Ghahan, LLC v. Palm Steak House, LLC

• Court: Court of Appeals for the Eleventh Circuit
• Decided: August 8, 2018
• Docket: 16-11300
• Status: Unpublished

Opinion

Case: 16-11300 Date Filed: 08/08/2018 Page: 1 of 15

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 16-11300; 16-11732 ________________________

D.C. Docket No. 9:12-cv-80762-KLR

GHAHAN, LLC, an Ohio Limited Liability,

Plaintiff - Third Party Defendant - Counter Defendant - Appellee,

versus

PALM STEAK HOUSE, LLC, a Florida limited liability company agent of f/k/a Palm Steak House Gentlemen’s Club,

THOMAS FARESE,

Defendants - Third Party Plaintiffs - Counter Claimants - Appellants,

SUZANNE FARESE, Case: 16-11300 Date Filed: 08/08/2018 Page: 2 of 15

Defendant - Third Party Plaintiff - Counter Claimant,

STEVE ROUMAYA,

Third Party Defendant - Counter Defendant.

________________________

Appeals from the United States District Court for the Southern District of Florida ________________________

(August 8, 2018)

Before WILLIAM PRYOR and MARTIN, Circuit Judges, and HALL, * District Judge.

MARTIN, Circuit Judge:

Palm Steak House, LLC and Thomas Farese appeal from the $675,000

judgment entered in favor of Ghahan, LLC and against Palm Steak on a breach-of-

contract claim following a jury trial. After careful review and with the benefit of

oral argument, we dismiss Mr. Farese’s appeal for lack of standing and affirm the

District Court in all respects.

I. Facts

We construe the evidence at trial, including all reasonable inferences, in

favor of the winner at trial. See Reeves v. Sanderson Plumbing Prods., Inc., 530

* Honorable James Randal Hall, United States Chief District Judge for the Southern District of Georgia, sitting by designation. 2 Case: 16-11300 Date Filed: 08/08/2018 Page: 3 of 15

U.S. 133, 150, 120 S. Ct. 2097, 2110 (2000). Here, the winner was Ghahan, and

the evidence was as follows.

In 2008, Ghahan entered into a management agreement with Palm Steak to

manage and invest in a strip club. Nick Hasan and Steve Roumaya, two of

Ghahan’s owners, represented Ghahan in its dealings with Palm Steak. Mr.

Roumaya believed Thomas Farese was a part owner of Palm Steak because he was

the only person Mr. Roumaya dealt with in matters relating to the club. By 2011,

Ghahan had invested over a million dollars in the club, which was doing well.

In April of 2011, Mr. Roumaya began negotiating with Mr. Hasan and other

Ghahan partners to buy out their interests, so that Roumaya could own outright all

of the properties under Ghahan’s control. Right after those negotiations began, Mr.

Roumaya separately asked Mr. Farese if he wanted to terminate the management

agreement under which Ghahan operated the strip club. Mr. Farese discussed the

possible termination with Mr. Hasan and Mr. Roumaya. As part of these

discussions, Mr. Roumaya conveyed to Mr. Farese that he intended to buy out Mr.

Hasan’s interest in Ghahan, and Mr. Farese never objected to this plan.

Over the next several months, the parties communicated by email to

negotiate the terms of a possible termination of the management agreement. On

May 27, 2011, Mr. Farese texted Mr. Roumaya, indicating he agreed to pay

$675,000 at 5.5% interest to terminate the agreement. Mr. Roumaya believed Mr.

3 Case: 16-11300 Date Filed: 08/08/2018 Page: 4 of 15

Farese was agreeing on behalf of Palm Steak to buy out the management

agreement.

Before the buyout of the management agreement could be completed, Mr.

Roumaya had to buy out his other partners in Ghahan. And in September 2011, he

did. Once that was done, Mr. Roumaya’s attorney, Thomas Puffenberger, drafted a

document titled “Termination of Management [A]greement” and emailed it to Mr.

Farese. Farese replied that he would review the agreement with his attorneys,

Barry Roderman and David Goldstein, who were copied on his email. Mr.

Roderman and Mr. Goldstein are also Palm Steak’s counsel in this action.

On November 10, Mr. Farese emailed Mr. Roumaya, copying Mr. Roderman

and Mr. Goldstein, stating to Mr. Roumaya and Mr. Puffenberger that they should

look at the attached modified termination agreement. The modified termination

agreement had language indicating that it came from Palm Steak, and it included

highlighted and crossed out terms. The highlighted portions reflected additions by

Palm Steak, while the crossed out terms indicated Palm Steak’s intent to delete

those terms. After receiving the modified draft, Mr. Roumaya met with Mr. Farese

in person. Over cigars, Mr. Farese asked Mr. Roumaya whether the revised

termination agreement was acceptable. Mr. Roumaya responded that it was. At

that point, Mr. Roumaya thought he had a deal to terminate the management

agreement for $675,000.

4 Case: 16-11300 Date Filed: 08/08/2018 Page: 5 of 15

On November 29, 2011, Mr. Roderman sent Mr. Roumaya a letter

purporting to terminate the still-in-effect management agreement because of what

he deemed a breach by Ghahan. Palm Steak never paid any of the $675,000 owed

under the Termination of Management Agreement.

II. Procedural History

On July 16, 2012, Ghahan sued Palm Steak, Thomas Farese, and Suzanne

Farese on seven counts, including claims for breach of contract and fraud arising

from the alleged breach of the termination agreement. Ghahan later amended the

complaint to add claims against Congress Plaza, LLC.

Before this case was tried, the District Court severed some claims and

parties so that the only claim set for trial was Ghahan’s claim that Palm Steak

breached the termination agreement. Also before the trial, the Court ruled as a

matter of law that Mr. Farese had general authority to run the day-to-day

operations of the club, but the “exact scope and nature” of his authority to act for

Palm Steak would be decided at trial. This order was never challenged by Palm

Steak.

The trial started on February 9, 2016. After Ghahan rested its case, Palm

Steak moved for judgment as a matter of law, arguing there had not been a meeting

of the minds between Palm Steak and Ghahan. The District Court reserved ruling

on the motion. Palm Steak renewed its motion for judgment as a matter of law

5 Case: 16-11300 Date Filed: 08/08/2018 Page: 6 of 15

after closing arguments, and the Court again reserved ruling until after the jury’s

verdict.

The jury returned a verdict in favor of Ghahan and awarded damages of

$675,000. By way of special interrogatories answered on the verdict form, the jury

found that Mr. Farese had actual or apparent authority to represent Palm Steak in

negotiating the termination agreement with Ghahan; the terms of the revised

termination agreement were acceptable to Mr. Farese; and Mr. Roumaya accepted

those terms and communicated his acceptance to Mr. Farese. After the verdict, the

District Court denied Palm Steak’s motion for a judgment as a matter of law.

The District Court entered a non-final judgment for $675,000 on Ghahan’s

breach-of-contract claim against Palm Steak, and ordered Ghahan to notify the

Court about whether it intended to proceed with any of its other claims. Ghahan

informed the Court that it did not intend to proceed with its remaining claims,

including the claims against Mr. Farese. The Court then entered a final judgment

on the breach-of-contract claim and dismissed all remaining claims with prejudice.

Palm Steak and Mr. Farese filed notices of appeal. After this Court came to

suspect a jurisdictional problem, Palm Steak filed a motion for relief from

judgment under Rule 60(b) in the District Court. Among other arguments, Palm

Steak contended its motion should be granted because the Court lacked diversity

jurisdiction and because the amended pretrial order about Mr. Farese’s testimony

6 Case: 16-11300 Date Filed: 08/08/2018 Page: 7 of 15

had violated its due process and jury trial rights. The District Court denied the

motion.

Soon after, this Court remanded the case back to the District Court so it

could make findings about the citizenship of the parties and whether jurisdiction

existed under 28 U.S.C. § 1332. After discovery and briefing, the District Court

found by a preponderance of the evidence that complete diversity existed among

the parties when Ghahan filed its complaint on July 16, 2012, so the Court had

subject matter jurisdiction. Briefly, it found that Ghahan, the sole plaintiff, was a

citizen of Ohio because its sole member, Mr. Roumaya, was a citizen of Ohio. As

for the defendants, the Court found Thomas and Suzanne Farese were citizens of

Florida. The Court also found Palm Steak and Congress Plaza were either citizens

of Florida or citizens of Florida, Virginia, New York, and California, depending on

how one of their common members, Nolita Trust, was organized. Most important

for this appeal, the Court found that two people, Marc Scott and John Caruso, were

not members of Palm Steak when the complaint was filed on July 16, 2012, so

their citizenship did not matter for purposes of diversity jurisdiction. Because no

defendant shared Ohio citizenship with Ghahan, the District Court found complete

diversity existed at the time Ghahan filed its complaint in 2012 and also when

Ghahan amended its complaint to add Congress Plaza as a defendant. The Court

7 Case: 16-11300 Date Filed: 08/08/2018 Page: 8 of 15

then terminated the case, leaving the former judgment intact, and returned the case

to this Court.

III. Discussion

A. Thomas Farese lacks standing to appeal.

Palm Steak and Mr. Farese appealed from the judgment of the District

Court. Mr. Farese appealed despite the fact that the District Court entered

judgment against only Palm Steak and dismissed the claims against the other

defendants, including Mr. Farese. Because Mr. Farese is not injured by the

judgment, he does not have standing to appeal. See Wolff v. Cash 4 Titles, 351

F.3d 1348, 1353–54 (11th Cir. 2003). His appeal is therefore dismissed.1

B. The District Court had subject matter jurisdiction under 28 U.S.C. § 1332.

On remand from this Court, the District Court found that Ghahan was a

citizen of Ohio and the defendants were citizens of either Florida or citizens of

Florida, Virginia, New York, and California, depending on how Nolita Trust, one

of Palm Steak and Congress Plaza’s members, was organized. Based on these

findings, the District Court concluded diversity jurisdiction existed. Palm Steak

argues Ghahan failed to meet its burden of showing the existence of diversity

1 Congress Plaza and Suzanne Farese also joined in an amended notice of appeal from the District Court’s jurisdictional order. We cannot know what they intended to argue on appeal because neither filed briefs. To the extent they intended to appeal one of the District Court’s earlier orders, their appeal was not timely. See Fed. R. App. P. 4(a)(1)(A). If instead they intended to challenge the District Court’s jurisdictional order, their appeal is dismissed for lack standing for the same reason as Mr. Farese’s appeal. 8 Case: 16-11300 Date Filed: 08/08/2018 Page: 9 of 15

jurisdiction because it did not establish the domicile of Marc Scott and John

Caruso, whom it alleges were members of Palm Steak when this action was filed.

“The existence of jurisdiction is a question of law we review de novo.”

Travaglio v. Am. Express Co., 735 F.3d 1266, 1268 (11th Cir. 2013). We review a

district court’s jurisdictional findings of fact for clear error. Id. at 1269. “A

finding is clearly erroneous if the record lacks substantial evidence to support it.”

Id. Under the clear error standard, this Court will uphold a district court’s choice

between two permissible views of the evidence even if we were inclined to reach a

different result. I.L. v. Alabama, 739 F.3d 1273, 1287 (11th Cir. 2014).

Diversity jurisdiction exists in cases between citizens of different states

where the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). The

party asserting diversity jurisdiction has the burden of proving its existence. King

v. Cessna Aircraft Co., 505 F.3d 1160, 1171 (11th Cir. 2007). Diversity of

citizenship is assessed at the time the action is filed. PTA-FLA, Inc. v. ZTE USA,

Inc., 844 F.3d 1299, 1306 (11th Cir. 2016).

Palm Steak argues the District Court’s findings that Mr. Scott and Mr.

Caruso were not members of Palm Steak when Ghahan filed suit on July 16, 2012

are clearly erroneous. Palm Steak’s argument goes like this: the record does not

show where Mr. Scott or Mr. Caruso was domiciled when this action began. Thus,

if either was a member of Palm Steak, then Ghahan has not carried its burden of

9 Case: 16-11300 Date Filed: 08/08/2018 Page: 10 of 15

showing that diversity jurisdiction exists. See King, 505 F.3d at 1171 (holding that

the party invoking federal jurisdiction has the burden of proving its existence); see

also Mallory & Evans Contractors & Eng’rs, LLC v. Tuskegee Univ., 663 F.3d

1304, 1305 (11th Cir. 2011) (per curiam) (holding that a limited liability company

“is a citizen of any state of which a member of the company is a citizen” (quotation

omitted)).

The District Court’s jurisdictional findings that Mr. Scott and Mr. Caruso

were not members of Palm Steak when the complaint was filed were not clearly

erroneous. Those findings were supported by Ms. Farese’s testimony that Palm

Beach Gentleman’s Club Trust, Nolita Trust, and Mr. Roderman were Palm

Steak’s only members in 2012. Her testimony was corroborated by Palm Steak’s

2012 tax return and K-1s, which show Mr. Scott as a partner, but lists his profit,

loss, and capital, at the beginning and end of 2012 as 0%. An affidavit from Earl

Wald, a certified public accountant, explained that “capital” on this form shows

Mr. Scott’s membership share, making his membership share 0%. As for Mr.

Caruso, the Court found he was not a member in 2012 because Palm Steak’s 2012

tax return did not list him as a member.

Palm Steak draws different inferences from this same evidence and also

points to contrary evidence to argue that Mr. Scott and Mr. Caruso were, in fact,

members when Ghahan filed the complaint. Palm Steak says Mr. Scott was a

10 Case: 16-11300 Date Filed: 08/08/2018 Page: 11 of 15

member because he testified that he invested in Palm Steak in 2007. It also argues

that the distribution of funds in the fall of 2012 to Mr. Scott and Mr. Caruso

following the sale of a different strip club in 2012 showed they were members

when the complaint was filed in July 2012.

Although the record may offer support for the idea that Mr. Scott and Mr.

Caruso were members of Palm Steak, the District Court was entitled to choose

between two permissible views of the evidence. I.L., 739 F.3d at 1287. We

therefore affirm the District Court’s citizenship findings. Based on these findings,

we affirm its holding that diversity jurisdiction existed.

C. There was an enforceable contract.

Palm Steak also argues the District Court erred by denying its motion for

judgment as a matter of law. It contends there was no mutual assent to the terms of

the termination agreement.

We review the denial of a motion for judgment as a matter of law de novo,

applying the same standards as the district court. McGinnis v. Am. Home Mortg.

Servicing, Inc., 817 F.3d 1241, 1254 (11th Cir. 2016). A party is entitled to

judgment as a matter of law if the opposing party “has been fully heard on an issue

during a jury trial and the court finds that a reasonable jury would not have a

legally sufficient evidentiary basis to find for the [opposing] party on that issue.”

Fed. R. Civ. P. 50(a).

11 Case: 16-11300 Date Filed: 08/08/2018 Page: 12 of 15

Under Florida law, to establish the existence of an enforceable contract, a

party must prove the existence of an offer from one party, its acceptance by

another, consideration on the part of both parties, and sufficiently specific essential

terms. Kolodziej v. Mason, 774 F.3d 736, 740–41 (11th Cir. 2014). Mutual

assent, although not necessarily an independent element, is required for the

formation of a contract. Id. at 741. The existence of mutual assent is determined

by examining the process through which the parties are purported to reach an

agreement. Id. This includes examining their written and spoken words and their

conduct on the whole. Id. Whether a party made or accepted an offer is

determined by considering how a reasonable, objective person would have

understood the party’s communication. Id.

There was sufficient evidence to support a finding of mutual assent to the

terms of Mr. Farese’s revised termination agreement. Based on Mr. Farese’s

revisions to the original draft and his emailed instruction to Mr. Roumaya and his

lawyer that they should review the attached revisions, a reasonable jury could find

Mr. Farese intended to make a counteroffer on the revised terms. See Peraza v.

Robles, 983 So. 2d 1189, 1190 (Fla. 3d DCA 2008) (holding that demand of

additional terms constituted a counteroffer). A reasonable jury could also find Mr.

Roumaya accepted those revised terms on behalf of Ghahan based on his testimony

that he told Mr. Farese he accepted those terms at a meeting in mid-November

12 Case: 16-11300 Date Filed: 08/08/2018 Page: 13 of 15

2011. Together, this evidence was sufficient for a reasonable jury to find there was

an enforceable agreement. See Kolodziej, 774 F.3d at 741. We therefore affirm

the denial of Palm Steak’s motion for judgment as a matter of law.

D. Palm Steak is not entitled to relief from judgment.

Palm Steak also argues the District Court violated its due process and jury

trial rights by entering an amended pretrial order ruling as a matter of law that Mr.

Farese had general authority to act for Palm Steak. It raised this argument for the

first time in a motion for relief from judgment under Federal Rule of Civil

Procedure 60(b)(6), which the District Court denied.

Rule 60 provides various grounds for relief from judgment. Rule 60(b)(6)

permits a district court to relieve a party from judgment for “any other reason that

justifies relief.” Fed. R. Civ. P. 60(b)(6). This is a “catch-all” provision that

justifies relief from a final judgment where “the circumstances are sufficiently

extraordinary to warrant relief.” Galbert v. W. Caribbean Airways, 715 F.3d 1290,

1294 (11th Cir. 2013) (quotation omitted). Because exercise of Rule 60(b)(6) is in

the District Court’s discretion, on appeal, Palm Steak “must demonstrate a

justification so compelling that the district court was required to vacate its order.”

Id. (quotation omitted).

Palm Steak has not established the extraordinary circumstances that would

justify relief from judgment. To begin, Palm Steak consistently overlooks the

13 Case: 16-11300 Date Filed: 08/08/2018 Page: 14 of 15

substance of the District Court’s ruling. The court clearly left to the jury the “exact

scope and nature” of Mr. Farese’s authority, including whether he had actual or

apparent authority to negotiate the termination agreement. As promised, the

District Court let the jury decide this issue. And the jury answered “Yes” to an

interrogatory asking whether “Ghahan prove[d] by a preponderance of the

evidence that Thomas Farese had actual or apparent authority to represent Palm

Steak House in negotiating a contract with Ghahan LLC[.]” Palm Steak fails to

show how these circumstances are so extraordinary as to warrant relief from

judgment under Rule 60(b)(6).

E. Palm Steak waived its other arguments.

Palm Steak makes two other arguments. It argues it is entitled to judgment

as a matter of law because the alleged agreement violated Florida’s statute of

frauds. And it argues the District Court should have granted a new trial because

Ghahan suggested in closing argument that Palm Steak’s trial counsel’s arguments

could be used as evidence.

Under the facts and circumstances of this case, Palm Steak waived both

arguments and no exception to its waiver applies. See Access Now, Inc. v. Sw.

Airlines Co., 385 F.3d 1324, 1332 (11th Cir. 2004). Palm Steak did not make its

statute-of-frauds argument in its motion for judgment as a matter of law. See

Softball Country Club-Atlanta v. Decatur Fed. Sav. & Loan Ass’n, 121 F.3d 649,

14 Case: 16-11300 Date Filed: 08/08/2018 Page: 15 of 15

659 (11th Cir. 1997) (finding defendant waived its right to a post-verdict motion

for judgment as a matter of law on attorney’s fees). And there was no fundamental

miscarriage of justice or fundamental error that warrants our review now.

See Austin-Westshore Constr. Co. v. Federated Dep’t Stores, Inc., 934 F.2d 1217,

1223 (11th Cir. 1991). Palm Steak also never objected to Ghahan’s closing

argument and did not challenge it in a motion for new trial. See Knight v. Miami-

Dade Cty., 856 F.3d 795, 818 (11th Cir. 2017) (finding plaintiff’s challenge to

closing arguments waived when raised for the first time on appeal).

AFFIRMED IN PART AND DISMISSED IN PART.