Razin v. a Milestone Llc

• Decision Date: 05 August 2011
• Docket Number: No. 2D10–5233.,2D10–5233.
• Citation: 67 So.3d 391
• Parties: Sheldon RAZIN, Appellant/Cross–Appellee,v.A MILESTONE, LLC, a Florida limited liability company, Appellee,andMichael J. McDermott, Cross–Appellant/Intervenor,v.Sheldon Razin, Appellant/Cross–Appellee,andTodd K. Norman, Intervenor,v.Sheldon Razin, Appellant/Cross–Appellee.
• Court: Florida District Court of Appeals

67 So.3d 391

Sheldon RAZIN, Appellant/Cross–Appellee,

v.A MILESTONE, LLC, a Florida limited liability company, Appellee,andMichael J. McDermott, Cross–Appellant/Intervenor,

v.Sheldon Razin, Appellant/Cross–Appellee,andTodd K. Norman, Intervenor,

v.Sheldon Razin, Appellant/Cross–Appellee.

No. 2D10–5233.

District Court of Appeal of Florida, Second District.

Aug. 5, 2011.

Erik E. Hawks and Vincent Falone of Akerman Senterfitt, Orlando, for Appellant/Cross–Appellee.No Appearance for Appellee.Michael J. McDermott of McDermott & Thacker, P.A., Brandon, for Cross–Appellant/Intervenor.Todd K. Norman and Kelly Holbrook of Broad and Cassel, Orlando, Intervenor.MORRIS, Judge.

Sheldon Razin is one of two managing members of A Milestone, LLC. Razin, in his individual capacity, initiated a collection action to recover monies he lent Milestone. Based on what he perceived to be his right under the parties' operating agreement, he retained his choice of counsel, Todd K. Norman, to represent Milestone in the collection action. However, the other managing member, Ashwini K. Bahl, retained separate counsel, Michael J. McDermott, to represent Milestone. Both Norman and McDermott filed motions to disqualify the other from representing Milestone. The trial court ultimately determined that neither attorney could properly represent Milestone and, therefore, that both Norman and McDermott were disqualified. The trial court then appointed a custodian to retain counsel to represent Milestone in the collection action and to perform other limited functions. One of those functions was to act as a tie-breaker should Razin and Bahl fail to agree on any management decisions. Razin now appeals the nonfinal orders disqualifying Norman and appointing a custodian. McDermott intervened in this action and filed a cross-appeal ¹ from the same orders. For the reasons explained herein, we must affirm in part and reverse in part the orders of disqualification and appointment.

I. BACKGROUND

Razin and Bahl created Milestone for the purpose of owning and operating a shopping plaza as an investment. Milestone's acquisition of the shopping plaza was financed, in part, by a $1,000,000 unsecured loan which Razin provided. The promissory note between Razin and Milestone provided that the loan was to be repaid by April 14, 2005. The note also provided that Milestone would be considered in default if it failed to repay the loan and that “[u]pon the occurrence of any event of Default, and at the option of the Lender, and without notice to any party, the Lender may declare all of the indebtedness evidenced hereby to be immediately due and payable.”

There is no dispute that Milestone failed to repay the loan by the due date. In March 2010, Razin sent a notice of default and demand for payment to Milestone. Although Razin also sent a tolling agreement which would have extended the time for repayment until May 14, 2010, Bahl refused to sign the agreement. Razin and Bahl's already acrimonious relationship ² continued to deteriorate until Razin finally filed his complaint seeking repayment under the note.

Things began to get procedurally complicated just prior to the filing of the complaint. On March 16, 2010, Razin sent a notice of a meeting of the board of managers of Milestone to Bahl and McDermott. The meeting was to be held on March 19, 2010. However, Bahl, through McDermott, responded that he would be unable to attend and requested that a different date be chosen. Bahl also raised objections to Razin's choosing whom to retain as counsel to represent Milestone in Razin's own suit against Milestone, and Bahl called for a vote on the matter by disinterested managers. Despite Bahl's request and objections, Razin went ahead with the meeting on March 19, 2010, and at the meeting, Razin voted to authorize the retention of Norman to represent Milestone in the collection action. Razin asserted his authority to retain Norman based on article VII, section 1 of the operating agreement. Article VII, section 1 provides in relevant part that “[n]otwithstanding any other provision of this Agreement, during the period that any portion of the Razin loan is outstanding, in the event of a disagreement between the Managers regarding any matter affecting the Company, the decision of Razin shall control with respect to such matter....”

Following the meeting, Bahl again raised objections to Razin's actions in voting to retain Norman, arguing that Razin had a conflict of interest. Bahl also informed Razin that the notice for the meeting was insufficient and that Razin was in breach of the operating agreement.

Ignoring Bahl's allegations, Razin proceeded to retain Norman to represent Milestone, and thereafter, Razin and Milestone (represented by Norman) entered into settlement negotiations to resolve the collection action. Eventually, Razin and Milestone drafted a settlement agreement which was contingent upon the trial court's approval.

Meanwhile, Bahl retained McDermott to represent Milestone. McDermott filed an answer and affirmative defenses on Milestone's behalf. Milestone (through McDermott) also asserted a counterclaim premised on an alleged prior breach of the operating agreement by Razin.

Razin and Milestone then filed a joint motion to strike the filings by McDermott and to disqualify McDermott from representing Milestone. In turn, McDermott filed a motion on Milestone's behalf to strike any and all documents filed by Norman and to disqualify Norman from representing Milestone. After a hearing, the trial court ruled that: (1) Razin did not provide reasonable notice of the March 2010 meeting of the board of managers, (2) the meeting did not meet quorum requirements, (3) neither Norman nor McDermott could properly represent Milestone because a majority of the managers (i.e., Razin and Bahl) was required to authorize the retention of counsel, and (4) a custodian was necessary to retain counsel for Milestone and to exercise other limited powers, including breaking a tie vote between Razin and Bahl. The trial court gave Razin and Bahl the opportunity to come to an agreement as to whom should be appointed as a custodian. However, Razin and Bahl could not come to an agreement, and as a result, the trial court appointed a person of the court's own choosing to act as a custodian.

II. ANALYSISA. Jurisdiction

We first write to address a jurisdictional issue raised by McDermott. McDermott has filed a motion to dismiss Razin's appeal, arguing that because the trial court's orders did not grant a right to immediate possession of property or appoint a receiver, the orders were not appealable pursuant to Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii) or (D). McDermott contends that the more appropriate review would be by certiorari.

We acknowledge that certiorari is typically the most appropriate method to obtain review of a disqualification order “because denying a party counsel of his or her choice is a material injury without appellate remedy.” Event Firm, LLC v. Augustin, 985 So.2d 1174, 1175 (Fla. 3d DCA 2008); see also Pinebrook Towne House Ass'n v. C.E. O'Dell & Assocs., 725 So.2d 431, 433 (Fla. 2d DCA 1999).

However, we believe that due to the appointment of the custodian, the orders here fall within the parameter of rule 9.130(a)(3)(D), which allows review of a nonfinal order granting the appointment of a receiver. Although the trial court labeled the appointment as one of a custodian, the reality is that the appointed person could—and most likely will—exercise the same type of authority and powers which are typically given to receivers. For instance, the custodian is not only given the authority to retain counsel, but he is also given the authority to cast a deciding vote on any management or operational decision when Razin and Bahl cannot agree on the particular matter. Given the acrimonious relationship between Razin and Bahl, the allegations that each has made against the other, and their history of being unable to agree on decisions affecting Milestone, it appears almost inevitable that the custodian would be casting tie-breaking votes on a regular basis, thereby effectively managing the business. Furthermore, the custodian's appointment was not limited in time which is an additional reason that the appointment here was really more in the nature of a receiver. We therefore conclude that based on the unusual facts in this case, we have jurisdiction pursuant to rule 9.130(a)(3)(D) over the nonfinal orders disqualifying Norman and McDermott and appointing a custodian.

B. Razin had sole authority to retain counsel pursuant to article VII, section 1.

Article VII, section 1 of the operating agreement clearly indicates that as long as the Razin loan remains outstanding, Razin had controlling authority over any decision affecting Milestone in the event of a disagreement. And pursuant to article II, section 4(D) of the operating agreement, the decision on the retention of counsel to represent Milestone is within the authority of the board of managers. Because there is no dispute that Razin is a manager and that the loan is outstanding, we believe that the parties to the operating agreement—Razin and Bahl—remain bound by it.

Indeed, where there is “an unambiguous contractual provision ..., a trial court cannot give it any other meaning beyond that expressed and must construe the provision in accord with its ordinary meaning.” Emergency Assocs. of Tampa v. Sassano, 664 So.2d 1000, 1003 (Fla. 2d DCA 1995). This is because the contractual language reveals the intent of the parties, and therefore, the plain language controls. See id.

In its order of disqualification, the trial court noted that it was troubled by what appeared to be Razin's conflict of interest in retaining counsel to represent Milestone in defense of Razin's collection action. But even though this scenario does not appear to be an arm's length transaction, the fact remains that Bahl agreed to the...