Minotty v. Baudo

42 So. 3d 824, 2010 WL 2882460
CourtDistrict Court of Appeal of Florida
DecidedJuly 21, 2010
Docket4D08-5090, 4D08-5091
StatusPublished
Cited by20 cases

This text of 42 So. 3d 824 (Minotty v. Baudo) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Minotty v. Baudo, 42 So. 3d 824, 2010 WL 2882460 (Fla. Ct. App. 2010).

Opinion

WARNER, J.

Dr. Paul Minotty, the founding member of Florida Eye Institute, Inc., appeals an $8,000,000 judgment in a shareholders’ derivative suit and individual judgments in excess of $2,000,000 in compensatory and punitive damages in favor of three doctors in the Eye Institute. We consolidate both appeals for purposes of this opinion. The judgments in the derivative suit were entered on claims of securities fraud, common law fraud, breach of fiduciary obligation, and illegal interception of confidential communications. As to the individual doctors, their judgments stemmed from claims of interception of confidential communications of two of the doctors, invasion of privacy, breach of fiduciary duty, and securities fraud in favor of appellee Dr. Zudans. We reverse the judgments for interception of confidential communications, as we conclude that the statute under which the claims were made does not permit recovery for anything other than actual interception of oral communications, which did not occur in this ease. As to FEI’s breach of fiduciary claim, we reverse because the trial court permitted admission of evidence of unpled transactions. And we conclude the court erred in entering judgment for duplicate damages on the securities and common law fraud claims. We also reverse the judgment in favor of Dr. Zudans for fraud, because he failed to present evidence of the proper measure of damages. We affirm the remaining judgments and affirm the issues raised by appellees on cross-appeal.

We begin with the facts underlying the litigation in this case. Dr. Minotty opened an eye care practice called Florida Eye Institute (“FEI”) in Vero Beach in 1985, buying the land and constructing a building to house the practice. He built a surgery center in 1986. Two doctors — Dr. *827 Roger Meyer and Dr. Karen Todd — -joined the practice and became shareholders between 1986 and 1991. In 1992, Dr. Minotty bought additional land and built a second building to connect to the first and house FEI’s growing practice and surgery and laser centers, called the Surgicenter. Dr. David O’Brien joined the practice in 1998.

Initially, the buildings and surgery center were owned by Dr. Minotty; not FEI. However, in 2001, Dr. Minotty sold to FEI the land and buildings in which the practice was located, for $5.5 million. All of FEI’s then existing shareholders (Drs. Mi-notty, Meyer, Todd and O’Brien) agreed to the purchase price by corporate resolution. When Dr. Baudo joined the practice in 2003, they refinanced the property and distributed the equity that had accumulated to the shareholders.

In 2003, all of FEI’s shareholders (except Baudo) authorized Dr. Minotty to negotiate to sell half the surgery center to FEI. 1 Up until this point the Surgicenter was owned by Dr. Minotty through a limited liability corporation. Dr. Minotty sold FEI 50% ownership in the Surgicenter in 10% increments each year for five years. The agreement set a formula to be paid for each 10% increment based upon the profitability of the center. FEI signed a note for each of the 10% shares. The contract also contained a “put” option, which permitted Dr. Minotty to force FEI to purchase the remaining 50% of the surgery center at the end of five years. While the sale was discussed at a shareholders meeting, Dr. Minotty had actually signed the agreements on behalf of both FEI and the Surgicenter the day before the shareholder meeting. At the meeting, he represented to the shareholders that they would have an “option” to purchase the remaining half of the Surgicenter in the future.

From 2003 to 2007, FEI made payments on the notes to Dr. Minotty for its share of the Surgicenter. In return, it received its share of the Surgicenter income. In March 2007, Dr. Minotty informed the other shareholders that he had decided to exercise the “put” and sell the remaining 50% of the Surgicenter to FEI, forcing FEI to buy it, which surprised several of the shareholders. They asked for an appraisal of the Surgicenter, and FEI obtained an expert to appraise the property. During this time the shareholders requested a change in the board of directors of FEI, which Dr. Minotty had occupied as the sole member since the inception of the corporation. Dr. Minotty agreed, and all six shareholders became directors of the corporation.

When the shareholders received the appraisal of the property, several of them determined that the original contract price was unfair. Drs. Zudans and Baudo met with Dr. Minotty, and demanded that he rescind the entire Surgicenter contract. Dr. Minotty refused. Drs. Zudans and Baudo then made a formal demand that FEI sue Dr. Minotty for damages, and a special board meeting was called. A vote was taken, but the doctors reached a deadlock, with two shareholders voting with Minotty and the other three (Baudo, Todd and Zudans) voting to sue.

As the relationship between the shareholders deteriorated, Dr. Minotty received information that caused him to suspect that the dissident shareholders were planning other methods to remove him from the practice, including setting him up for an arrest the evening of the office holiday party in December 2007. FEI documents were also disappearing from the offices. After contacting the Vero Beach Police, he *828 hired a private investigator to assist him. With Dr. Minotty’s concurrence, the private investigator set up hidden security cameras at FEI offices. These included the offices of Drs. Todd and Zudans. Although the cameras were equipped with audio as well as video recording, the audio recording never worked and therefore never intercepted any oral communications. Within a few days of their installation, the doctors were alerted to the cameras. The cameras were removed, but not before video was recorded of the doctors in their offices both alone and with their patients.

In January 2008, Drs. Todd, Baudo and Zudans brought a shareholders’ derivative suit on behalf of FEI against Dr. Minotty. They alleged claims for appointment of a receiver, breach of fiduciary duty, securities fraud, common law fraud, and illegal interception of communications under section 934.03, Florida Statutes. The complaint alleged that Dr. Minotty had acted as both the buyer and the seller in the sale of the Surgicenter, and that he had not given full disclosure to the shareholders. Additionally, it alleged that Dr. Minotty had engaged in self-dealing, breaches of fiduciary duties, and accounting activities that harmed FEI. It alleged that an independent valuation of the Surgicenter had valued it at significantly less than the purchase price that Dr. Minotty negotiated for himself. Finally, it alleged illegal interception of communications in violation of section 934.03, based upon the use of the hidden security cameras.

Shortly after the derivative action was filed, Drs. Todd, Baudo and Zudans personally sued Dr. Minotty, alleging breach of fiduciary duties, interference with business relationships, invasion of privacy, and intentional infliction of emotional distress. Drs. Zudans and Todd, whose offices had been wired, also included individual claims for interception of communications. And Dr. Zudans, who had purchased his shares for $200,000 when he joined the practice, included a count for fraudulent misrepresentation in the purchase of the stock.

The case proceeded with lightning speed and was set for trial within six months.

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Cite This Page — Counsel Stack

Bluebook (online)
42 So. 3d 824, 2010 WL 2882460, Counsel Stack Legal Research, https://law.counselstack.com/opinion/minotty-v-baudo-fladistctapp-2010.