Doctor Rooter Supply & Service v. McVay ( 2017 )


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  •            IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
    FIFTH DISTRICT
    NOT FINAL UNTIL TIME EXPIRES TO
    FILE MOTION FOR REHEARING AND
    DISPOSITION THEREOF IF FILED
    DOCTOR ROOTER SUPPLY & SERVICE,
    ETC., ET AL.,
    Appellants,
    v.                                                 Case No. 5D14-3498
    LAURA MCVAY,
    Appellee.
    ________________________________/
    Opinion filed September 7, 2017
    Appeal from the Circuit Court
    for Putnam County,
    Patti A. Christensen, Judge.
    William H. Davie, II, of The Davie Law Firm,
    P.A., Green Cove Springs, for Appellants.
    Adam P. Rowe, Caron Speas and Ralph
    Rowe, of Speas & Rowe, PLLC, Palatka, for
    Appellee.
    BERGER, J.
    Doctor Rooter Supply & Service, Inc. (Doctor Rooter) and Thomas J. Wall appeal
    the trial court’s final order granting summary judgment in favor of Laura McVay. We
    reverse.
    Doctor Rooter is a plumbing company that was owned by Thomas Wall and Laura
    McVay while they were married. They divorced in October 2012, at which time Thomas
    was given full ownership of the company. As a part of their divorce proceedings, Thomas
    and Laura executed a Consent Final Judgment. The Consent Final Judgment included
    a release of all claims that Thomas and Laura had or could have had against each other.
    After the divorce was final, Thomas allegedly discovered that Laura had taken
    approximately $116,000 from Doctor Rooter between 2007 and 2011 while she was the
    office manager.1 In 2013, Doctor Rooter and Thomas sued Laura for conversion,
    embezzlement, breach of fiduciary duty, and civil theft. In Laura's answer to the complaint,
    she cited numerous affirmative defenses, based mostly on the Consent Final Judgment
    entered in the dissolution case. Of relevance are Laura’s first, second, third, fourth, fifth,
    and tenth affirmative defenses.
    In her first affirmative defense, Laura claimed "that the causes of action alleged in
    the Amended Complaint were released and waived by the Plaintiffs when the parties
    hereto executed the Consent Final Judgment of Dissolution of Marriage." In her second
    affirmative defense, Laura claimed that res judicata barred this action because the civil
    theft claims should have been brought in the dissolution case. Laura’s third and fourth
    affirmative defenses alleged that the civil theft case actually involved the dissipation of
    marital assets and, as such, it should have been brought in family court. She, therefore,
    argued that the civil court lacked jurisdiction to consider the civil theft matter and that
    Thomas and Doctor Rooter lacked standing to bring the case. Laura’s fifth affirmative
    defense alleged that the civil theft claims were waived because they were compulsory
    1   Laura disputes the allegation that she stole money from the company.
    2
    in a court of competent jurisdiction is absolute and settles all issues actually litigated in a
    proceeding as well as those issues that could have been litigated." Engle v. Liggett Grp.,
    Inc., 
    945 So. 2d 1246
    , 1259 (Fla. 2006). The Supreme Court further described res
    judicata as follows:
    A judgment on the merits rendered in a former suit between the same
    parties or their privies, upon the same cause of action, by a court of
    competent jurisdiction, is conclusive not only as to every matter which
    was offered and received to sustain or defeat the claim, but as to every
    other matter which might with propriety have been litigated and
    determined in that action.
    
    Id.
     (quoting Dep't of Transp. v. Juliano, 
    801 So. 2d 101
    , 105 (Fla. 2001) (emphasis
    omitted)).
    Contrary to the trial court's conclusion otherwise, res judicata would not bar Doctor
    Rooter's and Thomas' civil theft claims against Laura because the theft case and the
    dissolution proceedings are not based upon the same cause of action. This fact remains
    even if Doctor Rooter were a party to the dissolution proceeding because the dissolution
    case only involved matters stemming from Thomas and Laura’s divorce and did not
    include claims regarding Laura taking money from Doctor Rooter.
    Moreover, questions of fact remain over Laura’s res judicata defense. According
    to the amended complaint, Thomas learned about Laura's theft from Doctor Rooter after
    an audit was completed in 2013, which was after the parties’ divorce was finalized in
    October 2012. Laura's affidavit, on the other hand, indicates that Thomas threatened to
    sue her for civil theft during their divorce proceedings. Thus, a question of fact remains
    about when Doctor Rooter and Thomas learned of the theft and whether they could have
    8
    evidence in a light most favorable to the non-moving party. If material facts are at issue
    and the slightest doubt exists, summary judgment must be reversed." Mills v. State Farm
    Mut. Auto. Ins. Co., 
    27 So. 3d 95
    , 96 (Fla. 1st DCA 2009) (citing Hancock v. Dep't of Corr.,
    
    585 So. 2d 1068
     (Fla. 1st DCA 1991)).
    Doctor Rooter and Thomas raise four issues on appeal, three of which have merit.2
    First, they argue that the trial court erred in finding that the assets of Doctor Rooter, a
    duly formed corporation, are actually assets directly owned by its shareholders, Thomas
    and Laura, and, thus, any assets Laura allegedly took from Doctor Rooter were marital
    assets. They further argue that the trial court’s mischaracterization of the theft as a
    dissipation of marital assets caused it to erroneously conclude that exclusive jurisdiction
    belonged in family court and that Doctor Rooter and Thomas did not have standing to
    bring the claim. Next, they argue that the trial court erred in holding that Doctor Rooter
    was bound by the release in the divorce proceeding when it was not a party to the
    proceeding, and therefore, res judicata and waiver did not bar the claims. Finally, Doctor
    Rooter and Thomas argue that questions of fact remain regarding the intent and
    understanding of Thomas and Laura when they executed the Consent Final Judgment
    that preclude entry of summary judgment. We will address each in turn.
    As this Court has previously explained, a "stockholder's interest in a corporation is
    limited to the legal rights flowing from the ownership of capital stock. Those rights do not
    include a pro-rata interest in corporate assets." Anson v. Anson, 
    772 So. 2d 52
    , 54 (Fla.
    5th DCA 2000). In fact, the corporation is a separate, legally recognized entity that holds
    2 Based on the facts of this case, we reject as meritless the claim that the trial court
    erred in granting summary judgment before discovery was complete.
    4
    title to its assets. 
    Id.
     Although a corporation that is owned by both spouses is a marital
    asset, see Thibault v. Thibault, 
    668 So. 2d 237
    , 238 (Fla. 1st DCA 1996), the corporation’s
    earnings are not marital assets. Instead, assets that are "acquired through corporate
    earnings are corporate assets until payments are made for services or as dividends."
    Anson, 
    772 So. 2d at 54
    .
    Doctor Rooter is a Florida corporation that was formed by the parties during their
    marriage. While they were married, Thomas owned 80% of the company's stock and
    Laura owned 20%. Even though Thomas and Laura were the only shareholders, Doctor
    Rooter was a separate legal entity and its earnings belonged to the corporation until such
    time as Thomas and Laura received payments from it. See 
    id.
     Therefore, Laura was not
    entitled to take money from Doctor Rooter until she received payments from the company
    either for services or as dividends. See 
    id.
    While Laura maintains that taking money from the company merely constituted the
    dissipation of marital assets, the record is not particularly clear on this point. Dissipation
    of marital assets occurs when "one spouse uses marital funds for his or her own benefit
    and for a purpose unrelated to the marriage at a time when the marriage is undergoing
    an irreconcilable breakdown."3 Romano v. Romano, 
    632 So. 2d 207
    , 210 (Fla. 4th DCA
    1994) (quoting Gentile v. Gentile, 
    565 So. 2d 820
    , 823 (Fla. 4th DCA 1990) (emphasis
    omitted)). In this instance, Thomas alleged that Laura took money from Doctor Rooter
    between 2007 and 2011 while she was working there.              According to the amended
    3We cannot tell, based on the record before us, whether Laura used the funds for
    purposes unrelated to the marriage or if the takings occurred during "a time when the
    marriage [was] undergoing an irreconcilable breakdown." Romano, 
    632 So. 2d at 210
    (quoting Gentile, 
    565 So. 2d at 823
    ).
    5
    complaint, when Laura took that money, it belonged to the company and was not
    considered to be a part of their marital funds. As such, it cannot be said that taking money
    from Doctor Rooter constituted the dissipation of marital assets as opposed to theft from
    the company. See Lopez v. Lopez, 
    135 So. 3d 326
    , 329 (Fla. 5th DCA 2013) (explaining
    that to qualify as dissipation of marital assets, misconduct must be intentional destruction
    of asset for party’s own benefit and used for purpose unrelated to marriage).
    Because Laura's actions do not fit within the definition of dissipation of marital
    assets, the dissolution statute is not the exclusive remedy available to Doctor Rooter and
    Thomas for Laura’s alleged theft. See Beers v. Beers, 
    724 So. 2d 109
    , 117 (Fla. 5th DCA
    1998) (explaining that chapter 61, Florida Statutes, provides exclusive remedy when one
    spouse has intentionally dissipated marital property during the marriage where no specific
    transaction or agreement exists between the spouses). Therefore, contrary to the trial
    court’s findings, the family law court did not have exclusive jurisdiction to consider the
    theft claims. Accordingly, Doctor Rooter and Thomas had standing to bring the instant
    claims outside of family court, and the trial court’s conclusion otherwise was error.
    For the same reason, the trial court also erred when it concluded Laura could not
    be held liable for stealing from herself. In Florida, when a corporation has more than one
    shareholder, an officer/shareholder has a fiduciary duty to all shareholders. Zold v. Zold,
    
    880 So. 2d 779
    , 780 (Fla. 5th DCA 2004). In other words, the corporation "is not the
    personal piggy bank for any one shareholder . . . ." 
    Id. at 781
    .
    Here, it is undisputed that Thomas and Laura were the only two shareholders with
    an interest in Doctor Rooter at the time Laura allegedly stole from it. However, the fact
    that they were married and the only two shareholders does not change the fact that Laura
    6
    owed a fiduciary duty to Doctor Rooter and to Thomas. See 
    id. at 780
    . Moreover, Laura
    was not entitled to remove funds from Doctor Rooter because, at the time of the alleged
    theft, the funds were assets of the corporation and not marital assets to which she was
    entitled. See Anson, 
    772 So. 2d at 54
    . Under these circumstances, Laura was not merely
    stealing from herself as the lower court found. Instead, she was stealing from Doctor
    Rooter and Thomas. Thus, she could be held liable for civil theft and the other claims in
    the amended complaint.4 See Dep’t of Ins. v. Blackburn, 
    633 So. 2d 521
    , 524 (Fla. 2d
    DCA 1994) (rejecting sole shareholder’s argument that he was stealing from himself and
    finding that receiver could bring claim for breach of fiduciary duty and civil theft against
    him because other creditors and policy holders may have been divested of money he
    took). Consequently, summary judgment was improperly granted on Laura’s claim that
    she could not be held liable for stealing from herself.
    Doctor Rooter and Thomas next argue that the trial court erred in holding that
    Doctor Rooter was bound by the release in the divorce proceeding as it was not a party
    to the proceeding and therefore, res judicata and waiver did not bar their claims. As the
    Florida Supreme Court explained, "[t]he foundation of res judicata is that a final judgment
    4 The trial court’s reliance on Hinkle v. State, 
    355 So. 2d 465
    , 467 (Fla. 3d DCA
    1978) (holding "a co-owner of a joint bank account cannot be guilty of larceny of funds
    held in the joint account[]") (citation omitted), Russ v. State, 
    830 So. 2d 268
    , 270 (Fla. 1st
    DCA 2002) ("A co-owner of property cannot be held guilty of larceny of such property
    unless the other co-owner has a superior legal interest that authorizes the withholding of
    the property." (citation omitted)), and Dimuccio v. D’Ambra, 
    750 F. Supp. 495
    , 501 (M.D.
    Fla. 1990) (concluding plaintiffs' allegations did not meet the elements of civil theft
    because the party who took the money was a co-owner of the property), is misplaced.
    Contrary to the trial court's findings, these cases are distinguishable and do not support
    summary judgment. None of the cases involve a shareholder of a closely held corporation
    being sued for civil theft for taking money from the corporation. Rather, they simply stand
    for the proposition that a co-owner of property cannot be held liable for taking that property
    when he has a superior legal interest in the property.
    7
    in a court of competent jurisdiction is absolute and settles all issues actually litigated in a
    proceeding as well as those issues that could have been litigated." Engle v. Liggett Grp.,
    Inc., 
    945 So. 2d 1246
    , 1259 (Fla. 2006). The Supreme Court further described res
    judicata as follows:
    A judgment on the merits rendered in a former suit between the same
    parties or their privies, upon the same cause of action, by a court of
    competent jurisdiction, is conclusive not only as to every matter which
    was offered and received to sustain or defeat the claim, but as to every
    other matter which might with propriety have been litigated and
    determined in that action.
    
    Id.
     (quoting Dep't of Transp. v. Juliano, 
    801 So. 2d 101
    , 105 (Fla. 2001) (emphasis
    omitted)).
    Contrary to the trial court's conclusion otherwise, res judicata would not bar Doctor
    Rooter's and Thomas' civil theft claims against Laura because the theft case and the
    dissolution proceedings are not based upon the same cause of action. This fact remains
    even if Doctor Rooter were a party to the dissolution proceeding because the dissolution
    case only involved matters stemming from Thomas and Laura’s divorce and did not
    include claims regarding Laura taking money from Doctor Rooter.
    Moreover, questions of fact remain over Laura’s res judicata defense. According
    to the amended complaint, Thomas learned about Laura's theft from Doctor Rooter after
    an audit was completed in 2013, which was after the parties’ divorce was finalized in
    October 2012. Laura's affidavit, on the other hand, indicates that Thomas threatened to
    sue her for civil theft during their divorce proceedings. Thus, a question of fact remains
    about when Doctor Rooter and Thomas learned of the theft and whether they could have
    8
    brought the claim as a part of the divorce proceedings.5 As such, it was improper for the
    trial court to enter summary judgment on Laura’s res judicata defense.
    Laura’s argument that Thomas and Doctor Rooter released and waived their civil
    theft claim by signing the Consent Final Judgment also fails. To establish waiver, a party
    must show: "(1) the existence at the time of the waiver of a right, privilege, advantage, or
    benefit which may be waived; (2) the actual or constructive knowledge of the right; and
    (3) the intention to relinquish the right." Goodwin v. Blu Murray Ins. Agency, Inc., 
    939 So. 2d 1098
    , 1104 (Fla. 5th DCA 2006) (citing Zurstrassen v. Stonier, 
    786 So. 2d 65
    , 70 (Fla.
    4th DCA 2001)). When a claim of waiver is based on a release contained in a contract,
    the reviewing court must construe the release and determine the intent of the parties by
    reviewing the entire instrument. Cerniglia v. Cerniglia, 
    679 So. 2d 1160
    , 1164 (Fla. 1996).
    Like any other contract, "where the language of a release is clear and unambiguous a
    court cannot entertain evidence contrary to its plain meaning." 
    Id.
     (citing Sheen v. Lyon,
    
    485 So. 2d 422
    , 424 (Fla. 1986)).
    Here, paragraph 18 of the Consent Final Judgment reads as follows:
    18) EFFECTIVE DATE OF AGREEMENT HEREIN, ENTIRE
    AGREEMENT AND NON-MERGER: Both parties had acknowledged
    that the agreement contained in this Consent Final Judgment shall be
    enforceable and binding upon the parties as of the date the last party
    signed this document below . . . . Further, by signing this Agreement, the
    parties have agreed that his [sic] document shall be construed and
    enforceable as a Settlement Agreement whether entered as an order of
    the Court or not. That is, they each have agreed to be bound by terms of
    this Agreement and each has acknowledged that he/she has agreed to
    the same for good and valuable consideration. The parties have agreed
    that this Agreement constitutes a full and final settlement of all pending
    5 If Thomas knew about the theft during the divorce, it is possible res judicata could
    bar the theft claim. If, however, Thomas learned of the theft in 2013, he could not have
    brought the claim during the divorce and res judicata would not bar the claim.
    9
    and current issues between them and they hereby each release each
    other from any claims which could have been resolved in this action of
    [sic] in this Judgment, except as provided herein. The parties have
    agreed that once this Consent Final Judgment is entered by the Court,
    the agreement . . . shall remain separately enforceable as a binding
    agreement between the parties . . . .
    (Emphasis added). Thomas and Laura, their attorneys, and the family court judge are
    the only people who signed the Consent Final Judgment. No one signed it on behalf of
    Doctor Rooter. As such, because it is clear that Thomas and Laura are the only parties
    to the Consent Final Judgment, they are the only parties bound by the release in
    paragraph 18. Therefore, Doctor Rooter was free to bring the theft suit against Laura.
    Regardless, summary judgment on the waiver issue was improper because
    material issues of fact remain. The release states that it covers "any claims which could
    have been resolved in this action [or] in this Judgment." As stated earlier, there is
    conflicting evidence regarding when Doctor Rooter and Thomas learned about the civil
    theft. According to Laura, they learned about it while the divorce was pending. However,
    Thomas claims that they learned of the embezzlement after the divorce was final. If
    Thomas is believed, Doctor Rooter and Thomas could not have brought the theft claim
    as a part of the divorce because they did not know about it.6 Therefore, summary
    6 A party’s failure to raise a compulsory counterclaim will result in the waiver of that
    claim. Londono v. Turkey Creek, Inc., 
    609 So. 2d 14
    , 18 (Fla. 1992). In this case, the
    trial court determined that the claims for conversion, embezzlement, breach of fiduciary
    duty, and civil theft were compulsory counterclaims in the dissolution of marriage case
    and were waived because they were not raised as counterclaims in that case. However,
    the claims in the amended complaint would be compulsory counterclaims to the
    dissolution case only if they arose from the same aggregate facts. See 
    id.
     Here, the theft
    claims brought in the amended complaint have no logical relationship to the dissolution
    case, which arose from Thomas and Laura’s inability to remain married. Thus, it was
    error for the lower court to find that they were waived by Thomas' failure to raise them in
    the divorce proceeding.
    10
    judgment should not have been granted on this basis. See Scheibe v. Bank of Am., N.A.,
    
    822 So. 2d 575
    , 575 (Fla. 5th DCA 2002) (finding summary judgment improperly granted
    on waiver issue where questions of fact remain); Parker v. Dinsmore Co., 
    443 So. 2d 356
    ,
    358 (Fla. 1st DCA 1983) (reversing entry of summary judgment where questions of fact
    remain on waiver issue).
    For the reasons stated above, we conclude the trial court erred in granting
    summary judgment on Laura’s first, second, third, fourth, fifth, and tenth affirmative
    defenses. Accordingly, we reverse the final order under review and remand for further
    proceedings.
    REVERSED and REMANDED.
    EDWARDS, J. and JACOBUS, B.W., Senior Judge, concur.
    11