Blackhawk Heating & Plumbing Co., Inc. v. Data Lease Financial Corp., s. 81-2155

• Decision Date: 03 August 1983
• Docket Number: Nos. 81-2155,81-2156,s. 81-2155
• Citation: 446 So.2d 127
• Court: Florida District Court of Appeals
• Parties: BLACKHAWK HEATING & PLUMBING CO., INC., an Illinois corporation, and Andrew Machata, Appellants, v. DATA LEASE FINANCIAL CORPORATION, a Florida corporation, and Roy W. Talmo, Appellees, and Citibank, N.A., Intervenor.

Page 127

446 So.2d 127

BLACKHAWK HEATING & PLUMBING CO., INC., an Illinois corporation, and Andrew Machata, Appellants, v. DATA LEASE FINANCIAL CORPORATION, a Florida corporation, and Roy W. Talmo, Appellees, and Citibank, N.A., Intervenor.

Nos. 81-2155, 81-2156.

District Court of Appeal of Florida,

Fourth District.

Aug. 3, 1983.

Rehearing and Clarification Denied

Oct. 5, 1983.

Michael B. Davis of Walton Lantaff Schroeder & Carson, West Palm Beach, for appellants.

Robert M. Sondak of Paul, Landy, Beiley, Harper & Metsch, P.A., Miami, for appellees.

John H. Schulte of Smathers & Thompson, Miami, and William B. Pennell of Shearman & Sterling, New York City, for intervenor.

DELL, Judge.

Blackhawk Heating and Plumbing Co., Inc. (Blackhawk) and Andrew Machata (Machata) appeal from an order finding Blackhawk liable to Data Lease Financial Corporation (Data Lease) for $2,757,267.78 and finding Blackhawk and Machata jointly and severally liable to Data Lease for $545,439.69. The trial court found these sums due pursuant to a stock option agreement and subsequent specific performance order.

Since 1973 this case has appeared in either this Court or the Supreme Court of Florida more than ten times. ¹ It has also involved various actions in the Federal Courts which have affected the proceedings of the State courts. ² Although the Southern and Federal Reporter contain numerous chronicles of the facts of this case, we find ourselves compelled to again review the history of this case.

In 1969, Data Lease purchased 870,000 shares of Miami National Bank (MNB) stock at $12 per share. The purchase price included the assumption of certain loans and the execution of a $1,500,000 promissory note by Data Lease due on July 1, 1970. On May 18, 1970, Data Lease and Blackhawk entered into an option agreement whereby Blackhawk received an option to purchase 25 percent (217,500 shares) of Data Lease's 870,000 MNB shares at $12 per share. In return, Blackhawk permitted Data Lease to use its credit, thereby enabling Data Lease to obtain a $2,000,000 loan to pay off the $1,500,000 promissory note. On January 25, 1971, Blackhawk notified Data Lease that it was exercising its option to purchase the shares of MNB stock but Data Lease refused to perform.

Blackhawk filed a complaint for specific performance, injunctive relief, accounting and damages based upon the option agreement. The trial court granted a temporary injunction to prevent Data Lease from "selling, assigning, hypothecating, transferring or otherwise disposing of or encumbering" any of the 870,000 MNB shares. After trial on the merits, the trial court found that the option agreement contained vague, indefinite and uncertain terms and that Blackhawk failed to properly exercise its option, and entered a final judgment dismissing Blackhawk's action for specific performance. The final judgment also dissolved the temporary injunction. Blackhawk appealed and this Court affirmed. Blackhawk Heating & Plumbing Co. v. Data Lease Financial Corp., 287 So.2d 118 (Fla. 4th DCA 1973).

In April of 1973, during the pendency of Blackhawk's appeal to this Court, Data Lease refinanced the 1969 MNB stock purchase obligation by pledging all 870,000 MNB shares and other stocks with Citibank ³ in return for a loan of $6,217,630.13. Before the Florida Supreme Court reinstated the temporary injunction which the trial court had initially granted against Data Lease, Data Lease also borrowed additional sums totaling $347,000 under the Citibank pledge agreement. In 1974, the Supreme Court reversed this Court and held that the 1970 option agreement contained sufficiently certain terms to sustain a cause of action for specific performance and that Blackhawk had properly exercised the option. The Supreme Court remanded with directions for the trial court to determine the parties' rights under the option agreement. Blackhawk Heating & Plumbing Co. v. Data Lease Financial Corp., 302 So.2d 404 (Fla.1974).

At this time, Citibank, pursuant to Data Lease's pledge, held the stock certificate representing the 870,000 shares of MNB stock. The pledge permitted Citibank to register the certificate in its name or in the name of its nominee. On July 12, 1974, Data Lease defaulted on its loan from Citibank. On April 22, 1975, Citibank and Data Lease entered into another agreement which among other things required Data Lease at Citibank's request to register the shares in the name of Citibank's nominee and to exercise its best efforts to have certain persons elected to the board of MNB. Data Lease and Citibank obviously made this agreement without regard for Blackhawk's rights to 217,500 shares of stock pursuant to the then recent decision of the Supreme Court and this Court's mandate on remand.

In 1977, this Court, in an unreported order, granted Blackhawk's motion to compel compliance with the mandate and instructed the trial court to

proceed to determine upon the presently entered findings of the Special Master the purchase price of the 25% stock of the Miami National Bank, the set-off for the cash flow benefits and the monies, if any, due in [exercise] of the option, and further to direct specific performance of the option agreement in accordance with such determination.

The trial court entered a final judgment for specific performance, containing the following relevant findings of fact:

1. Blackhawk Heating & Plumbing Company, Inc. properly exercised its option to purchase 217,500 shares of the common stock of the Miami National Bank on February 28, 1971 and as of said date all right, title and interest in said stock was vested in Blackhawk Heating & Plumbing Company, Inc.

2. The purchase price of said stock is determined to be $2,610,611.54.

3. The cash payment due on February 28, 1971 pursuant to the Option Agreement was $104,825.95.

4. The net cash flow benefits due Blackhawk Heating & Plumbing Company, Inc. pursuant to Paragraph 6(b) of the 5. The Court finds that no cash payment was due in exercise of the Option Agreement.

Option Agreement on February 28, 1971 were $289,004.16.

The trial court's order required Data Lease to specifically perform the 1970 option agreement by presenting the stock certificate representing 870,000 MNB shares along with the necessary documents to transfer 217,500 shares to Blackhawk and to request that MNB re-register the 217,500 shares in Blackhawk's name. In return, Blackhawk and Machata would execute a promissory note for $312,835.66 in favor of Data Lease. The final judgment for specific performance explained the effect of Data Lease's failure to perform.

10. Should the Defendant Data Lease Financial Corporation for any reason fail to present said stock certificate, stock powers, and other appropriate transfer documents to the Miami National Bank with [sic] 15 (fifteen) days of the date of this Judgment, then this Judgment shall be deemed a cancellation of stock certificate No. 12681 and the Defendant shall be required to apply to the Miami National Bank for the reissuance of a new certificate issuing 217,500 shares of the Miami National Bank stock in the name of Blackhawk Heating & Plumbing Company, Inc. Further, by reason of this Final Judgment for Specific Performance, Blackhawk Heating & Plumbing Company, Inc. may itself apply for reissuance of the 217,500 shares of stock as described above and shall be entitled from the date of this Judgment to all voting rights, dividends and other privileges appertaining to said 217,500 shares of the Miami National Bank stock presently registered in the name of Data Lease Financial Corporation.

On October 4, 1977, the date of entry of the final judgment, Blackhawk and Machata executed and delivered the required promissory note to Data Lease. Blackhawk presented the final judgment to the MNB and requested it to issue Blackhawk a new stock certificate for 217,500 of Data Lease's 870,000 shares. MNB refused to issue the shares. Blackhawk later discovered that pursuant to the 1973 loan and pledge agreement, MNB had honored Citibank's request to register and issue the stock in the name of Citibank's nominee, Johns & Co. Coincidently, the stock certificate issued to Johns & Co. bears the date October 4, 1977, and Citibank's letter requesting this transfer bears the date October 5, 1977, the day following the issuance of the stock certificate in the name of Johns & Co. Blackhawk filed suit against Citibank, Johns & Co. and MNB in federal court alleging among other things conspiracy, tortious interference with contract and mismanagement of MNB.

In 1978, Blackhawk and Citibank executed a settlement agreement whereby Blackhawk ended its litigation against Citibank, Johns & Co. and the MNB. Blackhawk agreed to join with Citibank so each could gain the maximum recovery from the stocks held by Citibank. In 1979, Citibank sold Data Lease's 870,000 MNB shares at a judicial sale ordered by the U.S. District Court for the Southern District of Florida and affirmed by the U.S. Court of Appeals for the Fifth Circuit. Citibank, N.A. v. Data Lease Financial Corp., 645 F.2d 333 (5th Cir.1981).

Meanwhile, the trial court denied Citibank's motions for intervention and substitution in this case. Citibank based its motion for intervention upon the 1973 pledge agreement with Data Lease and based its motion for substitution upon the 1978 settlement agreement with Blackhawk. Notwithstanding Citibank's interlocutory appeal, the trial court proceeded on Data Lease's motion to conduct a final hearing on November 9, 1979. The trial court found that Blackhawk had received the benefits of the 1977 specific performance order, ordered Blackhawk to pay Data Lease $2,431,481.22, and also found that Blackhawk and Machata jointly and severally owed Data Lease $500,982.74 on their 1977 promissory note. This Court affirmed the trial court's order denying substitution, but reversed the order denying Citibank's On October 21, 1981, the trial court made the same...