Source: https://melbournelegalteam.com/case/Business+dispute+Melbourne+Business+Prevails+Appeal
Timestamp: 2019-04-26 15:41:10+00:00

Document:
A business dispute between partners can get really ugly, that is why it is important to have experienced legal counsel at your side.
A local doctor and the company he ran was sued by his former business partner. The business dispute surrounded use of company funds and yearly contributions made by each partner. Arcadier, Biggie, & Wood stepped in to defend the local doctor and his business and was successful at the trial court level. The business partner appealed and the case was argued in front of the Florida Fifth District Court of Appeals in Daytona Beach, Florida.
SAWAYA and EDWARDS, JJ., and UNDERWOOD, C.L., Associate Judge, concur.
Per curiam affirmed or a (“PCA”) means the judge found no error at the trial court level.
Attached below is the brief filed by Arcadier, Biggie, & Wood, in the case on behalf of the Defendant.
The rule is that on Summary Judgment, “Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence.” Fla. R. Civ. P. 1.510(e).
According to the terms of the operating agreements assignment of ownership for each company is only effective if the following written conditions are met; First all members must agree to the transfer in writing; Second the transferee must agree in writing to be bound by the operating agreements. (A. 48) and (A. 77).
The only facts Plaintiff brought forth at summary judgment are purported admissions, waivers, meeting minutes, and public records to argue that he is a member of Alpha Properties and Zeta Medical.
The Plaintiff is essentially asking this court to look at every conversation, every transaction, and every subjective belief the parties have maintained over almost a two decade long period of time to determine the meaning of the operating agreements. This approach that the Plaintiff advocates for is a misapplication of the law.
The rule is that where the terms are unambiguous, the parties’ intent must be discerned from the four corners of the document. Dows v. Nike, Inc., 846 So.2d 595, 601 (Fla. 4th DCA 2003).
None of the information provided by the Plaintiff at summary judgment is admissible because it is parol evidence. Crown Management Corp. v. Goodman, 452 So.2d 49, 52 (Fla. 2nd DCA 1984).
The terms of the operating agreements are clear and unambiguous which precludes the Plaintiff’s parol evidence including meeting minutes, admissions, and statements of the Plaintiff and Defendant. Crown Management Corp., 452 So.2d at 52.
The Plaintiff failed to bring forth any written transfer agreements to satisfy the contractual requirements set out in the operating agreements. “When analyzing a claim for breach of an operating agreement, the precise terms of the agreement are critical.” Dinuro Investments, LLC v. Camacho, 141 So. 3d 731, 740 – 741 (Fla. 3rd DCA 2014).
Admissions, waivers, and meeting minutes are not written transfer agreements or amendments to the operating agreement executed by the members of Alpha Properties and Zeta Medical. Id.
If there is a dispute between the written agreement and verbal agreements to transfer the membership of Alpha Properties and Zeta Medical to the Plaintiff and Defendant the written operating agreements prevail. See F.S. 608.423(1).
Additionally both operating agreements contain complete agreement provisions that specifically state they are complete agreements that “supersede any and all agreements, representations, warranties, statements, promises, and understandings, whether oral or written, with respect to the subject matter hereof and thereof.” See (A. 47) and (A. 81).
Because there was no proper assignment from the professional associations to the Plaintiff or Defendant the Court was correct to conclude that it was undisputed that Plaintiff and Defendant were not members of Alpha Properties or Zeta Medical or parties to the contract. Therefore the Court correctly entered summary judgment against the Plaintiff.
It is undisputed that the Plaintiff was not a member of Alpha Properties or Zeta Medical. It is undisputed that Plaintiff was not a party to the operating agreements or an owner of property located at 20 E Melbourne Ave. Melbourne Florida. Therefore his claims were properly dismissed by the trial court.
Count I of Plaintiff’s Amended Complaint seeks the production of certain documents relating to Alpha Properties pursuant to F.S. 608.4101. Plaintiff alleges that he is a member of Alpha Properties, entitled to review “all financial and business records for ALPHA, pursuant to F.S. 608.4101. [Complaint ¶32].
Plaintiff fails to plead or prove 1) that Plaintiff is a member of Alpha Properties; 2) that he made a demand to Alpha Properties for records relating to Alpha Properties; 3) that demand was reasonable under the circumstances, and; 4) that Alpha Properties denied Plaintiff access to its records. F.S. 608.4101 (2011).
Pursuant to the Alpha Properties operating agreement, professional association is the member of Alpha Properties, not Plaintiff individually. (A. 85). Plaintiff is not a member of Alpha Properties, and therefore cannot establish the first element. (Id.).
Plaintiff only makes general allegations that repeated demands have been made, but fails to provide any evidence of when his demand was made, what documents he demanded, and when he was denied access.
Q What records specifically did you ask for?
A I don’t know. Robert Chitty’s an accountant. He should know.
Q So you’re stating that your accountant sometime in 2005 or 2006 approached the bookkeepers and they were denied access to information that was pertinent to Zeta Medical?
Q What documents did you request that you were not given?
Mr. Robert Chitty, however did not provide much clarification to Plaintiff regarding what was asked for and what he received. [Pl. p. 61:8-9] (A. 250). By way of example, Mr. Chitty seeks old invoices and cancelled checks to support statements and files which were produced; however Mr. Chitty cannot recall whether or not he reviewed all those documents. [Chitty depo, p.27;3-6; p. 33:5-15; pp. 36:13-37:10] (A. 290 – 298).
Not only does the Plaintiff lack standing but the records request claim fails for multiple additional reasons including, (1) Plaintiff failed to articulate what records were requested and what was not produced pursuant to F.S. 608.4101 (2011); (2) the requests were made to Zeta then the Plaintiff turned around and sued Alpha which is the wrong company; (3) given that Plaintiff’s record demands were made in 2006 at the latest, they are time barred by the four year statute of limitations 95.11(3)(f) (2011); (4) Mr. Chitty testified that he had access to the invoices and canceled checks that he requested from Alpha but could not recall what he reviewed; and (5) Mr. Chitty testified that reviewing the corporate records would be a waste of his time and he did not even show up to review them at the agreed upon time. (Chitty Depo. p. 8 L17 – L9 2, p. 38 L4 – 21) (A. 271 – 272, 301).
Therefore the Court properly dismissed Count I.
In Count II Plaintiff, alleges that he is a member of Alpha Properties, claims that Defendant breached a duty of loyalty owed to Plaintiff as a member of Alpha Properties pursuant to F.S. 608.4225. The statute provides, generally, that each manager and managing member shall owe a duty of loyalty and a duty of care to the limited liability company and all of the members of the limited liability company. Id.
F.S. 608.4225 is clear that the duties stated therein are owed to 1) the Limited Liability Company, and 2) all of the members of the limited liability company. As a result, in order to pursue an action for violations of the statute individually, Plaintiff must first establish that he is personally a member of Alpha Properties.
As is detailed above, the Alpha Properties operating agreement lists its members of the company as: the professional associations. (A. 85).
Each of the named members are professional associations, which are corporations under Florida Law. A general principle of corporate law is that a corporation is a separate legal entity, distinct from the individual persons comprising them and absent some basis to pierce the corporate veil, there is no basis for imposing liability for corporate debts and obligations upon the individuals. See Gasparini v. Pordomingo, 972 So.2d 1053, 1055 (Fla. 3d DCA 2008).
Essentially what Plaintiff is asking this Court to do is pierce his own corporate veil to provide him with standing and pierce Defendant’s corporate veil to impose liability. There is no Florida case we have seen that states that this is legally permissible.
Plaintiff is a signatory, not a party, to the Alpha Properties operation agreement because he executed the agreement in his capacity as President of his professional association., a Florida Corporation, and not in his individual capacity. Nielsen v. Schindler, 587 So. 2d 498 (Fla. 2nd DCA 1991).
Additionally Section 12.11 of the operating agreement expressly precludes any rights or benefits to persons not named as a member in the agreement. Plaintiff, having not been individually named a member under the operating agreement, has no rights as a third party pursuant to Section 12.11. (A. 84).
Based on the clear language of the Alpha Properties operating agreement, Plaintiff is not a member of Alpha Properties and therefore does not have standing to pursue a claim under §608.4225.
Therefore Count II was properly dismissed.
Plaintiff, alleging that he is a member of Zeta Medical, claims that Defendant breached a duty of loyalty owed to Plaintiff as a member in 2008-2010 pursuant to F.S. 608.4225.
The statute provides, generally, that each manager and managing member shall owe a duty of loyalty and a duty of care to the limited liability company and all of the members of the limited liability company. F.S. 608.4225 (2011).
F.S. 608.4225 is clear that the duties stated therein are owed to 1) the limited liability company, and 2) all of the members of the limited liability company.
As a result, in order to pursue an action for violations of the statute individually, Plaintiff must first establish that he is a member of Zeta Medical. Id.
In his Amended Complaint, Plaintiff alleges that, “[b]oth Defendant and Plaintiff were members of Zeta Medical.”[Complaint¶9.] The Operating agreement, attached to Plaintiff’s Amended Complaint states otherwise.
The operating agreement of Zeta Medical is very clear that the professional association is a member, not Plaintiff individually. (A. 52). As a result, any duty under F.S. 608.4225 is owed to the nonparty, the professional association.
Further the Zeta Medical operating agreement strictly prohibits Plaintiff from asserting any rights or benefits as an incidental third party beneficiary of his professional association.
Q When you say “my office” what does that mean?
A (“The professional association”), at that time.
A Which was part of Zeta Medical.
Q Explain that to me. How is that part of Zeta Medical?
A The three doctors operated their own practices under their entities which was then under Zeta Medical, LLC.
Q So all three practices were under Zeta Medical?
Q Do you recall ever entering into an operating agreement for Zeta?
Q Lets look at Exhibit A on page 36. In Exhibit A it shows the ownership interest of what became Zeta Medical, Correct?
Q And it lists names of companies, correct?
Q And when it lists you as a (“professional association”); that’s a company you had. Correct?
Q Does (“the professional association”), still exist?
Q You would agree with me that at least Exhibit A shows that all the ownership interest of Zeta Medical is owned by companies.
Plaintiff also deposed Defendant and inquires as to the members of Zeta Medical. Through his line of questioning, and confirmed by Defendant’s testimony, Defendant was not a member either.
Q Yeah. You were not individually a member of what was Chandra, Gayden, Patel and Associates, L.C.C.; were you?
Q It was (“the professional association”).
[Def. depo, p.21:7-12] (A. 210).
Thus any duty owed to a member of Zeta Medical would be owed by the Defendant’s professional association, and not Defendant individually. F.S. 608.4225 Because the Zeta Medical operating agreement attached to Plaintiff’s Complaint and Plaintiff’s own testimony regarding the ownership of Zeta Medical conflict with his allegations that he is personally a member of Zeta Medical, Plaintiff does not have standing to pursue a claim under F.S. 608.4225 as a member of Zeta Medical.
Therefore Count III was correctly dismissed.
Plaintiff has no ownership interest in 20 E. Melbourne Avenue. The Subject Property was purchased in 1994 by Chandra, Gayden & Patel LC now known as Alpha Properties of Brevard, LC, which remains an active company.
Partitions of property in Florida are governed by Florida Statutes, Chapter 64. The Statute provides that the action for partition may be filed by any one of the several joint tenants, tenants in common, or coparceners, against their cotenants, coparceners, or others interested in the lands to be divided. F.S. 64.031.
Because the partition statute does not apply to the subject property and Plaintiff cannot establish that he is a “party” which may bring such an action, as defined by F.S. 64.031, Plaintiff cannot establish standing to assert a claim for partition.
Therefore Count IV was correctly dismissed.
Count V of Plaintiff’s Amended Complaint alleges that Defendant Chandra was a member of both ZETA and ALPHA. [Complaint ¶75]. Plaintiff also alleges that Defendant owed a fiduciary duty to “the other members of [Zeta and Alpha], including Plaintiff” [Complaint ¶76].
These allegations are not supported by any competent evidence.
Both operating agreements contain complete agreement provisions that specifically state they are complete agreements that “supersede any and all agreements, representations, warranties, statements, promises, and understandings, whether oral or written, with respect to the subject matter hereof and thereof.” See (A. 47) and (A. 81).
The rule is that Plaintiff must show a breach of the operating agreement or a statutory rule in order to succeed on a claim of breach of duty of care for the operation of a company. See Dinuro Investments, LLC, 141 So.3d at 740 – 741.
According to their operating agreements the parties’ professional associations are members of Zeta Medical and Alpha Properties. (A. 85) and (A. 52). Plaintiff and Defendant are not personally members of either company. (Id.).
The operating agreements expressly preclude any third party causes of action under the terms of the operating agreements. See (A. 84) and (A. 48).
Conspicuously missing from the operating agreement is any provision stating that the members shall be directly liable to each other for breaches of the terms of the operating agreement. Absent such a stipulation, we presume individual members are not liable for obligations or decisions of the company.
Dinuro Investments, LLC, 141 So. 3d at 740 – 742.
The operating agreements in this case unequivocally state who the members are which does not include the Plaintiff or Defendant Chandra. Supra.
Therefore Count V was correctly dismissed.
Plaintiff sued Defendant for certain alleged violations of the Zeta Medical operating agreement. An operating agreement is a contract. See Razin v. A Milestone, LLC, 67 So.3d 391, 396 (Fla. 2d DCA 2011).
Plaintiff’s claim for breach of contract fails because he cannot establish that he is a party to the contract. CARETTA TRUC. v. Cheoy Lee Shipyards, 647 So.2d 1028, 1031 (Fla. 4th DA 1994).
The same holds true for Defendant Chandra, while he signed on behalf of his P.A., he is not a party to the agreement who may be held liable for violations of the contract. See BENAJA PROP. INC. v. Richard A. Murno, 603 So.2d 548 (Fla. 2nd DCA 1992) (Reversing judgment imposing personal liability for fees based on a contract where the individual specifically signed the contract as president of a corporation).
The Zeta Medical operating agreement speaks for itself. The members are Alpha Medical P.A. f/k/a/ Comprehensive Medical Clinics of Brevard, P.A.; Cardiovascular Systems, INC.; Alpha Medical L.L.C.; and the professional associations (A. 52).
The Agreement was signed by the individuals in their representative capacities for each of their respective professional companies. Nielson, 587 So.2d at 498. As it pertains to Count VI, Plaintiff signed the agreement as President of his professional association which is separate and distinct from himself. Id.
As a result, while Plaintiff was a signatory to the operating agreement, he was not a party to the agreement and lacks standing to enforce the terms therein. Supra.
Therefore Count VI was properly dismissed.
The Alpha Properties operating agreement speaks for itself. The members are the professional associations (A. 85). The Agreement was signed by the Plaintiff and Defendant in a representative capacity. (Id.).
Plaintiff’s claim for breach of contract fails because he cannot establish that he is a party to the contract. CARETTA TRUC, 647 So.2d at 1031.
The same holds true for Defendant, while he signed on behalf of his P.A., he is not a party to the agreement who may be held liable for violations of the contract. See BENAJA PROP. INC., 603 So.2d at 548.
Plaintiff and Defendant were signatories to the operating agreement, however neither were parties to the agreement therefore entry of summary judgment against the Plaintiff was proper. Id. and Nielson, 587 So.2d at 498.
Therefore Count VII was properly dismissed.
The rule is that lack of standing can be raised any time prior to the filing of an appeal. McLagan v. Federal Home Loan Mortgage Corp., 145 So.3d 943 (Fla. 2nd DCA 2014). (“[S]tanding may not be raised for the first time on appeal; however, it does not necessarily require that standing be raised only by means of an affirmative defense.”).
In Lovett v. National Collegiate Student Loan, 149 So.3d 735,737 (Fla. 5th DCA 2014), this Court determined that raising standing for the first time at the summary judgment stage properly preserved the issue and did not act as a waiver of the defense.
In this case standing was challenged in a lengthy and detailed motion to dismiss at the outset of the litigation multiple years before summary judgment was entered. (A. 95). The Plaintiff testified during his deposition that he was not a member of Alpha Properties and Zeta Medical based upon the contracts he attached to his complaints in this lawsuit. Supra.
In this case standing was challenged during summary judgment and served as a barrier to Plaintiff’s claims. In the Lovett, case this Court has deemed proper a similar assertion of standing as a defense during the summary judgment stage. 149 So.3d at 737.
Alpha Properties and Defendant in this case did even more to put the Plaintiff on notice of his lack of standing than the Defendant in Lovett, because the standing issue was raised during the pleading stage, during depositions, and during summary judgment.
The Plaintiff’s waiver argument is simply a misstatement of law because standing can be challenged by a Defendant on a motion even after a jury verdict has been rendered as long as the case has not been appealed. Maynard v. Florida Board of Education, 998 So.2d 1201, 1206 (Fla. 2nd DCA 2009).
Therefore the trial court properly dismissed all Counts for lack of standing.
The Plaintiff’s curative motions were futile because they did not correct the standing issue and by the time standing was addressed by the Plaintiff the statute of limitations had already expired.
None of this was ever hidden from the Plaintiff so the dismissal is not a result of fraud rather a result of the Plaintiff’s own inexcusable neglect.
The Defendant’s spent a lot of money and time defending this case and the Plaintiff affirmatively represented to the Plaintiff and the Court in a Pre Trial Statement that he did not wish to amend his pleadings.
Therefore it would be prejudicial to permit and amendment at this stage of litigation and prevent the Plaintiff from recouping litigation costs.
The rule is that if a motion to amend the pleadings is futile then it is not an abuse of discretion to deny the motion. Gate Lands Co. v. Old Ponte Verde Beach Condominium, 715 So.2d 1132, 1135 (Fla. 5th DCA 1998).
In this case the trial court at summary judgment rejected the Plaintiff’s argument that he has standing to pursue a cause of action. (A. 101). The motion to amend filed the day before summary judgment still did not correct the Plaintiff’s lack of standing issue therefore the court found that the amendment was futile. (A. 101).
The trial court correctly determined the motion to amend was futile because the trial court already understood and rejected the Plaintiff’s consistently maintained theory of standing and the motion to amend did not change the Plaintiff’s theory of standing. Gootee v. Clevinger, 778 So. 2d 1005, 1009 (Fla. 5th DCA 2000); see also Rader v. Allstate Ins. Co., 789 So. 2d 1045, 1047 (Fla. 4th DCA 2001) (Amendment is futile if it fails to sustain an action.).
Therefore the trial court did not abuse its discretion when it denied the Plaintiff’s Motion to Amend.
This rule was adopted by the Fifth Circuit in Porter v. Hardin, 164 F.2d 401 (C.A. 5th 1947). This follows the Florida Supreme Court’s holding and logic in Gershuny v. Martin, 539 So.2d 1131, 1133 (Fla. 1989), which determined that doctors are separate and distinct from their professional association.
Because the four (4) year statute of limitations for claims asserted in August 2011 against Rajiv Chandra would have expired by August of 2015 as to Rajiv Chandra, M.D., P.A. the Plaintiff’s Motion to Substitute is futile and was correctly denied. Supra.
It certainly appears that the Plaintiff fails the Identity of Interest test articulated in Cabot v. Clearwater Construction Co., 89 So.2d 662, 663-64 (Fla. 1956), because the Plaintiff still argues that he is the real party in interest even in his Initial Brief. It cannot be said that making himself the named Plaintiff and Doctor Chandra the named Defendant was a misnomer or improper designation rather it was an affirmative choice to make collections easier and the lawsuit more personal for himself and Doctor Chandra.
In addition the Plaintiff’s inability to designate the proper party is a result of his own inexcusable neglect. The Plaintiff had in his possession the operating agreements for which he sued upon in 2011 and 2012, the Plaintiff was aware of the Defendants’ challenge to standing via a motion to dismiss in 2011 and the Plaintiff admitted in his own deposition that he was not a member of these companies. Rayner v. Aircraft Spruce-Advantage, Inc., 38 So.3d 817, 821 n. 2 (Fla. 5h DCA 2010) (affirming trial court’s finding that amended pleading did not relate back noting that appellant’s failure to join correct party was plaintiff’s fault, since the correct defendant identified itself as the proper party before the statute of limitations expired.) See Beltran v. Miraglia, 125 So.3d 855, 860 (Fla. 4th DCA 2013).
Therefore the Motion to Substitute Parties was properly denied.
The Defendants never hid their standing defense from the Plaintiff. It was brought up in Defendant Chandra’s Motion to Dismiss, depositions, Defendant Chandra’s Motion for Summary Judgment, and was contained in the very contracts the Plaintiff sued upon. Supra.
The Defendant filed in his Motion to Set Aside Judgment a purported transfer agreement which Plaintiff cites in his brief (R. 1842). This document was never made part of the court file until after summary judgment was entered.
Plaintiff attempts to use this as “summary judgment” evidence in his brief but at best it was not presented at all during summary judgment was filed, after judgment was entered, and was never executed by the members in compliance with the assignment provisions contained in the operating agreements. Supra.
The Plaintiff simply had no interest in amending the pleadings until he actually lost. The Plaintiff even went as far as to represent to the trial court and the Defendants in a March 2015 Pre-Trial Statement that he did not need to nor did he want to amend his pleadings, “There are no amendments to Plaintiff’s pleadings.” (A. 416).
Plaintiff affirmatively chose to pursue the theory that he was a member of these companies regardless of what the contracts said. Even at the time summary judgment was being decided he still did not want to sub out as the Plaintiff.
At the time the contracts were entered into the business operation was setup in a way to shield the Plaintiff and Defendants from individual liability and to prohibit oral transfers of ownership interest. Now the Plaintiff chooses to ignore these provisions.
The Defendants have been prejudiced because they have spent a considerable amount of time and money defending this case based on the standing defense and then to have the Plaintiff switch his strategy after judgment was entered would prevent the Defendants from recouping litigation costs.
For the reasons stated above the Defendants requests that this Court affirm the decision of the Circuit Court.
 12.11 No Third Party Rights. Except as otherwise provided herein, this Agreement shall not (directly or indirectly, contingently or otherwise) confer or be construed as conferring any rights or benefits on any Peron that is not named a Member or a permitted transferee of a Member hereunder.

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