Webster Hughes v. Priderock Capital Partners, LLC.

CourtCourt of Appeals for the Eleventh Circuit
DecidedApril 28, 2020
Docket19-12615
StatusUnpublished

This text of Webster Hughes v. Priderock Capital Partners, LLC. (Webster Hughes v. Priderock Capital Partners, LLC.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Webster Hughes v. Priderock Capital Partners, LLC., (11th Cir. 2020).

Opinion

Case: 19-12615 Date Filed: 04/28/2020 Page: 1 of 19

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 19-12615 Non-Argument Calendar ________________________

D.C. Docket No. 9:18-cv-80110-RLR

WEBSTER HUGHES,

Plaintiff-Appellee,

versus

PRIDEROCK CAPITAL PARTNERS, LLC.,

Defendant-Appellant.

________________________

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

(April 28, 2020) Case: 19-12615 Date Filed: 04/28/2020 Page: 2 of 19

Before WILLIAM PRYOR, JILL PRYOR, and LUCK, Circuit Judges.

PER CURIAM:

Webster Hughes sued Priderock Capital Partners, LLC, to recover damages

for Priderock’s failure to compensate him for services he provided. After the district

court granted summary judgment in Priderock’s favor on two of Hughes’s claims,

Priderock conceded liability on Hughes’s remaining claim for breach of contract

implied in law. As a result, the only question to be resolved was the amount of

damages owed to Hughes, which the parties agreed should be awarded on a theory

of unjust enrichment. Over Priderock’s objection, the district court submitted the

question of damages to a jury. On appeal, Priderock argues that Hughes had no right

to a jury trial and that the jury’s verdict was contrary to both the district court’s

instructions and the clear weight of the evidence. We affirm.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Hughes is a mathematician experienced with mortgage-backed securities. 1 In

the summer of 2015, Hughes was approached by David Worley to help start an

investment fund. Worley told Hughes that he was working with a real-estate

investment firm—Priderock—that wanted to invest in a special type of mortgage-

backed securities called K-Deals. Hughes understood that his role would be to serve

1 “A mortgage-backed security is a security that entitles the holder to share in the payments (cash flow) from a fixed pool of mortgage loans.” Franklin Sav. Ass’n v. Dir., Office of Thrift Supervision, 934 F.2d 1127, 1133 n.1 (10th Cir. 1991). 2 Case: 19-12615 Date Filed: 04/28/2020 Page: 3 of 19

as an expert (by educating his partners and investors about K-Deals) and as an

analyst (by building financial models to predict how much money the fund would

make). Hughes agreed to join the project and immediately got to work.

Although Hughes worked on the project through May 2017, Priderock did not

pay Hughes a salary for his efforts. In June 2017, Priderock formally ended its

business relationship with Hughes and offered him $100,000 as a separation

payment. Hughes rejected the offer.

In January 2018, Hughes sued Priderock in the Southern District of Florida.

Hughes asserted three claims under Florida law: breach of oral contract, breach of

contract implied in fact, and breach of contract implied in law. The district court

granted summary judgment in Priderock’s favor on the first two claims, concluding

that they were barred by Florida’s statute of frauds. Priderock conceded liability as

to the third claim, breach of contract implied in law, so the only question remaining

was the amount of damages that Hughes was entitled to. The parties agreed that

damages should be “awarded on a theory of unjust enrichment”; that is, they agreed

Hughes was entitled to the “value of the benefit Priderock received from [his]

services.”

Priderock then moved to strike Hughes’s demand for a jury trial and have the

district court determine damages. Priderock argued that unjust enrichment was

equitable in nature and therefore Hughes had no right to a jury trial.

3 Case: 19-12615 Date Filed: 04/28/2020 Page: 4 of 19

The district court denied Priderock’s motion. It concluded that Hughes’s right

to a jury trial depended on whether he had a suit “at common law” within the

meaning of the Seventh Amendment. To answer that question, the district court

applied the Supreme Court’s two-part test enunciated in Granfinanciera, S.A. v.

Nordberg, 492 U.S. 33 (1989). Under that test, a court must first “compare the

statutory action to 18th-century actions brought in the courts of England prior to the

merger of the courts of law and equity.” Granfinanciera, 492 U.S. at 42 (citation

omitted). It must then “examine the remedy sought and determine whether it is legal

or equitable in nature.” Id. (citation omitted).

On part one of the test, the district court concluded that Hughes’s claim for

breach of contract implied in law was “a legal claim.” The district court determined

that, under Florida law, a claim for breach of contract implied in law is “evaluated

on the theory of unjust enrichment.” The district court cited several Florida cases

holding that unjust enrichment is a legal action and concluded that the cases

Priderock cited for the proposition that unjust enrichment is an equitable action were

unpersuasive.

On part two, the district court concluded that Hughes was “seeking a legal

remedy, rather than an equitable one.” The district court noted that Hughes was not

“seeking an order . . . to release funds from an escrow account or a specified sum

from an employee benefit account[;] [i]nstead, [Hughes sought] damages in the

4 Case: 19-12615 Date Filed: 04/28/2020 Page: 5 of 19

amount of ‘the value of the benefit that [he] . . . conferred on Priderock.’” The

district court stated that “[Hughes’s] unjust enrichment claim [was] a legal claim, as

it [sought] monetary damages, a hallmark of a legal action.” Thus, having

determined that both parts of the Supreme Court’s test favored Hughes, the district

court concluded that Hughes had a right to a jury trial under the Seventh

Amendment. The district court further noted that, “[t]o the extent that [it was] a

debatable question, ‘[t]he federal policy favoring jury trials [was] of historic and

continuing strength.’”

At trial, the parties offered differing opinions as to Hughes’s role in the project

and the value of his services. Hughes argued that he was “essential” to the project.

He argued that he worked 3,360 hours, a reasonable hourly rate was $400, and thus

he was entitled to $1,344,000. Alternatively, Hughes estimated that the overall

“success” of the fund would be between $20 million and $30 million, and he

contended that he was entitled to five percent of that amount. On the other hand,

Priderock argued that Hughes had an “exaggerated view of his role.” Priderock

asserted that Hughes had worked far less hours than he claimed and therefore was

entitled to only $100,000. Moreover, Priderock argued that Hughes’s estimate that

the fund would receive between $20 million and $30 million in returns was “sheer

fantasy.” According to Priderock, the fund lost money in 2017 and 2018 and was

projected to lose money in 2019.

5 Case: 19-12615 Date Filed: 04/28/2020 Page: 6 of 19

Early into its deliberations, the jury sent out a note asking, “Can Dr. Hughes

be awarded a percent of profit over time? Does the awarded amount have to be an

exact figure?” The parties agreed that the answer to the first question should be

“no.” As for the second question, Hughes argued that the award did not need to be

an exact figure, and Priderock disagreed.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Anderson v. Dunn
19 U.S. 204 (Supreme Court, 1821)
Parsons v. Bedford, Breedlove, & Robeson
28 U.S. 433 (Supreme Court, 1830)
Tull v. United States
481 U.S. 412 (Supreme Court, 1987)
Granfinanciera, S.A. v. Nordberg
492 U.S. 33 (Supreme Court, 1989)
Great-West Life & Annuity Insurance v. Knudson
534 U.S. 204 (Supreme Court, 2002)
Myers v. TOOJAY'S MANAGEMENT CORP.
640 F.3d 1278 (Eleventh Circuit, 2011)
Larry Bonner v. City of Prichard, Alabama
661 F.2d 1206 (Eleventh Circuit, 1981)
United States v. Fred T. Sullivan
1 F.3d 1191 (Eleventh Circuit, 1993)
United States v. James W. Stone
9 F.3d 934 (Eleventh Circuit, 1993)
Commerce v. Equity
695 So. 2d 383 (District Court of Appeal of Florida, 1997)
Partipilo v. Hallman
510 N.E.2d 8 (Appellate Court of Illinois, 1987)
Nehi Beverage Co., Inc. v. Petri
537 N.E.2d 78 (Indiana Court of Appeals, 1989)
FN Herstal SA v. Clyde Armory Inc.
838 F.3d 1071 (Eleventh Circuit, 2016)
Duty Free World v. Miami Perfume Junction
253 So. 3d 689 (District Court of Appeal of Florida, 2018)
Hard Candy, LLC v. Anastasia Beverly Hills, Inc.
921 F.3d 1343 (Eleventh Circuit, 2019)
Dow Chemical Co. v. Seegott Holdings, Inc.
768 F.3d 1245 (Tenth Circuit, 2014)

Cite This Page — Counsel Stack

Bluebook (online)
Webster Hughes v. Priderock Capital Partners, LLC., Counsel Stack Legal Research, https://law.counselstack.com/opinion/webster-hughes-v-priderock-capital-partners-llc-ca11-2020.