Willson v. Big Lake Partners, LLC

211 So. 3d 360, 2017 WL 815379, 2017 Fla. App. LEXIS 2780
CourtDistrict Court of Appeal of Florida
DecidedMarch 1, 2017
DocketNo. 4D15-1782
StatusPublished
Cited by3 cases

This text of 211 So. 3d 360 (Willson v. Big Lake Partners, LLC) 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
Willson v. Big Lake Partners, LLC, 211 So. 3d 360, 2017 WL 815379, 2017 Fla. App. LEXIS 2780 (Fla. Ct. App. 2017).

Opinion

ON MOTION FOR REHEARING

Warner, J.

We grant appellants’ motion for rehearing and clarification, vacate our prior opinion, and substitute the following in its place.

Robert Willson, Carl Ferrero, and OR Investment of Okeechobee, Inc., appeal a [362]*362final judgment for breach of contract, slander of title, and cancellation of notes and mortgages, as well as denying their claims for unjust enrichment. The court had originally ruled in their favor on some of the counts but reversed itself on a motion for rehearing by considering evidence it had excluded during trial. We conclude that in doing so, the court erred. We reverse and remand for a new trial on damages on the counts alleging breach of contract and slander of title.

Big Lake Partners, LLC, was a group of investors, mostly residing out of state, who were developing land in a community in Okeechobee called Palm Creek. Willson was retained to manage the development in 2000. He signed an operating agreement which delineated his managerial powers. Article IX, section 9.2 of the agreement contained limitations on his powers as manager, including limiting the power to “[ijncur indebtedness for borrowed money in excess of $5000” and limiting the power to “[pjlace a mortgage or other lien on the assets of the Company.” Willson hired Ferrero as the construction manager for the project. The development continually had problems and did not generate much in the way of sales. Willson complained that the investors did not respond to calls for working capital, but the investors never saw any profit from the sales that were made. In 2006, Willson and Ferrero made “deposits” to the company, which they referred to as loans, all in excess of the $5,000 limitation in the operating agreement. When it appeared that the relationship between Willson and the investors was souring, Willson executed mortgages on the property to secure his and Ferre-ro’s loans.

After Willson resigned, the investors took over the operation and discovered the executed mortgages, which caused a delay in further sales. They also discovered other expenses and what they deemed irregularities in Willson’s operation of the development, including excessive expenditures and commissions paid to Willson in excess of his compensation agreement.

Big Lake filed suit against Willson, Fer-rero, and CR Investments in 2008. Counts 1 and 2 sought rescission of mortgages (in favor of CR Investments and Ferrero) which secured the alleged notes, because the mortgages had not been authorized. Count 3 sought damages for Willson’s breach of the agreement. Count 4 alleged slander of title. Count 5 alleged breach of fiduciary duty against Willson. Willson, Ferrero, and CR Investments filed a counterclaim and amended counterclaim. Counts 1 and 2 sought foreclosure of the mortgages. Counts 3 and 4 were claims for money lent ($123,342.90 for CR Investment and $40,000 for Ferrero). Counts 5 and 6 sought damages in equity for unjust enrichment based on the loans. Count 7 was for indemnification.

The court held a lengthy trial on all issues. Big Lake’s main witness was its forensic accountant, Mikel Spraker. He testified regarding the misuse of funds by Willson, including damages of lost profits on sales lost due to the mortgages placed on the property by Willson and Ferrero. The accountant started to testify that in 2008, 2009, and 2010, there were no sales because of the improper mortgages clouding the title. But when Big Lake’s counsel asked the accountant if these mortgages hindered the sale of the property, defense counsel objected that this was speculative. The court sustained the objection. Plaintiffs’ counsel then asked the accountant if he was able to analyze sales that occurred in other subdivisions in Okeechobee County. Defense counsel objected that this was also too speculative. The court overruled the objection and allowed the testimony. The accountant then testified that from [363]*3632001 to 2006 there were forty-three home sales in a nearby development called Blue Heron. He then compared Blue Heron’s sales to Big Lake’s sales.

At this point, defense counsel objected again, stating that “these opinions” were not contained in the expert’s report. Counsel had not been on notice that the accountant was going to testify “about this,” and asked that the testimony be stricken and the accountant not be allowed to go further. The court asked why it was not disclosed, and Big Lake admitted that it was something that the accountant had just looked at in preparation for trial. The court asked defense counsel if he had a comparable witness. Defense counsel admitted that he did not. The court determined that while the accountant could proffer his testimony, the court would not consider it because of the late disclosure. Big Lake then proffered the accountant’s testimony that Big Lake had sold ten fewer homes than Blue Heron, and that Big Lake’s historical average gross profit was $16,528 per house, which would have constituted lost profits of $165,280.

The defense then put on its case, which mainly consisted of Willson’s testimony regarding his efforts to develop the property and the difficulties he had getting the investors to provide monies. He related that he and Ferrero had loaned the company substantial sums.

After trial, the court entered an order making findings of fact and conclusions of law. The court found that the operating agreement prohibited Willson from encumbering the development with the mortgages, and the court cancelled both the notes and mortgages. It reviewed the various items of damage, as testified to by the accountant, but found that no damages had been proven. As to the counts for breach of contract and slander of title based upon the recorded mortgages, the court found that no damages were proven because of the exclusion of the expert’s untimely report. It also found for the plaintiffs on other claims but found no damages. As to the defense counterclaims, the court ruled that Ferrero had loaned $40,000 to Big Lake, and that CR Investments had loaned $100,000 to fund construction and paid $23,342.90 to satisfy an IRS obligation. The court found for the defendants on their claims for unjust enrichment, determining that $38,800 was owed to Ferrero, $20,400 to Willson, and $86,642 to CR Investments.

The parties moved for rehearing, and the court eventually entered an amended final order which substantially changed the prior rulings with respect to damages for breach of contract and unjust enrichment. The court at length explained what the accountant had testified to with respect to lot sales and noted that defense counsel had not objected until after the accountant had presented substantial evidence on the losses. When defense counsel did object and move to strike, the court found that it had simply granted the objection to forthcoming testimony regarding the dollar amount but it did not strike the testimony already presented. The court pieced together from various statements made by the accountant that the expert’s testimony was not a prejudicial surprise and should have been admitted. The trial court then used the expert’s calculations from his previously-excluded report to determine that Big Lake had suffered $165,280 in losses as a result of the breach of contract and slander of title created by the recorded mortgages. It awarded $165,280 on the breach of contract count. To avoid double recovery, it awarded $1 on the slander of title count, as the measure of damages for the two counts was the same. On the counterclaim, the court reversed itself and de[364]

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Cite This Page — Counsel Stack

Bluebook (online)
211 So. 3d 360, 2017 WL 815379, 2017 Fla. App. LEXIS 2780, Counsel Stack Legal Research, https://law.counselstack.com/opinion/willson-v-big-lake-partners-llc-fladistctapp-2017.