William Rakip v. Paradise Awnings Corporation , 514 F. App'x 917 ( 2013 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-16138
Non-Argument Calendar
________________________
D.C. Docket No. 1:10-cv-20004-MGC
WILLIAM RAKIP,
llllllllllllllllllllllllllllllllllllllllPlaintiff - Counter
llllllllllllllllllllllllllllllllllllllllDefendant - Appellant
llllllllllllllllllllllllllllllllllllllllCross Appellee,
CESAR JERONIMO,
llllllllllllllllllllllllllllllllllllllllPlaintiff
llllllllllllllllllllllllllllllllllllllllCross Appellee,
versus
PARADISE AWNINGS CORPORATION,
a Florida Corporation,
MANUEL ALCIBAR,
JUAN CHAVIANO,
individually,
llllllllllllllllllllllllllllllllllllllllDefendants - Counter
llllllllllllllllllllllllllllllllllllllllClaimants - Appellees
llllllllllllllllllllllllllllllllllllllllCross Appellants.
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________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(March 27, 2013)
Before TJOFLAT, CARNES, and KRAVITCH, Circuit Judges.
PER CURIAM:
This case involves a dispute between William Rakip and his former
employer, Paradise Awnings Corporation. Rakip asserts claims under the Fair
Labor Standards Act and his former employer has counterclaimed for civil theft.
I.
In 2009 Rakip worked as an installation manager of a crew of awning
installers for Paradise Awnings Corporation. In August or September of that year,
Paradise agreed to loan Rakip $3,500, which he promised to repay. In November
of that same year, Rakip quit his job. He never repaid the $3,500 loan.
Several weeks later, Rakip filed a workers’ compensation claim against
Paradise. Then on January 4, 2010, he filed the complaint in this action, alleging
that Paradise and two of his supervisors violated the Fair Labor Standards Act by:
(1) paying him less than the minimum wage; and (2) not paying him overtime. 1
1
Rakip later amended his complaint to add a co-plaintiff, who did not appeal the
judgment against him. Rakip then amended his complaint a second time (after he and Paradise
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Paradise denied those allegations and brought a counterclaim alleging that Rakip’s
failure to pay back the $3,500 loan amounted to civil theft under Florida law.
In February 2010, Rakip and Paradise entered into settlement discussions
concerning Rakip’s outstanding claims. The result of those discussions was a
“Severance Agreement and Release” which stated that Rakip “releases and
discharges [Paradise] . . . from all legal, equitable, or administrative claims that he
may have against [it] . . . specifically includ[ing] any and all discrimination claims
arising under the . . . Fair Labor Standards Act. . . .” Rakip signed that agreement
on February 10 and Paradise signed it on February 22. Although the settlement
agreement states that Rakip would receive $100 as consideration, he actually
received $10,000: $5,200 for his FLSA claim, $1,800 for his workers’
compensation claim and the balance for costs and attorney’s fees.
The district court conducted an evidentiary hearing and concluded that the
agreement between Rakip and Paradise was a fair and reasonable settlement of
Rakip’s FLSA claims. It then dismissed those claims and conducted a trial on
Rakip’s co-plaintiff’s FLSA claims and Paradise’s civil theft counterclaim against
Rakip. After the presentation of evidence and before sending the claims to the
jury, Paradise moved to conform the pleadings to the evidence by converting its
had executed a settlement agreement) to allege that Paradise did not pay him for his last two
weeks of work, in violation of the FLSA.
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civil theft counterclaim to state a cause of action for breach of contract. The
district court granted the motion, and the jury returned a verdict for Paradise on the
breach of contract claim in the amount of $1,320. Rakip then moved to “correct”
the final judgment, arguing that he was entitled to judgment as a matter of law on
the civil theft counterclaim. The district court agreed and entered an amended
judgment for Paradise in the amount of $1,320 on the breach of contract claim and
for Rakip on the civil theft claim. Rakip again moved to amend the judgment,
arguing that the district court erred when it conformed the pleadings to state a
claim for breach of contract instead of civil theft. The district court agreed, and
entered a second amended judgment for Rakip on the civil theft claim. That
judgment did not mention the breach of contract claim, because the district court
concluded that it was error to send that claim to the jury. The second amended
judgment was the final judgment in this case, and both parties appeal that
judgment.
II.
Rakip raises two issues on appeal. He argues that: (1) the settlement
agreement that he entered into is not a fair and reasonable settlement of his FLSA
claims; and (2) that settlement agreement bars Paradise’s civil theft counterclaim
against him.
A.
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Rakip first contends that the settlement agreement is not a valid settlement
of his FLSA claims because it is not a stipulated judgment as required by Lynn’s
Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982). In Lynn’s
Food, we held that: “Other than a section 216(c) payment supervised by the
Department of Labor, there is only one context in which compromises of FLSA
back wage or liquidated damage claims may be allowed: a stipulated judgment
entered by a court which has determined that a settlement proposed by an employer
and employees, in a suit brought by the employees under the FLSA, is a fair and
reasonable [resolution] of a bona fide dispute over FLSA provisions.” Id. at 1355.
Although it is true that the settlement agreement at issue in this case is not
titled “stipulated judgment,” Lynn’s Food does not stand for the proposition that
any valid settlement of a FLSA claim must take a particular form. It only means
that the district court must take an active role in approving the settlement
agreement to ensure that it is not the result of the employer using its superior
bargaining position to take advantage of the employee. See id. at 1354 (“[W]hen
the parties submit a settlement to the court for approval, the settlement is more
likely to reflect a reasonable compromise of disputed issues than a mere waiver of
statutory rights brought about by an employer’s overreaching. If a settlement in an
employee FLSA suit does reflect a reasonable compromise over issues . . . that are
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actually in dispute[,] we allow the district court to approve the settlement in order
to promote the policy of encouraging settlement of litigation.”)
Here, that is exactly what the district court did—it conducted an evidentiary
hearing, took testimony from three witnesses, and concluded that the settlement
agreement was a “fair and reasonable [resolution] of a bona fide dispute over
FLSA provisions.” Id. at 1355. Rakip argues that that conclusion was incorrect
because the district court did not explain how it decided that the amount he would
receive under the settlement agreement was fair. But the testimony at the hearing
explained that Rakip received $10,000 to cover his workers’ compensation and
FLSA claims and to pay his attorney’s fees. The district court did not err by
crediting this testimony and concluding that the settlement was fair and
reasonable.2
B.
Rakip also contends that the settlement agreement released him from
liability for the civil theft claim that Paradise asserted against him. That issue is
not properly before us. Release is an affirmative defense, and a party must plead it
or it is waived. Latimer v. Roaring Toyz, Inc., 601 F.3d 1224, 1239 (11th Cir.
2010) (“Failure to plead an affirmative defense generally results in a waiver of that
2
Because we have concluded that there was a valid settlement of Rakip’s FLSA claims,
we do not address Paradise’s arguments that: (1) Rakip was an exempt manager for FLSA
purposes and therefore he was not entitled to overtime pay; and (2) Paradise was entitled to
summary judgment on the issue of whether Paradise is an “enterprise” for FLSA purposes.
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defense.”) Rakip’s answer to Paradise’s counterclaim pleaded seven affirmative
defenses. Release was not one of them. It is too late to assert that defense now on
appeal.
III.
Paradise contends that the district court erred when it reversed its ruling
granting Paradise’s motion to conform the pleadings to state a claim for breach of
contract and granted Rakip judgment as a matter of law on the civil theft claim.
We review a district court’s decision about whether to conform the pleadings to the
evidence for abuse of discretion. Diaz, 627 F.3d at 1214. We also review a district
court’s reconsideration of its earlier orders for abuse of discretion. Harper v.
Lawrence Cnty., Ala., 592 F.3d 1227, 1231–32 (11th Cir. 2010).
The district court initially granted Paradise’s motion to conform the
pleadings to state a breach of contract claim because it concluded that Rakip
impliedly consented to trial of that issue by presenting evidence that his failure to
repay the loan was a breach of contract. After the jury had returned a verdict for
Rakip on that claim, and after the district court had entered a judgment on the
verdict, the district court reversed its earlier decision to conform the pleadings
because it found that under our precedent in Diaz v. Jaguar Restaurant Group,
LLC, 627 F.3d 1212 (11th Cir. 2010), Rakip had not impliedly consented to trial of
the breach of contract claim. In Diaz, we held that a party does not impliedly
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consent to trial of an issue for Rule 15(b) purposes when the evidence it presents is
relevant to another defense in the case. Diaz v. Jaguar Restaurant Group, LLC,
627 F.3d 1212, 1215 (11th Cir. 2010).
In this case, the district court concluded that the evidence of breach of
contract was relevant to Rakip’s defense that the economic loss rule barred
Paradise’s civil theft counterclaim. 3 The district court would have been correct if
the economic loss rule had applied to Paradise’s civil theft claim. But under
Florida law, it does not. See Curd v. Mosaic Fertilizer, Inc., 39 So. 3d 1216, 1223
n.4 (Fla. 2010) (“[T]he economic loss rule[] [does] not prevent the bringing of an
action and recovery for intentional torts, such as . . . civil theft. . . .”); Pershing
Indus., Inc. v. Estate of Sanz, 740 So. 2d 1246, 1247 (Fla. 3d DCA 1999) (holding
that a civil theft tort is independent of the breach of a contract and therefore the
economic loss rule does not bar a civil theft claim); Escudero v. Hasbun, 689 So.
2d 1144, 1147 (Fla. 3d DCA 1997) (“Florida law . . . does not bar civil theft simply
because a contractual relationship is involved.”); Nerbonne, N.V. v. Lake Bryan
Int’l Properties, 689 So. 2d 322, 327 (Fla. 5th DCA 1997) (“[T]he mere existence
of a contractual relationship between the parties does not preclude actions for civil
theft and conversion.”). Because the district court reversed its earlier order
3
Under the economic loss rule, “parties in privity of contract are generally prohibited
from recovering in tort for economic damages [except] in certain limited circumstances.”
Indemnity Ins. Co. of N. Am. v. Am. Aviation, Inc., 891 So. 2d 532, 537 (Fla. 2004).
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conforming the pleadings to the evidence solely because it erroneously concluded
that the economic loss rule would bar Paradise’s civil theft claim as a matter of
law, the court abused its discretion. See Koon v. United States, 518 U.S. 81, 100,
116 S. Ct. 2035, 2047 (1996) (“A district court by definition abuses its discretion
when it makes an error of law.”); Gray v. Bostic, 625 F.3d 692, 693 (11th Cir.
2010) (en banc) (“[W]hen a district court commits an error of law in deciding how
to exercise its discretion, that court has, by definition, abused its discretion.”).
As a general rule, “if a district court has abused its discretion, the court of
appeals should not decide how to exercise [that] discretion; instead, it should
remand the matter so that the district court can exercise its discretion free from the
error of law.” Gray, 625 F.3d at 693. This case, however, presents unique
procedural circumstances. When the district court initially granted Paradise’s
motion to conform the pleadings to state a claim for breach of contract, it had the
discretion either to grant or deny that motion. It exercised that discretion free from
the error of law that it later made, and it did not abuse its discretion in doing so.
Accordingly, we need not remand. We vacate the first amended judgment and
second amended judgment, which were both based on the district court’s erroneous
conclusion that it could not have granted the defendant’s motion to conform the
pleadings. We reinstate the original final judgment in favor of Paradise in the
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amount of $1,320 for breach of contract, which is free from any error of law and
which reflects the jury’s verdict.4
AFFIRMED IN PART AND VACATED IN PART.
4
Because we conclude that the district court properly conformed the pleadings to state a
claim for breach of contract and not civil theft, we need not address whether Rakip was entitled
to judgment as a matter of law on the civil theft claim.
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