AMERICAN SALES AND MANAGEMENT ORGANIZATION LLC D/B/A EULEN AMERICA v. LUIS RODRIGUEZ LOPEZ ( 2023 )

Third District Court of Appeal
State of Florida
Opinion filed March 22, 2023.
Not final until disposition of timely filed motion for rehearing.
________________
No. 3D20-563
Lower Tribunal No. 14-17706
________________
American Sales and Management Organization LLC d/b/a
Eulen America,
Appellant/Cross-Appellee,
vs.
Luis Rodriguez Lopez,
Appellee/Cross-Appellant.
An Appeal from the Circuit Court for Miami-Dade County, William
Thomas, Judge.
Greenberg Traurig, P.A., and Joseph Mamounas and Jay A. Yagoda,
for appellant/cross-appellee.
Dorta Law, and Matias R. Dorta; Kula & Associates, P.A., Elliot B. Kula,
W. Aaron Daniel, and William D. Mueller, for appellee/cross-appellant.
Before FERNANDEZ, C.J., and EMAS and LINDSEY, JJ.
EMAS, J.
I. INTRODUCTION
This appeal and cross-appeal arise out of the employment (and
termination) of Luis Rodriguez Lopez (Rodriguez) as a manager and CEO of
American Sales and Management Organization, LLC (ASMO), a Miami-
based provider of aviation-services. After ASMO terminated Rodriguez in
2014, it sued him, alleging he breached his fiduciary duties to ASMO by
conspiring, and acting in concert, with others to start a competing aviation-
services business. Rodriguez filed a counterclaim for, inter alia,
indemnification, contending he was entitled, under the terms of ASMO’s
Operating Agreement, to be indemnified by ASMO for his attorney’s fees and
other legal costs to defend himself against ASMO’s claims.
The case proceeded to trial, and the jury found that Rodriguez
breached his fiduciary duty to ASMO and that ASMO suffered damage as a
result of such breach; despite these findings, the jury awarded ASMO $0 in
damages.
The trial court later granted ASMO’s posttrial motion for additur of $1
in nominal damages, and granted summary judgment in favor of Rodriguez
on his claim for indemnification. On appeal, ASMO challenges the trial
court’s final summary judgment awarding Rodriguez indemnification and
contends the trial court should instead have granted ASMO’s cross-motion
2
for summary judgment on Rodriguez’s indemnification claim. Rodriguez
cross-appeals, challenging the trial court’s order granting additur, as well as
the order denying his motion for judgment in accordance with his motion for
directed verdict on ASMO’s claim for breach of fiduciary duty.
For the reasons that follow, we reverse the additur award of $1 in
nominal damages in favor of ASMO and remand for entry of final judgment
for Rodriguez on the breach of fiduciary duty claim. We likewise reverse the
trial court’s final summary judgment in favor of Rodriguez on his
indemnification counterclaim, and remand for entry of final judgment in favor
of ASMO on that counterclaim.
II. FACTUAL AND PROCEDURAL BACKGROUND
In July 2014, ASMO sued Rodriguez (and others) for breach of
fiduciary duty, aiding and abetting, and civil conspiracy, alleging that
Rodriguez and his codefendants conspired to appropriate ASMO’s
resources for their own use to start a business venture in direct competition
with ASMO. In its complaint, ASMO sought damages—"including but not
limited to nominal damages”—for Rodriguez’s alleged breach of his statutory
duties of loyalty and care.
When ASMO filed its lawsuit, Rodriguez demanded (pursuant to
ASMO’s Operating Agreement) advancement for the legal fees and costs he
3
would expend in defending against the suit; ASMO denied this demand.
Rodriguez then filed a counterclaim for breach of contract, maintaining that,
under the terms of the Operating Agreement, ASMO was required to
indemnify and advance the expenses incurred by Rodriguez in defending
against ASMO’s lawsuit, upon an undertaking by Rodriguez that he would
repay ASMO if, ultimately, it was determined he was not entitled to
indemnification. ASMO’s denial of Rodriguez’s demand for advancement
and indemnification upon being sued, he alleged, constituted a breach of
ASMO’s Operating Agreement.
During the pendency of the lawsuit, the trial court granted Rodriguez
advancement of legal fees and costs in defense of ASMO’s lawsuit, which
ASMO appealed in American Sales & Management Organization, LLC v.
Luis Rodriguez Lopez, et al., 217 So. 3d 230 (Fla. 3d DCA 2017) (ASMO I).
In ASMO I, this court held that the “clear and unambiguous language” of
ASMO’s Operating Agreement obligated ASMO to advance expenses to
Rodriguez “in the defense of the underlying lawsuit.” Id. at 230. In so
holding, we made clear: “Advancement, as distinct from indemnification,
involves the advance payment of litigation expenses regardless of whether
indemnification is later determined.” Id. at n.1.
4
In March 2018, the case proceeded to a jury trial on ASMO’s claim
against Rodriguez for breach of duty as manager, as well as claims for civil
conspiracy and aiding and abetting by Rodriguez and other defendants.
(Rodriguez’s counterclaim against ASMO for indemnification would await
the outcome of the trial on ASMO’s claims.) In support of its claim that
Rodriguez breached his duties of loyalty and care, ASMO presented
evidence consisting primarily of emails, text messages and audio recordings
in which Rodriguez discussed starting a competing business venture with
funding from Carlos Alvarez (Rodriguez’s relative and a shareholder in
ASMO’s parent company, Eulen S.A. (Eulen), located in Spain).1 ASMO
cited specific actions by Rodriguez and his co-conspirators to support its
claim that Rodriguez breached his fiduciary duties to the company (e.g.,
causing ASMO to engage a sham subcontractor to generate “cash flow;”
sabotaging ASMO bids; sharing confidential and proprietary business
information; and generally using ASMO resources to benefit the nascent,
competing business).
1
Allegedly, there was a rift in the family, resulting in Alvarez’s removal as
CEO of Eulen in 2010.
5
The jury returned a verdict for ASMO on the breach of duty claim,
finding that Rodriguez breached his duty of care or his duty of loyalty,2 and
that such breach was the legal cause of damage to ASMO. Despite these
findings, the jury awarded $0 in damages. 3 The parties filed several post-trial
motions, including Rodriguez’s motion to set aside the verdict and for entry
of final judgment in accordance with his earlier motion for directed verdict,
as well as ASMO’s motion for additur of $1 in nominal damages. The trial
court denied Rodriguez’s motion and granted ASMO’s motion for additur of
$1 in nominal damages.
The trial court then addressed the parties’ competing motions for
summary judgment on Rodriguez’s remaining counterclaim for
2
The jury was instructed that for ASMO to recover under this theory, ASMO
had to prove three elements, including that Rodriguez owed ASMO a duty of
loyalty or a duty of care. Given the wording of the jury instructions and verdict
form, it cannot be determined whether the jury found a breach of both duties
or only one duty (and if only one duty, which one).
3
As to the remaining counts in ASMO’s complaint (for conspiracy and for
aiding and abetting), the jury found Rodriguez and Alvarez conspired to have
Rodriguez breach his duties of care and loyalty to ASMO and that Alvarez
aided and abetted Rodriguez in said breach. However, the jury found that
neither the conspiracy nor the aiding and abetting was a legal cause of
damage to ASMO. Thus, ASMO did not prevail on these claims, and those
claims do not form a part of this appeal. Still, it is noteworthy that, while the
jury found ASMO failed to prove causation on the conspiracy and aiding and
abetting counts, it nevertheless found that ASMO did prove Rodriguez’s
breach of duty was a legal cause of damage to ASMO.
6
indemnification. The trial court granted Rodriguez’s motion for summary
judgment and denied ASMO’s cross-motion, finding that “despite the
adjudication of liability but in view of the circumstances of the case”—i.e., the
jury awarded $0 in damages and therefore the case did not warrant
Rodriguez having to incur $1 million to defend against it—Rodriguez “is fairly
and reasonably entitled to indemnity for such expenses which the Court shall
deem proper.”
The trial court entered final judgment for ASMO on its breach of
fiduciary duty claim, awarding ASMO nominal damages of $1 (by way of
additur), and entered final summary judgment in favor of Rodriguez on his
counterclaim for indemnification.
ASMO asserts the trial court erred in granting Rodriguez’s motion for
summary judgment on his counterclaim for indemnification and in denying
ASMO’s cross-motion for summary judgment. In his cross-appeal,
Rodriguez asserts the trial court erred in denying his motion for judgment
notwithstanding the verdict on ASMO’s claim for breach of fiduciary duty, and
further erred in granting ASMO’s motion for additur.
7
III. DISCUSSION AND ANALYSIS
A. The trial court erred in granting ASMO’s motion for additur of
$1 in nominal damages.
We first address Rodriguez’s appeal of the trial court’s order granting
ASMO’s additur motion, as our determination of this issue directly impacts
our analysis of Rodriguez’s appeal of the denial of his motion for judgment
in accordance with motion for directed verdict. To this point, because we
reverse the additur order—and thereby reinstate the jury’s verdict awarding
zero damages—we are also compelled to reverse the trial court’s denial of
Rodriguez’s posttrial motion for judgment in accordance with his earlier
motion for directed verdict, which was premised on ASMO’s failure to prove
damages, an essential element of a breach of fiduciary duty claim. We first
explain why, under the unique circumstances of this case, the trial court
erred in granting ASMO’s posttrial motion for additur.
1. Inconsistent verdict or inadequate verdict?
On appeal, the parties frame this issue as whether the jury’s zero
verdict is “inconsistent” or “inadequate.” Rodriguez contends it is a legally
inconsistent verdict and that it was thus incumbent upon ASMO to raise the
issue of the verdict’s legal inconsistency before the jury was discharged.
See e.g., Coba v. Tricam Indus., Inc., 164 So. 3d 637 (Fla. 2015). He
8
concludes that, by failing to do so, ASMO waived any right to challenge the
jury’s award of $0 in damages or to seek posttrial additur.
ASMO counters that the $0 damage award, following a finding of
liability, did not render the verdict legally inconsistent, but merely inadequate.
Francis-Harbin v. Sensormatic Elecs., LLC, 254 So. 3d 523, 525 (Fla. 3d
DCA 2018). Because it was an inadequate verdict, ASMO continues, the
company was not required to raise the issue prior to the jury’s discharge,
and, instead, could raise it in a posttrial motion for additur or new trial. Id.We conclude that neither party is correct—under the rather unique
facts of this case, the verdict is neither inconsistent nor inadequate. We
reach this conclusion as a result of the agreed-upon jury instructions, and
the fact that the jury did precisely what the trial court said it could do.
The Florida Supreme Court has addressed the distinction between a
legally inconsistent verdict and an inadequate verdict:
Courts have distinguished cases involving inadequate verdicts
from those that are characterized as inconsistent. A verdict is
not necessarily inconsistent simply because it fails to award
enough money or even no money at all. In those
circumstances, the issue is the adequacy of the award, not its
consistency with any other award by the verdict. An objection to
the inadequacy or excessiveness of a verdict can be raised in a
motion for a new trial without requiring a party to object prior to
the jury's discharge.
On the other hand, an inconsistent verdict is defined as when
two definite findings of fact material to the judgment are
9
mutually exclusive. Where the findings of a jury's verdict in two
or more respects are findings with respect to a definite fact
material to the judgment such that both cannot be true and
therefore stand at the same time, they are in fatal conflict. To
preserve the issue of an inconsistent verdict, the party claiming
inconsistency must raise the issue before the jury is discharged
and ask the trial court to reinstruct the jury and send it back for
further deliberations.
Coba, 164 So. 3d at 643-44 (emphasis added) (citations and quotations
omitted). In other words, for a verdict to be legally inconsistent, it must
contain two material findings that legally cannot co-exist. And while a party
must object to an inconsistent verdict prior to the discharge of the jury,
“[t]here is no requirement to object to a verdict as being inadequate prior to
the discharge of the jury.” DiMare, Inc. v. Robertson, 758 So. 2d 1193, 1194
(Fla. 3d DCA 2000).
2. Was the jury’s verdict legally inconsistent?
We first address Rodriguez’s argument that the jury’s verdict was
legally inconsistent. He contends that the jury’s verdict in favor of ASMO on
the breach of fiduciary duty claim cannot be legally reconciled with the jury’s
verdict awarding $0 in damages for that breach. The premise of Rodriguez’s
argument is that, once the jury found Rodriguez breached his fiduciary duty
to ASMO and found that such breach was a legal cause of damage to ASMO,
the jury was legally required to award damages in some amount to ASMO.
If Rodriguez is correct, the verdict was legally inconsistent, and ASMO was
10
required to preserve this issue by raising it with the trial court before the jury
was discharged, rather than raising it in a posttrial motion for additur or new
trial.
Rodriguez’s position has superficial appeal, and might have won the
day except for one critical fact: the trial court instructed the jury that, if it
found Rodriguez liable (i.e., that he breached his duty to ASMO and that
such breach was a legal cause of damage to ASMO) but that ASMO did not
prove any loss or damage, the jury could award nominal damages to ASMO.
The jury was not told that it must award nominal damages under such
circumstances. Here are excerpts of the relevant instructions on the law
given to the jury at the conclusion of the trial:
JURY INSTRUCTION No. 28
The first claim by ASMO against Rodriguez is for breach of duty
as a manager. ASMO claims that Rodriguez violated duties of
loyalty and of care that Rodriguez owed to ASMO.
To recover from Rodriguez, ASMO must prove three elements
by the greater weight of the evidence:
1. Rodriguez owed ASMO a duty of loyalty or a duty of care;
2. Rodriguez violated any one of those duties; and
3. ASMO suffered damages proximately caused by Rodriguez’s
violation.
11
JURY INSTRUCTION No. 47
If your verdict is for Defendants, you will not consider the matter
of damages. But if the greater weight of the evidence supports
ASMO claims, you should determine and write on the verdict
form, in dollars, the total amount of loss, injury, or damage that
the greater weight of the evidence shows will fairly and
adequately compensate ASMO for its loss, injury, or damage.
JURY INSTRUCTION No. 48
If you decide that Defendants are liable but also that ASMO
did not prove any loss or damage, you may still award ASMO
nominal damages, such as one dollar.
(Emphasis added).
Thus, the jury was told that if it found: 1) that Rodriguez breached his
duty to ASMO; 2) that the breach caused ASMO to suffer damages; but 3)
ASMO failed to prove a specific amount of damages by the greater weight
of the evidence, the jury nevertheless may award nominal damages such as
$1. It necessarily follows that under these same circumstances, the jury may
also award no nominal damages.
By its verdict, the jury did precisely what it was told by the court—in
the instructions on the law—that it could do. The jury not only acted in
accordance with the jury instructions; it also followed the instructions
contained in the verdict form, which provided in pertinent part:
VERDICT FORM
We, the jury, return the following verdict:
12
1. Did Luis Rodriguez breach his duty of care or his duty of loyalty
to ASMO?
Yes __X__
No _____
If your answer to question 1 is NO, then your verdict is for the
defendants, and you should not proceed further except to date
and sign this verdict form and return it to the courtroom. If your
answer to question 1 is YES, then answer question 2.
2. Was Luis Rodriguez’s breach of the duty of care or the duty of
loyalty a legal cause of damage to ASMO?
Yes __X__
No _____
If your answer to question 2 is NO, your verdict is for the
defendants, and you should not proceed further except to date
and sign this verdict form and return it to the courtroom. If your
answer to question 2 is YES, please answer question 3.
3. What is the total amount of damages suffered by ASMO as a
result of Luis Rodriguez’s breach of the duty of care of the duty
of loyalty?
$ 0.00 (zero)
The jury’s answers to the questions on the verdict form were consistent
with and faithful to the instructions on the law as provided by the court.4
4
During closing argument, ASMO argued—without objection—that the jury
had the discretion to award nominal damages: “[T]he law recognizes the
concept of nominal damages. So, in other words, if you conclude that the
defendants have committed a legal wrong but that ASMO has suffered no
actual out-of-pocket losses, the law allows you to award ASMO nominal
13
Again, Rodriguez contends that ASMO waived any objection to the
zero damages award by failing to object to the verdict form before the jury
was discharged. But remember that a legally inconsistent verdict means a
verdict containing two material findings that are mutually exclusive—in other
words, that the jury by its verdict has failed to follow the trial court’s
instructions on the law. The underlying purpose for requiring an objection
before discharging the jury is to give the trial court an opportunity to cure the
error by reinstructing the jury on the applicable law and returning them to the
jury room to continue deliberating and return a verdict form in conformity with
the jury instructions on the law applicable to the case. See Coba, 164 So.
3d at 644 (“To preserve the issue of an inconsistent verdict, the party
claiming inconsistency must raise the issue before the jury is discharged and
ask the trial court to reinstruct the jury and send it back for further
deliberations.”) (quotation omitted). See also Moorman v. Am. Safety Equip.,
594 So. 2d 795, 799 (Fla. 4th DCA 1992) (“It is quite basic that objections as
to the form of the verdict or to inconsistent verdicts must be made while the
jury is still available to correct them.”)
damages, which is a recognition of the fact that a wrong was committed.”
(Emphasis added).
14
The instant case begs the question: Had ASMO objected to the verdict
before the jury was discharged (as Rodriguez contends ASMO was required
to do), what would the trial court have done to “reinstruct the jury” on the law
and to return the jury to the jury room for continued deliberations? The trial
court had already told the jury what the law permitted it to do, and the jury
had already done what the trial court said it could do—return a verdict for
zero damages (i.e., choosing not to award nominal damages) even though
ASMO proved its claim against Rodriguez. “The jury cannot be faulted for
doing exactly what it was instructed to do.” Plana v. Sainz, 990 So. 2d 554,
557 (Fla. 3d DCA 2008). Any alleged error in the instructions to the jury
would have to have been preserved earlier with a timely objection to the jury
instructions or to the verdict form,5 and the failure to do so waives such a
5
Because this issue has not been raised on appeal, we leave for another
day the broader question of whether a jury is required as a matter of law to
award at least nominal damages upon a determination that a defendant
breached a fiduciary duty to a plaintiff and that such breach was a legal
cause of damage to that plaintiff. The nominal damages instruction in the
instant case was patterned after Florida’s standard jury instruction, which
does not mandate such an award. See Fla. Std. J. Inst. (Cont. & Bus.)
504.11 (“If you decide that (defendant) breached the contract but also that
(claimant) did not prove any loss or damage, you may still award (claimant)
nominal damages such as one dollar.”)
While it is clear that a jury may award nominal damages under these
circumstances, see e.g., Hutchison v. Tompkins, 259 So. 2d 129, 132 (Fla.
1972) (“It is well established in Florida that where the allegations of a
complaint show the invasion of a legal right, the plaintiff on the basis thereof
15
claim on appeal. Id. See also Coba, 164 So. 3d at 645 (holding “a party must
timely object to any error pertaining to the verdict or the argument is waived”
and that it is “well established that a failure to object to a verdict form
may recover at least nominal damages”); Continuum Condo. Ass'n v.
Continuum VI, Inc., 549 So. 2d 1125, 1127 (Fla. 3d DCA 1989) (“[N]ominal
damages can be awarded when a legal wrong has been proven, but the
aggrieved party has suffered no damages . . . or where . . . recoverable
damages were not proven”) (citations omitted); Highsmith v. ECAA, LLC, 138
So. 3d 544 (Fla. 1st DCA 2014); Minotty v. Baudo, 42 So. 3d 824, 836 (Fla.
4th DCA 2010) (“Where a breach of fiduciary duty is shown but no actual
damages are proved, nominal damages may be awarded”); Rocco v. Glenn,
Rasmussen, Fogarty & Hooker, P.A., 32 So. 3d 111, 116 n. 2 (Fla. 2d DCA
2009) (“[A] defendant may be liable for nominal damages for a breach of
fiduciary duty even if the plaintiff cannot prove actual damages”), it is unclear
whether a jury must award nominal damages under these circumstances.
See, e.g., Land & Sea Petroleum Holdings, Inc. v. Leavitt, 321 So. 3d 810,
817 (Fla. 4th DCA 2021) (discussing the mandatory versus permissive
nature of nominal damages and observing: “A nominal damages award is
appropriate when there is a breach of contract, breach of fiduciary duty, or
an aiding and abetting a breach of fiduciary duty cause of action.”) The
Second District, in Wilson v. Univ. Cmty. Hosp., Inc., 101 So. 3d 857, 859
(Fla. 2d DCA 2012), held that a finding of a breach of contract did not
necessarily require an award of at least nominal damages, and certified
conflict with the Fifth District’s decisions, “to the extent that the[se] cases
hold that nominal damages must be awarded where a plaintiff has shown a
breach. . . ” in MSM Golf, L.L.C. v. Newgent, 853 So. 2d 1086 (Fla. 5th DCA
2003), Destiny Const. Co. v. Martin K. Eby Const., 662 So.2d 388, 390 (Fla.
5th DCA 1995) and Indian River Colony Club, Inc. v. Schopke Constr. &
Eng’g, Inc., 619 So. 2d 6 (Fla. 5th DCA 1983) The Florida Supreme Court
initially granted review to address this inter-district conflict, but later
dismissed the petition for review upon the parties’ stipulation. See Brooker
v. Univ. Cmty. Hosp., Inc., 115 So. 3d 998 (Fla. 2013) (dismissing petition
for review).
16
regarding defects not of a constitutional or fundamental character constitutes
a waiver of such defects.”) (citations and quotations omitted).
The outcome here might well be different had the jury returned a
verdict of zero damages after being instructed by the trial court that it must
award at least nominal damages if it found Rodriguez breached its duty to
ASMO and that such breach was a legal cause of damage to ASMO.
Compare Beverly Health & Rehab. Servs., Inc. v. Freeman, 709 So. 2d 549,
551 (Fla. 2d DCA 1998) (“[E]ven if nominal damages were awardable in this
case, the jury's failure to award such damages would result in an inconsistent
verdict, not an inadequate one. That is, the verdict would have been
inconsistent if the jury were required to award nominal damages once it
found that Beverly Health had violated Mr. Freeman's rights”) (emphasis
added).
But because the jury was instructed—without objection by either
party—that it could, but was not required, to award nominal damages after
finding Rodriguez breached a duty that was a legal cause of damage to
ASMO, and because the jury returned a verdict consistent with those
unobjected-to jury instructions and consistent with the directions provided on
the verdict form, the jury’s verdict was not legally inconsistent.
17
3. Was the jury’s verdict inadequate?
We next turn to whether ASMO could properly challenge the award of
$0 damages as inadequate, and seek a posttrial additur of nominal damages
as a remedy. Because we have determined that the verdict was not legally
inconsistent, we must also conclude that the award of $0 in damages cannot
be inadequate—again, the jury did exactly what it was instructed it had the
authority to do.
As a preliminary matter, we note this court has recognized that a “zero
damage verdict for the plaintiff, even when coupled with a finding of liability
against the defendant, may be tested for inadequacy,” Steinbauer Assocs.,
Inc. v. Smith, 599 So. 2d 746, 748 (Fla. 3d DCA 1992), and that a party “may
raise the issue of an inadequate verdict for the first time in a posttrial motion
for additur.” Ellender v. Bricker, 967 So. 2d 1088, 1091 (Fla. 2d DCA 2007).
Here, the jury expressly found that Rodriguez’s breach of duty was a “legal
cause of damage to ASMO,” but awarded ASMO zero dollars. We further
note that, during the trial, ASMO presented no dollar amount for any
purported compensatory damages, and requested nominal damages during
closing argument. Following closing arguments, in legal arguments to the
court, ASMO even conceded to the trial court that, on the breach of duty
claim, the damages it sought were nominal, not actual.
18
Therefore, the question is whether the trial court had the authority to
grant an additur to increase the jury’s nominal damage award from $0 to $1.
Given the unobjected-to jury instruction that authorized the jury to award $0
in nominal damages, the jury’s award of zero damages cannot be challenged
as inadequate. Steinbauer, 599 So. 2d 746. See also Plana, 990 So. 2d at
557 (“Because counsel for the plaintiffs agreed to the wording of the verdict
form, instructing the jury to go no further if it concluded that Mr. Sainz's
negligence was not the legal cause of Elena's injury, the plaintiffs are
precluded from asserting that the zero damage award entered by the jury
was error”) (citing Papcun v. Piggy Bag Disc. Souvenirs, Food & Gas Corp.,
472 So. 2d 880, 881 (Fla. 5th DCA 1985) (noting well-established Florida
law that “failure to object to a verdict form regarding defects not of a
constitutional or fundamental character constitutes a waiver of such
defects”)).
In sum, ASMO could not successfully argue that a zero verdict was
inadequate where the jury was instructed otherwise, i.e., “If you decide that
Defendants are liable but also that ASMO did not prove any loss or damage,
you may still award ASMO nominal damages, such as one dollar.” Again,
“[t]he jury cannot be faulted for doing exactly what it was instructed to do.”
Plana, 990 So. 2d at 557.
19
We therefore reverse the trial court’s order granting the $1 additur with
directions to reinstate the verdict, which awarded $0 in damages to ASMO.
Because the trial court must reinstate the original verdict— which awarded
zero dollars in damages— we also reverse the trial court’s order denying
Rodriguez’s motion for judgement in accordance with motion for directed
verdict, as the return of a proper verdict of $0 in damages means ASMO
failed to prove damages, an essential element of its breach of fiduciary duty
claim.6 Globe Sec. Sys. Co. v. Mayor's Jewelers, Inc., 458 So. 2d 828, 830
(Fla. 3d DCA 1984) (“Unless there is a separate finding of actual or nominal
damages—an essential element of the tort—the tort is not established
notwithstanding a finding of liability by the jury”); see also 55 Fla. Jur 2d Torts
6
We review de novo the trial court's ruling on a motion for directed verdict
and motion for judgment in accordance with an earlier motion for directed
verdict:
An appellate court must evaluate the evidence in the light most
favorable to the non-moving party, drawing every reasonable
inference flowing from the evidence in the nonmoving party's
favor. If there is conflicting evidence or if different reasonable
inferences may be drawn from the evidence, then the issue is
factual and should be submitted to the jury for resolution.
Miami-Dade Cnty. v. Eghbal, 54 So. 3d 525, 526 (Fla. 3d DCA 2011)
(citations omitted). A directed verdict should only be granted (or affirmed on
appeal) “where no proper view of the evidence could sustain a verdict in
favor of the nonmoving party.” Banco Espirito Santo Int’l, Ltd. v. BDO Int’l,
B.V., 979 So. 2d 1030, 1032 (Fla. 3d DCA 2008) (quoting Owens v. Publix
Supermarkets, Inc., 802 So. 2d 315, 329 (Fla. 2001)).
20
§ 3 (“Damage or injury resulting from the breach of duty and invasion of right
is an element necessary to make a cause of action in tort; the question of
liability is irrelevant if there are no damages”) (citing McIntyre v. McCloud,
334 So. 2d 171, 172 (Fla. 3d DCA 1976)) (“Even assuming arguendo, that a
‘wrong’ (in the form of negligence) was perpetrated by the defendants on the
plaintiff, it is, nonetheless, well-established in the common law that there is
no valid cause of action where there is shown to exist, at the very most, a
‘wrong’ without ‘damage’”).
We turn to the final (and presumably the most practically significant)
issue—indemnification.
B. The trial court erred in entering final summary judgment for
Rodriguez on his counterclaim for indemnification
1. In light of the jury’s verdict finding ASMO proved a breach of
fiduciary duty, Rodriguez was statutorily precluded from
entitlement to indemnification
One might understandably assume that, because we have upheld the
jury’s award of no damages and directed the trial court to enter judgment in
favor of Rodriguez on ASMO’s claim for breach of fiduciary duty, Rodriguez
would also be entitled to judgment in his favor on his counterclaim for
indemnification (and thus relieving him of the obligation to repay ASMO for
the attorney’s fees and costs advanced to Rodriguez to defend the
21
underlying suit). However, we conclude Rodriguez was not entitled to
indemnification because, under the relevant statutory scheme,
indemnification was available to Rodriguez only if the underlying claim did
not arise from his breach of fiduciary duties to ASMO. Therefore, ASMO
needed to prove only that Rodriguez breached his duty of loyalty or duty of
care to ASMO, which the jury by its verdict found ASMO had in fact proven,
even if the jury also determined that no damages should be awarded to
ASMO for that breach.
In light of the jury’s determination, the plain language of sections
605.0408, 605.04091, and 605.0105, Florida Statutes (2016) (the Revised
Limited Liability Company Act)7 precluded the trial court from finding in favor
7
As an initial matter, Rodriguez contends that, because ASMO’s underlying
lawsuit was filed in July 2014, and Chapter 605 (the Revised Limited Liability
Company Act) took effect in January 2015, we must apply the provisions of
Chapter 608 (the repealed Limited Liability Companies Act) in resolving the
indemnification claim. We hold that Chapter 605 (not 608) controls, since the
counterclaim for indemnification was filed in February 2016, well after the
effective date of Chapter 605. Diversified Mortg. Inv’rs v. Benjamin, 345 So.
2d 392, 393 (Fla. 3d DCA 1977) (“It is the filing of the counterclaim which
commences [a counterclaimant’s] action, not the filing of the complaint.”) We
further note that Rodriguez’s counterclaim for indemnification was
permissive, not compulsory, could have been brought in a separate action,
and did not accrue until the determination of liability on ASMO’s claims. And
finally, we note that the agreed-upon instructions provided to the jury tracked
the current version of Chapter 605, not Chapter 608; Rodriguez does not
challenge those instructions on appeal.
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of Rodriguez on his indemnification claim. Section 605.0408(2), Florida
Statutes (2016), provides:
(2) A limited liability company may indemnify and hold harmless
a person with respect to a claim or demand against the person
and a debt, obligation, or other liability incurred by the person by
reason of the person's former or present capacity as a member
or manager if the claim, demand, debt, obligation, or other
liability does not arise from the person's breach of . . .
605.04091.
(Emphasis added).
In turn, section 605.04091(1), Florida Statutes, provides standards of
conduct for members and managers:
Each manager of a manager-managed limited liability company
and member of a member-managed limited liability company
owes fiduciary duties of loyalty and care to the limited liability
company and members of the limited liability company.
Section 605.04091(2)(b)-(c) then further provides that this duty of
loyalty includes:
1) “Refraining from dealing with the company in the conduct or
winding up of the company's activities and affairs as, or on
behalf of, a person having an interest adverse to the company,
except to the extent that a transaction satisfies the
requirements of s. 605.04092”; and
2) “Refraining from competing with the company in the conduct
of the company's activities and affairs before the dissolution
of the company.”
The statute next explains that the duty of care “in the conduct or
winding up of the company’s activities and affairs is to refrain from engaging
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in grossly negligent or reckless conduct, willful or intentional misconduct, or
a knowing violation of law.” § 605.04091(3). Again, section 605.0408(2)
precludes indemnification where the claim arises from a breach of any of
these duties.
Here, the jury by its verdict expressly determined that “Luis Rodriguez
breach[ed] his duty of care or his duty of loyalty to ASMO” and further found
that “Luis Rodriguez’s breach of the duty of care or the duty of loyalty [was]
a legal cause of damage to ASMO.” Pursuant to the unambiguous language
of the above provisions in Chapter 605, Rodriguez cannot be entitled to (and
ASMO cannot be obligated to provide) indemnification where the jury found
he violated a duty of care or loyalty to ASMO. And given the plain language
of the statute, the jury’s failure to award even nominal damages to ASMO is
irrelevant—the statutory prohibition of indemnification does not require that
ASMO obtain a judgment in its favor on the breach of fiduciary duty claim
(i.e., by proving all elements including damages). The jury’s finding that
ASMO proved Rodriguez breached his fiduciary duty was itself sufficient to
statutorily preclude Rodriguez from entitlement to indemnification.
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2. The trial court erred in relying upon a provision in the Operating
Agreement to award indemnification to Rodriguez where such a
provision was expressly prohibited by section 605.0105(3), Florida
Statutes.
Rodriguez contends that, notwithstanding this statutory preclusion, the
trial court was within its discretion to grant indemnification pursuant to the
language of ASMO’s Operating Agreement. It’s true that the Operating
Agreement purports to grant the trial court discretion in deciding whether to
award indemnification:
The Company shall indemnify and hold harmless any Person
who was or is a party . . . to any threatened, pending or
completed action or suit by or in the right of the Company to
procure a judgment in favor by reason of the fact that such
person . . . is or was a Member, Manager, director or officer of
the Company . . . if such person’s acts did not constitute
gross negligence or willful misconduct and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged
to be liable to the Company unless and only to the extent
that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper.
(Emphasis added).
The trial court relied on this provision of the Operating Agreement,
determining that Rodriguez was entitled to indemnification because “the
circumstances of this case did not warrant Rodriguez having to incur
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approximately $1 million defending a case, where the evidence
demonstrated and ASMO admitted it did not suffer any damages.”
However, the trial court’s decision to grant indemnification pursuant to
the above provision of the Operating Agreement was erroneous because
Chapter 605 expressly prohibits an operating agreement from providing
indemnification to a manager who has breached a duty of care or loyalty
under section 605.04091.
Further, sections 605.0105(3)(g) & (p) together provide:
An operating agreement may not do any of the following: . . .
(g) Relieve or exonerate a person from liability for conduct
involving bad faith, willful or intentional misconduct, or a knowing
violation of law. . . .
(p) Provide for indemnification for a member or manager
under s. 605.0408 for any of the following: 1. Conduct
involving bad faith, willful or intentional misconduct, or a knowing
violation of law. 2. A transaction from which the member or
manager derived an improper personal benefit. 3. A
circumstance under which the liability provisions of s. 605.0406
are applicable. 4. A breach of duties or obligations under s.
605.04091, taking into account a restriction, an expansion, or an
elimination of such duties and obligations provided for in the
operating agreement to the extent allowed by subsection (4).
(Emphasis added).
As the plain language of section 605.0105(3) mandates, a manager
who violates any of the above-listed duties is precluded from indemnification,
and such statutory preclusion cannot be altered, modified or waived by the
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Operating Agreement. See Louis T. M. Conti, Gregory M. Marks, Florida's
New Revised LLC Act, Part II, Fla. B.J., November 2013, at 47, 49 (“The
prohibition of indemnification for such wrongful conduct cannot be changed
by the operating agreement, nor can the operating agreement limit a
person's liability to the LLC if his or her wrongful conduct causes damages
(both are nonwaivable under F.S. §§ 605.0105(3) (g) & (p))”). As a result,
and even if we agreed with the trial court’s assessment regarding the
“circumstances of the case,” we are compelled to reverse its decision in favor
of Rodriguez on his claim for indemnification. Instead, and given the jury’s
verdict, which constituted a determination that Rodriguez violated his duty of
care or duty of loyalty under section 605.04091, Rodriguez was statutorily
precluded from entitlement to indemnification, notwithstanding the provision
in the Operating Agreement purporting to confer discretion upon the trial
court to do otherwise. The trial court should instead have granted ASMO’s
cross-motion for summary judgment on Rodriguez’s counterclaim for
indemnification.
IV. CONCLUSION
On ASMO’s appeal, we reverse the final summary judgment in favor
of Rodriguez on his counterclaim for indemnification, and remand with
instructions to enter final judgment in favor of ASMO on the counterclaim for
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indemnification. On Rodriguez’s cross-appeal, we reverse the trial court’s
order granting additur, reinstate the jury’s verdict and award of $0 damages,
and remand with instructions to enter final judgment in favor of Rodriguez on
the breach of fiduciary duty claim.
Reversed and remanded with directions.
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