Tulepan v. Roberts
Filing
112
ORDER granting 64 Motion for Summary Judgment; denying 70 Motion to Dismiss; denying as moot 14 Motion to Dismiss; denying as moot 14 Motion to Dismiss for Failure to State a Claim; denying as moot 15 Motion to Strike. Signed by Judge Donald M. Middlebrooks on 1/16/2015. (kcr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 14-cv-80574-MIDDLEBROOKS/BRANNON
CRAIG S. TULEPAN,
Plaintiff,
v.
BOB ROBERTS,
Defendant.
------------------------~/
ORDER
THIS CAUSE comes before the Court upon Defendant's Motion for Partial Summary
Judgment [DE 64] and Defendant's Motion to Dismiss the Amended Complaint for Failure to
Join Indispensable Parties [DE 70]. Defendant's Motion for Partial Summary Judgment [DE 64]
was filed on November 6, 2014. Plaintiff Craig Tulepan ("Plaintiff') filed a Response [DE 75]
on November 25, 2014, to which Defendant filed a Reply [DE 86] on December 12, 2014.
Defendant's Motion to Dismiss the Amended Complaint for Failure to Join Indispensable Parties
[DE 70] was filed on November 17, 2014. Plaintiff filed a Response [DE 77] on November 27,
2014, to which Defendant filed a Reply [DE 85] on December 10, 2014. For the reasons that
follow, Defendant's Motion for Partial Summary Judgment [DE 64] is granted and Defendant's
Motion to Dismiss the Amended Complaint for Failure to Join Indispensable Parties [DE 70] is
denied.
BACKGROUND
This matter arises out of an employment contract dispute between Plaintiff Craig Tulepan
("Plaintiff') and Defendant Bob Roberts ("Defendant").
Defendant owns and operates his
deceased wife Lucille Roberts' fitness-club business and invests its income in various enterprises
through an unincorporated entity known as "The Roberts Organization."
[DE 11 at
~
6].
Plaintiff and Defendant met in late September 2001, after Defendant advertised that he was
looking to hire someone to manage and expand his real estate holdings, and Plaintiff responded.
[DE 74- Ex. 2, Tulepan Depo. at 7, 9]. Plaintiff and Defendant met twice in September of2001.
[!d. at 68]. During their second meeting, they discussed an employment arrangement under
which Plaintiff would find locations for and manage the leases of Lucille Roberts' health clubs in
New York in exchange for a salary of $125,000 and an expense allowance. [DE 74- Ex. 2,
Tulepan Depo. at 69; DE 74- Ex. 1, Roberts Depo. at 29-31]. Around that time, Plaintiff owed
the IRS over $100,000, which Defendant also paid. [DE 74- Ex. 2, Tulepan Depo. at 69-70].
According to Defendant, Lucille Roberts paid Plaintiffs paychecks at that time. [DE 74- Ex. 1,
Roberts Depo. at 32]. No writing memorializes the 2001 agreement. [!d. at 29].
In late 2002, Plaintiff ceased managing Lucille Roberts' health clubs, and began seeking
suitable locations for the purchase of real estate on behalf of various entities in which Defendant
held an interest. [DE 74- Ex. 2, Tulepan Depo. at 32-37]. Upon the purchase of two Floridabased shopping centers for Defendant - Somerset Shoppes and Catalina Shoppes - Plaintiff
relocated to Florida to manage, lease, and maintain the shopping centers.
[DE 74 - Ex. 2,
Tulepan Depo. at 39; DE 74- Ex. 1, Roberts Depo. at 30-32]. In 2003, Tulepan Management,
LLC ("Tulepan Management") was formed to manage Defendant's real estate in Florida.
Plaintiff was in charge of management and leasing for Tulepan Management and opened an
office in Coral Springs, Florida. [DE 65
at~
15; DE 75
41, 44, 67].
2
at~
15; DE 74- Ex. 2, Tulepan Depo. at
On June 25, 2004, Plaintiff and Defendant executed a written Employee Compensation
contract ("Employee Compensation Agreement") 1• [DE 11-1]. It provided that beginning in
July 1, 2004, Plaintiffwas to be provided with a base salary of$125,000, a $25,000 "transaction
fee," and a $50,000 expense allowance. It also described a two-part bonus provision. [/d.]. First,
Plaintiff was entitled to a bonus of 5% of the increase in the net operating income from the prior
year as presented on internal financial statements, not including mortgage interest expenses. If
there was a decrease in the net income, 5% of the decrease would be "deducted from any
employee bonus." [!d.]. Second, Plaintiff was entitled to 5% of the increase in the value of the
property from the purchase date to be determined five years after the purchase date. [!d.; DE 74
- Ex. 2, Tulepan Depo. at 72-73]. The Employee Compensation Agreement defined its term as
"5 years with provision for extension if agreed to by both parties; 90 written notice to terminate
by either party." [DE 11-1]. Finally, the Employee Compensation Agreement provided that
"[i]n the event that this arrangement is terminated by either party, employee will receive
compensation above, prorated to the date of termination. Bonus ... will be paid out over 2 years
as stated above."
[/d.].
Both Plaintiff and Defendant signed the Employee Compensation
Agreement. [/d.].
In 2007, Plaintiff claimed he was entitled to two bonuses under Paragraph 5(b) of the
Employee Compensation Agreement [DE 11-1] totaling $2,445,000.00, and Defendant claims
Plaintiff received [$2,445,000.00] in accordance Paragraph 5(b) of the Employee Compensation
Agreement. [DE 74- Ex. 2, Tulepan Depo. at 87-88; DE 74-3, Responses 19, 20]. According to
the Amended Complaint:
1
Plaintiff refers to this Agreement as the "Employment Contract." [DE 11 at~ 10].
3
Mr. Tulepan offered2 , in lieu of receiving the bonus payments, to take an equity
interest in Somerset Shoppes and Catalina Shoppes. Mr. Tulepan made the offer
to demonstrate his loyalty to Mr. Roberts. Mr. Roberts immediately agreed to the
investment, and expressed his enthusiasm for the arrangement and its effect of
aligning the parties' interests in increasing the value of the properties.
***
The parties agreed that, in exchange for the investments, Mr. Tulepan would
receive an equity interest in the two properties equivalent to the investments'
percentage of the properties' values. Mr. Tulepan's investment in Somerset
Shoppes amounted to 2.05 percent of its value. Mr. Tulepan's investment in
Catalina Shoppes amounted to 2.41 percent of its value. The parties additionally
agreed that Mr. Tulepan would not receive any distributions on his equity interest,
but that, in lieu of distributions, Mr. Tulepan would be paid six percent interest on
the invested funds - $85,200 per year on the Somerset Shoppes investment, and
$61,500 per year on the Catalina Shoppes investment. Together, the investments
would generate $146,700 in interest each year, payable in monthly installments of
$12,225.
The parties agreed, also, on payments owed to Mr. Tulepan upon any sale or
refinance of either property. Upon a sale, Mr. Roberts would pay Mr. Tulepan his
percentage share of the net proceeds. Upon a refinancing, Mr. Roberts would pay
Mr. Tulepan his percentage share of any increase in the refinanced mortgage
amount over the original mortgage. The parties agreed that any appraisals of the
properties required to implement their agreement would be conducted jointly.
The parties did not execute a writing to memorialize their agreement or any of its
terms- that Mr. Tulepan would invest the $2.445 million bonus payment in
Mr. Roberts's properties, or the amount of equity Mr. Tulepan would receive in
exchange for his investment, or the interest to be paid in consideration for the use
of the funds, or the payments owed upon any sale or refinancing of the properties.
Instead, as had been their practice, the parties once again proceeded by handshake
-by oral agreement (hereafter, the "Investment Agreement").
[DE 11
at~~
20, 22-25].
On January 1, 2008, to implement the Investment Agreement's equity provisions,
Plaintiff, the Kevin Roberts Trust, and the Kirk Roberts Trust executed Amended and Restated
Operating
Agreements
("Amended
Operating
2
Agreements")
with
Catalina
Shoppes
In the Amended Complaint, Plaintiff alleges that it was his idea to invest his bonuses in
Catalina and Somerset. [DE 11 at~ 20]. However, in deposition, Plaintiff testified that it was
Defendant's idea. [DE 74- Ex. 2, Tulepan Depo. at 106-110].
4
Management, LLC and Somerset Shoppes Management, LLC. See [DE 65-4; DE 65-5]. The
Amended Operating Agreements contain integration clauses which provide: "This Agreement
embodies the entire agreement and understanding among the Manager and the Members and
supersedes all prior agreements and understandings, if any, among and between the Manager
and Members relating to the subject matter hereof." [!d. at Sec. 15.9]. Pursuant to the terms of
the Agreements, Plaintiff became a non-voting "Class B Member" of both entities, with a 2.05%
ownership interest in Somerset Fla, LLC and a 2.41% ownership interest in Catalina Fla, LLC.
[DE 65-4 at 6, 31, Schedule A; DE 65-5 at 6, 31, Schedule A]. Prior to August 5, 2013, Plaintiff
never demanded that his 2007 bonuses be paid to him in cash. [!d. at 109-11 0]. Had Plaintiff
received the bonus in cash, he would have had to pay United States income taxes on it. [!d. at
112-113].
Between 2006 and 2008, Plaintiff acquired and managed a number of other Florida-based
shopping centers on Defendant's behalf, including Westview Shoppes, Coral Square Shoppes,
Plantation Shoppes, Orange Avenue Shoppes, Orange Avenue Mart, and Indrio Road Shoppes.
[DE 74- Ex. 2, Tulepan Depo. at 49-59]. Around 2007, Plaintiffs base compensation increased
to $186,000.
[DE 74 - Ex. 2, Tulepan Depo. at 82-83].
However, a Restated Employee
Compensation Agreement ("Restated Employee Compensation Agreement") 3 reflecting this
increase in salary was not prepared until May 10, 2010. 4 [DE 1-2]. The Restated Employee
Compensation Agreement was signed by Plaintiff, but does not appear to have been signed by
Plaintiff refers to this Agreement as the "Restated Employment Contract." [DE 11 at~ 30].
Plaintiff alleges that the Restated Employee Compensation Agreement reflects his increased
base salary, but does not reflect his increased compensation paid through CST Heron
Management by Somerset Shoppes Management LLC [DE 74- Ex. 6 at 1, ~ 4] or Catalina
Shoppes Management LLC [DE 74- Ex. 6 at 1, ~ 4]. See [DE 74 at~ 51].
3
4
5
Defendant. [/d.]. In August of2013, Plaintiff was fired. [DE 74- Ex. 2, Tulepan Depo. at 90,
164].
On April 30, 2014, Plaintiff filed a Complaint against Defendant, which he amended on
May 14, 2014.
[DE 1, 11].
The Amended Complaint alleges that Defendant's "abrupt
termination of [Plaintifrs] employment, without cause and without pay, breached the Restated
Employment Contract's five-year term, breached its requirement that any termination be
preceded by a 90-day notice, and breached the duty of trust that [Defendant] owed to [Plaintiff]."
[DE 11 at
~
50].
The Amended Complaint further alleges that Defendant "refuses to pay
[Plaintifr s] income, expenses, bonuses, and interest payments accrued and owed under the
parties' contracts, and refuses to return [Plaintifrs] investments in [Defendant's] properties."
[!d. at
~
1]. Plaintiff alleges six Counts against Defendant: Count I - Conversion; Count II -
Violation of Florida Civil Theft Statute, Fla. Stat. § 772.11; Count III - Breach of
Trust/Constructive Fraud; Count IV - Recovery of Unpaid Wages; Count V - Breach of
Employee Compensation Contract; and Count VI - Breach of Investment Agreement.
I.
MOTION FOR SUMMARY JUDGMENT [DE 641
Defendant moves to dismiss the Amended Complaint for failure to state a claim [DE 14] and
for partial summary judgment as to Counts I, II, III, IV, and V 5 of the Amended Complaint. [DE
64].
STANDARD
"The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.
5
Although Defendant labels his Motion for Partial Summary Judgment as pertaining to Counts I,
II, III, and IV of the Complaint, the Motion argues that summary judgment should also be
granted as to Count V. See [DE 64 at 10-13].
6
R. Civ. P. 56(a). The movant "always bears the initial responsibility of informing the district
court of the basis for its motion, and identifying those portions of 'the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it
believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)(1)(A)). Where the non-moving party
bears the burden of proof on an issue at trial, the movant may simply "[point] out to the district
court that there is an absence of evidence to support the nonmoving party's case." /d. at 325.
After the movant has met its burden under Rule 56(c), the burden shifts to the nonmoving party to establish that there is a genuine issue of material fact. Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585 (1986). Although all reasonable inferences
are to be drawn in favor of the non-moving party, Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986), he "must do more than simply show that there is some metaphysical doubt as to the
material facts." Matsushita, 475 U.S. at 586. The non-moving party may not rest upon the mere
allegations or denials of the adverse party's pleadings, but instead must come forward with
"specific facts showing that there is a genuine issue for trial." /d. at 587 (citing Fed. R. Civ. P.
56(e)). "Where the record taken as a whole could not lead a rational trier of fact to find for the
non-moving party, there is no 'genuine issue for trial."' /d. "A mere 'scintilla' of evidence
supporting the opposing party's position will not suffice; there must be enough of a showing that
the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.
1990). If the non-moving party fails to make a sufficient showing on an essential element of his
case on which he has the burden of proof, the moving party is entitled to a judgment as a matter
of law. Celotex Corp., 477 U.S. at 323.
Discussion
7
Count 1: Conversion
Conversion is "the exercise of wrongful dominion or control over property to the
detriment of the rights of the actual owner." Bel-Bel Int'l Corp. v. Cmty. Bank of Homestead,
162 F.3d 1101, 1108 (11th Cir. 1998) (applying Florida law). In other words, conversion is
possession of:
a chattel which so seriously interferes with the right of another to control it that
the actor may justly be required to pay the other the full value of the chattel.
Conversion is the direct antonym of permission. The two cannot exist
simultaneously. Constructive conversion takes place when a person does such
acts to the goods of another as amounting in law to appropriation of the property.
90 C.J.S. Trover and Conversion § 1.
Where an owner gives another permission to take
possession of his property, he must terminate that permission by requesting return of the property
before continued possession by the non-owner will constitute a conversion.
!d.
Neither
knowledge nor intent is required to establish a claim for conversion. See, e.g., United States v.
Bailey, 288 F. Supp. 2d 1261, 1264 (M.D. Fla. 2003), ajj'd, 419 F.3d 1208 (11th Cir. 2005). In
fact, "the tort may be established despite evidence that the defendant took or retained property
based on the mistaken belief that he had a right to possession." !d. (internal quotations and
citations omitted).
"Evidence of wrongful intent need only be established where punitive
damages are sought in connection with the tort." !d.
Florida adheres to the common-law formulation of the tort of conversion, rather than the
more liberal modem rule. United States v. Bailey, 419 F .3d 1208, 1214 (11th Cir. 2005). Under
the common law rule, the right to possession at a future time is insufficient to maintain an action
for conversion.
!d.
"The tort of conversion applies to many types of personal property,
including money. In an action for conversion of money, the money must be specific money that
8
is capable of identification." Navid v. Uiterwyk Corp., 130 B.R. 594, 595 (M.D. Fla. 1991 ).
Thus, to state a claim for conversion of money under Florida law:
a plaintiff must demonstrate, by a preponderance of the evidence: ( 1) specific and
identifiable money; (2) possession or an immediate right to possess that money;
(3) an unauthorized act which deprives plaintiff of that money; and (4) a demand
for return of the money and a refusal to do so.
Bailey, 288 F. Supp. 2d 1261, 1264.
In Count I, Plaintiff alleges that Defendant has refused to pay money owed to Plaintiff
under the Restated [Employee Compensation Agreement] and the "Investment Agreement." [DE
11
at~~
85-86]. Plaintiff further alleges that "[b]y counsel, [Defendant] repudiated the Restated
Employment Contract and the Investment Agreement."
[!d. at
~
87].
"As a result of the
repudiation, if not before," Plaintiff argues he "is entitled to the immediate return of his
investment in Somerset Shoppes and Catalina Shoppes," in the amounts of $1,420,000 and
$1,025,000, respectively, along with other money owed to him under the contracts. [Id.
at~
88].
Defendant argues that summary judgment should be granted as to Plaintiffs conversion
claim because "[e]ach and every one of the damage claims alleged are specifically addressed by
the terms of the parties written contracts. These [constitute] nothing more than a simple debt
which can be discharged by the payment of money, which cannot generally form the basis of a
claim for conversion or civil theft." [DE 64 at 15] (internal quotations and citations omitted). In
response, 6 Plaintiff argues that Tiara Condominium Ass 'n v. Marsh & McLennan Companies,
Inc., 110 So. 3d 399, 407 (Fla. 2013) "leaves Florida law unsettled on the extent to which tort
claims between parties in contractual privity may proceed," and that there are "intentional tort
claims separate from the contract claims." [DE 20 at 5].
6
Plaintiff fails to specifically address this argument in his Response to Defendant's Motion for
Summary Judgment, see [DE 75], but does so in his Response to Defendant's Motion to Dismiss
for Failure to State a Claim. See [DE 20].
9
The Eleventh Circuit and Florida courts have consistently held that "a conversion action
is not an appropriate means of vindicating a claim which essentially alleges breach of contract."
Misabec Mercantile, Inc. De Panama v. Donaldson, Lufkin & Jenrette ACLI Futures, Inc., 853
F.2d 834, 838 (lith Cir. 1988) (citing Advanced Surgical Technologies, Inc. v. Automated
Instruments, Inc., 777 F.2d 1504, 1507 (11th Cir. 1985) (applying Florida law). To establish a
viable claim for civil theft or conversion where the parties have a contractual relationship,
the civil theft or conversion must go beyond, and be independent from, a failure to comply with
the terms of the contract. Walker, 59 So. 3d at 190 (citing Ginsberg v. Lennar Fla. Holdings,
Inc., 645 So.2d 490, 494 (Fla. 3d DCA 1994)).
Plaintiff argues, however, that Tiara Condominium "leaves Florida law unsettled on the
extent to which tort claims between parties in contractual privity may proceed."
In Tiara
Condominium, the Florida Supreme Court reviewed the original purpose and development of the
economic loss rule, a judicially-created doctrine that sets forth the circumstances under which a
tort action is prohibited if the only damages suffered are economic losses. Tiara Condominium
Ass 'n, Inc., 110 So. 3d at 401. Noting that the rule has been applied in some cases to situations
well beyond that original intent, the court in Tiara Condominium held that the economic loss rule
is limited to the products liability context. However, as Justice Pariente states in her concurring
opinion, the holding:
is not a departure from precedent, but instead simply represents the culmination of
the [c]ourt's measured articulation ofthe economic loss rule's original intent. ...
[The] decision is neither a monumental upsetting of Florida law nor an expansion
of tort law at the expense of contract principles. To the contrary, the majority
merely clarifies that the economic loss rule was always intended to apply only to
products liability cases.
Tiara Condo. Ass 'n, 110 So. 3d at 408 (Pariente, J. concurring).
In other words, Tiara
Condominium does not overrule common law contract principles. As Justice Pariente observes,
10
common law contract principles behave similarly to the economic loss rule in that, for a plaintiff
in contractual privity to bring a valid tort claim, he must still prove the tort is independent of any
breach of contract. !d. (citing Lewis v. Guthartz, 428 So. 2d 222, 224 (Fla. 1982). Thus, even in
light of Tiara Condominium, fundamental contract principles continue to bar a tort claim where a
defendant has not committed a breach of duty independent of his breach of contract. !d.
Plaintiff also argues, however, that "the facts alleged in the Amended Complaint do in
fact state intentional tort claims separate from the contract claims." [DE 20 at 5]. Specifically,
Plaintiff argues, Defendant:
repeatedly acknowledged his agreements and his debts to [Plaintiff], yet still
refused to return [Plaintiffs] investment to him, and still refused to pay him the
unpaid wages and interest owed under the agreements, without providing any
reason for withholding them .... [Defendant's] numerous statements that he was
indebted to [Plaintiff], followed by his repudiation of those debts and refusal to
return funds that he concededly owed, are extracontractual events that elevate the
facts as pleaded from a contract claim to a conversion and civil theft claim.
[DE 20 at 6-7].
The Amended Complaint specifically states that Defendant failed to pay Plaintiff wages
owed under "under the Restated [Employee Compensation Agreement]."
[DE 11 at
~
85].
These include a "$25,000 transaction fee owed upon the closing ofthe 2012 Somerset Shoppes
refinancing; [t]wenty-one months of compensation and expenses owed for the remainder of the
Contract's five-year term, from August 6, 2013, to May 10, 2015, in the amount of $439,670;
[and b]onus owed under Paragraph 5(b), in an amount believed to exceed $1.2 million." [Id.].
The Amended Complaint further alleges that Defendant refused to pay Plaintiff other money
owed "under the Investment Agreement." [!d.
at~
86]. This includes "[b]onus owed upon the
2012 Somerset refinancing, in the amount of $246,000; [and] . . . interest on [Plaintiffs]
investment in Somerset Shoppes and Catalina Shoppes, currently in the amount of $97,800, and
11
increasing by $12,225 each month." [/d.]. Plaintiff also alleges that Defendant refuses to return
Plaintiffs "investment in Somerset Shoppes and Catalina Shoppes, in the amount of $1,420,000
for Somerset Shoppes and $1,025,000 for Catalina Shoppes." [/d.
at~
88].
It is undisputed that all of the sums at issue in Count I are allegedly owed to Plaintiff
under either "the Restated [Employee Compensation Agreement," or "the Investment
Agreement." [!d. at
~~
84 - 92]. Despite Plaintiffs unsupported assertions to the contrary, a
breach of contract claim does not simply tum into a conversion claim because a defendant
knowingly breached his contract. Given that neither knowledge nor intent is required to establish
a claim for conversion, Plaintiffs assertions that Defendant knew he owed Plaintiff unpaid wages
under the contracts and nevertheless refused to pay them, are inapposite. Accordingly, because
there is no evidence in the record to support a conversion claim as to Plaintiffs unpaid wages,
beyond and independent from Defendant's alleged failure to comply with the terms of the
parties' contracts, Defendant's motion for summary judgment is granted as to Plaintiffs
conversion claim for unpaid wages.
Plaintiff also invested $2,445,000 of his bonuses, specifically $1,420,000 into Somerset
Shoppes Management, LLC and $1,025,000 into Catalina Shoppes Management, LLC, to
acquire his Class B interests in those entities. Plaintiff demands the return of his investments,
along with payment of the interest owed on them. [DE 11
at~~
89, 98]. As Plaintiff notes, this
"investment was not memorialized by a written contract - it was an oral agreement based on
trust, on a handshake." [DE 20 at 7] (citing [DE 11,
~
25]). It is undisputed that Plaintiff and
Defendant agreed to invest Plaintiffs bonus into Somerset and Catalina. [DE 11
at~
at~
20; DE 74
21; DE 74- Ex. 4, Mandell Depo. at 32-33; DE 74- Ex. 2, Tulepan Depo. at 107, 109-113].
Accordingly, the investment of Plaintiffs $2,445,000 bonus into Somerset and Catalina was not
12
"an unauthorized act [depriving] plaintiff of that money," as is required to bring a claim for
conversion ofmoney under Florida law. See, e.g., Bailey, 288 F. Supp. 2d 1261, 1264 (emphasis
added).
Indeed, the Investment Agreement was subsequently memorialized in the Amended and
Restated Operating Agreements with Catalina Shoppes Management, LLC and Somerset
Shoppes Management, LLC. Plaintiff, the Kevin Roberts Trust, and the Kirk Roberts Trust were
the parties to those agreements, along with Catalina Shoppes Management, LLC and Somerset
Shoppes Management, LLC. [DE 65-4; DE 65-5]. The Amended Operating Agreements make
Plaintiff a non-voting "Class B Member" of both entities, with a 2.05% ownership interest in
Somerset Fla, LLC and a 2.41% ownership interest in Catalina Fla, LLC. [DE 65-4 at 6, 31,
Schedule A; DE 65-5 at 6, 31, Schedule A].
Under the terms of the Amended Operating
Agreements, Plaintiff is only, potentially, entitled to a return of his investment upon the sale of
each shopping center, which is the principle asset of each limited liability company. [DE 74- Ex.
2, Tulepan Depo. at 228, 231-235; DE 65-4- Ex. D at Sec. 2.23, 4.1(d)(iv), Articles 4-5, 11; DE
65-5 - Ex. E at Sec. 2.23, 4.l(d)(iv), Articles 4-5, 11 ]. Plaintiff understood the ramifications of
his Class B membership interest before he signed the Amended Operating Agreements. [DE 74Ex. 2, Tulepan Depo. at 211-213, 216-219, 222-227; DE 74- Ex. 4, Mandell Depo. at 41-42,4552, 11 0]. The Parties do not dispute that the shopping centers have not been sold and that
Plaintiff continues to own and possess his Class B membership interests in both entities. [DE
74- Ex. 2, Tulepan Depo. at 197]. As such, Plaintiff cannot show "possession or an immediate
right to possess" the $2,445,000 at issue, as is also required to bring a conversion claim for
money under Florida law. Accordingly, Defendant's motion for summary judgment is granted as
to Count I.
13
Count II: Violation of Florida Civil Theft Statute, Fla. Stat. § 772.11
A cause of action for civil theft under Florida law "derives from two statutory sources:
the criminal section setting forth the elements of theft, and the civil section granting private
parties a cause of action for a violation of the criminal section." Palmer v. Gatta Have it Golf
Collectibles, Inc., 106 F. Supp. 2d 1289, 1303 (S.D. Fla. 2000) (quoting Ames v. Provident Life
and Accident Ins. Co., 942 F. Supp. 551, 560 (S.D. Fla. 1994), aff'd, 86 F. 3d 1168 (11th Cir.
1996)). Thus, to maintain a cause of action under the Florida Civil Theft Statute, a plaintiff
"must show by 'clear and convincing evidence' an injury caused by the defendant's violation of
one or more of the provisions of the criminal theft laws found in Fla. Stat. §§ 812.012-037."
Almeida v. Amazon. com, Inc., 456 F.3d 1316, 1326-27 (11th Cir. 2006). Although Plaintiff does
not cite a specific criminal statute, he appears to allege a violation of the criminal theft statute,
Fla. Stat. § 812.014. Therefore, to succeed in a claim for civil theft under Florida law, Plaintiff
must demonstrate that Defendant "(1) knowingly (2) obtained or used, or endeavored to obtain or
use, [Plaintiffs] property with (3) 'felonious intent' (4) either temporarily or permanently to (a)
deprive [Plaintiff] of [his] right to or a benefit from the property or (b) appropriate the property
to [Defendant's] own use or to the use of any person not entitled to the property." United
Technologies Corp. v. Mazer, 556 F.3d 1260, 1270 (11th Cir. 2009) (citing Fla. Stat. §§ 772.11
(providing civil remedy for theft or exploitation), 812.014(1) (criminal theft statute); Almeida v.
Amazon.com, Inc., 456 F.3d 1316, 1326-27 (11th Cir. 2006)). In addition, "is it essential that the
victim have a legally recognized property interest in the items stolen." Anthony Distributors,
Inc. v. Miller Brewing Co., 941 F. Supp. 1567, 1575 (M.D. Fla. 1996). Under Florida law, every
element "of civil theft must be proven by clear and convincing evidence, which is an
intermediate standard, between the preponderance of the evidence standard and the criminal
14
beyond a reasonable doubt standard." !d. (quoting Small Business Administration v. Echevarria,
864 F. Supp. 1254, 1264-65 (S.D. Fla. 1994)).
With respect to Plaintiffs investments m Catalina and Somerset Shoppes, LLC,
Defendant argues that summary judgment should be granted because Plaintiff has not offered
any evidence of felonious intent, and because Defendant has not committed theft. [DE 64 at 910]. Specifically, Defendant argues that Plaintiff cannot prove theft because Plaintiff:
still owns his Class B membership interests in both Catalina Shoppes Fla LLC and
Somerset Shoppes Fla LLC. Thus, it is hard to claim civil theft when there has
been no theft. It is even harder to claim civil theft when the claimant still owns the
alleged stolen property. And it rises to the level of absurdity when the Plaintiff:
recognizing that he still owns a percentage interest in each of the two entities,
then files a separate lawsuit (the New York Lawsuit) for 'equitable rescission'
claiming he made a mistake and now wants his investment back.
[DE 64 at 10]. In his response, Plaintiff appears to argue that Defendant has misconstrued the
basis of his civil theft claim. Rather than claiming Defendant stole his Class B membership
interests in Catalina and Somerset, Plaintiff argues that because of its unfairness, the investment
itself robbed Plaintiff of his $2,445,000 bonus. [DE 75 at 14-15]. Specifically, Plaintiff alleges
that Defendant:
kept [Plaintiffs] bonuses worth $2,445,000, and put them into 'investments' that
by their terms need never be returned to [Plaintiff], and that will likely never be
repaid in full. That is an unlawful exercise of control over [Plaintiffs] bonuses,
whatever the contractual legerdemain by which the swindle was accomplished.
[DE 75 at 15]. As to Defendant's argument that Plaintiff has not offered any evidence of
felonious intent to commit theft, Plaintiff counters that Defendant:
contends that, despite the lack of any supporting writing, Mr. Tulepan's
compensation depended on Mr. Roberts's gains in the values of all the Florida
commercial properties Mr. Roberts acquired during Mr. Tulepan's employmentnot just the Somerset and Catalina properties in which Mr. Roberts invested Mr.
Tulepan's bonuses- and that Mr. Tulepan would be required to pay Mr. Roberts
for any declines in these unrelated properties. [DE 74-11 at 2, ,-r 7.] Mr. Roberts
offered Mr. Tulepan a revised Employee Compensation agreement in 2012 with
such a term, [Id.] but Mr. Tulepan refused to sign it. [DE 74-2 at 252-53.] Mr.
15
Roberts's own lawyer, Arnold Mandell, testified that Mr. Roberts's proposed
2012 contract did not reflect the parties' employment agreement, which Mr.
Mandell testified was stated in the 2004 and 201 0 Employee Compensation
agreements. [DE 74-5 at 23-27.] ... Mr. Roberts contends that Mr. Tulepan's
bonuses - Mr. Tulepan 's compensation that accrued in 2007 by the plain terms of
the parties ' 2004 contract - remain subject to forfeit at any time while in Mr.
Roberts's possession depending on Mr. Roberts's estimate of the gains or losses
of other, unrelated properties in which Mr. Tulepan has no interest, that Mr.
Roberts purchased during Mr. Tulepan's tenure.
[DE 75 at 4-5] (emphasis in original). Plaintiff also argues that Defendant instructed his lawyer
"to include terms in the [Amended Operating Agreements] that cause [Plaintiff] to lose most or
all of his invested bonuses unless the shopping centers increase dramatically in value. This
'investment,' as ultimately realized by the 2008 agreements is a swindle that allows [Defendant]
to pocket [Plaintiffs] money." [DE 75 at 3] (citing [DE 74-9 at 4-8]). See also [DE 74-9, Walsh
Expert Report at 4-8] (finding that under the Amended Operating Agreements, the properties
would have to dramatically increase in value for Plaintiff to recover - let alone profit from - his
investments).
Having reviewed the record in this case, the Court finds that Plaintiff has failed to
advance sufficient record evidence of Defendant's felonious intent to steal Plaintiffs $2,445,000.
As Plaintiff notes, Defendant's proposed 2012 contract, which would have required Plaintiff to
pay Defendant for any decrease in the value of a property, see [DE 74-11 at 2, ~ 7], did not reflect
or become the parties' ultimate employment agreement. Defendant, Asher Brukner (Defendant's
accountant charged with negotiating the Amended Operating Agreements), and Arnold Mandell
(Mr. Roberts's attorney charged with drafting the Amended Operating Agreements) have all
testified that it was Defendant's intent, in entering into the Amended Operating Agreements for
Somerset Shoppes LLC and Catalina Shoppes LLC with Plaintiff in January 2008, for Plaintiffto
share in any gains and any losses in the value of those entities, respectively. [DE 74- Ex. 1 at
131-132.; DE 74- Ex. 8 at 61-66; DE 74- Ex. 5 at 116-117]. Mr. Brukner further testified that
16
he believes the ultimate Amended Operating Agreements achieve those objectives. [DE 74-8 at
65]. In addition, Mr. Mandell testified that the Amended Operating Agreements were negotiated
at arm's length, and that it was the parties' intention that if the properties were sold for a net
profit, Plaintiff would recoup his investment and further profit from it. [DE 74-5 at 114-118].
Even Plaintiff admits that under the terms of the Amended Operating Agreements, if and when
Somerset and/or Catalina Shoppes are sold, Plaintiff will recover at least some of his investment.
In sum, the evidence suggests that Plaintiff will recover his investments upon sale of the
properties, provided that a profit has been shown following the payment of expenses, [DE 74-6,
DE 74-7], and that this was Defendant's intent.
Although Plaintiff argues that the jury should be allowed to assess Defendant's demeanor
to determine whether Defendant is being truthful about his intent with respect to the Amended
Operating Agreements, it is Plaintiff's burden under the Florida Civil Theft Statute to prove civil
theft by "clear and convincing evidence." Fla. Stat. § 772.11. See Almeida, 456 F.3d 1316
(affirming district court's grant of summary judgment on civil theft count upon finding that
plaintiff failed to present clear and convincing evidence of felonious intent). Because Plaintiff
has not shown that Defendant possessed felonious intent to steal Plaintiffs investment of
$2,445,000 by clear and convincing evidence, summary judgment is granted to the extent
Plaintiff argues civil theft of his investment.
Turning to Plaintiffs unpaid wages, the Court reiterates that to establish a viable claim
for civil theft where the parties have a contractual relationship, the theft must go beyond, and
be independent from, a failure to comply with the terms of the contract. Walker, 59 So. 3d at
190; Rosenthal Toyota, Inc. v. Thorpe, 824 F.2d 897, 902 (11th Cir. 1987) (citing Rosen v.
Marlin, 486 So.2d 623,624 (Fla. 3d DCA), rev. denied, 494 So.2d 1151 (Fla. 1986)). Defendant
17
argues that summary judgment should be granted as to Plaintiff's unpaid wages because "each
and every one of the damage claims alleged are specifically addressed by the terms of the
parties' written contracts." [DE 64 at 15]. Indeed, the unpaid wages, interest, and unreturned
investments at issue in Count II are identical to those at issue in Count I. [DE 11
at~~
93-102].
For the reasons discussed in greater detail in Count I, namely, because there is a contractual
relationship between the parties, and because that relationship plainly encompasses the alleged
theft of Plaintiff's unpaid wages, summary judgment is also granted to the extent Plaintiff argues
civil theft of his unpaid wages. Walker, 59 So. 3d at 190.
Count III: Breach of Trust/Constructive Trust'
In Count III, Plaintiff alleges three ways in which a fiduciary relationship exists between
Defendant and Plaintiff. [DE 11 at
~
104]. The elements of a claim for breach of trust or
fiduciary duty under Florida law are: "( 1) the existence of a fiduciary duty; (2) the breach of that
duty; and (3) damage proximately caused by that breach." Treco Int'l S.A. v. Krornka, 706 F.
Supp. 2d 1283, 1288 (S.D. Fla. 2010); see also Servicios De Alrnacen Fiscal Zona Franca Y
Mandatos S.A. v. Ryder Int'l, Inc., 264 F. App'x 878, 881 (11th Cir. 2008) (finding that existence
of a fiduciary relationship must be established before a constructive trust claim can be raised).
The burden of proving a fiduciary relationship is on Plaintiff in this case.
See Orlinsky v.
Patraka, 971 So. 2d 796, 800 (Fla. Dist. Ct. App. 2007) ("A fiduciary relationship must be
established by competent evidence, and the burden of proving such a relationship is on the party
asserting it.").
7
Although Count III is labeled "Breach of Trust/Constructive Fraud," [DE 11 at 24 ], counsel for
Plaintiff later clarified that the term "Constructive Fraud" in the title was a typographical error,
and should read "Constructive Trust." [DE 20 at 14].
18
Plaintiff first contends that Defendant owed him, as a minority member of Somerset LLC
and Catalina LLC, a fiduciary duty based on Defendant's alleged role as the managing member
of the LLCs.
[DE 75 at 10].
Somerset Shoppes Management LLC and Catalina Shoppes
Management LLC are both Delaware limited liability companies, governed by Delaware law.
[DE 65-4 at 1; DE 65-5 at 1]. The elements of breach of fiduciary duty claim under Delaware
law are "(I) that the fiduciary duty exists and (2) that the fiduciary breached that duty." In re
Tropicana Entm 't, LLC, 520 B.R. 455, 470 (Bankr. D. Del. 2014) (citing York Lingings v.
Roach, No. 16622-NC, 1999 WL 608850, *2 (Del. Ch. July 28, 1999)). "For a fiduciary duty to
exist, there must first be a fiduciary relationship." !d.
Under Delaware law, managers or
managing members of an LLC owe traditional fiduciary duties of loyalty and care to each other
and to the company unless those duties are eliminated, restricted, or otherwise displaced by
express language in the LLC operating agreement. 2009 Caiola Family Trust v. PWA, LLC, No.
CV 8028-VCP, 2014 WL 7232276, at *8 (Del. Ch. Dec. 18, 2014) (citing 6 Del. C. 18-1104 ("A
limited liability company organized under Delaware law 'may displace fiduciary duties
altogether or tailor their application" by the terms of its operating agreement. As a default rule,
however, managing members of LLCs owe traditional fiduciary duties of loyalty and care."));
see also Feeley, 62 A.3d at 663 (Del. Ch. 2012); Kelly v. Blum, No. 4516-VCP, 2010 WL
629850, at *1 (Del. Ch. Feb. 24, 2010). The parties dispute, however, whether Defendant is the
managing member of Somerset LLC and Catalina LLC. [DE 91 at 12, ~ 1].
Even assuming Defendant was in a fiduciary relationship with Plaintiff based on his
position with the LLCs, Plaintiff has not established a claim for breach of fiduciary duty.
Plaintiff does not allege any breach of duty as to the management of the LLCs, with the
exception that Defendant, as alleged manager of the LLCs, "refus[ed] to account for or return
19
[Plaintiffs] investments in Somerset Shoppes and Catalina Shoppes."
[DE 11 at
~
104].
Plaintiff, however, has failed to demonstrate any duty owed by Defendant, as alleged manager of
the LLC, to return Plaintiffs LLC interest upon termination from employment or at Plaintiffs
demand. Further, Plaintiff does not explain how Defendant's failure to provide Plaintiff with
appraisals of the two properties covered by the LLCs harmed Plaintiff. 8 As to Count III, Plaintiff
alleges that Defendant's "breaches have effectively ended [Plaintiffs] working life by leaving
[Plaintiff] in a position where he is unable to find a suitable replacement job." [!d.
at~
107]. He
further alleges he has been damaged "in the amount of $7,037,137, plus prejudgment interest
running from August 6, 2014." [!d.
at~
109]. It appears Plaintiffs damages result from his
inability to redeem or cash out his membership interests in the LLCs, not from any breach of
fiduciary duty. Plaintiff cannot, therefore, establish a claim of breach of fiduciary duty as to the
LLCs under Delaware law. 9
Next, Plaintiff argues Defendant owes him a fiduciary duty "because [Plaintiff] placed his
trust in [Defendant] by offering his principal asset to [Defendant] for investment in [Defendant's]
companies under the parties' Investment Agreement, on a handshake, and [Defendant] accepted
[Plaintiffs] trust." [!d.
at~
105]. In his Response [DE 75], Plaintiff emphasizes that Defendant's
oral "retention in trust of [Plaintiffs] bonuses is separate, in time and import, from the parties'
eventual decision, seven months later, to invest [Plaintiffs] bonus money in two companies ...
in exchange for a (worthless) "Class B" membership interest in each, and then to memorialize
8
In his Complaint, Plaintiff alleges that in 2013, Defendant told him "we are conducting an
accounting of the properties so we may reconcile the amount owed to you." [DE 11 at~ 64].
Plaintiff further alleges that Defendant "did not offer [Plaintiff] an opportunity to participate in
the accounting," [id. at~ 65], and did not provide Plaintiff with "the accounting he claimed to
have taken ... contrary to the fiduciary duties [Defendant] owes [Plaintiff]." [!d. at~ 66].
9
The result would be the same under Florida law.
20
that decision several months later in [Amended Operating Agreements] for the two companies."
[DE 75 at 10].
Nevertheless, the record evidence indicates that Defendant did not owe Plaintiff a
fiduciary duty under Florida law. "For a confidential or fiduciary relationship to exist under
Florida law 'there must be substantial evidence showing some dependency by one party and
some undertaking by the other party to advise, counsel, and protect the weaker party."' Muniz v.
GCA Servs. Grp., Inc., No. 3:05 CV 172 J 33MMH, 2006 WL 2130735, at* 10 (M.D. Fla. July
28, 2006) (citing Lanz v. Resolution Trust Corp., 764 F. Supp. 176, 179 (S.D.Fla.1991).
"Further, '[t]he fact that one party places trust or confidence in the other does not create a
confidential relationship in the absence of some recognition, acceptance or undertaking of the
duties of a fiduciary on the part of the other party."' !d. (citing Harris v. Zeuch, 103 Fla. 183,
137 So. 135 (1931); Barnett Bank ofW Florida v. Hooper, 498 So. 2d 923 (Fla.1986)). Here,
the record indicates that Plaintiff and Defendant were dealing at arm's length. See Servicios De
Almacen Fiscal Zona Franca Y Mandatos S.A., 264 F. App'x at 881-82 ("when the parties are
dealing at arm's length, a fiduciary relationship does not exist because there is no duty imposed
on either party to protect or benefit the other.").
Plaintiff is an experienced real estate
professional. It was Plaintiff who identified the Somerset and Catalina properties for Defendant
to purchase in the first instance. Plaintiff managed both properties before and after Plaintiff
invested his own bonus into the properties. [DE 74- Ex. 2, Tulepan Depo. at 39, 42-44, 65-66,
318-319].
Moreover, although Plaintiffs deposition testimony indicates otherwise, the
Complaint unambiguously states that it was Plaintiff who approached Defendant with an offer to
invest his own bonus payments into Somerset and Catalina Shoppes in exchange for an equity
interest in those entities. Specifically, the Complaint alleges:
21
Mr. Tulepan offered, in lieu of receiving the bonus payments, to take an equity
interest in Somerset Shoppes and Catalina Shoppes. Mr. Tulepan made the offer
to demonstrate his loyalty to Mr. Roberts. Mr. Roberts immediately agreed to the
investment, and expressed his enthusiasm for the arrangement and its effect of
aligning the parties' interests in increasing the value of the properties.
[DE II
at~
20]. See Cooper v. Meridian Yachts, Ltd, 575 F.3d 1151, 1177 (lith Cir. 2009)
("[T]he general rule [is] that a party is bound by the admissions in his pleadings."). Plaintiff
alleges that he placed his trust in Defendant. [DE 11
at~
21]. However, there are no clear
allegations or evidence that Defendant accepted this trust.
Moreover, even if a fiduciary
relationship did exist between Plaintiff and Defendant, Plaintiff has failed to articulate what duty
has been breached with respect to the parties' oral Investment Agreement.
Finally, Plaintiff argues that Defendant violated his fiduciary obligation, as Plaintiffs
employer, "to abide [by] the parties' agreements, to pay [Plaintiff] his wages earned under the
parties' Restated [Employee Compensation Agreement], and to treat [Plaintiff] fairly in accord
with the terms of Restated [Employee Compensation Agreement]."
[DE 11 at
~
106].
Specifically, Plaintiff alleges Defendant violated his fiduciary obligation "by breaching the
Contract's five-year term, by firing [Plaintiff] without cause, notice or explanation, and by
withholding wages owed to [Plaintiff] under the Restated [[Employee Compensation
Agreement]." [!d.]. Although an employee-employer relationship sometimes creates a fiduciary
relationship 10, "[u]nder Florida law, a cause of action for breach of fiduciary duty will not lie
where the claim of breach is dependent upon the existence of a contractual relationship between
the parties." Detwiler v. Bank of Cent. Florida, 736 So. 2d 757, 759 (Fla. Dist. Ct. App. 1999)
(citing Greenfield v. Manor Care, Inc., 705 So. 2d 926, 932 (Fla. 4th DCA 1997), rev. denied,
717 So. 2d 534 (Fla. 1998)). "This is true because the duty is owed only as a result of the
10
See, e.g., Heritage Schooner Cruises, Inc. v. Cansler, No. 13-22494-CIV, 2013 WL 5636689,
at *4 (S.D. Fla. Oct. 16, 2013).
22
existence of the contract." [Id.]. Since all of the allegations at issue here arise out of the parties'
contractual relationships, summary judgment is granted in favor of Defendant as to Count III.
Counts IV and V: Recovery of Unpaid Wages; Breach of Employee Compensation
Contract
In Count IV, Plaintiff alleges he "is entitled to payment of his unpaid wages [due under
the Restated Employee Compensation Agreement] and prejudgment interest under Florida
common law. [DE 11 at
~~
113-114]. He further alleges he is also entitled to "recovery of the
costs and attorney fees incurred in prosecuting this action as provided by Fla. Stat. § 448.08."
[!d. at
~
114].
Count V alleges Plaintiff "performed his obligations under the Restated
Employ[ee Agreement]" and Defendant breached the Restated Employee Compensation
Agreement by refusing to pay Plaintiff the following:
(a)
(b)
Twenty-one months of compensation and expenses owed for the remainder
of the Contract's five-year term, from August 6, 2013, to May 10, 2015, in
the amount of $439,670; and
(c)
[!d. at
The $25,000 transaction fee owed upon closing of the 2012 Somerset
Shoppes refinancing;
Bonus owed under Paragraph 5(b), in an amount believed to exceed $1.2
million.
~~
116-118].
Plaintiff further alleges Defendant "breached the Restated Employ[ee
Compensation Agreement] by terminating it immediately, in breach of the five-year term, and
without the required 90-day notice, on August 6, 2013." [ld.
at~
120].
Defendant argues that summary judgment should be granted as to Counts IV and V
because "the amount of compensation allegedly owed based on the terms of the [Restated
Employment Agreement] cannot be accurate and must be limited ... to the 90 day time period
which [Plaintiff] admits is part of the contract upon which he relies." [DE 64 at 10].
23
Under Florida law, '"where the language of a contract is unambiguous and not subject to
conflicting inferences, construction of the contract is a question of law for the court, not a
question of fact for the jury." Weingart v. Allen & O'Hara, Inc., 654 F.2d 1096, 1103 (5th Cir.
1981) (citing Friedman v. Virginia Metal Prod Corp., 56 So. 2d 515, 516 (Fla. 1952);
Ellenwood v. Southern United Life Ins. Co., 373 So. 2d 392, 394 (Fla. App. 1979); Atlantic Coast
Line R.R. Co. v. Boone, 85 So. 2d 834, 842 (Fla.1956). '"Also, where there is an ambiguity in the
contract and the facts are not in dispute, it is the province of the court, not the jury, to resolve the
ambiguity as a matter of law." Id (citing Ellenwood, 373 So. 2d at 394).
In this case, the parties agree that the Restated Employee Compensation Agreement [DE
11-2], dated May 10, 2010, contains the following terms:
Term: Five (5) years with provision for extension if agreed to by both parties. 90
day written notice to terminate by either party....
In the event that the Agreement is terminated by either party, employee shall
receive compensation above, prorated to the date of termination.
[DE 11-2]. 11
However, the parties dispute whether the Restated Employee Compensation
Agreement is for a definite term or terminable at will. [DE 75 at 19]. Assuming the Restated
Employee Compensation Agreement is for a definite term, the parties also dispute whether that
term is 90 days or five years. [Id]
'"The general rule of law in Florida is that an employment contract without a definite term
is terminable at will, and no cause of action may be maintained for its termination." Raytheon
Subsidiary Support Co. v. Crouch, 548 So. 2d 781, 782 (Fla. 4th DCA 1989) (citing DeMarco v.
Publix Super Markets, Inc., 384 So.2d 1253 (Fla. 1980); Roy Jorgensen Associates, Inc. v.
Deschenes, 409 So. 2d 1188 (Fla. 4th DCA 1982); Crawford v. David Shapiro & Co., 490 So. 2d
11
The parties also agree that the original Employee Compensation Agreement [DE 11-1 ], dated
June 25, 2004, contains essentially identical terms.
24
993 (Fla. 3d DCA 1986)). "Additionally, mere expectations are insufficient to create a binding
term of employment." !d. (citing Maguire v. American Family Life Assurance Co. of Columbus,
Georgia, 442 So.2d 321 (Fla. 3d DCA 1983)). In this case, however, the Restated Employee
Compensation Agreement specifically provides that the term is "5 years." [DE 11-1; DE 11-2].
The Restated Employee Compensation Agreement's provision for "90 day written notice to
terminate by either party" is consistent with a contract for a definite term. If the parties had the
absolute right under the contracts to terminate their relationship at will, there would be no need
for such a provision. 12
The parties agree that Defendant failed to provide Plaintiff with the required 90 days'
written notice of termination, but dispute whether this breach entitles Plaintiff to lost wages for
the entire duration of the contract, or whether Plaintiffs claim for lost wages is limited to those
90 days. Under Florida law, where an employer terminates an employment contract prior to
the end of the contract's specified term, the employee is generally entitled to wages for the
entire unexpired term of the contract in addition to any unpaid balance for services rendered.
Juvenile Foundation v. Rievman, 370 So. 2d 33 (Fla. 3d DCA 1979). However, where
the parties have the right to terminate the contract prior to the end of the contract's term,
through a 90-day written notice provision, for example, a terminated employee is not entitled to
lost wages for the entire length of the contract. See Bernhardt v. Jacksonville Medical Center,
Inc., 543 So. 2d 833, 835 (Fla. 1st DCA 1989) (quoting Juvenile Foundation v. Rievman, 370
12
See Raytheon Subsidiary Support Co., 548 So. 2d at 783 ("These particularized rights and
remedies, which cover various contingencies, are only consistent with a contract for a definite
term. If Raytheon had the right under the contract to terminate an employee without due cause
and with no repercussion to itself, there would be no necessity for Raytheon to expressly protect
itself under circumstances in which an employee is terminated with due cause.").
25
So.2d 33, 35-36 (Fla. 3d DCA 1979)). This is true even where the contract requires advanced
notice of termination, and the employee is nonetheless terminated immediately in clear
violation of the notice requirement. Under those circumstances, the terminated employee may
only recover lost wages for the duration of the contractual notice period (in the instant case, 90
days). See, e.g., Akzo Nobel Coatings, Inc. v. Auto Paint & Supply of Lakeland, Inc., No.
2011 WL 5597364, *4-5 (M.D. Fla. Nov. 17, 2011); Bernhardt v. Jackwnville Medical
Center, Inc., 543 So. 2d 833 (Fla. 1st DCA 1989); Treasure Lake of Georgia, Inc. v. Harold
Miller Marketeer, Inc., 358 So. 2d Ill (Fla. 3d DCA 1978).
In Bernhardt, for example, the employment contract provided for automatic renewal
at the end of its one-year term unless either party provided the other with notice of their intent
not to renew the contract at least three months (90 days) prior to the term's end. Bernhardt,
543 So. 2d at 834. The employer in that case breached the contract's notice requirement, firing
the employee without providing the requisite three months' notice. The court held that the
employee's damages were limited to "three months of his average monthly income in addition
to . . . income from services rendered." !d. at 835. Such a holding is consistent with the
principle that the contract damages should place the injured party in the same financial
position he would have occupied if the contract had been fully performed, but not in a better
position.
Juvenile Foundation, 370 So. 2d 33; Larry Hobbs Farm Equipment, 2008 WL
3931323, at *4.
Here, assuming that Defendant had provided Plaintiff the requisite 90-days'
notice on August 6, 20 13 (rather than terminating the contract immediately), Plaintiff would
have earned wages under the Restated Employee Compensation Agreement for an additional
90 days. Allowing Plaintiff to recover wages for any period exceeding 90 days would provide
Plaintiff with an unjustified windfall. See Treasure Lake of Georgia, 358 So. 2d 111;
26
Bernhardt, 543 So. 2d 833; Akzo Nobel Coatings, 2011 WL 5597364, *4-5; Larry Hobbs Farm
Equipment, 2008 WL 3931323.
Accordingly, summary judgment is granted in favor of
Defendant to the extent Plaintiff seeks more than 90 days of unpaid wages under Counts IV
and V.
Punitive Damages
Under Florida law, punitive damages are not recoverable in a breach of contract action
absent an accompanying underlying tort.
Roger Lee, Inc. v. Trend Mills, Inc., 41 0 F .2d 928
(5th Cir. 1969) ("punitive damages are not generally recoverable under an action for breach of
contract"); Lewis v. Guthartz, 428 So. 2d 222 (Fla. 1983); Masciarelli v. Maca Supply Corp.,
224 So. 2d 329 (Fla. 1969). Given that summary judgment has been granted in favor of
Defendant as to all of Plaintiffs tort claims and only contract claims remain, Plaintiffs
claims for punitive damages must also be dismissed.
CONCLUSION
Counts I, II, and III are dismissed. Count IV shall proceed to trial to the extent Plaintiff
seeks 90 days of unpaid wages under the Restated Employee Compensation Agreement. Count
V shall proceed to trial to the extent Plaintiff seeks 90 days of unpaid wages, a $25,000
transaction fee, and a bonus under the Restated Employee Compensation Agreement. Count VI
proceeds to trial in its entirety.
II.
MOTION TO DISMISS FOR FAILURE TO JOIN INDISPENSABLE
PARTIES [DE 701
Defendant moves to dismiss the Amended Complaint for failure to join indispensable parties
under Rule 19, arguing that this case cannot proceed without Catalina, Somerset, CST Heron,
and Tulepan Management.
27
STANDARD
"Dismissal of an action pursuant to Fed. R. Civ. P. 12(b)(7), for failure to join a party
under Fed. R. Civ. P. 19, is a 'two-step inquiry."' Raimbeault v. Accurate Mach. & Tool, LLC,
302 F.R.D. 675, 682 (S.D. Fla. 2014) (citing Focus on the Family v. Pinellas Suncoast Transit
Authority, 344 F.3d 1263, 1279 (11th Cir. 2003)).
First, a court must decide whether an absent party is a necessary party in the case under
Rule 19(a).
Int 'l Importers, Inc. v. Int 'l Spirits & Wines, LLC, 2011 WL 7807548, at *8
(S.D. Fla. July 26, 2011) (citing Molinos Valle del Cibao v. Lama, 633 F.3d 1330, 1344 (lith
Cir. 2011)). "If a court determines that an absent party does satisfy the Rule 19(a) criteria, i.e.,
that the party is a required party, the court must order that party joined if its joinder is feasible."
Raimbeault, 302 F.R.D. at 682 (citing Fed. R. Civ. P. 19(a)(2)). If the absent party is not
required, the litigation continues as initiated by Plaintiff. See, e.g., Developers Sur. & Indem. Co.
v. Harding Vill., Ltd., 2007 WL 465519, at *2 (S.D. Fla. Feb. 9, 2007). "A party is not necessary
simply because joinder would be convenient, or because two claims share common facts."
Raimbeault, 302 F.R.D. at 682 (internal quotation and citation omitted). Rather, an absent party
is considered necessary "(i)
if: in its absence, the court cannot accord complete relief among the
existing parties to the action; (ii) if the nonparty's absence would have a prejudicial effect on that
party's ability to protect its interest relating to the subject of the action; or (iii) if, due to the
absent party's related interest, the nonparty's absence would leave the existing parties at a
substantial risk of incurring inconsistent obligations upon the court's disposition of the current
action.ld. (citingFed.R.Civ.P.19(a)(l);CityofMarietta v. CSXTransp. Inc., 196F.3d 1300,
1305 (11th Cir. 1999)).
28
Second, if a necessary party cannot be joined, the court must consider whether "in equity
and good conscience, the action should proceed among the existing parties or should be
dismissed." Fed. R. Civ. P. 19(b); Challenge Homes, Inc. v. Greater Naples Care Ctr., Inc., 669
F.2d 667 (11th Cir. 1982).
Rule 19(b) enumerates the four most significant factors in determining whether an
absent party is indispensable: (1) the extent to which a judgment rendered in the person's
absence might prejudice that person or the existing parties; (2) the extent to which any
prejudice could be lessened or avoided by protective provisions in the judgment, shaping the
relief: or other measures; (3) whether a judgment rendered in the person's absence would be
adequate; and, (4) whether the plaintiff would have an adequate remedy if the action were
dismissed for non-joinder.
Fed. R. Civ. P. 19(b); Doty v. St. Mary Parish Land Co., 598
F.2d 885, 887 (5th Cir. 1979) ("A district court may refuse to proceed with the action if
prejudice would result to either the absent party or to parties already joined"); Raimbeault,
2014 WL 4954237, at *8.
In cases challenging the enforceability or validity of a contract, joinder of all parties
to that contract will typically be required. Harrell and Sumner Contracting Co. v. Peabody
Petersen Co., 546 F.2d 1227, 1228-29 (5th Cir. 1977) ("in an action brought on a
partnership contract, all members of the partnership are indispensable parties"); Raimbeault,
2014 WL 4954237, at *9. This is true primarily because the absent contract-party has a
legally protected interest in the outcome of the litigation. Raimbeault, 2014 WL 4954237, at
*9.
In addition, non-joinder of a contract-party would undermine the court's ability to
render complete relief among existing parties, since the absent party would not be bound by
the court's judgment on the challenged contract. !d.; see also, Spear Group, Inc. v. Florida
29
Power & Light Co., 2014 WL 272724, at *3 (Jan. 23, 2014) (absent party deemed "required"
under Rule 19(a) because plaintiff was suing to recover monies under its contract with the
absent party, and to resolve the dispute, the court would be required to adjudicate the absent
party's rights under the contract).
DISCUSSION
Defendant argues that "in his Amended Complaint, [Plaintiff] ignores the company that
issued his paycheck (Tulepan Management, LLC) and all four contracts, and the parties who
signed them, and has decided to simply name Bob Roberts individually as the sole defendant."
[DE 70 at 2]. Specifically, Defendant argues:
Catalina Somerset, Tulepan Management and CST Heron are all necessary
parties to this suit because: (i) the question of whether Craig Tulepan is entitled
to a "return" of his investment is governed by the terms of the various
operating agreements to which Tulepan, Catalina and Somerset are parties; (ii)
in the event that this Court orders the requested return of capital, as Tulepan
hopes, it will require the Court to rule on and interpret the terms of those
operating agreements; (iii) if the Court orders a return of Tulepan's investment
capital it will negatively impact the operation of those two entities (simply,
they will have less operating capital); (iv) to the extent that any decision of
this Court will impact the operation of Catalina and Somerset those entities have
the right to come in to this case as parties and defend it; (v) that the presence
of these parties is required has now become crystal clear by the tiling of the
New York Action which involves the very same transaction (Tulepan's
investment into the shopping centers), the same shopping centers (Catalina
and Somerset) and the same Plaintiff, Tulepan; (vi) the payment of interest,
as all parties testified in this case, is governed by the terms of two separate
independent contractor agreements between CST Heron and Catalina and
Somerset and none of those companies are parties to this action; and (viii)
finally, Craig Tulepan is suing for "unpaid wages" yet he has failed to name as a
party his employer - Tulepan Management.
[DE 70 at 3-4].
However, Defendant mischaracterizes the claims alleged in the Amended
Complaint. Rather than being based on the "the [Amended Operating Agreements] to which
Tulepan, Catalina and Somerset are parties," the Amended Complaint pled various tort claims
30
against Defendant, and breaches of contracts between Plaintiff and Defendant only. The only
claim tangentially related to the Amended Operating Agreements with Catalina and Somerset
was Plaintiff's breach of trust claim. However, the Court has granted summary judgment in
favor of Defendant as to this claim.
At this juncture, the only claims left before the Court are Defendant's alleged breach of
the Restated Employee Compensation Agreement (Counts IV and V) and Defendant's alleged
breach of the oral Investment Agreement (Count VI).
The 2004 Employee Compensation
Agreement was signed by Plaintiff and Defendant in their individual capacities. [DE 11-1 ]. The
Restated Employee Compensation Agreement, which contained essentially identical terms, was
signed only by Plaintiff. [DE 11-2]. There was a blank signature line for "Bob Roberts." [!d.].
Although Defendant argues that Tulepan Management was Plaintiff's employer, and that
Plaintiff was paid by this entity, Tulepan Management is not a party to the Restated Employee
Compensation Agreement.
[DE 11-2].
Neither has Defendant provided any evidence to
demonstrate that Defendant assigned any obligations under the Restated Employee
Compensation Agreement to Tulepan Management. In addition, Defendant does not argue that
anyone besides Plaintiff and Defendant was a party to the oral Investment Agreement. Finally,
while a party may move even at trial for Rule 19 joinder, "undue delay in making the motion can
properly be counted against him as a reason for denying the motion. A joinder question should
be decided with reasonable promptness." Fed. R. Civ. P. 19, Advisory Committee Note (1966
amendment). Defendant does not allege discovery disclosed some latent reason for joinder, but
rather appears to have slept on this argument for eight months.
Accordingly, Defendant's
Motion to Dismiss for Failure to Join Indispensable Parties is denied and it is hereby
31
ORDERED AND ADJUDGED as follows:
1. Defendant's Motion for Partial Summary Judgment as to Counts I, II, Ill, IV, and V
[DE 64] is GRANTED;
2. Defendant's Motion to Dismiss the Amended Complaint for Failure to State a Claim
[DE 14] is DENIED AS MOOT;
3. Defendant's Motion to Strike Claims for Punitive Damages [DE 15] is DENIED AS
MOOT; and
4. Defendant's Motion to Dismiss the Amended Complaint for Failure to Join
Indispensable Parties [DE 70] is DENIED.
SO ORDERED in Chambers at West Palm Beach, Florida, this
Copies to:
Counsel of Record
/6' day of January, 2015.
D ALD M. MIDDLEBROOKS
UNITED STATES DISTRICT JUDGE
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