Doctor Rooter Supply & Service v. McVay

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
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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.
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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
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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.
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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.
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