Schmidt v. Sabow

• Decision Date: 18 August 2021
• Docket Number: 2D20-2370,Case Nos. 2D20-2371
• Citation: 331 So.3d 781
• Parties: Robert E. SCHMIDT, Jr., Appellant, v. John M. SABOW, and Boulder Venture South, LLC, Appellee. Kelly C. Schmidt, Appellant, v. John M. Sabow and Boulder Venture South, LLC, Appellees.
• Court: Florida District Court of Appeals

331 So.3d 781

Robert E. SCHMIDT, Jr., Appellant,

v.John M. SABOW, and Boulder Venture South, LLC, Appellee.

Kelly C. Schmidt, Appellant,

v.John M. Sabow and Boulder Venture South, LLC, Appellees.

Case Nos. 2D20-2371

2D20-2370

District Court of Appeal of Florida, Second District.

August 18, 2021

Marion Hale and Sharon E. Krick of Johnson, Pope, Bokor, Ruppel & Burnes, LLP, Clearwater, for Appellant Robert E. Schmidt, Jr.

Kelli A. Edson of Quarles & Brady, LLP, Tampa, for Appellant Kelly C. Schmidt.

Samuel J. Heller and Marc Julius Wolfson of Heller Law PLLC, St. Petersburg, for Appellees.

STARGEL, Judge.

Robert E. Schmidt, Jr., and Kelly C. Schmidt appeal from the final judgment entered in favor of John M. Sabow, wherein the trial court found that a consent and joinder signed by the Schmidts in their individual capacities constituted a personal guarantee of the obligations under the 2005 Amended and Restated Independent Contractor Agreement entered into by Boulder Ventures South, LLC, and Mr. Sabow. Because this argument fails due to res judicata, the statute of limitations, and the lack of specificity in the consent and joinder which would qualify it as a personal guarantee, we reverse.

Factual Background

Robert Schmidt is a real estate developer who creates different single-purpose limited liability companies for each development. One reason he uses these individual LLCs is to protect his and his wife's personal liability for each development. Robert Schmidt created Boulder Ventures South, LLC, for a shopping center development in Pinellas County. The Schmidts together owned 100% of Boulder Ventures while Robert Schmidt was the manager of Boulder Ventures.

Mr. Sabow and Mr. Schmidt, as manager of Boulder Ventures, signed an Amended and Restated Independent Contractor Agreement (the Agreement) that was effective December 1, 2004. The Agreement defined Mr. Sabow's duties in developing new business and managing day-to-day real estate projects. Additionally, the Agreement described how Mr. Sabow would be compensated and appears to envision compensating Mr. Sabow in the same manner for future developments as the Agreement required Boulder Ventures to pay him. The Agreement granted Mr. Sabow a 30% interest in the net value of a development described as the "Parkside Mall" project.¹ Mr. Sabow attempted to have the Schmidts personally guarantee the terms of the Agreement. Mr. Schmidt refused to sign a personal guarantee, but he and his wife eventually did sign a consent and joinder to the Agreement. The terms of the consent and joinder were as follows:

The undersigned, Robert E. Schmidt, Jr., individually, and Kelly C. Schmidt, individually, hereby join into and acknowledge, agree and consent to the terms and provisions of the Amended and Restated Independent Contractor Agreement dated effective December 1, 2004 by and between Boulder and John M. Sabow, and further agree to be fully bound [sic] all of the terms and provisions thereof.

When asked about the consent and joinder, Mr. Sabow testified: "A personal guarantee would have been better, but yes, this is what I got and this is what I ended up with." Mr. Sabow then admitted that the consent and joinder did not mention anything about the Schmidts paying Mr. Sabow. He then asserted that he signed the Agreement "hoping it would be legally sufficient."

2009 Litigation

Eventually, Robert Schmidt fired Mr. Sabow who then filed a three-count complaint for (i) breach of the Agreement against Boulder Ventures, KB Parkside, LLC (which was another entity owned by the Schmidts), and the Schmidts in their individual capacities; (ii) injunctive relief for the breach of the Agreement; and (iii) a declaratory judgment solely against Boulder Ventures.

Count one alleged that the Schmidts executed a consent and joinder to the Agreement which individually bound them to the Agreement while also alleging the defendants breached the Agreement when they failed to pay Mr. Sabow compensation following his termination. The trial court dismissed count two prior to trial and granted the Schmidts' motion for involuntary dismissal of count one in the final judgment. However, the trial court did grant Mr. Sabow declaratory relief in count three while determining: "[Mr. Sabow] and Boulder Ventures were parties to a contract effective December 1, 2004, that was guaranteed by Defendants Robert and Kelly Schmidt." The court also found that Mr. Sabow was owed $5,230,153.46 under the terms of the Agreement. All of the defendants timely appealed this order.

Mr. Sabow then filed a motion for supplementary relief seeking entry of an order of money damages against each defendant, jointly and severally, for the $5,230,153.46 in awarded damages plus interest. The motion was granted in part and denied in part. The trial court determined that the total amount of compensation Boulder Ventures owed Mr. Sabow including interest was $5,400,238.46, but the trial court only entered the supplemental judgment against Boulder Ventures and did not enter judgment against the Schmidts or KB Parkside, LLC. Boulder Ventures timely appealed this supplemental order; Mr. Sabow failed to file a cross-appeal.

On appeal, this court affirmed the final judgment and supplemental final judgment but remanded "for the limited purpose of having the trial court delete from the findings of fact and conclusions of law the statement that the Schmidts guaranteed the agreement." Boulder Venture S. LLC v. Sabow , 204 So. 3d 114, 116 (Fla. 2d DCA 2016). This court noted that the Schmidts were named as defendants in count one for breach of contract and that count one was resolved in favor of the Schmidts. Id. at 115 n.1. The court went on to note that count one may have placed the guarantee

issue in play because it was brought against the Schmidts individually. Mr. Sabow has not, however, cross-appealed that aspect of the final judgment. Although the trial court declined to award monetary relief against the Schmidts in the supplemental final judgment based at least in part on its belief that their issue was at issue in the appeal, Mr. Sabow has not cross appealed that denial of relief either.

Id.

2015 Litigation

Mr. Sabow then filed the instant litigation while the previous case was pending before this court. In relevant part, the complaint asserted that Boulder Ventures and Mr. Sabow entered into the Agreement and that the Schmidts personally guaranteed the Agreement by virtue of the consent and joinder. Mr. Sabow then asserted that the Schmidts were jointly and severally liable for the amount Boulder Ventures owed him and that each of them had breached the Agreement by failing to pay him. The Schmidts filed multiple motions for summary judgment asserting the action was barred by res judicata, the rule against splitting causes of action, and collateral estoppel. The trial court denied these motions.

During a deposition, Mr. Sabow asserted that the Schmidts breached the Agreement when he was fired in December 2007. As the instant litigation was not commenced until 2015, Mr. Schmidt then filed a motion for summary judgment based on statute of limitations because the breach of contract action was not commenced within five years of the breach. The trial court denied this motion as well.

In its final judgment, the trial court determined that whether the consent and joinder constituted a personal guarantee by the Schmidts was "not properly explored in the 2009 litigation nor was it an issue essential to the findings and judgment [in that litigation]." For this reason, the trial court found collateral estoppel did not bar the claims in the instant litigation. The trial court then denied the Schmidts' res judicata claim because

[i]t is unclear if any evidence or facts necessary to support the claim of personal liability of the Schmidts were introduced at the 2014 trial regarding the 2009 litigation, and to the extent they may have been, they were not resolved by the Court in resolving Count one. However, they are necessary and vital to the Court's finding in the instant case.

The trial court denied the Schmidts' statute of limitations argument by finding the instant case did not accrue until the 2014 final judgment was entered, and therefore, the claims were not barred by the statute of limitations.

The trial court then determined that the consent and joinder as written was unambiguous and clearly evidenced a personal liability by each of the Schmidts in their individual capacity. The trial court found both Schmidts to be individually responsible for Boulder Venture's judgment debt and entered judgment against the Schmidts, jointly and severally, in the amount of $5,400,238.46.

Analysis

The Schmidts challenge the trial court's determination that collateral estoppel, res judicata, and the statute of limitations did not bar Mr. Sabow's claims. Additionally, the Schmidts assert on appeal the trial court erred in determining that the consent and joinder was a personal guarantee, in refusing to allow a set-off for amounts Mr. Sabow owed Boulder Ventures, and in striking the Schmidts' demand for a jury trial. We reverse because the trial court erred in determining res judicata and the statute of limitations did not bar Mr. Sabow's claims in the instant litigation. Furthermore, the trial court erred in determining that the Schmidts agreed to personally guarantee the terms of the Agreement by virtue of signing the consent and joinder. As these issues are dispositive of this appeal, we decline to comment on the remaining issues.

Res Judicata

This court reviews de novo a trial court's decision regarding the application of res judicata to claims for relief. See Campbell v. State , 906 So. 2d 293, 295 (Fla. 2d DCA 2004).

The purpose of the doctrine [of res judicata] is to prevent relitigation of matters and to produce certainty as to individual rights. Four conditions must be met: identity of the thing sued for; identity of the cause of action; identity of parties; and identity of the

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