SSRGA recently succeeded in obtaining reversal of a trial court order that allowed a party to amend his complaint to assert punitive damages against our client in a commercial litigation suit.
The lawsuit arose out of the parties’ business dealings in two LLCs engaged in real estate brokerage. Our client was the owner and president of a corporation that owned an interest in the two LLCs, along with two individuals who also held ownership interests. Disputes arose, and the corporation sued one of those individuals for counts that included breach of contract and breach of fiduciary duty. The defendant filed a counterclaim against the corporation and a third-party claim against our client personally. In the third-party claim, the defendant alleged counts that included breach of fiduciary duty, breach of contract, conspiracy, and defamation.
The defendant later moved to amend his third-party complaint to assert punitive damages against our client. The defendant based his punitive damages claim on allegations that our client had acted through his corporation to pressure one of the LLCs to make distributions it was financially unable to make, defamed him to the other individual in the LLCs and to employees, and orchestrated a vote with the other individual to remove him of his interest and managerial role in one of the LLCs. Our client opposed the motion to amend the third-party complaint, but the trial court allowed the defendant to amend to assert punitive damages. Our client appealed that order as an appealable nonfinal order pursuant to Fla. R. App. P. 9.130.
SSRGA represented the owner and president of the corporation on appeal to the Third District Court of Appeal. We pointed out that punitive damages are reserved as punishment for truly egregious conduct and are not intended as a means to compensate a plaintiff. We argued that the defendant had failed both the pleading component and the evidentiary component required to properly assert a punitive damages claim.
The appeals court agreed with SSRGA’s arguments and issued a written opinion. On the first breach of fiduciary duty claim, the appeals court held that the defendant failed to proffer facts showing our client knew of the wrongfulness of his conduct or that he was acting in disregard of the defendant’s rights. On the second breach of fiduciary duty claim and the conspiracy and defamation counts, the appeals court held that the allegations simply did not amount to outrageous conduct and that the normal remedies afforded for these causes of action are enough to redress any injury the defendant had sustained.
The appeals court reversed the order allowing the defendant to assert punitive damages against our client in the third-party complaint. This favorable result for our client eliminates the possibility that he could be individually liable for punitive damages in the lawsuit moving forward.
* Opinion not final until disposition of timely filed motion for rehearing *