Brough v. Imperial Sterling Ltd.

• Decision Date: 16 July 2002
• Docket Number: No. 01-14195.,No. 01-15049.,No. 01-14222.,01-14195.,01-14222.,01-15049.
• Citation: 297 F.3d 1172
• Parties: Richard A. BROUGH, Jr., Plaintiff-Counter Defendant-Appellee, v. IMPERIAL STERLING LTD., a Delaware corporation, Defendant-Counter Claimant-Counter Defendant-Appellant, Harriet Golding, a.k.a. Harriet Golding Martin, Counter-Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1172

297 F.3d 1172

Richard A. BROUGH, Jr., Plaintiff-Counter Defendant-Appellee, v. IMPERIAL STERLING LTD., a Delaware corporation, Defendant-Counter Claimant-Counter Defendant-Appellant, Harriet Golding, a.k.a. Harriet Golding Martin, Counter-Defendant.

No. 01-14195.

No. 01-14222.

No. 01-15049.

United States Court of Appeals, Eleventh Circuit.

July 16, 2002.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Daniel S. Rosenbaum, Becker & Poliakoff, West Palm Beach, FL, for Imperial Sterling Ltd in Nos. 01-14195, 01-14222 & 01-15049.

Michael R. Riemenschneider, O'Brien, Riemenschneider & Kancilia, Melbourne, FL, for Richard A. Brough, Jr. in Nos. 01-14195 & 01-14222.

Michael R. Riemenschneider, O'Brien, Riemenschneider & Kancilia, Melbourne, FL, Lorin Louis Mrachek, Page, Mrachek, Fizgerald & Rose, P.A., West Palm Beach, FL, Kelly Lee Reagan, West Palm Beach, FL, for Richard A. Brough, Jr. in No. 01-15049.

Appeal from the United States District Court for the Middle District of Florida.

Before MARCUS and KRAVITCH, Circuit Judges, and VINSON^*, Chief District Judge.

KRAVITCH, Circuit Judge:

This appeal presents the question of whether, under Florida law, it is too speculative for a jury to award damages for future unearned commissions to an employee whose contract has been repudiated by his employer. We hold that, where it is unclear whether the employee would have received the commissions under the contract, it is too speculative for a jury to award compensation for the lost commissions. We therefore reverse the award of damages for future commissions. We affirm the award of damages involving other issues.

I. BACKGROUND

Imperial Sterling Limited ("ISL") is a real estate management and investment company that owns a number of properties in Brevard County, Florida. ISL derives significant revenue from the leasing and management of these properties. In 1996, Richard Brough was interviewed for the position of ISL property manager for the company's Florida operations. The interviewing was conducted primarily by Harriet Golding, the president of ISL at the time, but Brough also flew to New York to meet with Golding's son Jerrold Levy, the vice-president of ISL and majority shareholder of the company. Brough was given the position. A handwritten contract, dated August 27, 1996 and signed by Golding, provided that Brough was entitled to an annual salary of $60,000 that would be raised to $65,000 after six months, as well as medical insurance and a car allowance. The contract also specified that Brough would "receive comissions [sic] on sales of land or buildings but no comissions [sic] on leases." The contract indicated that Brough's job was to "manage and lease all Melbourne properties and work on the sale of same." A second contract from Golding, dated October 29, 1997, extended the terms of Brough's employment agreement for five years starting November 1, 1997. The second letter specified that "there will be 10% commissions on all sales, swaps or purchases of Florida Properties."

In 1999, Levy and Golding had a dispute that led to Levy taking over the presidency of the company and removing Golding from office.¹ Shortly thereafter, Levy indicated to Brough that he was interested in selling the Florida properties and that Brough should find a broker to help with the property sales. In a phone conversation approximately a week-and-a-half later, Levy and Brough discussed Brough's 10% commission on the sale of any of the properties. Levy and Brough give differing accounts of the phone conversation, but Levy subsequently claimed that it was the first time he had ever heard about the commission contract. Levy asked to see copies of the contracts, and Brough forwarded copies to him approximately one month later. Five months after receiving copies of the contracts, Levy sent a letter to Brough denying that ISL was bound by the two contracts. As a result, Brough left his job and sued ISL for breach of contract.

ISL brought counterclaims against Brough and Golding for fraud and conspiracy to commit fraud. Both the counterclaims and ISL's defense of the breach of contract relied primarily on the theory that there never was a genuine commission agreement and that the handwritten contracts were fabrications made by Brough and Golding after Golding's dispute with Levy. The claims went to a jury trial that began on June 11, 2001, more than a year before the second contract would have expired. At the close of ISL's evidence, the district court granted Brough's and Golding's motions for judgment as a matter of law on the fraud counts, but denied ISL's motion for judgment as a matter of law on the breach of contract claim. The jury found in favor of Brough on the breach of contract claim, awarding him total damages of $3,199,560: $406,000 for lost commissions on the one property that had been sold before the trial, $2,585,000 in future commissions on other Florida properties that had not yet been sold, and $208,560 in lost salary, benefits, and vehicle allowance.²

II. DISCUSSION

A. The denial of ISL's motion for judgment as a matter of law on the future commission damages awarded on Brough's breach of contract claim

A district court's denial of a motion for judgment as a matter of law is reviewed by this court de novo. Maytronics, Ltd. v. Aqua Vac. Sys., Inc., 277 F.3d 1317, 1320 (11th Cir.2002). This court, like the district court, must consider all the evidence, and the inferences drawn therefrom, in the light most favorable to the nonmoving party. Wideman v. Wal-Mart Stores, Inc., 141 F.3d 1453, 1454 (11th Cir.1998). The motion can be granted only if there was "no legally sufficient basis for a reasonable jury to find in favor" of the nonmoving party. Carter v. DecisionOne Corp., 122 F.3d 997, 1003 (11th Cir.1997).

ISL argues that the issue of unearned future commissions should not have been submitted to the jury because it was too speculative. Although lost profits are an appropriate measure for damages from breach of contract, the loss "must be proven with a reasonable degree of certainty before it is recoverable. The mind of a prudent impartial person should be satisfied that the damages are not the result of speculation or conjecture." Johnson Enters. of Jacksonville, Inc., v. FPL Group, Inc., 162 F.3d 1290, 1325 (11th Cir.1998) (quoting Shadow Lakes, Inc. v. Cudlipp Constr. & Dev. Co., 658 So.2d 116, 117 (Fla.2d Dist. Ct.App. 1995)). In this case, the jury's award of $2,585,000 for "future commissions on other Florida properties" was based on speculation that ISL would sell its property, and therefore we reverse the award of those damages.

The cases involving Florida law that are most analogous to this one are Himes v. Brown & Co. Sec. Corp., 518 So.2d 937 (Fla.3d Dist. Ct.App. 1987) and Kane v. Shearson Lehman Hutton, Inc., 916 F.2d 643 (11th Cir.1990).³ In Himes, an investor argued that he should be awarded lost profits against a securities firm, because the firm's failure to properly execute his purchase orders prevented him from buying and selling securities at the optimal time. Himes, 518 So.2d at 938. The Florida Court of Appeals held that there was no evidence that the investor "would have completed the time-sensitive transactions at precisely the correct time" and therefore any damages were speculative and non-recoverable. Id. In Kane, an investor similarly claimed that he failed to receive profits because his broker failed to inform him about negative information related to a company he had invested in. Kane, 916 F.2d at 647. This court, citing Himes, held that the investor could not recover his anticipated profits based on the speculation that "he would have sold the securities at the optimal time." Id. Both Himes and Kane stand for the proposition that damages may not be awarded for lost profits when those profits are dependent on a party taking an action that it is unclear he would have taken. In this case, it was unclear at the time of the trial whether ISL would have sold its Florida property before November 1, 2002, when Brough's contract expired.

Brough introduced substantial evidence at trial intended to prove that the properties would have been sold before November 1, 2002. The evidence included (1) minutes from a board of directors meeting in which Levy indicated that ISL should retain real estate experts to assist with the sale of all the Florida properties; (2) testimony that Brough was instructed to prepare and market the properties for sale before he left the company; (3) evidence that an outside real estate firm was hired to market and sell the properties; (4) evidence that, at the time of trial, all of the Florida properties were listed for sale and some offers had been received; and (5) expert testimony that the properties were likely to sell within a year or less from the date of the breach, given the market area and prices. While this evidence is probative of the likelihood that the properties would sell if ISL decided to proceed with the property sales, it rests on the assumption that ISL would continue to act in that manner. Under the contract, ISL had no obligation ever to make a sale of property and the company could have decided at any time to change its business strategy and discontinue efforts to sell the property. The jury could only award Brough damages by speculating that ISL would leave the properties on the market and accept offers from buyers.

Under Florida law, once ISL repudiated the contract, Brough had an immediate cause of action against it. See Hosp. Mortgage Group v. First Prudential Dev. Corp., 411 So.2d 181, 182 (Fla.1982). In this particular case, however, it would have been advisable for Brough to have waited until the term of his contract had ended before bringing this action because there was absolutely no means by which a jury could determine with reasonable certainty what Brough's commissions would have been had the contract not been...