KIS GROUP, LLC, ALERION MANAGEMENT GROUP, LLC and RICARDO DEAVILA v. YVES MOQUIN

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
KIS GROUP, LLC, ALERION MANAGEMENT GROUP, LLC and,
RICARDO DEAVILA,
Petitioners,
v.
YVES MOQUIN,
Respondent.
No. 4D18-1435
[January 2, 2019]
Petition for writ of certiorari to the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Donald W. Hafele, Judge; L.T. Case
No. 502016CA011722XXXXMB.
Mary F. April, Peter M. Bernhardt and Courtney G. Tito of McDonald
Hopkins LLC, West Palm Beach, for petitioners.
Daniel M. Samson of Samson Appellate Law, Miami, and Matthew S.
Sarelson of Kaplan, Young & Moll-Parrón, Miami, for respondent.
DAMOORGIAN, J.
Petitioners KIS Group, LLC, Alerion Management Group, LLC and
Ricardo DeAvila seek certiorari review of the trial court’s order granting
Respondent Yves Moquin’s motion to amend his complaint to assert a
claim for punitive damages. Because the court failed to follow the
procedural requirements of section 768.72, Florida Statutes, we grant the
petition.
Petitioner KIS is a company that was formed for the sole purpose of
investing in KIOSK Information Systems, Inc., a company that designs and
manufactures kiosk systems. Petitioner Alerion manages KIS and
Petitioner DeAvila serves as a manager for Alerion. In 2010, Respondent
purchased two membership units in KIS for $353,333.33. Five years later,
Respondent contacted DeAvila and requested to redeem his investment in
KIOSK. Before granting the request, DeAvila advised Respondent that
KIOSK might be sold within the year. Respondent acknowledged the
possibility of a sale but decided to nonetheless redeem his investment.
Several months after Respondent redeemed his investment, KIOSK sold
for a substantial profit. Respondent thereafter sued Petitioners for,
amongst other things, fraud in the inducement. The fraud claims were
predicated on Respondent’s belief that at the time he requested to redeem
his investment, Petitioners knew that the sale of KIOSK was imminent and
not merely a remote future possibility as represented by DeAvila.
Respondent maintained that Petitioners intentionally withheld this
information in order to fraudulently induce him to sell his units early.
Petitioners moved for summary judgment and, following a hearing, the
court granted partial summary judgment. The three separate fraud claims
against Petitioners, however, survived.
Shortly thereafter, Respondent moved to amend his complaint to add a
claim for punitive damages. At the ensuing hearing, Respondent argued
that the court’s previous denial of Petitioners’ motion for summary
judgment on the fraud claims was the functional equivalent of a
determination by the court that there was a reasonable evidentiary basis
for punitive damages. In support thereof, Respondent cited First Interstate
Development Corp. v. Ablanedo, 511 So. 2d 536, 539 (Fla. 1987) for the
proposition that “proof of fraud sufficient to support compensatory
damages necessarily is sufficient to create a jury question regarding
punitive damages.” Petitioners countered that regardless of the previous
ruling on the motion for summary judgment, the court was required to
conduct a section 768.72 evidentiary inquiry to determine whether there
was evidence in the record which would provide a reasonable basis for
recovery of punitive damages.
After hearing argument from both parties, the trial court made it
abundantly clear that it did not believe Respondent established a
reasonable evidentiary basis for punitive damages:
[T]he ipso facto argument that you used, while it may or may
not be viable under Florida law, despite the statutory
requirement of proffer of evidence, under these particular
facts, I’m hard-pressed to watch a jury or allow a jury to
consider [punitive damages] at the same time they’re
considering the underlying claim.
Because again, these facts are not the type of egregious facts,
at least not from my perspective, that we usually see to justify
a claim for punitive damages. . . . These facts are just not that
compelling . . . .
2
Nonetheless, believing that it was constrained by the holding in
Ablanedo, the court granted Respondent’s motion to amend. The court
also abated all financial discovery so that Petitioners could either seek
review of the order or file a motion for summary judgment in order to test
the adequacy of the punitive damages claim. This petition follows.
“Certiorari review is available to determine whether a trial court has
complied with the procedural requirements of section 768.72, but not to
review the sufficiency of the evidence.” Tilton v. Wrobel, 198 So. 3d 909,
910 (Fla. 4th DCA 2016).
Section 768.72, Florida Statutes, provides in relevant part that: “In any
civil action, no claim for punitive damages shall be permitted unless there
is a reasonable showing by evidence in the record or proffered by the
claimant which would provide a reasonable basis for recovery of such
damages.” § 768.72(1), Fla. Stat. (2018). In other words, “[t]he statute
requires the trial court to act as a gatekeeper and precludes a claim for
punitive damages where there is no reasonable evidentiary basis for
recovery.” Bistline v. Rogers, 215 So. 3d 607, 611 (Fla. 4th DCA 2017).
This is because punitive damages are reserved for truly culpable behavior
and are intended to “express society’s collective outrage.” Imperial Majesty
Cruise Line, LLC v. Weitnauer Duty Free, Inc., 987 So. 2d 706, 708 (Fla. 4th
DCA 2008) (quoting Hosp. Corp. of Lake Worth v. Romaguera, 511 So. 2d
559, 565 (Fla. 4th DCA 1986)).
In the present case, it is clear that the trial court did not follow the
procedural requirements of section 768.72 in ruling on Respondent’s
motion to amend. Nonetheless, Respondent maintains that the court did
not depart from the essential requirements of the law because it applied
the correct law, namely Ablanedo. We disagree.
A careful reading of Ablanedo demonstrates that the case does not
stand for the proposition that a trial court’s denial of a motion for summary
judgment on a fraud claim is the functional equivalent of a determination
by the court that there is a reasonable evidentiary basis for punitive
damages. Ablanedo involved a situation where the trial court allowed the
jury to consider the issue of compensatory damages on a fraud claim at
the close of evidence, but at the same time entered a directed verdict on
the punitive damages claim. 511 So. 2d at 538. Accordingly, the court’s
holding that “proof of fraud sufficient to support compensatory damages
necessarily is sufficient to create a jury question regarding punitive
damages” was made in the specific context of the sufficiency of the
evidence on a motion for directed verdict. Id. at 539; see also Rappaport
v. Jimmy Bryan Toyota of Fort Lauderdale, Inc., 522 So. 2d 1005, 1006
3
(Fla. 4th DCA 1988). That case did not involve, as here, the issue of
whether a ruling by the trial court on a motion for summary judgment that
a defendant has failed to establish that there are no material issues of fact
regarding a fraud claim is the functional equivalent of a plaintiff
establishing, for pleading purposes, a reasonable evidentiary basis for
punitive damages. See Ameriseal of N. E. Fla., Inc. v. Leiffer, 738 So. 2d
993, 995 (Fla. 5th DCA 1999) (recognizing that “[a]lthough similar,
summary judgments and directed verdicts are not identical”).
Moreover, even if Ablanedo does stand for the proposition that a trial
court’s denial of a motion for summary judgment on a fraud claim is the
functional equivalent of a determination by the court that there is a
reasonable evidentiary basis for punitive damages, the enactment of
section 768.72 undercuts the scope of that ruling. Unlike consideration
of a motion for summary judgment which precludes the court from
weighing the evidence or reaching conclusions therefrom, section 768.72
necessarily requires the court to weigh the evidence and act as a factfinder.
It is axiomatic, then, that the analysis required for a motion for summary
judgment cannot be substituted for the analysis required under the
statute.
The First District’s holding in Noack v. Blue Cross & Blue Shield of
Florida, Inc., 872 So. 2d 370 (Fla. 1st DCA 2004) is instructive. In that
case, the petitioners sought mandamus relief to compel the trial court to
grant their motion seeking leave to amend the complaint to assert a claim
for punitive damages. Id. at 371. The petitioners maintained that the trial
court’s ruling was contrary to the law of the case as established in an
earlier appeal wherein the appellate court reversed an order granting the
respondents’ motion for summary judgment on the petitioners’ fraud
claim. Id. In rejecting the petitioners’ argument, the court held that:
The conventional analysis utilized in resolving a summary
judgment motion has no application in the context of a
punitive damages determination under section 768.72.
Whether the entitlement to plead a claim for punitive damages
has been established must be determined under the procedure
and standards set forth in the statute, and our finding in the
earlier appeal that respondents failed to establish that there
is no material issue of disputed fact concerning the fraud
claim is not the equivalent of petitioners establishing a
reasonable evidentiary basis for punitive damages.
Id. at 371–72 (internal citation omitted).
4
In support of its holding, the Noack court relied on the Fifth District’s
decision in Potter v. S.A.K. Development Corp., 678 So. 2d 472 (Fla. 5th
DCA 1996). In Potter, the court considered, and ultimately rejected, the
argument that if a trial court has determined that there is a material issue
of fact on a claim for fraud, then, ipso facto, the procedural requirements
of section 768.72 have been satisfied:
We cannot agree that a finding by the trial court that a
defendant has failed to establish that there is no material
issue of fact concerning whether he perpetrated a fraud is the
equivalent of the plaintiff establishing a reasonable evidentiary
basis for punitive damages.
This case illustrates the sort of confusion that can result when
the statutory procedure is not complied with. Before a
defendant may be subjected to financial worth discovery and
required to defend a punitive damage claim, the statute
requires that the plaintiff provide the court with a reasonable
evidentiary basis for punitive damages. This procedure needs
to be followed exactly as required by statute, using the
standards set forth in the statute.
Id. at 473 (emphasis added); see also Hudson Hotels Corp. v. Seagate
Beach Quarters, Inc., 696 So. 2d 867, 868 (Fla. 4th DCA 1997) (Gross, J.,
dissenting) (favorably citing Potter for the proposition that “[a] holding that
a defendant has failed to establish the absence of any material fact on a
plaintiff’s tortious interference claim is not the equivalent of the plaintiff
establishing a reasonable evidentiary basis for punitive damages”). 1
Accordingly, we grant the petition and quash the trial court’s order
granting the motion to amend to assert a claim for punitive damages.
Petition granted.
TAYLOR and LEVINE, JJ., concur.
* * *
1 As the majority in Hudson Hotels denied the petition without explanation, that
case is tantamount to a per curiam affirmance without written opinion and has
no precedential value. St. Fort v. Post, Buckley, Schuh & Jernigan, 902 So. 2d
244, 248 (Fla. 4th DCA 2005) (“We reiterate that a per curiam affirmance without
written opinion, even one with a written dissent, has no precedential value and
should not be relied on for anything other than res judicata.”).
5
Not final until disposition of timely filed motion for rehearing.
6