Hester v. Florida Capital Group, Inc. , 2016 Fla. App. LEXIS 4834 ( 2016 )

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
DANIEL T. HESTER, an individual, )
)
Appellant, )
)
v. ) Case No. 2D15-1167
)
FLORIDA CAPITAL GROUP, INC., a )
Florida corporation; CHARLES E. )
HUGHES, an individual; and J. MALCOLM )
JONES, JR., an individual, )
)
Appellees. )
)
Opinion filed March 30, 2016.
Appeal from the Circuit Court for Pinellas
County; Walter L. Schafer, Jr., Judge.
John E. Johnson and Christopher L.
DeCort of Johnson & Cassidy, P.A.,
Tampa, for Appellant.
Christopher L. Griffin of Foley & Lardner
LLP, Tampa; and John S. Lord, Jr. and
Christina M. Kennedy of Foley & Lardner
LLP, Orlando, for Appellees.
MORRIS, Judge.
Daniel T. Hester appeals an order dismissing with prejudice his complaint
against Florida Capital Group, Inc.; Charles E. Hughes; and J. Malcom Jones, Jr.
(collectively referred to as the appellees), for breach of Hester's employment
agreement, fraud, negligent misrepresentation, and declaratory and injunctive relief. In
a pretrial effort to resolve the disputes, the parties entered into a settlement agreement,
but the parties later disputed the enforceability of certain terms of that agreement. The
trial court granted the appellees' motion to enforce the settlement agreement and
entered an order dismissing Hester's complaint. On appeal, Hester challenges the trial
court's interpretation of the terms of the settlement agreement. We reverse for the
reasons explained below.
I. Facts and procedural background
Florida Capital Group, Inc. (the Bank), operates a national banking
association with an office in Pinellas County. Hughes and Jones were officers of the
Bank, and Hester was employed by the Bank as an executive. After Hester's
employment was terminated, he initiated the underlying litigation in 2010. In 2011, the
parties participated in mediation and reached an initial settlement that was contingent
upon regulatory approval from governmental agencies. The approval was not obtained,
and the parties recommenced settlement discussions in 2012. On July 18, 2012, the
parties executed the settlement agreement at issue in this appeal.
The agreement provides that Hester will dismiss his complaint against the
appellees in exchange for the payment of certain sums by the appellees. The
agreement also provides that the sums are subject to approval by the necessary
regulatory agencies. More specifically, the agreement provides as follows:
2. The parties shall submit to the necessary federal
regulatory entities, including as necessary the Federal
Reserve, the Federal Deposit Insurance Corporation
[(FDIC)], and/or the Office of Comptroller of the Currency,
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within 10 days of the execution of this Agreement (the
"Submission Date"), for approval of the payment of the sums
set forth in Section 3 within six months from the Submission
Date. The parties agree to stay all active litigation, including
but not limited to all discovery, until after the expiration of
this six[-]month period.
3. In consideration for Hester's promises and
covenants contained in this Agreement, Florida Capital,
Hughes and Jones agree to pay Hester the total settlement
amount of $500,000.00 (the "Settlement Amount"), broken
down as follows: Florida Capital will pay to Hester the gross
amount of $160,000.00 for claimed severance pay; Florida
Capital will pay to Hester the gross amount of $40,000.00 for
claimed attorneys' fees and costs; and Florida Capital's,
Hughes' and Jones' insurance carrier, The Travelers
Companies, Inc., will pay to Hester the gross amount of
$300,000.00 for claimed compensatory damages for the
negligence claims; provided however the parties agree that
any and all payments agreed to in this Agreement are
subject to advance approval by the necessary regulatory
entities. Said amounts will be delivered within 15 days after
Hester, Florida Capital, Hughes and Jones receive the
necessary regulatory approvals for any respective payment.
. . . After regulatory approval is received for the Settlement
Amount, the payments will be made as follows: a check in
the amount of $160,000.00, payable to Hester, representing
payment for claimed severance pay . . . ; a check in the
amount of $300,000.00, payable to Hester, representing
payment for claimed compensatory damages for the
negligence claims . . . ; and a check in the amount of
$40,000.00, payable to Hester's lawyer's firm, representing
payment for attorney's fees and costs alleged in the Lawsuit
. . . . In the event that regulatory approval is received for a
total amount equal to or greater than $350,000.00, but not
for the Settlement Amount--or for an amount less than
$350,000.00 and Hester provides Florida Capital, Hughes
and Jones with the written confirmation of acceptance of
said amount as detailed in Section 6--the payments will be
made proportionally in accordance with the breakdown
provided in this Section.
4. If regulatory approval is received for the
Settlement Amount, Hester will dismiss with prejudice the
Lawsuit no later than five days after receipt of payment of
those sums, by filing a notice of dismissal with prejudice with
the court.
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5. If regulatory approval is received for a total amount
of $350,000.00 or greater, Hester will dismiss with prejudice
the Lawsuit no later than five days after receipt of payment
of those sums, by filing a notice of dismissal with prejudice
with the court.
6. If regulatory approval is received for a total amount
less than $350,000.00, Hester will have the sole option to
accept or reject payment of the approved amount that is less
than $350,000.00, by sending written confirmation of said
acceptance or rejection to Florida Capital, Hughes and
Jones within 15 days of receiving regulatory approval. If
Hester accepts the approved amount that is less than
$350,000.00, Hester will dismiss with prejudice the Lawsuit
no later than five days after receipt of payment of those
sums, by filing a notice of dismissal with prejudice with the
court. If Hester does not accept the approved amount that is
less than $350,000.00, the active litigation shall continue
under the pre-determined schedule set forth in Section 7.
7. In the event that the necessary federal regulatory
entities fail to respond to the submission for approval as set
forth in Section 2 within six months of the Submission Date,
upon expiration of the six[-]month period referenced in
Section 2 the active litigation shall continue under the
following pre-determined schedule, which shall be agreed to
by the parties and submitted to the court with jurisdiction
over the Lawsuit as a condition of this Agreement . . . .
(Emphasis added.) Section 7 of the agreement further provides that depositions and
discovery would be concluded in March 2013, that all dispositive motions would be
heard in April 2013, and that a jury trial in Pinellas County would commence no later
than June 1, 2013. Section 8 of the agreement provides that Hester will accept "regular
early termination benefits available to him pursuant to the [Supplemental Executive
Retirement Plan (SERP)]" and that he will not seek any enhanced early termination
benefits under the SERP. Further, the Bank is required to begin paying Hester the
SERP payments within forty-five days, including a lump sum payment for the SERP
payments that had accrued since his termination.
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Pursuant to Section 2 of the agreement, in July 2012, Hester and the
appellees submitted to the regulatory agencies an application for approval of the
agreed-upon payments in Section 3, but the regulators failed to respond to the
application within six months. On February 8, 2013, Hester filed an unopposed motion
to set the matter for trial, and on November 1, 2013, the parties filed a joint stipulation to
set the cause for trial in February 2014.
Approximately a year and a half after the parties submitted the application
to the regulatory agencies, the Bank sent Hester a letter advising him that the Bank had
"received confirmation from the FDIC that Mr. Hester may be paid $300,000 as part of
the settlement." The FDIC letter, dated December 18, 2013, stated that the $300,000
payment by the Bank's insurer did not require regulatory approval. The FDIC letter
further stated, however, that the $160,000 and $40,000 proposed payments constituted
"golden parachute payments" that required regulatory approval. The FDIC determined
that "[a]ny amount in excess of twelve months' salary, including the $40,000 for
attorney's fees, would constitute an impermissible golden parachute payment." As to
that portion of the settlement, the FDIC indicated that it was prepared to deny the
application but that it would consider a revised application if submitted within thirty days.
The Bank stated in its letter to Hester that it was submitting a revised application to the
FDIC requesting that it be allowed to pay him a golden parachute payment of $160,000.
On December 23, 2013, Hester sent the Bank a letter rejecting the offer of
$300,000. Hester noted that the settlement agreement had "expired by its own terms
and is of no further force or effect." Hester objected to any "stay relief that is premised
upon the [B]ank's unilateral submission to the FDIC" of a new application. Hester
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counteroffered to settle his claims for a total of $760,000. In April 2014, Hester made
another offer to settle his claims for a total of $720,000. In May 2014 and again in
August 2014, the appellees offered to have their insurance company pay Hester
$350,000 and then submit a new application to their regulators for an additional
payment of $160,000, for a total settlement of $510,000. Upon receiving no response
from Hester, the appellees filed a motion to enforce the settlement agreement, arguing
that the appellees had offered to pay $350,000 and an additional $160,000 if regulatory
approval was obtained.
Following two hearings on the appellees' motion to enforce, the trial court
entered an order approving and enforcing the settlement agreement in September
2014. The trial court found that the agreement is clear and unambiguous and that the
six-month period in the agreement referred to a period of non-litigation rather than an
expiration date for the agreement. The court further found that the appellees' total offer
to Hester of $510,000 met the terms of the settlement agreement. The trial court
directed the Bank to pay $350,000 to Hester and to submit the necessary paperwork for
regulatory approval to pay him an additional $160,000, with payment to be made within
ten days of receipt of such approval. The court also found that under the agreement,
the appellees are prevailing parties for purposes of attorneys' fees and costs. Hester
attempted to appeal the September 2014 order, but this court dismissed the appeal as
being from a nonfinal, nonappealable order. Hester entered into a stipulation with the
appellees whereby the trial court entered a final order dismissing the case with
prejudice, so that Hester could appeal the trial court's ruling enforcing the payment
terms of the settlement agreement.
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II. Analysis
On appeal, Hester argues that the trial court erred in enforcing certain
payment provisions of the agreement that he claims had expired. He contends that the
terms of the agreement clearly and unambiguously provide that the payment provisions
in Sections 3 through 6 were contingent upon regulatory approval being received within
six months. Hester claims that because regulatory approval was not received within six
months, he was not required to accept those payments. He argues that other
provisions of the agreement did not expire after any specific period of time, e.g., the
provisions regarding the SERP payments in Section 8, and that those provisions
became binding at execution of the agreement and are enforceable. The appellees, on
the other hand, argue that the trial court correctly ruled that the agreement does not
contain an expiration date for regulatory approval; the agreement only stayed the active
litigation during a six-month period. The appellees contend that the agreement did not
require the regulatory approval to be obtained within six months in order for the
payment provisions to be valid.1
The interpretation of settlement agreements is governed by contract law.
Gira v. Wolfe, 115 So. 3d 414, 417 (Fla. 2d DCA 2013). We review de novo the trial
court's interpretation of the agreement in this case as a matter of law, and in doing so,
we "may reach a construction or interpretation of the contract contrary to that of the trial
court." Bethany Trace Owners' Ass'n v. Whispering Lakes I, LLC, 155 So. 3d 1188,
1191 (Fla. 2d DCA 2014). "The cardinal rule of contractual construction is that when the
language of a contract is clear and unambiguous, the contract must be interpreted and
1
We note that neither Hester nor the appellees argue that the terms of the
agreement are ambiguous.
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enforced in accordance with its plain meaning." CitiMortgage, Inc. v. Turner, 172 So. 3d
502, 504 (Fla. 1st DCA 2015) (quoting Columbia Bank v. Columbia Developers, LLC,
127 So. 3d 670, 673 (Fla. 1st DCA 2013)). "When interpreting contractual provisions,
courts 'will not interpret a contract in such a way as to render provisions meaningless
when there is a reasonable interpretation that does not do so.' " Bethany Trace Owners'
Ass'n, 155 So. 3d at 1191 (quoting Moore v. State Farm Mut. Auto. Ins. Co., 916 So. 2d
871, 877 (Fla. 2d DCA 2005)).
We agree with Hester that the language of the agreement is clear and
unambiguous in that it requires regulatory approval of the payment terms in Sections 3
through 6 within six months.2 Specifically, Section 2 states that "[t]he parties shall
submit to the necessary federal regulatory entities . . . for approval of the payment of
sums set forth in Section 3 within six months from the Submission Date." (Emphasis
added.) This language clearly expresses an intent that the regulatory approval be
received within six months. Section 2 goes on to provide that all active litigation would
be stayed "until after the expiration of this six[-]month period." Had the underlined
language above not been included in the agreement, the trial court's interpretation (and
the appellees' interpretation) of the agreement would be reasonable. If the underlined
language requiring approval within six months had been omitted, the six-month time
period would have simply been a stay of litigation and nothing more. But Section 2
clearly requires regulatory approval of the agreed-upon payments within six months. To
2
The breakdown of the agreed-upon settlement amount is set forth in
Section 3, and Sections 4 through 6 in turn address if regulatory approval is received in
the settlement amount, in an amount of $350,000 or greater, or in an amount less than
$350,000.
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read Section 2 otherwise—as simply being a stay of litigation—would render
meaningless the language referring to approval within six months.
The language of Section 7 of the agreement further demonstrates that the
parties intended for the regulatory approval to be received within six months in order for
the payment terms of Sections 3 through 6 to take effect. Section 7 provides for a
litigation schedule "[i]n the event that the necessary federal regulatory entities fail to
respond to the submission for approval as set forth in [s]ection 2 within six months of
the Submission Date" and "upon expiration of the six[-]month period referenced in
Section 2." (Emphasis added.) This language reflects the parties' intent that regulatory
approval be received within six months in order to trigger the payment provisions in
Sections 3 through 6. This language also reflects the parties' intent that if such timely
approval was not received, the litigation would continue on Hester's claims mentioned in
Section 3 in accordance with the schedule provided in Section 7. If the parties had
contemplated that regulatory approval could be received after the six-month period had
expired and that litigation would again be stalled in the future, the litigation schedule
outlined in section 7 would be meaningless. We note that there is no language in the
agreement regarding what would happen to the litigation if regulatory approval were to
be received after six months, further supporting the conclusion that the parties did not
intend for approval to be received after six months for purposes of the payment
provisions in Sections 3 through 6.
The appellees argue that the agreement does not contain an expiration
date, but Hester does not argue that the entire agreement contains an expiration date.
Rather, he argues, and we agree, that the payment provisions in Sections 3 through 6
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took effect only if the regulatory approval was received within six months of the date the
application was submitted.
Because the only reasonable interpretation of the agreement requires
regulatory approval of the payment terms in Sections 3 through 6 within six months and
because regulatory approval was not received within six months, the trial court erred in
concluding that the payment terms in Sections 3 through 6 are enforceable against
Hester.3 In light of our determination on this issue, we need not address Hester's
remaining arguments on appeal. We reverse the final order dismissing Hester's
complaint with prejudice and remand for further proceedings consistent with this
opinion.
Reversed and remanded.
KELLY and CRENSHAW, JJ., Concur.
3
Even though the trial court concluded that the agreement is
unambiguous, it noted an expiration provision that had been included in an earlier draft
of the agreement but was stricken from the final agreement. Only if the terms are
latently ambiguous should a trial court consider extrinsic evidence in determining the
intent of the parties. See Emergency Assocs. of Tampa, P.A. v. Sassano, 664 So. 2d
1000, 1002-03 (Fla. 2d DCA 1995) (discussing the difference between a patent and
latent ambiguity and holding that a trial court is authorized to consider parol evidence
when a latent ambiguity exists, i.e., when a contract is clear and unambiguous on its
face but fails to specify the rights and duties of the parties in certain situations).
Because the agreement in this case is clear and unambiguous regarding the factual
situation presented in this case, resort to extrinsic evidence is not necessary.
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