Court Opinion

ID: 9929327
Source: CourtListenerOpinion
Date Created: 2024-02-02 15:05:03.672914+00
Date Added: 2024-06-11T10:07:19.451296
License: Public Domain

FIFTH DISTRICT COURT OF APPEAL
                  STATE OF FLORIDA
                 _____________________________

                      Case No. 5D23-1402
                  LT Case No. 2019-CA-000944
                 _____________________________

KUN XIANG, M.D.,

    Appellant,

    v.

OCALA HEART CLINIC II, LLC,
WILLIAM F. DRESEN, M.D.,
JOSEPH R. ALONSO, M.D., VIJAY
K. MITTAL, M.D., SUREXA
CACODCAR, M.D., LAN LUO, M.D.
and TONG LIU, M.D.,

    Appellees.
                 _____________________________

On appeal from the Circuit Court for Marion County.
Gary L. Sanders, Judge.

Tim W. Sobczak, of Dean, Mead, Egerton, Bloodworth, Capouano
& Bozarth, P.A., Orlando, for Appellant.

Michael R. Riemenschneider and Jeffrey L. DeRosier, of
Riemenschneider, Wattwood & DeRosier, P.A., Melbourne, for
Appellees.

                       February 2, 2024

SOUD, J.
    Dr. Kun Xiang appeals the amended final judgment entered
against him by the trial court in this contractual dispute arising
from Xiang’s membership in and employment with Ocala Heart
Clinic. We have jurisdiction. See Art. V, § 4(b)(1), Fla. Const.; Fla.
R. App. P. 9.030(b)(1)(A). We affirm.

                                  I.

    Xiang was a cardiologist at the Clinic who, after two years of
employment, became a member physician. To become a member
physician, Xiang entered into two different agreements with the
Clinic: a Member Employment Agreement and an Operating
Agreement, 1 the terms of which require they be read in pari
materia. These two agreements provided, inter alia, that Xiang
would buy 100 “membership units” in the Clinic for more than
$300,000.

     As was customary, the Clinic allowed Xiang to pay the
purchase amount over a period of years. Xiang elected to pay
monthly installments over a five-year term with a modest interest
rate. The trial court received in evidence—without objection—an
amortization schedule setting forth the amount of the debt and the
terms of repayment, including the five-year term, the interest rate,
and the monthly payment identifying amounts assigned to
principal and interest. Xiang made numerous payments toward
his buy-in.

     Not long after buying in as a member physician, the
relationship between Xiang and the Clinic soured. The growing
discord centered in part around Xiang’s assertion that the Clinic
breached its obligation under the Operating Agreement to make a
distribution to him to cover a 2017 tax liability. 2 The Member

    1 Xiang testified that prior to entering into these agreements,

he read the agreements and consulted with counsel.
    2 All member physicians incurred a 2017 tax liability. While

the Clinic does not seem to dispute its obligation to make a
distribution to Xiang and all member physicians, the testimony
before the trial court established it was the Clinic’s longstanding

                                  2
Employment Agreement required Xiang to give the Clinic ten days’
written notice of the breach as an opportunity for the Clinic to cure.
He did not do so.

     Ultimately, Xiang resigned. The Member Employment
Agreement required Xiang to provide the Clinic with 180 days’
notice of his resignation. Again, he did not do so, resigning with
approximately forty-five days’ notice to the Clinic.

    Xiang’s resignation triggered the Clinic’s repurchase of his
membership units. Related thereto, the Operating Agreement
provides:

       Upon the purchase of Units owned by Kun Xiang,
       M.D., any balance owed to the Company by
       him on the Xiang Promissory Note shall be
       deemed indebtedness . . . . In the event the
       Purchase Price . . . is less than the amounts
       due under the Xiang Promissory Note, Kun
       Xiang, M.D.[,] shall be required to pay the
       Company any such difference.

     Whatever the cause, no promissory note was ever executed
between Xiang and the Clinic. A clinic representative testified he
believed “it was just an oversight.”

     Pertinent here, Xiang filed, as amended, a seven-count
complaint. The Clinic answered and filed a two-count
counterclaim: count I for breach of the Member Employment
Agreement and count II for payment of the balance of the buy-in
price required by the Operating Agreement. 3

practice not to pay such a distribution and that members simply
paid their respective tax liabilities.
    3 The issues we address in this opinion arise from the trial

court’s determinations on the Clinic’s counterclaim. We affirm
without further comment the trial court’s decision on Xiang’s
amended complaint.

                                  3
     Following a two-day bench trial, 4 as to count I of the Clinic’s
counterclaim, the trial court found that Xiang breached the
Member Employment Agreement but awarded no damages,
concluding that any damages were speculative given the lack of
evidence introduced at trial. The trial court found the Clinic to be
the prevailing party on this count. As to count II of the Clinic’s
counterclaim, the lower court found that Xiang owed the balance
of the buy-in price as required by the Operating Agreement and
entered judgment in favor of the Clinic accordingly. Xiang’s appeal
followed.5

                                 II.

     We review de novo a trial court’s interpretation of a contract,
which is, of course, a question of law. See Smith v. Carlton, 348 So.
3d 52, 56 (Fla. 5th DCA 2022). Importantly, however, “[i]n an
appeal from a bench trial, the trial judge[‘]s findings of fact are
clothed with a presumption of correctness on appeal, and these
findings will not be disturbed unless the appellant can
demonstrate that they are clearly erroneous.” 6 Covelli Fam., L.P.
v. ABG5, L.L.C., 977 So. 2d 749, 752 (Fla. 4th DCA 2008) (internal
quotations and citations omitted).

     Further, the trial court’s determination of the prevailing party
for purposes of awarding attorneys’ fees is reviewed for abuse of

    4 During trial, Xiang abandoned all but two counts of his
amended complaint: count I seeking severance compensation and
count VII seeking rescission and damages under the Florida
Securities and Investor Protection Act.
    5 The Clinic did not cross appeal.

    6 When a reviewing court concludes that a trial court’s finding,

whether express or inferential, “is without support of any
substantial evidence, is clearly against the weight of the evidence
or that the trial court has misapplied the law to the established
facts, then the decision is ‘clearly erroneous’” and we “will reverse
because the trial court has ‘failed to give legal effect to the
evidence’ in its entirety.” Holland v. Gross, 89 So. 2d 255, 258 (Fla.
1956).

                                  4
discretion. Hardeman Landscape Nursery, Inc. v. Watkins, 290 So.
3d 574, 576 (Fla. 2d DCA 2020) (citing Erhm Orthopedics, Inc. v.
Edwards, 260 So. 3d 559, 561 (Fla. 2d DCA 2019)).

                                   A.

     As to count I of the Clinic’s counterclaim, the trial court found
that Xiang breached the Member Employment Agreement by
failing to (i) give the required ten-day written notice of breach and
opportunity to cure and (ii) give 180 days’ notice of his resignation.
However, while the trial court found in favor of the Clinic it
determined that “any award of damages would be speculative at
best based upon the inadequacy of the evidence produced at trial.”
Since the Clinic failed to prove damages, Xiang argues the trial
court erred in finding the Clinic was the prevailing party on this
count. We disagree.

     “[T]he party prevailing on the significant issues in the
litigation is the party that should be considered the prevailing
party for attorney’s fees.” Moritz v. Hoyt Enters., Inc., 604 So. 2d
807, 810 (Fla. 1992) (emphasis added). Thus, “the fairest test to
determine who is the prevailing party is to allow the trial judge to
determine from the record which party has in fact prevailed on the
significant issues tried before the court.” 7 Id. A trial court is vested
with broad discretion to determine which party has prevailed in
the case before it. Skylink Jets, Inc. v. Klukan, 308 So. 3d 1048,
1051 (Fla. 4th DCA 2020) (citing Sidlow v. Bowles Custom Pool &
Spas, Inc., 32 So. 3d 722, 722 (Fla. 5th DCA 2010)).

     It is certainly true that damages are an essential element to
be proven by a plaintiff in a breach of contract action. Generally,
“[t]o prove breach of contract, the plaintiff must establish (1) the
existence of a contract, (2) a breach of the contract, and (3)
damages resulting from the breach.” Farman v. Deutsche Bank
Nat’l Tr. Co., as Tr. for Long Beach Mortg. Loan Tr. 2006-05, 311
So. 3d 191, 195 (Fla. 2d DCA 2020) (internal quotation and citation

     7 In Moritz, the Florida Supreme Court rejected the position

that the prevailing party is the party who recovered an affirmative
judgment. Moritz, 604 So. 2d at 809–10; see also Skylink Jets, Inc.,
308 So. 3d at 1051.

                                   5
omitted). “Under Florida law, damages are an essential element of
an action for breach of contract.” Id. (citations omitted). However,
proof of damages is not a condition precedent for a party asserting
a breach of contract claim to be considered the prevailing party.

     “Absent compelling circumstances,[8] . . . ‘[i]n a breach of
contract action, one party must prevail.’” Khodam v. Escondido
Homeowner’s Ass’n, Inc., 87 So. 3d 65, 66 (Fla. 4th DCA 2012). This
is true even when, as in Khodam, a defendant is determined to
have breached the contract but plaintiff is awarded no damages.
See id. (“Despite the absence of damages, the finding that appellee
breached the contract made appellant the prevailing party on the
litigation’s significant issues.” (citing Green Cos., Inc. v. Kendall
Racquetball Inv., Ltd., 658 So. 2d 1119, 1121 (Fla. 3d DCA 1995))).

     In the case sub judice, the trial judge found that the Clinic
proved Xiang breached the Member Employment Agreement by
failing to give the required ten-day written notice of breach and
180 days’ notice of his resignation. Thus, even though the trial
court declined to award damages, the trial judge was well within
his discretion to determine the Clinic prevailed. The significant
issue in this count of the counterclaim was whether Xiang
breached the Member Employment Agreement. The trial court
found he did, and that determination is not clearly erroneous.
Under Florida law, this conclusion is sufficient for the Clinic to be
considered the prevailing party on Count I of its counterclaim.

    8  An example of such compelling circumstances would be
where a contract fails as a result of fault by both contracting
parties. In such an instance “an award of prevailing party fees
would not be appropriate because it would result in an unjust
reward to a party whose conduct caused the failure of the contract.”
Hardeman Landscape Nursery, Inc., 290 So. 3d at 576 (internal
quotations and citation omitted). Additionally, where neither
party proves a breach of the contract, an award of fees may not be
warranted. Id. (citing Lasco Enters., Inc. v. Kohlbrand, 819 So. 2d
821, 826 (Fla. 5th DCA 2002)).

                                 6
                                B.

     As to the judgment entered in favor of the Clinic on Count II
of its counterclaim, Xiang argues that the trial court erred in
finding in favor of the Clinic and entering judgment for the amount
he still owed for his buy-in to the membership. Specifically, Xiang
asserts that the Clinic cannot enforce the debt against him after
he left the Clinic because the Operating Agreement contemplates
“amounts due under the Xiang Promissory Note”—a promissory
note that does not exist. We disagree.

     Importantly, the existence of the debt incurred by Xiang to
purchase his membership in the Clinic was not disputed at trial.
As the trial court found, and as the record before us makes clear,
Xiang agreed to the buy-in amount. The trial court received into
evidence at trial—without objection—the amortization schedule
for Xiang’s buy-in, which identifies the buy-in amount, the five-
year payment period, the interest charged, and the portions of each
payment assigned to principal and interest. Xiang’s own testimony
confirmed he was provided a copy of the amortization schedule
prior to becoming a member and agreed to it. Indeed, Xiang made
numerous payments toward the buy-in as set out in the
amortization schedule prior to his resignation from the Clinic.

     The parties’ failure to execute a promissory note as
contemplated by the Operating Agreement is not fatal to the
existence of the debt Xiang owed to the Clinic. “A promissory note
evidence[s] a debt and specif[ies] terms under which one party will
pay money to another. But a promissory note is not required to
create a debt . . . .” In re Luna Devs. Grp., LLC, 618 B.R. 595, 615
(Bankr. S.D. Fla. 2020) (internal quotation and citation omitted).
Thus, while a promissory note evidences a debt, it does not
constitute the debt itself. See Price v. Mize, 628 P.2d 705, 706
(Okla. 1981) (“A promissory note is an unconditional written
promise, payable to order or to bearer, signed by the maker, in
which the maker agrees to pay a fixed sum of money on demand or
at a definite time. A debt is a sum of money due upon either an
express or an implied contract. The promissory note is not a loan
or a debt, it is only the evidence of indebtedness from the maker to

                                 7
the payee.”). 9 Indeed, in foreclosure cases, the absence of a
promissory note does not render a mortgage unenforceable.
See Thomas v. Thomas, 96 So. 2d 771, 773 (Fla. 1957) (finding the
mere absence of a promissory note evidencing a debt did not
prohibit a holding that the transaction was a mortgage
arrangement); Crum v. U.S. Fid. & Guar. Co., 468 So. 2d 1004,
1007 (Fla. 1st DCA 1985) (a one-month period between the
execution of mortgage and the corresponding promissory note does
not render the mortgage unenforceable for lack of
consideration); see also First Am. Bank of N.Y. v. Sloane, 651
N.Y.S.2d 734, 735 (1997) (finding a mortgage is not invalidated by
the absence of the note or bond manifesting the debt).

     As the want of a promissory note does not eviscerate the
existence of the buy-in debt, it follows then that the lack of a
promissory note does not preclude enforcement of the debt against
Xiang. The Clinic’s legal right to collect the remainder of the buy-
in price after Xiang’s resignation emanates from the Operating
Agreement. Specifically, as to the Clinic’s redemption of Xiang’s
membership units, the Operating Agreement provides:

       Upon the purchase of Units owned by Kun Xiang,
       M.D., any balance owed to the Company by
       him on the Xiang Promissory Note shall be
       deemed indebtedness . . . . In the event the
       Purchase Price . . . is less than the amounts
       due under the Xiang Promissory Note, Kun
       Xiang, M.D.[,] shall be required to pay the
       Company any such difference.

     Thus, the balance Xiang owed for the buy-in remained an
indebtedness even after his resignation. The precise balance owed
by Xiang was evidenced by the amortization schedule stipulated
into evidence during trial and the payments Xiang made before his
resignation. And since the amount still owed by Xiang exceeded

    9 This can be further seen when considering the definition of

“promissory note” in the context of Florida’s Uniform Commercial
Code, which defines a promissory note as “an instrument that
evidences a promise to pay a monetary obligation . . . .”
§ 679.1021(1)(mmm), Fla. Stat. (2018).

                                 8
the purchase price to be paid by the Clinic to redeem his
membership units, 10 the Operating Agreement makes clear he
remained liable for the unpaid balance of the buy-in.

                                 III.

     Accordingly, for these reasons, the Amended Final Judgment
of the trial court is AFFIRMED.

    It is so ordered.

HARRIS and PRATT, JJ., concur.

                 _____________________________

    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.
               _____________________________

    10  The Operating Agreement sets forth a method for
determining the purchase price the Clinic must pay to redeem a
transferring member’s membership units. Because of the brevity
of Xiang’s tenure as a member, the Clinic’s purchase price to
redeem his membership units was zero.

                                  9