James Fratangelo v. John Olsen

271 So. 3d 1051

• Court: District Court of Appeal of Florida
• Decided: December 21, 2018
• Docket: 18-1016
• Status: Published

Opinion

Third District Court of Appeal State of Florida

Opinion filed December 21, 2018. Not final until disposition of timely filed motion for rehearing. ________________

No. 3D18-1016 Lower Tribunal No. 15-18158 ________________

James Fratangelo, et al., Petitioners,

vs.

John Olsen, Respondent.

On Petition for Writ of Certiorari from the Circuit Court for Miami-Dade County, William Thomas, Judge.

Gunster, and Angel A. Cortinas and Jonathan H. Kaskel, for petitioners.

Buchanan Ingersoll & Rooney PC, and Jennifer Olmedo-Rodriguez and Mark S. Auerbacher, for respondent.

Before ROTHENBERG, C.J., and SUAREZ and LAGOA, JJ.

SUAREZ, J.

James Fratangelo et al.1 (“Fratangelo”) petition for writ of certiorari and to

quash the trial court’s April 20, 2018 non-final Order, and to instruct the trial court 1 The Petitioners include Fratangelo and several of his companies: 21 Assets Management Holdings, LLC (“21-AMH”); Assets Recovery 23, LLC (“AR23”); BLB Trading, LLC; AMH 21 Trust; AMH 21, LLC; Assets Recovery 24, LLC; and Assets Recovery 27, LLC. to enter final judgment for Fratangelo, or, alternatively, to instruct the trial court to

enter final judgment based on the twenty-six assets and remaining counts that were

tried in the November 27, 2017 bench trial. We dismiss the petition, as Fratangelo

has failed to show any required irreparable harm.

FACTS

James Fratangelo, John Olsen, and Daniel Coosemans2 together owned

multiple limited liability companies (“LLCs”) and subsidiaries formed to invest in

and rehabilitate low or non-performing assets. Two primary LLCs are at issue in

this appeal: 21-AMH, and AR23. Olsen was the original owner of 21-AMH, but

Fratangelo eventually became a 50% owner. Effective January 1, 2013, Olsen and

Fratangelo entered into purchase and sale agreements (“General Agreements”), to

divest Olsen of his role in 21-AMH and to leave Fratangelo sole owner, at least on

paper.3 Around March of 2014, Fratangelo and Olsen decided to part ways, and to

wind up their multiple business relationships. Effective September 1, 2014, Olsen

2 Coosemans settled his case against Fratangelo. The trial court granted Coosemans’ motion to enforce that December 1, 2017 Settlement Agreement, and Fratangelo’s appeal from that order is currently pending before this Court, see 3D18-705. 3The trial court found that, based on evidence in the record, Olsen and Fratangelo continued to make management decisions regarding 21-AMH even after the purchase and sale agreement. 2 and Fratangelo entered into Amended Agreements wherein Olsen agreed to release

Fratangelo from any and all claims arising before that effective date, including all

claims arising from disposition of 21-AMH assets, including the subsidiaries. The

Amended Agreements also provided for division of assets and an accounting for

any missing, unknown, or concealed assets (the “Missing Assets”).

Olsen ultimately sued Fratangelo for 1) breach of the 21-AMH agreement;

2) breach of the AR23 agreement; 3) joint venture; 4) declaratory relief; 5)

equitable accounting; and 6) unjust enrichment. Olsen alleged that Fratangelo sold

or transferred assets of 21-AMH and AR23 prior to the effective dates of the

General and Amended Agreements, hiding these transactions from Olsen and

thereby diminishing the number and value of missing assets.

FIRST TRIAL

The trial court dismissed Olsen’s joint venture count and entered a partial

final judgment in favor of Fratangelo regarding the Release, determining the

Release was valid and enforceable, and that Olsen expressly agreed to extinguish

any claims involving 21-AMH arising prior to September 1, 2014. The court

found that Olsen had sufficient information to determine the identity of Missing

Assets and to demand liquidation under the General Agreements, and had no

membership interest in 21-AMH after the effective date of first General

Agreement. The trial court directed the parties to prepare a joint list of all potential

Missing Assets. The parties submitted a list of 525 potential Missing Assets.

3  At the end of the discovery period, the trial court granted partial summary

judgment in favor of Fratangelo by concluding 460 of the potential Missing

Assets were actually sold and payment was made to Olsen.

 The trial court granted partial summary judgment in favor of Fratangelo on

Olsen’s claims regarding thirty-two additional assets, concluding those were

not Missing Assets. Seven of those had been transferred to a subsidiary of

21-AMH.

 The trial court granted partial summary judgment in favor of Fratangelo on

Olsen’s claims regarding seven additional assets, concluding they had been

charged off and Olsen had abandoned any claims to them.

 The trial court granted partial summary judgment on Olsen’s breach of

contract claims against five more assets, but allowed Olsen’s claims as to

those five assets to proceed for equitable accounting.

SECOND TRIAL

At the time of the second trial in front of a successor judge, only twenty-six

assets remained to be determined. The trial court denied Olsen’s motion to

bifurcate the issues of liability and damages, and proceeded to conduct an eight-

day bench trial, during which the trial court, upon considering new testimony and

evidence, revisited and reversed several of the prior partial summary judgments.

The trial court found that the parties were partners, and that disposition of certain

4 assets prior to the September 1, 2014 Amended Agreement could result in

cognizable claims against Fratangelo. The court found that Olsen did not release

Fratangelo from claims arising out of those asset transfers, that Fratangelo had

breached the General Agreements, and that Olsen was entitled to recover the value

of assets transferred prior to September 1, 2014, and for revenue generated from all

Missing Assets. The trial court determined that,

Based on the facts presented, the Court finds that the greater weight of the evidence shows Defendants breached obligations by failing and refusing to disclose and/or account for Missing Assets; failing to make appropriate distributions; and failing to provide cooperation in regards to documenting and liquidating or transferring "Transferred Assets."

The trial court ordered a third trial for equitable accounting, explaining that

without such an accounting Olsen was not capable of fully quantifying his

damages. Fratangelo moved for entry of final judgment and reconsideration of the

non-final Order, arguing it was based on 1) an impermissible finding of an unpled

partnership; 2) due process violations stemming from the un-noticed

reconsideration and reversal of prior partial summary judgments; 3) erroneous

retention of jurisdiction to allow Olsen to pursue an equitable accounting. The trial

court denied the motion, and Fratangelo here petitions for a writ of certiorari

seeking to quash that order and enter judgment in his favor.

ANALYSIS

We note that the Petitioners seek review of the trial court’s non-final order

via petition for certiorari, rather than by waiting until the litigation has concluded

5 to take an appeal from the as yet undetermined Final Judgment. Therefore, our

standard of review is not what it would be for an appeal from a final judgment. A

non-final order for which no appeal is provided by rule is reviewable by certiorari

only in extremely limited circumstances. The non-final order is reviewable only if

the order is a departure from the essential requirements of law and thus causes

material injury to the petitioner throughout the remainder of the proceedings,

effectively leaving no adequate remedy on appeal.4 See Bd. of Trs. of Internal

Improvement Trust Fund v. Am. Educ. Enters., 99 So. 3d 450, 454 (Fla. 2012);

Williams v. Oken, 62 So. 3d 1129, 1132 (Fla. 2011) (quoting Reeves v. Fleetwood

Homes of Fla., Inc., 889 So. 2d 812, 822 (Fla. 2004)); Allstate Ins. Co. v.

Langston, 655 So. 2d 91, 94 (Fla. 1995). The threshold question that must first be

addressed by this Court, before we may address the petition itself, is whether there

is a showing of a material injury/irreparable harm that cannot be corrected on

appeal. See Citizens Prop. Ins. Corp. v. San Perdido Ass'n, Inc., 104 So. 3d 344,

351 (Fla. 2012) (holding that before certiorari can be used to review non-final

orders, the appellate court must focus on the threshold jurisdictional question of

whether there is a material injury that cannot be corrected on appeal). Only after

irreparable harm has been established can an appellate court then review whether

4 Many of the arguments raised in the petition are arguments which may be appropriate and relevant for review upon appeal of a final judgment but not on certiorari review of a non-final order. 6 the petitioner has also shown a departure from the essential requirements of law.

Id.

We first consider the threshold jurisdictional issue of irreparable harm.

Fratangelo claims that as a result of the trial court’s non-final order he has suffered

prospective loss of business and impaired relationships with employees and

vendors. He asserts he has suffered irreparable harm because 1) companies with

which he previously did business, or was negotiating to do business with, have

been reluctant to engage in business with him; 2) prospective lenders have notified

him that his reputation stemming from this lawsuit may impair his ability to

conduct future business; 3) prospective principals to a proposed new company

have expressed “concern and reluctance” to proceed as a result of the trial court’s

order; and 4) some of his employees have received negative emails about their

employment with Fratangelo’s companies. As a matter of law, however, none of

these claimed damages rise to the level of an irreparable injury that cannot be

addressed on appeal from a final judgment. Fratangelo’s claims of reputational

harm and others’ “reluctance” to engage in prospective business deals are too

prospective and speculative in nature to invoke the certiorari jurisdiction of this

Court, which may be exercised only upon a proper, legally recognized showing of

irreparable harm. See Martin–Johnson, Inc. v. Savage, 509 So. 2d 1097, 1100 (Fla.

1987) (recognizing that to establish the type of irreparable harm necessary in order

to permit certiorari review, a party cannot simply claim that continuation of the

7 lawsuit would damage one's reputation); Holden Cove, Inc. v. 4 Mac Holdings,

Inc., 948 So. 2d 1041, 1042 (Fla. 5th DCA 2007) (stating irreparable harm cannot

be premature or speculative). Without this threshold showing of irreparable harm,

Fratangelo has not met the required jurisdictional threshold for us to consider the

petition and, therefore, the petition for certiorari must be dismissed.

We write further only to state that, even had that jurisdictional threshold

been met, certiorari would still not be an appropriate remedy. Fratangelo’s due

process arguments fail to consider that prior to final judgment, a successor judge

has the power to vacate or modify a predecessor's interlocutory rulings, such as an

order on a motion for summary judgment. Because the trial judge here had not

entered a final judgment in the case, he could modify his previous rulings and

those of his predecessor. See Tingle v. Dade Cty Bd. of Cty Commissioners, 245

So. 2d 76, 78 (Fla. 1971) (successor judge may “vacate or modify the interlocutory

rulings or orders of his predecessor in the case.”); Wasa Int'l Ins. Co. v. Hurtado,

749 So. 2d 579 (Fla. 3d DCA 2000). To be sure, the facts became more fully

developed once the litigation entered the second trial phase. During the second trial

phase, the court found substantial competent evidence that Fratangelo breached the

General Agreements by hiding and transferring assets for his own gain. Fratangelo

has not made any convincing argument that the equitable accounting ordered by

the trial court is error. Indeed, after hearing the evidence presented, the trial court

specifically held that the contract demands between the litigants involve extensive

8 or complicated accounts and that it was not clear that the remedy at law is as full

and adequate as it is in equity.5 In light of the 8-day bench trial during which the

trial court heard extensive additional evidence and weighed the credibility of

multiple witnesses, the trial court was free to revisit any prior interlocutory, non-

final orders entered by the predecessor judge – including, but not limited to, the

findings of fact and conclusions of law made by the predecessor judge in the

September 6, 2016 Order. Accordingly, we find the Petitioner’s due process

arguments and reliance on St. Petersburg Hous. Auth. v. J.R. Dev., 706 So. 2d

1377, (Fla. 2d DCA 1998), and Levy v. Ben-Shmuel, 255 So. 3d 493 (Fla. 3d DCA

2018), to be inapposite, as the facts in both of those cases arose out of final

judgments and not, as here, from a non-final order. This litigation is not ended, and

until a Final Judgment is rendered, the Petitioners have not met their burden to

establish either irreparable harm or a departure from the essential requirements of

the law.

Having found no material or irreparable harm that cannot be remedied on

appeal from a final judgment, we dismiss the petition.

Lagoa, J., Concurs.

5 We find Fratangelo’s concern that the trial court has given Olsen “unfettered access” to confidential financial records to be easily remedied by a motion filed in the trial court to seal those records to prevent unauthorized disclosure. See e.g., Eberhardt v. Eberhardt, 666 So. 2d 1024 (Fla. 4th DCA 1996) (holding that discovery requiring production of personal income tax returns in case involving claim for breach of contract and accounting, in and of itself, not irreparable harm).

9 James Fratangelo v. John Olsen Case No. 3D18-1016

ROTHENBERG, C.J. (dissenting). 10 The petitioners, James Fratangelo (“Fratangelo”) and several of his

companies, 21 Assets Management Holdings, LLC (“21-AMH”), Assets Recovery

23, LLC (“AR23”), BLB Trading, LLC (“BLB”), AMH-21 Trust, AMH 21, LLC

(“AMH 21”), Assets Recovery 24, LLC (“AR24”), and Assets Recovery 27, LLC

(“AR27”) (collectively, “the petitioners”), seek certiorari review of the trial court’s

non-final April 20, 2017 order issued after a bench trial. Because the record

reflects that the trial court departed from the essential requirements of law,

resulting in irreparable harm that cannot be adequately remedied on direct appeal,

the petition should be granted.

The Underlying Lawsuit

Fratangelo, respondent John Olsen (“Olsen”), and Daniel Coosemans

(“Coosemans”) entered into a business relationship in 2007 wherein they formed

limited liability companies for the purpose of purchasing performing and non-

performing first and second mortgages, home equity loans, lines of credit, credit

card debt collections, non-performing auto loans, and REO properties (“distressed

assets”). Through these limited liability companies, the parties improved the

performance of the loans and the payment of debts or liquidated them for a

negotiated cash settlement. The parties’ relationships were governed by fully

integrated limited liability company operating agreements.

There were three sets of companies, which the parties generally refer to as

the “Miami Companies,” the “Panama Companies,” and the “Virgin Island

11 Companies.” The Miami Companies included 21-AMH and its subsidiaries, BLB,

AMH-21 Trust and AMH 21. The Panama Companies included AR23, AR24, and

AR27. The Virgin Island Companies included various companies, which will not

be identified as they are not relevant to this petition. At various times, the parties

were members of and managed their businesses through two primary limited

liability companies: (1) 21-AMH, the Miami Company, operated by Fratangelo

and Olsen; and (2) AR23, the Panama Company, which was managed by

Coosemans.

In August 2011, Olsen withdrew from AR23 and thereafter Fratangelo and

Coosemans each had a 50% membership in AR23. The operating agreement was

therefore amended to reflect that as of August 2011, Olsen had no membership

interest in AR23.

On January 1, 2013, Olsen also entered into a purchase and sale agreement

with Fratangelo (“the original 21-AMH agreement) wherein he divested his

membership interest in 21-AMH (the Miami Company). Pursuant to this

agreement, Fratangelo was to pay Olsen $300,000 within 24 months; Olsen was to

receive the redemption assets listed on Schedule A and the sold assets listed on

Schedule B; and Fratangelo was to receive the assets listed on Schedule C.

Although, as of January 1, 2013, Olsen no longer had an ownership interest

in 21-AMH, and he never had an ownership interest in any of the 21-AMH

subsidiaries, Olsen continued to maintain a working relationship with Fratangelo

12 and worked as the asset manager of one of Fratangelo’s companies, Asset

Recovery Management Co.

On September 1, 2014, Fratangelo and Olsen executed an amended and

restated purchase and sale agreement (“the amended 21-AMH agreement”) which

was then attached to and incorporated into the original purchase and sale

agreement. The amended 21-AMH agreement provided that Olsen would receive

millions of dollars in assets in exchange for signing a broad release, whereby Olsen

agreed to release and forever discharge Fratangelo and 21-AMH from any and all

claims related to Fratangelo’s acts or omissions prior to September 1, 2014. Olsen

also agreed to assume 21-AMH’s non-bank debt in exchange for additional assets.

The amended 21-AMH agreement also provides for the distribution of assets

not listed on Schedules A, B, or C, and which were referred to in the amended 21-

AMH agreement as the “missing assets.” The “missing assets” provision of this

agreement, however, limited the distribution of the “missing assets” to those assets

owned by 21-AMH prior to the “effective date,” which was the date Fratangelo

and Olsen entered into the amended 21-AMH agreement: September 1, 2014.

Paragraph 3.(g) of the amended 21-AMH agreement provides in relevant part as

follows:

Missing Assets. . . . In the event as of the Effective Date any of the Asset Companies owns any other assets (other than its interest in entities that are parties to this Agreement, and other than as set forth in clause (h) below), either directly or indirectly, then Fratangelo (the “Paying Partner”) shall pay Olsen (“the Payee Partner”) one-half (1/2) of the net market value of such asset. 13 The procedure for distribution of the missing assets was also provided.

Olsen was required to make a written demand for his 50% share of the net market

value of an identified missing asset; Fratangelo would confirm that the asset

identified by Olsen was an asset owned by 21-AMH as of September 1, 2014 and

was not listed on Schedules A, B, or C; Fratangelo would sell the missing asset;

and then Fratangelo would distribute 50% of the net market value of the missing

asset to Olsen.

However, as already stated, the amended 21-AMH agreement also included

a broad release whereby Olsen agreed to release and forever discharge Fratangelo

and 21-AMH from any and all claims related to Fratangelo’s acts or omissions

prior to September 1, 2014. The release language in paragraph 4.3. of the amended

21-AMH agreement provides as follows:

Seller hereby waives, releases and forever discharges Fratangelo and the Company from and against all manner of actions, cause and causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, obligations, liabilities, costs, expenses, losses, damages, judgments, executions, claims and demands, of whatever kind and nature, in law or in equity, whether known or unknown, whether or not concealed or hidden, arising out of or relating to any matter, cause or thing whatsoever, that Seller may have had or now has by reason of any matter or thing whatsoever arising out of any or in any way connected to the Company or the Redemption Assets, excluding the obligations of Fratangelo and/or the Company hereunder, under that certain General Agreement among Fratangelo, the Company, Olsen and other parties thereto dated as of September 1, 2014 and that certain [sic] General Agreement among Fratangelo, Daniel Coosemans, Olsen and other parties thereto dated as of September 1, 2014 (collectively, the “General Agreements.”). 14 After executing the amended 21-AMH agreement, Olsen came to believe

that in the months prior to the agreed-upon September 1, 2014 effective date,

Fratangelo and 21-AMH sold or transferred assets of the Asset Companies, thereby

diminishing the number and value of the missing assets. Olsen sued the petitioners

for: (1) breach of the 21-AMH amended agreement (referred to as the “General

Agreement”); (2) breach of the AR23 agreement; (3) joint venture; (4) declaratory

relief; (5) equitable accounting; and (6) unjust enrichment. Olsen’s count for joint

venture sought to pierce the corporate veil of the various limited liability

companies and have the trial court declare that Olsen and Fratangelo were joint

venturers.

The Trial Court’s Interim Rulings

A. Olsen’s claim for joint venture

Olsen sought in his amended complaint to have his relationship with

Fratangelo and Coosemans declared a joint venture. In order to establish the

existence of a joint venture, Olsen sought to pierce the corporate veil of the various

limited liability companies in which he and Fratangelo were associated. On

January 11, 2016, the trial court (Judge Jennifer Bailey) granted the petitioners’

motion to dismiss Olsen’s joint venture claim (count III), but gave Olsen ten days

to amend count III. Olsen failed to amend his joint venture claim. Olsen therefore

abandoned his joint venture claim thus leaving intact the designation and

protections provided to limited liability companies. 15 B. Olsen’s motion for a temporary injunction

Olsen sought to enjoin the sale or transfer of the petitioners’ assets. On

February 9, 2016, Judge Bailey conducted a hearing on Olsen’s motion for

injunctive relief and denied the motion.

C. Partial final judgment following a bench trial

In order to limit the issues, Judge Bailey bifurcated the case and conducted a

two-day bench trial on the petitioners’ affirmative defense of release. The issue

tried was the effect of the release language contained in the amended 2l-AMH

agreement and Olsen’s claims regarding asset transfers between January 1, 2013

and September 1, 2014.

It was undisputed that in 2013, when Olsen and Fratangelo decided to seek

financing in the amount of $10 million, and because Olsen had outstanding IRS tax

liens of approximately $1.5 million, which would have precluded obtaining the

financing, Olsen agreed to be removed from the company. 21-AMH’s counsel

prepared the necessary documents, including an assignment of Olsen’s

membership interest and a purchase agreement for the sale of Olsen’s interest in

21-AMH to Fratangelo. Olsen acknowledged that he signed the assignment of his

membership interest transferring his membership interest to Fratangelo as of

January 1, 2013.

Between January 1, 2013 and August 2014, Olsen continued to work with

Fratangelo as an asset manager. Olsen testified that during that time he

16 participated in management and decision making regarding 21-AMH, he had

access to the database of all 21-AMH’s assets, and he was intimately involved in

the daily operations of the company. However, in August 2014, when Olsen came

back from vacation, he discovered that Fratangelo had vacated the premises with

the employees and the company’s records and files. As a result, the parties’

longtime transactional attorney, who took a neutral position regarding Olsen and

Fratangelo because she had represented them both over the years, drafted the 2014

agreements. These documents were signed by Olsen and Fratangelo on October 1,

2014, and made effective September 1, 2014. The signed documents contained a

general agreement, an amended purchase and sale agreement, and the release

provision previously provided in this opinion, and which was the subject of the

bifurcated trial.

At the bifurcated trial, Olsen claimed that between January 2013 and

September 2014, Fratangelo transferred assets from 21-AMH to other companies

he unilaterally controlled without Olsen’s consent or authorization. Fratangelo

contended that he had the authority to sell these assets because he was the sole

owner of 21-AMH during that time, but more importantly, he contended that any

transfers from 21-AMH between January 21, 2013 and September 1, 2014 were

not subject to Olsen’s claims because Olsen signed the release releasing Fratangelo

from any claims regarding these assets.

Judge Bailey issued a partial final judgment following the bifurcated trial,

17 finding for Fratangelo on his affirmative defense of release on September 6, 2016.

Specifically, Judge Bailey found that the amended 21-AMH agreement and the

release language in paragraph 4.3.1 were clear and unambiguous, and that pursuant

to the release, Olsen specifically released Fratangelo and “the Company” from all

actions and against all sums of money and accounts “known or unknown, whether

or not concealed or hidden.”

Judge Bailey noted that “[t]here is no warranty with regard to the assets

here. . . . The parties agreed to accept asset distribution free and clear of any issues

with regard to each other, the company as well as their respective assets.” Judge

Bailey additionally noted that during that time Olsen and Fratangelo were

adversaries; it was undisputed that Olsen had sufficient documents under his own

control to double-check that each of the assets had been accounted for; and he

should have performed due diligence before he signed the agreement which

contained an extremely broad release. Thus, Judge Bailey concluded that although

Olsen may now regret signing the release, he signed as a sophisticated business

person, the release is valid and binding, Fratangelo is not liable to Olsen for claims

arising from 21-AMH’s asset transfers between January 1, 2013 and September 1,

2014, and thus Olsen is only entitled to 50% of the net market value of the missing

assets owned by 21-AMH on September 1, 2014.

D. The potential missing assets

Following the issuance of Judge Bailey’s partial final judgment granting

18 Fratangelo’s affirmative defense of release, the parties prepared a Joint Missing

Asset List, which listed 525 potential missing assets. On February 16, 2017, the

trial court granted partial summary judgment in favor of the petitioners, concluding

that 460 of the 525 potential missing assets were missing assets that had been sold

and for which Olsen had been paid.

On March 16, 2017, the trial court granted partial summary judgment in

favor of the petitioners regarding an additional thirty-two of the potential missing

assets, concluding that they were not missing assets. On November 16, 2018, the

trial court granted partial final judgment in favor of the petitioners regarding an

additional twelve assets, thus leaving only approximately twenty-six potential

missing assets to be tried.

E. The trial court’s pre-trial rulings

In November and December 2017, the successor judge, Judge William

Thomas (“the successor judge”), conducted an eight-day bench trial regarding the

remaining potential missing assets. Prior to trial, the successor judge:

(1) granted the petitioners’ motion in limine to preclude Olsen from

submitting any evidence contrary to the partial final judgment

issued by Judge Bailey on September 6, 2016; and

(2) denied Olsen’s motion to bifurcate the trial on issues of liability

and damages.

The Trial

19 A. The trial court failed to honor its pre-trial rulings and other prior judgments rendered during the litigation

Based on the successor judge’s pre-trial rulings, the petitioners proceeded to

trial on the remaining twenty-six potential missing assets expecting that the trial

court would honor its rulings. Thus, based on the successor judge’s pre-trial

rulings, no evidence should have been introduced concerning: (1) any unpled

partnership; (2) any assets other than the remaining twenty-six potential missing

assets; or (3) the transfer or disposition of any assets between January 1, 2013 and

September 1, 2014, and Olsen was required to prove all of his remaining claims at

the bench trial, not have a second bite of the apple following the trial.

The record, however, reflects that the successor judge failed to honor his

pre-trial rulings and allowed Olsen to try, over strenuous objection by the

petitioners, his unpled claim of partnership; allowed Olsen to introduce evidence in

support of Olsen’s claim that he had an ownership interest in 21-AMH after

January 1, 2013; sua sponte reversed his prior summary judgment order regarding

seven assets and allowed Olsen to introduce evidence regarding these assets;

retried the issue of the release contained in the amended 21-AMH agreement; and

concluded that the disposition of assets prior to September 1, 2104 were subject to

Olsen’s claims.

The successor judge then concluded that Olsen and Fratangelo were partners

in a joint venture, despite: Judge Bailey’s dismissal of Olsen’s joint venture claim

without prejudice; Olsen not amending 20 his complaint to plead either a joint venture or a partnership; and Fratangelo’s

objections to defending against an unpled claim with no notice. Also without

notice, in direct violation of his own pre-trial ruling, and in contravention of Judge

Bailey’s order granting summary judgment in favor of the petitioners on their

defense of release, the successor judge: found that Olsen did not release the

petitioners from claims arising out of asset transfers prior to September 1, 2014;

allowed Olsen to present evidence and make argument regarding the disposition of

assets prior to September 1, 2014; concluded that Fratangelo’s unauthorized

transfers of assets was not protected by the release provisions contained in the

amended 21-AMH agreement; and the petitioners were liable to Olsen for these

assets.

B. The trial court departed from the essential requirements of law

A denial of due process is a per se departure from the essential requirements

of law requiring certiorari relief. Haines City Cmty. Dev. v. Heggs, 658 So. 2d

523, 527 (Fla. 1995) (“Failure to observe the essential requirements of law means

failure to accord due process of law within the contemplation of the Constitution,

or the commission of an error so fundamental in character as to fatally infect the

judgment and render it void”) (quoting State v. Smith, 118 So. 2d 792, 795 (Fla.

1st DCA 1960)).

There is nothing more fundamental than the right to notice and a meaningful

opportunity to be heard. “Procedural due process serves as a vehicle to ensure fair

21 treatment through the proper administration of justice where substantive rights are

at issue, and requires fair notice and a real opportunity to be heard at a meaningful

time and in a meaningful manner.” Crosby v. Fla. Parole Comm’n, 975 So. 2d

1222, 1223 (Fla. 1st DCA 2008); see also Mullane v. Cent. Hanover Bank & Tr.

Co., 339 U.S. 306, 314 (1950) (holding that the notice required to satisfy due

process must reasonably convey the required information, apprise interested parties

of the pendency of the action, and afford them a meaningful opportunity to present

their objections); Keys Citizens for Responsible Gov’t, Inc. v. Fla. Keys Aqueduct

Auth., 795 So. 2d 940, 948 (Fla. 2001) (“Procedural due process requires both fair

notice and a real opportunity to be heard.”).

(1) The petitioners were denied procedural due process when they were forced to defend against an unpled claim at trial

The petitioners were denied procedural due process where, without notice,

the trial court permitted Olsen to present evidence on a claim dismissed by the

predecessor judge, and then awarded relief on Olsen’s unpled claim. As this Court

has repeatedly held, it is error to allow a plaintiff to proceed on an unpled claim

and for the trial court to assess liability on the unpled claim. See Sunbeam

Television Corp. v. Mitzel, 83 So. 3d 865, 875 (Fla. 3d DCA 2012); see also

Agrofollajes, S.A. v. E.I. DuPont De Nemours & Co., 48 So. 3d 976, 995 (Fla. 3d

DCA 2010) (disapproved on other grounds) (holding that “when a plaintiff pleads

one claim but tries to prove another, it is error for a trial court to allow the

plaintiffs to argue the unpled issue at 22 trial); Michael H. Bloom, P.A. v. Dorta-Duque, 743 So. 2d 1202, 1203 (Fla. 3d

DCA 1999) (“It is well settled that a defendant cannot be found liable under a

theory that was not specifically pled.”).

It is also well-settled law that a trial court lacks jurisdiction to enter

judgment on an issue not raised by the pleadings. See Bank of Am., N.A. v. Nash,

200 So. 3d 131, 135 (Fla. 5th DCA 2016) (holding that judgment granting relief

outside the pleadings is void); Cunha v. Mann, 183 So. 3d 1113, 1115 (Fla. 3d

DCA 2015) (holding that judgment granting relief outside the pleadings is voidable

on appeal); Wachovia v. Mortg. Corp. v. Posti, 166 So. 3d 944, 945 (Fla. 4th DCA

2015); Paulk v. Paulk, 25 So. 3d 672, 674 (Fla. 2d DCA 2010) (holding that the

trial court lacks jurisdiction to enter judgment outside the pleadings).

Olsen had pled that the relationship between the parties was one of a joint

venture. Judge Bailey dismissed the joint venture count; Olsen did not replead the

existence of a joint venture, thereby abandoning the claim; and Olsen failed to

plead the existence of a partnership. The governing documents also clearly reflect

that Fratangelo and Olsen chose to operate as members of limited liability

companies, not as partners. A partnership is a “residual form of . . . business

association, existing only if another form does not.” § 620.8202(2), Fla. Stat.

Uniform Cmt. 2.; Houri v. Boaziz, 196 So. 3d 383, 389-90 (Fla. 3d DCA 2016)

(finding that it was error to disregard the limited liability company as joint

ventures); Marriott Int’l, Inc. v. Am. Bridge Bahamas, Ltd., 193 So. 3d 902, 910

23 (Fla. 3d DCA 2015) (“As a matter of law, a corporation is not a joint venture”)

(Scales, J., concurring).

(2) The petitioners were denied procedural due process when they were forced to defend at trial claims decided in their favor prior to trial

Summary judgment was granted in favor of the petitioners regarding their

affirmative defense of release. Summary judgment was also granted in their favor

on the majority of the assets Olsen claimed were missing assets, for which he was

entitled to receive his 50% interest. Additionally, just prior to trial, the petitioners

filed, and the successor judge granted, a motion in limine to preclude Olsen from

submitting any evidence contrary to the partial final judgment issued by Judge

Bailey on September 6, 2016 (wherein Judge Bailey found for the petitioners on

their defense of release). Thus, the petitioners expected that the trial would be

limited to a determination of whether any of the remaining listed twenty-six

potential missing assets were, in fact, missing assets subject to partial disbursement

to Olsen.

The successor judge, however, with no notice to the petitioners, and over

repeated objections by the petitioners, permitted Olsen to relitigate the effect of the

very broad release he signed and to present evidence regarding assets he claimed

were missing assets and which were not in the remaining twenty-six identified

assets the petitioners were prepared to address at trial. Although we recognize that

a trial court has the inherent authority to revisit an earlier ruling either it has made

or a predecessor judge has made, it 24 must provide notice and a meaningful opportunity to the party or parties to prepare

for and to defend its position. See Wright v. Wright, 654 So. 2d 674, 674 (Fla. 5th

DCA 1995) (“While a trial court may modify [an interlocutory order], elementary

notions of procedural due process which include notice and a meaningful

opportunity to be heard apply . . . .”).

The successor judge’s mid-trial revisiting of issues resolved prior to trial,

without notice, without allowing the petitioners a meaningful opportunity to

prepare for, and over the petitioners’ repeated objections was a clear departure

from the essential requirements of law and from one of the most basic and

fundamental protections to be afforded every litigant.

(3) The petitioners were denied procedural due process, when, after denying pretrial Olsen’s motion to bifurcate liability and damages, the trial court reversed its position after trial

Prior to trial, Olsen moved to bifurcate the issues of liability and damages.

The trial court denied Olsen’s motion to bifurcate liability and damages and

declared that all remaining issues would be tried during the trial. Olsen proceeded

to trial on his claims, wherein he sought damages on revenue from the missing

assets earned prior to the sale of those assets, and damages arising from the

approximately twenty-six remaining missing assets that the trial court determined

would be tried. Olsen failed to present any competent evidence regarding damages

relating to his claimed damages on the revenue earned by the missing assets or to

prove that any of the remaining twenty-six potential missing assets were missing

25 assets. Thus, Olsen failed to prove his damages, and the trial court found no

damages for either category.

However, instead of entering judgment in favor of the petitioners, the trial

court concluded that Olsen was entitled to an equitable accounting in order to

prove his damages. This too was a departure from the essential requirements of

law. See Cleveland v. Crown Fin., LLC, 212 So. 3d 1065, 1069 (Fla. 1st DCA

2017) (holding that “courts generally do not provide parties with an opportunity to

retry their case upon a failure of proof”); Correa v. U.S. Bank, Nat’l Ass’n, 118 So.

3d 952, 956 (Fla. 2d DCA 2013) (noting that counsel should have been aware of its

burden and citing to cases refusing to give a party a second bite of the apple);

Allard v. Al-Nayem Int’l, Inc., 59 So. 3d 198, 202 (Fla. 2d DCA 2011) (stating that

a party’s failure to prove damages is an improper ground for rehearing).

Equitable accounting is a remedy, not a mechanism to provide a plaintiff,

who failed to prove his damages at trial, with another opportunity to do so post

trial. The law is also well settled that a court cannot exercise its equitable powers

where an express contract exists and where the plaintiff has an adequate remedy at

law. Ocean Commc’ns, Inc. v. Bubeck, 956 So. 2d 1222, 1225 (Fla. 4th DCA

2007) (“Defendants correctly state that a plaintiff cannot pursue an equitable

theory . . . if an express contract exists.”); Lake Tippecanoe Owners Ass’n v. Nat’l

Lake Devs., Inc., 390 So. 2d 185, 187 (Fla. 2d DCA 1980) (holding that a court

cannot exercise equitable powers when a plaintiff has an adequate remedy at law);

26 Rosen v. Rosen, 167 So. 2d 70, 72 (Fla. 3d DCA 1964) (holding that jurisdiction to

impose equitable remedies assumes that no adequate remedy exists at law).

The trial appeared to recognize this well-established legal concept, but then

it failed to apply it to Olsen’s equitable accounting claim. When addressing

Olsen’s unjust enrichment claim, the trial court correctly concluded that Olsen was

not entitled to relief because he was entitled to relief pursuant to the contract

(agreements). However, when addressing Olsen’s equitable accounting claim, the

trial court concluded that because the underlying transactions were complex,

Olsen’s ability to prove his contractual damages was insufficient. See Bankers Tr.

Realty, Inc. v. Kluger, 672 So. 2d 897, 898 (Fla. 3d DCA 1996) (concluding that a

plaintiff may obtain an equitable accounting if he demonstrates that the contract

demands involve extensive or complicated accounts and it is clear that the remedy

at law is inadequate).

Olsen, however, failed to establish either of these two requirements:

complexity or an inadequate remedy at law. He offered no evidence regarding

complexity and both agreements contain a straight forward formula for payment of

the missing assets. He is entitled to one-half of the net market value of the missing

21-AMH assets, and one-third of the net market value of the missing AR23 assets.

And, the parties created a list of these assets prior to trial. The number of

transactions does not make them complex nor establish a need for an equitable

accounting. Managed Care Sols., Inc. v. Essent Healthcare, Inc., 694 F. Supp. 2d

27 1275, 1280 (S.D. Fla. 2010) (concluding that the fact that the aggregation of

thousands of receivables might be required did not make calculation of damages

unduly complex).

Olsen was also provided with a full opportunity to conduct discovery, and as

Judge Bailey found in the partial final judgment she issued on September 6, 2016:

Olsen had sufficient source documents under his own control to double-check that each and every asset in 21AMH throughout the history of the LLC had been accounted for. Olsen simply failed to do his due diligence . . . . The asset listing process began in spring 2014 at a time when Olsen had full access to all the records, and Olsen never lost access to the underlying source spread sheets.

The successor judge thus departed from the essential requirements of law by

permitting Olsen to pursue his equitable accounting claim post trial after he failed

to prove his damages under the express written agreements.

C. The majority opinion

The majority opinion’s answer to the identified due process violations is its

argument that a successor judge has the power to vacate or modify a predecessor

judge’s interlocutory rulings. While that statement is true, a successor judge does

not have the authority to enter a judgment on an issue not raised in the pleadings,

see Nash, 200 So. 3d at 135; Cunha, 183 So. 3d at 1115; Posti, 166 So. 3d at 945;

Sunbeam; 83 So. 3d at 875, Agrofollajes; 48 So. 3d at 995; Paulk, 25 So. 3d at

674; Bloom, 743 So. 2d at 1203.

Due process also mandates that if a successor judge wishes to revisit a prior

ruling either by a predecessor judge or 28 by itself, he or she must provide notice and a meaningful opportunity to the party

or parties to defend the earlier ruling. Wright, 654 So. 2d at 674. The trial court in

the instant case violated all of these well-settled principles and denied Fratangelo

his right to even the most rudimentary protections of procedural due process.

D. The petitioners have established irreparable harm that cannot be adequately remedied on appeal

Based on the successor judge’s rulings, Olsen must be given access to

Fratangelo’s confidential and personal financial records from the beginning of their

relationship to the present. Because Judge Bailey dismissed Olsen’s joint venture

claim, and Olsen did not amend his pleadings to pursue the existence of either a

joint venture or a partnership, Olsen was not entitled to delve into Fratangelo’s

personal financial records. However, the successor judge has now reversed the

partial final judgment issued by Judge Bailey, without providing notice to

Fratangelo or affording him with a meaningful opportunity to defend himself

against Olsen’s claims; concluded that the parties were partners; and has concluded

that the amended 21-AMH agreement did not release Fratangelo or 21-AMH from

claims Olsen may have had regarding assets and asset transfers from January 1,

2013 through September 1, 2014. Thus, Olsen is now entitled to access to

Fratangelo’s confidential financial records, which he did not previously have

access to.

In Mana v. Cho, 147 So. 3d 1098, 1098-99 (Fla. 3d DCA 2014), this Court

granted Mana’s petition for certiorari 29 relief and quashed the portion of the trial court’s order requiring Mana to produce

his personal financial information. This Court concluded that we had jurisdiction

because permitting the discovery constituted a departure from the essential

requirements of law “and the discovery of confidential financial information is the

type of ‘cat out of the bag’ discovery that can cause material injury that cannot be

adequately redressed on appeal.” Id. at 1100; see also Diaz-Verson v. Walbridge

Aldinger Co., 54 So. 3d 1007, 1011 (Fla. 2d DCA 2010) (granting certiorari and

quashing the trial court’s order denying petitioner’s motion for a protective order,

concluding that petitioner’s personal financial information was not relevant to the

issues raised in the pleadings and disclosure of personal financial information

would result in irreparable harm).

Similarly, Olsen failed to plead partnership, the issue of the parties’

relationship was definitively tried and determined by Judge Bailey, and the issue

was not tried by consent. Thus, the disclosure of Fratangelo’s personal financial

information is not relevant to any issue raised in the pleadings, and disclosure is

the type of “cat out of the bag” discovery that will result in irreparable harm.

Fratangelo had also asserted and submitted proof of actual on-going harm

based on the trial court’s rulings flowing from the issues improperly tried with no

notice to Fratangelo. For example, Fratangelo submitted proof that, based on the

trial court’s April 20, 2018 order, a company with which Fratangelo has had a

long-standing and significant business relationship has instructed its employees to

30 not engage with Fratangelo in any way, and prospective principals with whom

Fratangelo had been negotiating with regarding the start of a new business are now

demonstrating a reluctance to include Fratangelo as a member of any new

company. Fratangelo’s employees have received and are continuing to receive

threatening emails, warning them that their continued relationship with Fratangelo

will harm them, and prospective lenders have notified Fratangelo that they are

aware of the trial court’s findings in its April 20, 2018 order and these findings are

negatively impacting their ability to do business with him.

In Zimmerman v. D.C.A. at Welleby, Inc., 505 So. 2d 1371, 1373 (Fla. 4th

DCA 1987), the Fourth District Court of Appeal concluded that the loss of

potential sales constituted irreparable harm because of the difficulty in determining

how many sales were lost and what the profit would have been on each lost sale.

Thus, the Fourth District found that because the damages would be speculative and

unascertainable, the remedy at law would be inadequate and the harm irreparable.

Id.; see also K.G. v. Fla. Dep’t of Children & Families, 66 So. 3d 366, 368 (Fla. 1st

DCA 2011) (“A petitioner can show irreparable harm by demonstrating either that

the injury cannot be redressed in a court of law or that there is no adequate legal

remedy.”); City of Oviedo v. Alafaya Utils., Inc., 704 So. 2d 206, 207 (Fla. 5th

DCA 1998) (affirming temporary injunction based on the incalculable loss that

would occur if the injunction was not granted).

Here too, the loss and harm to Fratangelo will be difficult to measure and

31 prove. Thus, his damages will be speculative and unascertainable, his remedy at

law will be inadequate, and he will suffer irreparable harm. Because Fratangelo

was denied procedural due process, the trial court’s findings cannot stand. Failure

to grant his petition, requiring him to open his books and accounts and disclose

personal financial information, and allowing his business relationships to continue

to deteriorate, will result in irreparable harm that cannot be remedied on direct

appeal. Thus, Fratangelo’s petition should be granted.

Conclusion

The petitioners have demonstrated both a clear departure from the essential

requirements of law and irreparable harm that cannot be remedied on appeal.

There is nothing more fundamental than the right to notice and a meaningful

opportunity to be heard. Fratangelo was denied that fundamental right when the

successor judge re-tried issues previously tried and resolved in Fratangelo’s favor

and also tried unpled issues, all without notice to Fratangelo and over Fratangelo’s

objection. The harm: granting Olsen access to Fratangelo’s business and personal

financial information, and allowing the trial court’s findings (based on the

improperly tried issues) to stand until resolution of the entire case, is incapable of

measurement and thus constitutes irreparable harm that cannot be remedied on

appeal. I, therefore, dissent from the majority’s dismissal of the petition.