INSPIRED CAPITAL, LLC, etc. v. STEVEN HOWELL

Third District Court of Appeal
State of Florida
Opinion filed August 2, 2023.
Not final until disposition of timely filed motion for rehearing.
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No. 3D22-1220
Lower Tribunal No. 14-5578
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Inspired Capital, LLC, etc., et al.,
Appellants,
vs.
Steven Howell, et al.,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Peter R.
Lopez, Judge.
Wasson & Associates, Chartered, and Roy D. Wasson; Hernandez,
Lee & Martinez, LLC, and Eric A. Hernandez and Jermaine A. Lee, for
appellants.
Boies Schiller Flexner LLP, and Bruce A. Weil and Laselve E. Harrison,
for appellees.
Before FERNANDEZ, HENDON and BOKOR, JJ.
BOKOR, J.
Inspired Capital, LLC (“Inspired”) appeals the trial court’s entry of final
summary judgment in favor of Steven Howell on Inspired’s various derivative
claims. Inspired contends that the trial court both improperly entered
summary judgment based on a lack of evidence of out-of-pocket damages,
and improperly disallowed amendment of the pleadings and discovery
responses to specifically assert such damages. As explained below, the
trial court correctly granted final summary judgment and didn’t abuse its
discretion in denying leave to amend. However, based on the record, the
trial court erred in granting final judgment on the issue of nominal damages.
BACKGROUND
Inspired’s complaint sought “economic damages” for all claims,
including a breach of contract claim based on an operating agreement. The
operating agreement provided that Inspired would invest $500,000 in
Inspired Food Solutions (“IFS”) in exchange for a 15% interest in IFS and
entitlement to royalty and cash return payments. During discovery, Inspired
provided interrogatory responses stating that “[Inspired] has not calculated
the extent of [Inspired]’s damages, which will be calculated by a damages
expert, whose opinion will be timely disclosed,” but that such damages would
“likely” include “(1) the value of the investment in IFS, (2) the lost profits from
the lost business opportunities, and/or (3) the value of the business.”
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Inspired’s damages expert set forth in his report that Inspired can potentially
either recover lost profits or lost business value damages, but not both.
Howell filed a motion for summary judgment claiming that damages set
forth by the expert in his report were too speculative. Inspired filed an
untimely 1 opposition brief that did not address the lost profits or lost business
value damages and instead asserted that Inspired would be entitled to out-
of-pocket (i.e., the value of the investment in IFS) and nominal damages.
Following Inspired’s untimely opposition, Howell filed a motion to strike the
opposition brief. The trial court granted both the motion to strike and
summary judgment motion, but only granted partial summary judgment to
the extent that Inspired’s claims were for lost profits and lost business value
damages.
Thereafter, Howell filed another motion for summary judgment on
Inspired’s claims for out-of-pocket damages and nominal damages. The trial
court again granted summary judgment, finding that Inspired waived these
damages by not asserting them in their pleadings or interrogatory responses.
In response, Inspired moved for rehearing and leave to amend the pleadings
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Inspired filed their opposition brief on September 27, 2021, three days
before the hearing took place on September 30, 2021. See Fla. R. Civ. P.
1.510(c)(5) (“At least 20 days before the time fixed for the hearing, the
nonmovant must serve a response that includes the nonmovant’s supporting
factual position . . . .”).
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and discovery responses. The trial court denied the motion for rehearing
and motion to amend. This appeal followed.
STANDARD OF REVIEW
We review de novo an order granting summary judgment. Fernandez
v. Cruz, 341 So. 3d 410, 412 (Fla. 3d DCA 2022). We review an order
denying a motion to amend a pleading for abuse of discretion. Pangea
Produce Distribs., Inc. v. Franco’s Produce, Inc., 275 So. 3d 240, 242 (Fla.
3d DCA 2019).
LEGAL ANALYSIS
Inspired argues that out-of-pocket damages are general damages and
thus do not need to be specifically pled. See Fla. R. Civ. P. 1.120(g); see
also Hutchison v. Tompkins, 259 So. 2d 129, 132–33 (Fla. 1972) (explaining
that general damages are those damages that “naturally and necessary flow
or result from the injuries alleged” and do not to be specifically pled).
However, that argument confuses summary judgment with a motion to
dismiss. While a motion to dismiss tests the sufficiency of the pleadings,
here, we are dealing with a summary judgment, which tests the sufficiency
of the evidence to determine if there’s a triable issue of fact. See Fla. Bar v.
Greene, 926 So. 2d 1195, 1999–1200 (Fla. 2006) (“A motion to dismiss is
designed to test the legal sufficiency of the complaint” while “[s]ummary
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judgment is designed to test the sufficiency of the evidence to determine if
there is sufficient evidence at issue to justify a trial or formal hearing.”).
Therefore, the categorization of out-of-pocket damages as general or
specific damages is irrelevant at the summary judgment stage. To overcome
summary judgment, the party with the burden of proof, here, Inspired, the
plaintiff below, must provide sufficient evidence to demonstrate a genuine
issue of material fact.
Inspired would necessarily be bound by its responses to discovery,
including its interrogatory responses. See Mana v. Cho, 147 So. 3d 1098,
1100 (Fla. 3d DCA 2014) (finding that the respondent was bound by the
damages theory set forth in his interrogatory responses preventing him from
seeking other damages). Inspired’s interrogatory responses provided that a
damages expert would calculate the damages. In his report the expert
provided only two ways of calculating the damages: lost profits and lost
market value. For these models of damages, the trial court correctly
concluded that the expert offered speculative evidence insufficient to support
an award of damages on these bases. See Crain Auto. Grp., Inc. v. J & M
Graphics, Inc., 427 So. 2d 300, 301 (Fla. 3d DCA 1983) (noting that in order
to recover lost profits the lost profits must be shown with a reasonable
degree of certainty); see also Fid. Warranty Servs., Inc. v. Firstate Ins.
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Holdings, Inc., 74 So. 3d 506, 514 (Fla. 4th DCA 2011) (determining lost
market value cannot be used to prove damages if the data supporting those
damages is speculative). The trial court correctly ascertained that the
projections that the expert relied upon required “extraordinary assumptions”
and “hypothetical conditions” to be correct and the companies used in the
report to calculate the damages are, according to the expert’s own
admissions, “noncomparable.” Additionally, the expert admitted that he did
not review any of the documentation used to prepare the projections and that
such projections are “never accurate.” The trial court, therefore, correctly
determined that the calculations provided by the expert constituted
impermissibly speculative damages, insufficient to survive a motion for
summary judgment.
The trial court also correctly disposed of Inspired’s out-of-pocket or
reliance damages theory. In the order granting summary judgment, the trial
court noted that Inspired failed to dispute the pertinent statement of
undisputed fact in the motion for summary judgment that “by November 26,
2013 (when Defendants first heard of IFS), Plaintiffs had already incurred,
and spent, the entirety of the ‘$500,000 contribution’ they now seek to
recover from Defendants as out of pocket expenses.” These purported out-
of-pocket damages can’t form the basis for reliance damages—even
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assuming the belated request to seek such damages were appropriate—
where the undisputed facts at summary judgment establish that there was
no such reliance. See Resort Int’l, Inc v. Charter Air Ctr., Inc., 503 So. 2d
1293, 1296 (Fla. 3d DCA 1987) (“A party is entitled to recover, as against
the breaching party . . . those expenditures made in reliance upon the
performance of the contract.”). Howell met its burden by showing an
“absence of evidence to support the non-moving party’s case.” Celotex Corp.
v. Catrett, 477 U.S. 317, 325 (1986). Inspired then failed to “present
affirmative evidence” setting forth “specific facts showing that there is a
genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256–
57 (1986)
Inspired also argues that the trial court erred by not allowing leave to
amend the pleadings and discovery responses to defeat summary judgment.
Although Florida encourages adjudication on the merits and liberal
amendment, “there is an equally compelling obligation on the court to see to
it that the end of all litigation be finally reached.” Alvarez v. DeAguirre, 395
So. 2d 213, 216 (Fla. 3d DCA 1981) (quoting Brown v. Montgomery Ward &
Co., 252 So. 2d 817, 819 (Fla. 1st DCA 1971)). In addition, when summary
judgment has been entered against the party seeking leave to amend, this
court has been reluctant in allowing that party to amend their pleadings to
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advance new issues. See Jain v. Buchanan Ingersoll & Rooney PC, 322 So.
3d 1201, 1206 (Fla. 3d DCA 2022) (finding that the trial court did not abuse
its decision by denying leave to amend to advance new issues after
summary judgment was entered against that same party). Leave to amend
is not a do-over. In the present case, based on the totality of the
circumstances, the length of litigation, including the exhaustive discovery
and briefing that occurred to date, the trial court was within its discretion to
deny leave to amend.
Finally, Inspired argues that the trial court improperly granted summary
judgment on its claim for nominal damages. See Hutchison, 259 So. 2d at
132 (determining that if the plaintiff can show an invasion of a legal right the
plaintiff may recover at least nominal damages in certain circumstances);
see also Land & Sea Petroleum Holdings, Inc. v. Leavitt, 321 So. 3d 810,
817 (Fla. 4th DCA 2021) (same). However, to overcome summary judgment
on the issue of nominal damages, Inspired must show an issue of fact upon
which a fact finder could find a breach of a duty. 2 See Leavitt, 321 So. 3d at
2
Inspired in its amended complaint sufficiently pleads nominal damages by
asserting that Howell misappropriated and improperly misused trade secret
and other confidential information of Inspired. See Hutchison, 259 So. 2d at
132 (“It is well established in Florida that where the allegations of a complaint
show the invasion of a legal right, the plaintiff on the basis thereof may
recover at least nominal damages . . . .”). Howell nevertheless argues that
nominal damages have been waived by not asserting those damages earlier
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817 (“[T]he law allows for nominal damages when a party fails to adequately
prove damages for the breach of a contract, the breach of a fiduciary duty,
or the aiding and abetting of a breach of fiduciary duty [provided that] the trial
court actually found (either specifically or indirectly) Appellant had suffered
damages as to those causes of action.”). A fact finder may award nominal
damages upon a finding of a breach. Am. Sales & Mgmt. Org. LLC v. Lopez,
48 Fla. L. Weekly D605 at *6 n.5 (Fla. 3d DCA Mar. 22, 2023); see also
Continuum Condo. Ass'n, Inc. v. Continuum VI, Inc., 549 So. 2d 1125, 1127
(Fla. 3d DCA 1989) (“[N]ominal damages can be awarded when a legal
wrong has been proven, but the aggrieved party has suffered no
damages . . . or where . . . recoverable damages were not proven . . . .”
(alterations in original)). None of the summary judgment orders entered by
the trial court address the issue of whether a breach of contract or breach of
fiduciary duty occurred.
Accordingly, we conclude the trial court erred in granting judgment as
a matter of law on the claims for which a finder of fact could choose to award
in the proceeding. This proposition is not supported by case law. See
Leavitt, 321 So. 3d at 816 (explaining that nominal damages are waived if
not requested during closing arguments or as part of a jury instruction). The
record demonstrates that Inspired sought nominal damages before trial, and
because no trial has yet occurred, any argument that Inspired waived such
damages by failing to request during trial is premature.
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nominal damages upon a finding of a breach of contract, breach of fiduciary
duty, aiding and abetting a breach of fiduciary duty (or any other claim
allowing for nominal damages). See Leavitt, 321 So. 3d at 817–18 (holding
that after a finding of a breach of contract, breach of fiduciary duty, and aiding
and abetting a breach of fiduciary duty, “the trial court erred in failing to award
nominal damages on those specific claims”). We therefore affirm the portion
of the summary judgment award pertaining to all measures of damages,
save nominal damages. We also affirm the trial court’s order denying leave
to amend. We reverse the entry of summary and final judgment as it pertains
to claims for which nominal damages may be available and remand for
further proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded.
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