Huber v. Disaster Solutions, LLC

• Decision Date: 09 December 2015
• Docket Number: 4D14–520.,Nos. 4D13–4360,s. 4D13–4360
• Parties: Dan HUBER, Mary Huber and Lads Network Solutions, Inc., a Missouri Corporation, Appellants, v. DISASTER SOLUTIONS, LLC, and Scott Lewis, Appellees.
• Court: Florida District Court of Appeals

180 So.3d 1145

Dan HUBER, Mary Huber and Lads Network Solutions, Inc., a Missouri Corporation, Appellants,

v.DISASTER SOLUTIONS, LLC, and Scott Lewis, Appellees.

Nos. 4D13–4360

4D14–520.

District Court of Appeal of Florida, Fourth District.

Dec. 9, 2015.

Rehearing Denied Jan. 4, 2016.

Stewart Valencia of Holman, Cohen & Valencia, Hollywood, for appellants.

Robert J. Hauser of Pankauski Law Firm PLLC, West Palm Beach, for appellee Disaster Solutions, LLC.

Scott Lewis, West Palm Beach, pro se.

CONNER, J.

The appellants, Dan Huber, Mary Huber, and LADS Network Solutions, Inc. ("LADS"), appeal two trial court orders finding them in civil contempt of court for violating court orders and an agreed injunction requiring the appellants not to disclose confidential information to third parties. The contempt orders impose two monetary sanctions, one compensatory, the other coercive, in favor of the appellees, Disaster Solutions, LLC ("DSL") and Scott Lewis ("Lewis"). The coercive monetary sanction was suspended on the condition that the appellants timely comply with court orders in the future, including a requirement that the compensatory sanction be paid within ten days.

The appellants raise numerous grounds for reversal. We affirm, without discussion as to all of the grounds for reversal raised by appellants, except one. The sole issue we analyze is the propriety of imposing a deadline for payment of a compensatory contempt sanction to avoid the imposition of a suspended coercive contempt fine. Finding no statutory, rule, or case law authority for imposing a deadline for the payment of a compensatory civil fine or sanction, we reverse as to that issue alone.

Factual Background and Trial Court Proceedings

LADS is in the business of developing and licensing software programs, specializing in the use of Global Positioning Satellite ("GPS") technology. The principals in LADS are Dan and Mary Huber.

DSL performs services in the disaster relief industry. In 2006, its principal, Lewis, started working on inventing software programs which would incorporate Bluetooth functionality into GPS technology to enable cellular phones to exchange data using Bluetooth capability when the Internet or cellular phone towers are inoperable.¹

In 2010, the two companies entered into a software development agreement. Because DSL was sharing intellectual property, for which patent applications were pending, the software development agreement contained confidentiality provisions. One of the provisions specifically provided that if LADS was ordered to disclose information deemed confidential under the agreement to a third party as a result of litigation by or against LADS, LADS was to promptly notify DSL so that DSL would have the opportunity to seek protective orders against the disclosure.

In 2011, the deadline for the development of the software was not met. By 2012, the relationship between the companies had soured to the point that DSL sued LADS, and LADS countersued.

Early in the litigation, the parties mutually consented to the entry of a temporary injunction against disclosure of information to third parties, as provided in the software development agreement. Subsequently, LADS used the confidentiality provisions of the software development agreement and the temporary injunction as excuses for noncompliance with discovery requests propounded by DSL. There were several motions to compel by DSL, leading to multiple sanctions orders against LADS and the Hubers.

During the litigation in the trial court below, DSL discovered that LADS and the Hubers were embroiled in litigation in another state with a DSL competitor. In the course of the foreign litigation, LADS had responded to discovery requests by the competitor, and in doing so, redacted all information about LADS that it deemed was confidential, but did nothing to protect disclosure of information about DSL that was deemed confidential under the software development agreement. Equally important, LADS did nothing to give DSL prior warning that the discovery disclosure was forthcoming in the foreign litigation.² DSL filed a notice and motion seeking an order to show cause why LADS and the Hubers should not be adjudged in civil contempt of court.

After an evidentiary hearing on the civil contempt motion, the trial court entered a detailed order ("October 2013 order"), with extensive findings of facts and conclusions of law, adjudging LADS and the Hubers in civil contempt. As discussed in more detail below, the order imposed two monetary sanctions, which the case law frequently refers to as contempt fines. One of the monetary sanctions was compensatory; the other was coercive.

The coercive sanction was in the amount of $100,000, suspended as follows:

Further, the Defendants can avoid ever paying this $100,000 by merely complying with this Court's orders moving forward. This $100,000 compensatory coercive sanction is suspended (in accordance with the procedures approved in [ International Union, United Mine Workers v.] Bagwell[ , 512 U.S. 821, 114 S.Ct. 2552, 129 L.Ed.2d 642 (1994) ] and Nical [of Palm Beach, Inc.] v. Lewis [, 981 So.2d 502 (Fla. 4th DCA 2008) ] ) upon condition that the Defendants strictly and timely comply with all orders of this Court and satisfy all future discovery obligations in strict adherence to the Florida Rules of Civil Procedure.... Should another violation be proven, this $100,000 shall be payable immediately to the Plaintiffs from the Defendants, who are jointly and severally liable for this $100,000 sanction payment.

The October 2013 order established the entitlement to a compensatory monetary sanction, but not the amount. The amount was established by a subsequent order ("January 2014 order"), after a further evidentiary hearing. Specifically important to the issue decided by this opinion, the October 2013 order provided:

As Defendants' timely payments have been one of the violations sanctioned several times before, in regards to the determination of the amount of fees and costs of this order, the Court orders that full payment [of the compensatory sanction] shall be made within ten calendar days of said determination. Any delay whatsoever in this reimbursement shall be considered a violation of this Order, which shall result in the immediate payment to the Plaintiffs of the $100,000 suspended judgement/fine. [sic]

(emphasis added). The January 2014 order made no reference to the provision in the October 2013 order that failure to timely pay the compensatory sanction would result in the imposition of the coercive sanction.

The appellants gave notice of their appeal regarding the October 2013 order and the January 2014 order.

Legal Analysis

A trial court's contempt order is reviewed on appeal with a presumption of correctness and will not be reversed "unless a clear showing is made that the trial court either abused its discretion ‘or departed so substantially from the essential requirements of law as to have committed fundamental error.’ " Lewis v. Nical of Palm Beach, Inc., 10 So.3d 159, 163 (Fla. 4th DCA 2009) (quoting Northstar Invs. & Dev., Inc. v. Pobaco, Inc., 691 So.2d 565, 566 (Fla. 5th DCA 1997) ) (quotation marks omitted). We review the legal issues de novo and whether factual findings are supported by competent substantial evidence. Nical of Palm Beach, Inc. v. Lewis, 981 So.2d 502, 504 (Fla. 4th DCA 2008).

Monetary Civil Contempt Sanctions

Trial "courts have broad discretion in formulating a valid contempt sanction" and "the ability ... to impose creative contempt sanctions." Parisi v. Broward Cnty., 769 So.2d 359, 367 (Fla.2000). Discretion to flexibly and creatively formulate an appropriate civil contempt sanction is needed because "[t]oo restrictive a view of a court's contempt powers would render it impotent like a toothless lion, who can only roar in dismay at the disobedience of his decrees." Riley v. Riley, 509 So.2d 1366, 1370 (Fla. 5th DCA 1987). However, the discretion and flexibility granted to the trial courts sometimes make appellate analysis confusing. It has been said that "[f]ew legal concepts have bedeviled courts, judges, lawyers and legal commentators more than contempt of court." Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 827 n. 3, 114 S.Ct. 2552, 129 L.Ed.2d 642 (1994) (quoting Robert J. Martineau, Contempt of Court:

Eliminating the Confusion between Civil and Criminal Contempt,

50 U. Cin. L.Rev. 677 (1981)).

Although flexibility and creativity in formulating civil contempt sanctions is clearly acknowledged in our case law, our supreme court has also said:

While the inherent contempt power of a single judge is a bulwark of our legal system, the United States Supreme Court has also recognized that contempt power "uniquely is ‘liable to abuse.’ " Bagwell, 512 U.S. at 831, 114 S.Ct. 2552. This is because in the area of civil contempt proceedings, "the offended judge [is] solely responsible for identifying, prosecuting, adjudicating, and sanctioning the contumacious conduct." Id. Thus, a balance must be struck between the recognition that courts are vested with contempt powers to vindicate their authority and the necessity of preventing abuse of these broad contempt powers. See id. at 831–32, 114 S.Ct. 2552.

Parisi, 769 So.2d at 363. The court went on to note that "the Supreme Court recognized in Bagwell, most contempt sanctions ‘to some extent punish a prior offense as well as coerce an offender's future obedience.’ " Id. at 364 (quoting Bagwell, 512 U.S. at 828, 114 S.Ct. 2552 ). For that reason, there must always be concern as to the extent a sanction is punitive. That is because the procedural safeguards for punitive sanctions are much more stringent than for remedial sanctions. Id. at 364. ("[T]he nature of the contempt both determines the procedures for adjudication and sets the parameters for the sanctions that can be imposed.").

Monetary contempt sanctions are classified as either "compensatory" or "coercive" sanctions. Id. at...