Opinion
Case No. 6D23-83
06-23-2023
Douglas HANNAH a/k/a Douglas J. Hannah, Appellant, v. MALK HOLDINGS, LLC, Appellee.
Christopher D. Donovan, of Roetzel & Andress, LPA, Naples, for Appellant. Dineen Pashoukos Wasylik, of DPW Legal, Tampa, for Appellee.
Christopher D. Donovan, of Roetzel & Andress, LPA, Naples, for Appellant.
Dineen Pashoukos Wasylik, of DPW Legal, Tampa, for Appellee.
TRAVER, C.J.
Douglas Hannah appeals a final judgment for civil theft and conversion in favor of Malk Holdings, LLC. We affirm the trial court's ruling on conversion because competent, substantial evidence supports it. But we reverse as to civil theft. As a condition precedent to a civil theft proceeding, a would-be plaintiff must send a demand letter to its potential defendant, who then has thirty days to "comply" under the civil theft statute by returning the amount allegedly owed. See § 772.11(1), Fla. Stat. (2018). Here, Hannah unquestionably sent a check drawn on his attorney's trust account, which Malk Holdings received within the statutory time frame. Because Malk Holdings demanded payment in cash or a cash equivalent, the parties contest whether Hannah indeed "complied" with the civil theft statute. But we need not answer this question. Malk Holdings’ conduct upon receiving the full amount it demanded waived any subsequent arguments it might have had about Hannah's compliance with its demand letter. Thus, we conclude that the trial court should have entered a directed verdict on Malk Holdings’ failure to satisfy a condition precedent and Hannah's affirmative defense of payment.
This case was transferred from the Second District Court of Appeal to this Court on January 1, 2023.
Hannah is an investor who specializes in structured investments. This means that he identifies investment opportunities, and then procures investors to raise the necessary capital to pursue them. Dr. Sunil Malkani is Malk Holdings’ primary owner and manager. At the time their relationship soured, Malkani and Hannah had collaborated in more than seventy-five investments.
At issue in this case were two structured investments. The first, Distressed Capital II, LLC ("DCII"), purchased distressed assets, sold them for a profit, and then distributed those profits to its investors. Hannah co-managed DCII and ran its daily operations. DCII had multiple investors, including Malk Holdings. The second, Tamiami Square, involved a real estate purchase. Hannah and Malk Holdings solely participated in this investment, whereby Hannah lent money to a Malk Holdings subsidiary to purchase the property. The parties disputed whether Malk Holdings pledged any collateral to back the Tamiami Square loan. Hannah insisted that he and Malkani had entered into an oral agreement whereby Malk Holdings would collateralize the Tamiami Square loan with the DCII profit distributions. But Malkani did not recall any pledge agreement, and when DCII distributed its next round of profits to everyone but Malk Holdings, he instructed his lawyer to send Hannah two civil theft demands. These thirty-day demands, for a combined $91,347 in cash, issued on June 21, 2018.
At Hannah's direction, his lawyer drafted a check from the law firm's trust account for $91,347 payable to Malk Holdings. On July 2, 2018, Hannah's lawyer sent this check via certified mail to the same Malk Holdings lawyer who sent the civil theft demand letters. On July 5, 2018, the Malk Holdings’ lawyer received the full payment requested, albeit not in cash. But the lawyer said nothing. He did not contact Hannah's lawyer to contest the form of payment. The record is silent whether he told Malkani. But Malkani testified that as of July 11, 2018, he did not know where the check was, which certainly implies that his lawyer did not tell Malkani he had full payment in hand for nearly a week.
The ensuing events are likely irreplicable. Malkani personally called Hannah's lawyer's office on July 11, 2018, and said he had never received a check, suggesting that it might have been sent to the wrong address. At Malkani's direction, a legal assistant put a stop payment on the first check. This assistant offered to wire the funds directly to Malk Holdings that day, but Malkani declined because he did not wish to share his banking information. Instead, Malkani asked for another check, which issued the next day. Malkani then waited nineteen more days—ten days after the expiration of the thirty-day deadline—to try to deposit the check. The check was rejected, not because of a lack of funds, but due to an input error made by the legal assistant. Malkani did not seek to remedy this error. Instead, he filed a bar grievance against Hannah's lawyer and sued Hannah for civil theft and conversion.
Thereafter, Malk Holdings accepted $91,347 from Hannah, subject to its right to pursue its claims against him at trial, including treble damages under the civil theft statute. Before the trial court submitted the matter to the jury, Hannah twice moved for directed verdict, arguing that he had complied with Malk Holdings’ demand letters. He explained that even if he had not strictly followed directions on the payment's form, Malk Holdings waived its right to make this argument by its subsequent actions. Accordingly, Hannah reasoned that the trial court should direct a verdict in his favor on Malk Holdings’ failure to comply with a condition precedent to suit and his affirmative defense of payment. The trial court denied both motions, and the jury returned a verdict in Malk Holdings’ favor for civil theft and conversion. After trebling the $91,347 verdict and setting off the $91,347 Hannah had already paid, the trial court entered a final judgment of $182,964.
We review de novo the trial court's denial of Hannah's motions for directed verdict on Malk Holdings’ civil theft claim. See Christensen v. Bowen , 140 So. 3d 498, 501 (Fla. 2014). We will affirm the trial court's decisions "if any reasonable view of the evidence could sustain a verdict in favor of [Malk Holdings]." See Kopel v. Kopel , 229 So. 3d 812, 819 (Fla. 2017) (quoting Meruelo v. Mark Andrew of Palm Beaches, Ltd. , 12 So. 3d 247, 250 (Fla. 4th DCA 2009) ). We "view the evidence and all inferences of fact in the light most favorable to [Malk Holdings]." See id . (citing Christensen , 140 So. 3d at 501 ).
Before filing a civil theft action, a "person claiming injury must make a written demand for $200 or the treble damage amount of the person liable for damages under this section." § 772.11(1), Fla. Stat. (2018). "If the person to whom a written demand is made complies with such demand within 30 days after receipt of the demand, that person shall be given a written release from further civil liability for the specific act of theft or exploitation by the person making the written demand." Id .
This pre-suit demand is a condition precedent to a civil theft lawsuit. See id. ; see also Cummings v. Warren Henry Motors, Inc. , 648 So. 2d 1230, 1233 (Fla. 4th DCA 1995). Malk Holdings generally alleged it complied with this condition precedent, and Hannah offered a specific and particular denial. See Fla. R. Civ. P. 1.120(c). Therefore, Malk Holdings had the ultimate burden of proof on this point at trial. See Palma v. JPMorgan Chase Bank, N.A. , 208 So. 3d 771, 774–75 (Fla. 5th DCA 2016) ; see also Berg v. Bridle Path Homeowners Ass'n , 809 So. 2d 32, 34 (Fla. 4th DCA 2002) (stating that rule 1.120 "does not relieve the plaintiff from having to prove every element of its entitlement to a judgment against the defendant once the defendant makes a specific denial of a particular element of a claim"). By contrast, payment is an affirmative defense, on which Hannah bore the burden at trial. See Ins. Co. of the South v. Kennedy & Ely Ins., Inc. , 143 So. 2d 199, 201 (Fla. 3d DCA 1962). In either context, the trial court should have granted Hannah's motions for directed verdict.
We note that Malk Holdings does not dispute that it received prompt and full payment of the money it claimed Hannah owed it fifteen days after demand. Indeed, the Malk Holdings lawyer who drafted the demand letter at Malkani's direction testified to receiving the precise amount sought. There is no dispute the original check would have cleared had Malk Holdings deposited it.
No Florida case has discussed what "complies with" means in the context of a pre-suit civil theft demand letter under section 772.11(1). Accordingly, the parties expend significant energy debating whether an attorney's trust fund check "complies with" a demand for cash payment. But we need not resolve this issue based on the unique posture of this case. On these facts, we conclude that Malk Holdings waived its right to argue that Hannah failed to comply with its demand letters. Specifically, after issuing the demands at his client's direction, Malk Holdings’ lawyer accepted Hannah's check and did not tell Malkani about it at all, much less dispute the form of payment he received. Malkani thereafter refused a wire transfer, and then demanded a second check. If Malk Holdings had the right to demand payment in a specific form under the statute, its subsequent conduct waived this right. See Major League Baseball v. Morsani , 790 So. 2d 1071, 1077 n.12 (Fla. 2001) (defining waiver as "voluntary and intentional relinquishment of a known right, or conduct which implies the voluntary and intentional relinquishment of a known right").
We decline, however, to disturb the jury's conversion verdict, which is supported by competent, substantial evidence. See Coba v. Tricam Indus., Inc. , 164 So. 3d 637, 643 (Fla. 2015). The elements of conversion are: 1) a taking of chattels; 2) with intent to exercise ownership over them an ownership inconsistent with the real owner's right of possession. E.g. , W. Yellow Pine Co. v. Stephens , 86 So. 241, 243 (Fla. 1920) ; Utah Power Sys., LLC v. Big Dog II, LLC , 352 So. 3d 504, 508 (Fla. 1st DCA 2022). A conversion may be evidenced by a plaintiff's demand and a defendant's refusal, but proof of these actions is unnecessary when a plaintiff can demonstrate that the unauthorized act constituted a conversion regardless of a demand. See Goodrich v. Malowney , 157 So. 2d 829, 832 (Fla. 2d DCA 1963) (citing Louisville & N.R. Co. v. Citizens’ & Peoples’ Nat'l Bank of Pensacola , 77 So. 104, 105 (Fla. 1917) ). The trial court instructed the jury on this point, and Hannah did not object. Malkani's and Malk Holdings’ lawyer's testimony supported the jury's verdict that no collateral pledge agreement existed, and that Hannah intentionally took Malk Holdings’ DCII distributions, over which Malk Holdings had no independent access or control.
Accordingly, we remand this matter to the trial court for the entry of a directed verdict against Malk Holdings on its civil theft claim. We otherwise affirm.
AFFIRMED in part; REVERSED in part; and REMANDED with directions.
WHITE and MIZE, JJ., concur.