Fision Corp. v. Frueh

• Docket Number: 2D22-2517
• Decision Date: 23 August 2023
• Parties: FISION CORPORATION, Appellant, v. MARIA FRUEH, Appellee.
• Court: Florida District Court of Appeals

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FISION CORPORATION, Appellant, v. MARIA FRUEH, Appellee.

No. 2D22-2517

Florida Court of Appeals, Second District

August 23, 2023

Appeal from the Circuit Court for Hillsborough County; Darren D Farfante, Judge.

Cory L. Chandler of Spector Gadon Rosen Vinci P.C., St Petersburg; and Kristen Over of Spector Gadon Rosen Vinci P.C., St. Petersburg (substituted as counsel of record), for Appellant.

V Stephen Cohen of Bajo Cohen Agliano P.A., Tampa, for Appellee.

LaROSE, JUDGE.

Fision Corporation appeals the summary judgment entered against it in a derivative action stemming from an unpaid loan. See § 605.0802, Fla. Stat. (2020); see generally Citizens Nat'l Bank of St. Petersburg v Peters, 175 So.2d 54, 56 (Fla. 2d DCA 1965) ("[A] derivative suit [i]s an action in which a stockholder seeks to enforce a right of action existing in the corporation.... If . . . the injury is primarily against the corporation, or the stockholders generally, then the cause of action is in the corporation and the individual[ stockholder's] right to bring it is derived from the corporation." (citations omitted)). We have jurisdiction. See Fla. R. App. P. 9.030(b)(1)(A). Fision failed to pay off the loan according to the loan terms. Accordingly, we affirm.

Background

In March 2018, MGA Holdings, LLC, loaned Fision $82,500. A promissory note memorialized the loan. In relevant part, paragraph 2.b. of the note provides as follows:

On November 26, 2018[,] . . . Borrower shall pay to Lender the Loan amount of Eighty[-]Two Thousand Five Hundred and 00/100 Dollars ($82,500.00), plus interest in the amount of Five Hundred Fifty and 00/100 Dollars ($550.00), for a total of Eighty[-]Three Thousand Fifty and 00/100 Dollars ($83,050.00). These funds shall be paid out of any bridge financing or other funding received by either the Borrower or the Guarantor. If no such financing or funding has taken place, the funds will be due regardless.

As we explain later, the promissory note contained no provision allowing for repayment in Fision stock.

Fision did not timely repay the loan. So, in November 2020, Maria Frueh, the owner of half of MGA's outstanding membership units, filed a derivative action to recover the monies Fision owed to MGA. She alleged that Fision's failure to pay breached the terms of the note. Further, she recounted that William C. Gerhauser, MGA's president and the owner of the other half of MGA's outstanding membership units (and, simultaneously, a member of Fision's board of directors), failed to consult her before making the loan.^[1] The parties filed cross-motions for summary judgment. See Fla. R. Civ. P. 1.510. Fision admitted that it had failed to timely repay its debt. However, it asserted that "on March 18, 2021, Fision transferred to MGA shares of [Fision] stock with a value of $98,450.00. That amount was sufficient to repay MGA all principal and interest on the loan." Ms. Frueh countered that no such transfer had occurred and, even if it had, the note did not contemplate satisfaction of the debt with Fision stock.

After a hearing, the trial court granted Ms. Frueh's motion and denied Fision's. It reasoned that the note "[wa]s not convertible." Instead, the trial court found, "it was certainly explicit in the language of this note that the funds would be either funds received from financing or through some other source, essentially a cash payment back of the $82,500 plus interest in the amount of $550." The trial court declined to address whether Fision had transferred stock to MGA.

Fision moved for rehearing, in support of which it attached an affidavit from Mr. Gerhauser. Mr. Gerhauser averred that "[a]t the time the Promissory Note was proffered, neither MGA nor Fision intended that the Promissory Note could only be repaid in legal tender." Alternatively, he contended that "[i]n March 2021, Fision and MGA agreed that Fision could repay the debt evidenced by the Promissory Note by transferring to MGA shares of Fision common stock equal in value to the principal and accrued interest due on the Promissory Note."^[2] Fision also provided the trial court with several Securities &Exchange Commission forms and printouts purportedly evidencing a transfer. Ms. Frueh countered that the affidavit was untrue as there had never been such an agreement, and, regardless, she reiterated, Fision had transferred no stock. The trial court summarily denied rehearing.

Analysis

Fision contends that the trial court mistakenly interpreted the note to require a cash repayment. For sure, the note neither permitted nor prohibited repayment with Fision stock. Fision complains that the trial court failed to draw every possible inference in its favor, as the nonmoving party, when it concluded that the debt was nonconvertible to shares of stock. Fision alleges that the trial court compounded its error by rejecting Mr. Gerhauser's rehearing affidavit thereby making credibility determinations, and resolving disputed issues of fact. Fision stresses that genuine issues of material fact remain for trial.

I. The Summary Judgment Standard (of Review)

"We review orders granting summary judgment de novo." SHM Cape Harbour, LLC v. Realmark META, LLC, 335 So.3d 754, 758-59 (Fla. 2d DCA 2022). Similarly, we review de novo the trial court's interpretation of the note's terms. See U.S. Bank Nat'l Ass'n v. Rios, 166 So.3d 202, 208 (Fla. 2d DCA 2015) ("[A] decision interpreting a contract presents an issue of law that is reviewable by the de novo standard of review." (alteration in original) (quoting Mgmt. Comput. Controls, Inc. v. Charles Perry Constr., Inc., 743 So.2d 627, 630 (Fla. 1st DCA 1999))).

The trial court entered summary judgment under the relatively new version of rule 1.510. See In re Amends. to Fla. R. Civ. P. 1.510, 317 So.3d 72, 77 (Fla. 2021) ("New rule 1.510 takes effect on May 1, 2021. This means that the new rule must govern the adjudication of any summary judgment motion decided on or after that date, including in pending cases."). The revised version of rule 1.510(a) provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."

Revised rule 1.510 "align[ed] Florida's summary judgment standard with that of the federal courts." In re Amends. to Fla. R. Civ. P. 1.510, 309 So.3d 192, 192 (Fla. 2020). Subject to several time-related changes, our supreme court "adopt[ed] the text of the federal summary judgment rule." In re Amends. to Fla. R. Civ. P. 1.510, 317 So.3d at 74. As a result, we are guided and bound by "the large body of case law interpreting and applying [the federal summary judgment rule]." Id. at 75.

The United States Supreme Court directs that summary judgment is proper "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Insofar as Fision argues that Ms. Frueh failed to overcome or completely negate its arguments, this is not her burden under the revised rule. See In re Amends. to Fla. R. Civ. P. 1.510, 317 So.3d at 76 ("In Florida it will no longer be plausible to maintain that 'the existence of any competent evidence creating an issue of fact, however credible or incredible, substantial or trivial, stops the inquiry and precludes summary judgment, so long as the "slightest doubt" is raised.' "(quoting Bruce J. Berman &Peter D. Webster, Berman's Florida Civil Procedure § 1.510:5 (2020 ed.))).

Instead, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Stated differently, "the inquiry is 'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.' "Mane FL Corp. v. Beckman, 355 So.3d 418, 425 (Fla. 4th DCA 2023) (quoting Anderson, 477 U.S. at 251-52).

Now, the summary judgment movant "satisf[ies] its initial burden of production in either of two ways: '[I]f the nonmoving party must prove X to prevail [at trial], the moving party at summary judgment can either produce evidence that X is not so or point out that the nonmoving party lacks the evidence to prove X.' "In re Amends. to Fla. R. Civ. P. 1.510, 317 So.3d at 75 (alterations in original) (quoting Bedford v. Doe, 880 F.3d 993, 996-97 (8th Cir. 2018)); In re Amends. to Fla. R. Civ. P. 1.510, 309 So.3d at 193 ("[T]he burden on the moving party may be discharged by 'showing'-that is, pointing out to the [trial] court-that there is an absence of evidence to support the nonmoving party's case." (quoting Celotex, 477 U.S. at 325)). And then, "[w]hen the moving party has carried its burden[,] . . . its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (footnote omitted).

II. The Promissory Note, Rules of Construction, and the Bard

Turning to the note, "[o]ur goal in contractual interpretation 'is to arrive at a reasonable interpretation of the entire agreement, and to construe contractual terms 'in such a manner as to give them a meaning consistent with the apparent object of the parties in entering into the contract.' "Fitness Int'l, LLC v. 93 FLRPT LLC, 361 So.3d 914, 919 (Fla. 2d DCA 2023) (quoting Beach Towing Servs., Inc. v. Sunset Land Assocs., 278 So.3d 857, 861 (Fla. 3d DCA 2019))...