Dobiesz’s Motion to Dismiss
Schessel and Primrose assert four claims against Dobiesz: (1) tortious interference, (2)
defamation, (3) breach of fiduciary duty, and (4) fraud in the inducement. Dobiesz makes three
arguments in support of his contention that these claims should be dismissed, including the
argument that the claims are not properly brought under Federal Rule of Civil Procedure 14(a).
Because the Court agrees with that argument, the Court need not address Dobiesz’s other
arguments.
Rule 14(a)(1) provides that “[a] defending party may, as third-party plaintiff, serve a
summons and complaint on a nonparty who is or may be liable to it for all or part of the claim
against it.” Dobiesz argues that the claims against him are not properly brought under Rule
14(a), because the claims do not assert Dobiesz’s derivative liability for the claims asserted by
Plaintiffs against Primrose and Schessel.
Primrose and Schessel respond that the fraud in the inducement claim operates as an
indemnity claim, and as such, it is properly brought under Rule 14(a). Specifically, they allege
in their third-party complaint that if Schessel is liable to DDS on its claim to enforce the
promissory notes, “then Schessel has a right to be indemnified by Dobiesz in the amount of any
damages awarded against Schessel on such claim.” (Doc. No. 89, p. 19). As such, Primrose and
8
Schessel argue that once they properly implead Dobiesz under Rule 14(a), they can assert any
other additional claims they may have against Dobiesz under Rule 18(a).1 As explained below,
the Court rejects Primrose and Schessel’s argument that they can properly implead Dobiesz by
asserting the fraud in the inducement claim.
The Eleventh Circuit has stated the following regarding impleading a third-party:
Rule 14(a) allows a defendant to assert a claim against any person not
a party to the main action only if that third person's liability on that
claim is in some way dependent upon the outcome of the main claim.
Rule 14(a) does not allow the defendant to assert a separate and
independent claim even though the claim arises out of the same
general set of facts as the main claim.
U.S. v. Olavarrieta, 812 F.2d 640, 643 (11th Cir 1987)(citations omitted).
In support of his contention that the fraud in the inducement claim is not properly
brought under Rule 14(a), Dobiesz cites U.S. Distributors, Inc. v. Block, 2010 WL 337669, at *4
(S.D. Fla. Jan. 22, 2010). In Block, the plaintiff corporation asserted claims “aris[ing] out of a
transaction for the purchase and sale of aircraft parts and vehicles and the assumption of rental
payment obligations for a leased storage facility.” Id. at *1. The defendant attempted to assert a
third-party complaint against the Confalones (the husband was an officer and the wife was an
agent of the plaintiff corporation), alleging that they made material misrepresentations that
induced him to enter into the agreement in question. See id. at *1, 3. The defendant asserted a
fraud in the inducement claim against the Confalones under Rule 14(a) and argued that it
operated as an indemnity claim. See id. The court rejected the argument, stating:
The Court is unaware of any circumstance under which the
1
Rule 18(a) provides that a party asserting a third-party complaint may join as many
claims as it has against the third-party defendant.
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Confalones would be liable for the damages that the Plaintiff might
obtain against the Defendant. James Confalone is an officer of the
Plaintiff and, at least as alleged in the complaint, his wife, Karen
Confalone, was acting on behalf of the Plaintiff in connection with
the Plaintiff's transaction with the Defendant. Under these
circumstances, if the Court allowed the third-party complaint to
stand, it would implicitly rule that the officers and agents of a
corporation that is suing for breach contract could be or are liable for
any damages that the corporation obtains against the party that is
found to have breached the contract. That unlikely scenario does not
exist in this case.
*
*
*
Apparently recognizing that Rule 14 is typically used to bring
indemnitors into the litigation, the Defendant argues that his fraud-inthe-inducement claim operates as an indemnity claim. The problem
with this theory is that the fraud-in-the-inducement claim is not an
indemnity claim. Under the third-party complaint, the Confalones
may be liable to the Defendant even if the Plaintiff does not prevail
in its lawsuit. In this respect, the claims in the third-party complaint
are independent from the main litigation even though they arise out
of the same transaction. To the extent the Defendant contends that he
was tricked into a contract, he should raise (as he has already done)
that claim as an affirmative defense and counterclaim.
Id. at *3, 4.
The situation in Block is quite similar to the instant case, and the Court is persuaded by
the Block court’s analysis and conclusion. Schessel and Primrose do not address the Block case,
and thus, there is no argument before the Court that Block is distinguishable. Furthermore, the
Court reads their opposition to implicitly concede that Dobiesz’s liability under the fraud in the
inducement claim is not entirely dependent on DDS’s success against Schessel on the
enforcement of the promissory notes claim. Schessel and Primrose do not contend that
Dobiesz’s liability on the fraud in the inducement claim would be eliminated if DDS’s claim on
the notes is rejected and no award is made. Instead, they state that “if DDS’s claim on the notes
is rejected and no award is made, then Schessel’s damages for the fraud in the inducement will
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be greatly reduced.” (Doc. No. 133, p. 6)(emphasis added).
Accordingly, this Court agrees with Dobiesz and concludes that the fraud in the
inducement claim is not properly brought under Rule 14(a). As such, none of the claims against
Dobiesz are properly before this Court and must be dismissed without prejudice. If Primrose and
Schessel want to pursue their claims against Dobiesz, they will have to do so in a separate action.
B. FSS-FL and DDS’s Motion to Dismiss
Schessel and Primrose assert nine counterclaims against FSS-FL and DDS: (1) a tortious
interference claim against both, (2) a defamation claim against both, (3) a breach of fiduciary
duty claim against FSS-FL, (4) a breach of loyalty claim against FSS-FL, (5) a declaratory
judgment claim against both, (6) a breach of the amendment to the Operating Agreement against
DDS, (7) a breach of the Operating Agreement against FSS-FL, (8) an unjust enrichment claim
against DDS, and (9) an unpaid wages claim against DDS. FSS-FL and DDS (“the Companies”)
move to dismiss several of these claims, arguing that: (1) the Court lacks supplemental subject
matter jurisdiction over four of these claims, and (2) three of the claims are not sufficiently pled.
Accordingly, the Court will address each argument.
1. Supplemental Jurisdiction
The Companies argue that the Court lacks supplemental jurisdiction over the tortious
interference, defamation, unjust enrichment, and unpaid wages claims, because those claims do
not arise out of a common nucleus of operative fact with the federal Computer Fraud and Abuse
Act (“CFAA”) claim. The Court rejects this argument in part.
This Court has federal question subject matter jurisdiction over this case due to Plaintiffs’
CFAA claim. As a result, the Court has “supplemental jurisdiction over all state claims which
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arise out of a common nucleus of operative fact with” the CFAA claim. Parker v. Scrap Metal
Processors, Inc., 468 F.3d 733, 743 (11th Cir. 2006).
The allegations supporting the CFAA claim are that Schessel improperly accessed DDS’s
servers to obtain DDS’s confidential information and customer information, and Schessel used
that information when he created Primrose to target and solicit DDS’s customers. Primrose and
Schessel’s tortious interference, defamation, and unpaid wages claims arise out of a common
nucleus of operative fact with the CFAA claim in the same way that Plaintiffs’ state law claims
arise out of a common nucleus of operative fact with the CFAA claim. Such claims arise out of
the employment relationship between Schessel and DDS and the fallout that occurred after
Schessel was terminated.
The defamation claim includes allegations that the Companies defamed Primrose and
Schessel by telling others that they could not be trusted. The basis for the Companies’
contention that Schessel and Primrose could not be trusted is likely due, in part, to the
Companies’ allegation that Schessel improperly accessed DDS’s servers to obtain DDS’s
confidential information and customer information. Furthermore, the defamation claim relates
directly to Plaintiffs’ civil theft and fraud claims. If this Court has supplemental jurisdiction
over Plaintiffs’ civil theft and fraud claims, then it has supplemental jurisdiction over Primrose
and Schessel’s defamation claim.
Likewise, the tortious interference claim directly relates to Plaintiffs’ tortious
interference claim, as both claims appear to relate to the same two customers (ROI and FTI).
Thus, if this Court has supplemental jurisdiction over Plaintiffs’ tortious interference claim, then
it has supplemental jurisdiction over Primrose’s tortious interference claim with the same
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customers.
Additionally, the unpaid wages claim relates directly to Plaintiffs’ claim to enforce the
promissory notes, because Schessel alleges that the promissory notes evidenced advances to his
salary. Thus, to the extent that Plaintiffs seek to enforce the promissory notes, they are
(according to Schessel) denying him his salary (in the form of cancelling the promissory notes).
As such, if this Court has supplemental jurisdiction over Plaintiffs’ claim to enforce the
promissory notes, then it has supplemental jurisdiction over Schessel’s unpaid wages claim.
While the Court agrees that it has supplemental jurisdiction over the defamation, tortious
interference, and unpaid wages claims, the Court rejects Schessel and Primrose’s argument that
the Court has supplemental jurisdiction over the unjust enrichment claim. The unjust enrichment
claim seeks reimbursement for Schessel’s travel expenses, and such a claim does not arise out of
a common nucleus of operative fact with the CFAA claim. The Court notes that Schessel and
Primrose argue that this claim directly relates to Plaintiffs’ breach of contract claim. However,
Plaintiffs’ breach of contract claim has been limited to the allegation that Schessel violated his
obligation to assign certain inventions to DDS. (Doc. No. 147). Therefore, the Court must
dismiss the unjust enrichment claim without prejudice, because the Court lacks supplemental
jurisdiction over it.
2. Sufficiency of the Allegations
Next, the Companies argue that Primrose and Schessel have not sufficiently alleged their
tortious interference, breach of fiduciary duty, and declaratory judgment claims. Accordingly,
the Court will analyze each claim.
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a. Tortious Interference
In Count I, Primrose asserts a tortious interference claim against DDS and FSS-FL with
regard to their alleged interference with Primrose’s attempt to close contracts with ROI and FTI.
Primrose alleges that Dobiesz (who owns and controls DDS and FSS-FL) was aware of
Primrose’s advantageous business relationships with ROI and FTI. Furthermore, Primrose
alleges that Dobiesz, on behalf of DDS and FSS-FL, induced ROI and FTI to stop doing business
with Primrose. As a result, Primrose lost contracts and advantageous business relationships with
ROI and FTI, which were ready to sign contracts with Primrose until Dobiesz interfered.
The Companies move to dismiss this counterclaim, arguing that it is not sufficiently pled.
The Florida Supreme Court has stated the following regarding claims for tortious interference:
The elements of tortious interference with a business relationship are
“(1) the existence of a business relationship . . . (2) knowledge of the
relationship on the part of the defendant; (3) an intentional and
unjustified interference with the relationship by the defendant; and
(4) damage to the plaintiff as a result of the breach of the
relationship.” A protected business relationship need not be
evidenced by an enforceable contract. However, “the alleged
business relationship must afford the plaintiff existing or prospective
legal or contractual rights.” “An action for intentional interference
is appropriate even though it is predicated on an unenforceable
agreement, if the jury finds that an understanding between the parties
would have been completed had the defendant not interfered.
Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812, 814 (Fla.1994)(citations omitted).
Upon review, the Court concludes that Primrose has sufficiently stated a tortious interference
claim against DDS and FSS-FL with regard to their alleged interference with Primrose’s
advantageous business relationships with ROI and FTI.
b. Breach of Fiduciary Duty
In Count III, Schessel asserts a breach of fiduciary duty claim against FSS-FL (the
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manager of DDS) based on the following conduct by Dobiesz on behalf of FSS-FL: (a) taking
money owed by DDS to Schessel for salary, distributions and expense reimbursements and
diverting it to himself; (b) causing DDS to employ Dobiesz family members and paying them
using DDS funds when the family members were not qualified for such employment and did not
contribute value to DDS equivalent to the money being paid to them; (c) purporting to “expel”
Schessel as an owner of DDS member units without any legal basis to do so; (d) excluding
Schessel from enjoying the profits of DDS while paying such profits to himself; and (e) causing
DDS to enter into contracts with entities owned directly or indirectly by Dobiesz and paying
money to them without receiving products or services with a value equivalent to the payments
made to them.
FSS-FL argues that this claim should be dismissed, because it does not identify a basis
for a fiduciary duty apart from one that arises from Florida Statute § 608.4225 (stating that each
manager and managing member of an LLC shall owe a duty of loyalty and a duty of care to the
LLC and the LLC’s members) and/or paragraph 4.5 of the DDS Operating Agreement (which
states that FSS-FL shall perform its duties in good faith, in a manner that it reasonably believes
to be in the best interests of DDS, and with such care as an ordinarily prudent person in a similar
position would use under similar circumstances). FSS-FL argues that since Schessel already
asserts counterclaims against FSS-FL for breaching the duty of loyalty set forth in Florida
Statute § 608.4225 (Count IV) and for breaching paragraph 4.5 of the DDS Operating
Agreement (Count VII), his breach of fiduciary duty claim in Count III is merely duplicative of
the other two counterclaims and should be dismissed. This Court agrees with FSS-FL and
dismisses this counterclaim.
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c. Declaratory Judgment
In Count V, Schessel alleges that on August 30, 2011, FSS-FL unilaterally amended the
January 2, 2003 Operating Agreement for DDS without the knowledge or consent of Schessel in
order to allow Dobiesz, who controlled FSS-FL (the majority member of DDS), to expel
Schessel without cause. Schessel contends that the amendment is invalid, and as such, Schessel
asserts a claim for the Court to declare the rights and obligations of FSS-FL, DDS, and Schessel
under the Operating Agreement and the amendment thereto. Thus, Schessel seeks a declaration
that the August 30, 2011 amendment is invalid and unenforceable.
FSS-FL argues that this claim must be dismissed, because the amendment is clearly valid.
FSS-FL points out that Florida Statute § 608.4231(1) provides that an operating agreement may
provide for the amendment of the operating agreement without the vote or approval of any
member or class or group of members. Furthermore, paragraph 11.2 of the Operating Agreement
provides that the Operating Agreement can be amended by a writing executed by a majority of
the membership interests in DDS.2 Additionally, paragraph 5.8(a) of the Operating Agreement
provides the following:
Whenever the Members of the Company are required or permitted to
take any action by vote, such action may be taken without a meeting,
without prior notice and without a vote, if a consent or consents, in
writing, setting forth the action so taken shall be signed by the
Members who hold the voting interests having not less than the
minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all of the Members entitled to
vote therein were present and voted and shall be delivered to the . .
2
Paragraph 11.2 of the Operating Agreement states that no amendment to the Operating
Agreement “shall be effective unless made in a writing duly executed by a majority of the
Membership Interests and specifically referring to each provision of this Agreement being
amended.” (Doc. No. 89-1).
16
. Manager . . . of the Company.
(Doc. No. 89-1).
Schessel appears to concede that the August 30, 2011 amendment was a writing executed
by a majority of the membership interests in DDS. The amendment provides, in pertinent part,
that the following provisions are added to the Operating Agreement as paragraph 9.5:
(a) A Member may be expelled from Membership in the
Company, without cause, and required to surrender to the Company
his or her Membership Interest upon the vote or written consent of
Members who hold at least a majority of the Membership Interests.
In exchange for the expelled Members' Membership Interest, the
Company shall pay the expelled Member an amount equal to his or
her pro rata share of the Book Value of the Company, determined by
the Company as of the last day of the quarter immediately preceding
the date of expulsion ("Book Value").
(b) A Member may be expelled from Membership in the
Company, "with cause" (as hereinafter defined),3 and required to
3
The amendment defines “with cause” as facts which permit a conclusion by the
Company that the Member has:
(i) failed or refused to carry out the directions of the Manager
or the Chairman of the Company;
(ii) violated any applicable statute, regulation or ordinance or
provision of any code of ethics with respect to his activities;
(iii) committed acts which would constitute a crime;
(iv) breached his employment obligations to the Company or
any of its Affiliates;
(v) willfully committed or omitted to perform an act, which
commission or omission is calculated to injure the Company or which
results in the Company having committed a felony or being subject
to any civil penalty or liability which would have an adverse effect
on the business, property or financial condition of the Company;
*
*
*
(vii) failed to attain the goals and performance objectives
under any and all business plans of the Company; or
(viii) submitted any reports or documents to the Manager or
Chairman of the Company which a Member knew or should have
known were inaccurate or misleading.
17
surrender to the Company his or her Membership Interest upon the
vote or written consent of Members who hold at least a majority of
the Membership Interests. In exchange for the expelled Members'
Membership Interest, the Company shall pay the expelled Member
an amount equal to fifty percent (50%) of the Book Value determined
by the Company as of the last day of the quarter immediately
preceding the date of expulsion.
(Doc. No. 89-2).
By June of 2012, FSS-FL was alleged to hold a majority of the membership interests in
DDS, and as such, the amendment purports to allow FSS-FL to expel Schessel with or without
cause. To the extent that the expulsion is without cause, DDS would be required to pay Schessel
100% of the book value of his membership interest in DDS. However, if Schessel was expelled
for cause, then, according to the amendment, Schessel would be further penalized by only being
paid 50% of the book value of his membership interests.
Schessel is not clear regarding whether he was expelled with or without cause, and as
such, it is unclear whether DDS is using the amendment to support its contention that it is only
required to pay Schessel 50% or 100% of the book value of his membership interests.
Regardless, to the extent that DDS and FSS-FL contend that they could secretly agree to amend
the Operating Agreement to allow them to expel Schessel and not pay him 100% of the fair
value of his membership interests, the Court agrees with Schessel that the validity of the
amendment is in question and he can seek declaratory relief.
Florida Statute § 608.431 provides that an interest of a member in an LLC is personal
property. Furthermore, Florida Statute § 608.427 provides:
Upon withdrawal, a withdrawing member is entitled to receive any
(Doc. No. 89-2).
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distribution to which the withdrawing member is entitled under the
articles of organization or operating agreement, and, if not otherwise
provided in the articles of organization and operating agreement, the
withdrawing member is entitled to receive, within a reasonable time
after withdrawal, the fair value of the withdrawing member’s interest
in the limited liability company as of the date of resignation based
upon the withdrawing member’s right to share in distributions from
the limited liability company.
Fla. Stat. § 608.427(2). While the amendment to the Operating Agreement purports to authorize
a different payment scheme for an expelled member’s membership interests, the Companies have
not provided any specific authority on point that would allow them to secretly agree to the
forfeiture of Schessel’s property interest in the LLC without his consent. As such, at this time,
the Court denies the Companies’ motion to dismiss Schessel’s declaratory judgment claim.
IV. Conclusion
Accordingly, it is ORDERED AND ADJUDGED that:
(1)
Dobiesz’s Motion to Dismiss (Doc. No. 107) is GRANTED, and the claims
against him are dismissed without prejudice.
(2)
DDS and FSS-FL’s Motion to Dismiss (Doc. No. 106) is GRANTED IN PART
AND DENIED IN PART: The motion is granted to the extent that the Court
dismisses the unjust enrichment counterclaim (Count VIII) without prejudice due
to lack of subject matter jurisdiction and dismisses the breach of fiduciary duty
claim (Count III) for failing to state a claim; otherwise, the motion is denied.
DONE AND ORDERED at Tampa, Florida, this 3rd day of February, 2014.
Copies to:
Counsel of Record
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