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Filing # 75903091 E-Filed 08/02/2018 03:14:47 PM
IN THE CIRCUIT COURT OF THE 17TH
JUDICIAL CIRCUIT IN AND FOR
BROWARD COUNTY, FLORIDA
YARIV ALIMA,
CASE NO: CACE-16-011606 (07)
Plaintiff,
v.
ATMOS TECHNOLOGY LLC, et al.,
Defendants. /
DEFENDANTS’ JOINT MOTION FOR FEES AND COSTS RESULTING FROM
MISTRIAL
All Defendants (collectively “Defendants”), hereby file their Motion for Fees and Costs
incurred as a result of the mistrial and/or continuance of the trial in this case that occurred as a
result of misconduct by Plaintiff and Plaintiff's counsel, and state:
INTRODUCTION
The Court declared a mistrial on the second day of the jury trial in this case, after Plaintiff
repeatedly insisted upon presenting issues to the jury that were not properly framed in the pleadings
nor included in the parties’ Pretrial Stipulation. The Court determined that these matters could not
be submitted to the jury, and therefore offered Plaintiff a choice between accepting a mistrial and
reframing his pleadings or proceeding without presenting the improper issues to the jury. Plaintiff
selected the former option and a mistrial was declared.
The result of the mistrial is that Plaintiff has effectively received the benefit of an untimely
continuance to correct his mistakes and bring the case to trial a second time, with Defendants
suffering both the substantial fees and expenses relating to the aborted trial proceeding as well as
the prospect of incurring duplicative fees and expenses when the matter is again set for trial. Under
Florida law, it is proper for a party or attorney who causes a mistrial, last-minute continuance, or
other improper delay in the proceedings to be required to compensate the opposing parties for
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*4* FILED: BROWARD COUNTY, FL BRENDA D. FORMAN, CLERK 8/2/2018 3:14:47 PM.****resulting fees and expenses. The Court similarly possesses inherent authority to sanction a party
or attorney for bad faith conduct that prejudices another party. It would be inequitable and unjust
for Plaintiff to receive the benefit of a continuance without compensating Defendants for the
wholly unnecessary expenses they incurred as a result of Plaintiff's misconduct that caused this to
happen mid-trial. Defendants therefore request that this Court require Plaintiff to compensate
Defendants for such fees and expenses in accordance with applicable Florida law.
MATERIAL FACTS
Plaintiff filed his Second Amended Complaint against Defendants on June 5, 2017. That
pleading asserts two claims for damages: a claim for breach of fiduciary duty against
certain defendants (the “Member Defendants”) and a claim for alleged statutory violations
by the remaining defendants (the “Company Defendants”), both of which principally
concern a failure to pay certain alleged distributions of profits to Plaintiff.
The trial on these claims originally was set to proceed on the trial docket for the first quarter
of 2018, but the trial ultimately was scheduled to start on July 16, 2018.
The Parties filed an initial Pretrial Stipulation on March 13, 2018. The Pretrial Stipulation
was consistent with the Second Amended Complaint and confirmed that the claims for
breach of fiduciary duty and statutory violations would be the only claims for damages
presented by Plaintiff at trial.
On July 6, 2018 Plaintiff circulated a draft “Final Pretrial Stipulation,” which again was
consistent with the Second Amended Complaint in the same manner.
On July 9, 2018 — one week before trial — Plaintiff for the first time proposed revising the
Pretrial Stipulation to add a new “issue” to the list of matters to be resolved at trial, which
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Attorneys-at-Lawasserted that the Member Defendants’ “misappropriated” or stole Plaintiff's ownership
interest in the Company Defendants.
Defendant promptly objected on the basis that Plaintiff's Second Amended Complaint does
not contain a claim for conversion or misappropriation of the membership interest and that
the parties have stipulated that Plaintiff remains a 25% owner of the Company Defendants
to date.
Plaintiff voluntarily removed the proposed revision in response to Defendants’ objection,
and parties filed a Final Pretrial Stipulation in a form that did not list any alleged
misappropriation or conversion of Plaintiff's membership interest as an issue to be resolved
at trial.
When the Court later advised the parties that it wished to resolve any preliminary
evidentiary issues before trial, Defendants filed a motion seeking to exclude any reference
to a claim for misappropriation or conversion of Plaintiff's membership interest as
contemplated in Plaintiff's proposed revision to the Stipulation. The Motion to Exclude,
which provides further detail regarding the aforementioned facts regarding this issue, was
filed July 12, 2018.
Plaintiff responded by filing a Response on July 13, 2018, confirming that Plaintiff did in
fact intend to argue at trial that Plaintiff's membership interest at trial had been
misappropriated or stolen and that the value of such interest would be sought as damages.
. Upon review of the filings, this Court sent correspondence to the parties on Friday, July
13, 2018, ruling that “the case will be tried on the pleadings and stipulation for trial”
consistent with Defendants’ Motion and advising the parties to “prepare their arguments
accordingly.” See July 13, 2018 Correspondence, attached hereto as Exhibit “2”.
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. On July 15, 2018, Plainti
. Defendants and their counsel accordingly spent the remainder of July 13, 2018 and the
entire weekend preparing for trial in accordance with the Court’s ruling that the issues
would be limited to those in the pleadings and Stipulation.
urished the Court with a Verdict Form that did not include
any reference to conversion or misappropriation of Plaintiff's membership interests nor
any reference to a valuation of such interest by the jury. A copy of the Verdict Form is
attached hereto as Exhibit “3”.
At no time did Plaintiff's various Complaints, the parties’ filed Pretrial Stipulations, or the
Verdict Form contain any claim for conversion of Plaintiff's membership interests nor
reflect that the jury would be asked to determine or award Plaintiff the alleged value of his
ownership interests.
. However, notwithstanding these facts, Plaintiff's counsel confirmed on the morning of July
16, 2018, at the outset of trial, that Plaintiff intended to persist in asserting that his
membership interest had been misappropriated or converted and seeking damages for the
alleged value of that interest.
. The Court again ruled that the trial would be conducted solely on the basis of the pleadings
and Pretrial Stipulation and instructed Plaintiff's counsel to refrain from straying from the
matters framed in those documents. Representative rulings and statements by the Court
included:
I made a tuling Friday, and I’m making a ruling now. You are limited
to the issues that are framed in the stipulation to which stipulation, and
what’s pled in the Complaint, and how you phrased the damages
question on the verdict form.
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Attorneys-at-Law16.
17.
18.
THE COURT: Mr. Lamb, whatever is in the Complaint and whatever
is in the stipulation, you are allowed to argue it. If it’s in there, you
can argue it. If it’s not, you can’t argue it.
MR. LAMB: I understand.
THE COURT: That's as simple as I can put it.
MR. LAMB: Thank you.
See Excerpts of Trial Transcripts, attached hereto as Exhibit “1”, at pg. 10 and 13.
The trial then commenced, during which Plaintiff's counsel asserted in opening argument
that Plaintiff had been deprived of his membership interest and indicated that Plaintiff
would be seeking damages for the value of the interest, over objection by Defendants.
On the second day of trial, Plaintiff sought to present testimony of an expert witness
specifically regarding the alleged value of Plaintiff's membership interest, for the purpose
of asserting that such value constituted damages for alleged misappropriation or conversion
of Plaintiff's interests.
The Court once again admonished Plaintiff that this issue was not properly framed in the
pleadings, the Pretrial Stipulation, or the Verdict Form, and described Plaintiff's repeated
attempts to improperly raise the issue as “classic blind siding the opponent.” See Ex. “1”,
Trial Excerpts, pg. 18; see also Ex. “1”, Trial Excerpts, pg. 128 (“Honestly . . . [do not see
one single word in the verdict form [or] one single word in the stipulation about valuation
of his 25 percent interest.”).
. The Court further indicated that the Court did not believe the issue regarding the value of
Plaintiff's interest in the Company Defendants was a proper issue for resolution by a jury
in either event, but rather constituted a matter of equity for resolution by the Court. See Ex.
“1”, Trial Excerpts, pg. 26-27.
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Attorneys-at-Law20. Following argument on these issues, the Court provided Plaintiff with the choice of either
accepting a mistrial in order to reframe his pleadings or proceeding with the trial without
the improper issue. See Ex. “1”, Trial Excerpts, pg. 19 and 27-28.
21. Plaintiff chose the option of a mistrial to attempt to reframe the pleadings to address the
disputed issues, and the jury was discharged shortly thereafter. Ex. “1”, Trial Excerpts, pg.
30.
22. Defendants incurred substantial fees and expenses as a result of the trial proceeding that
was rendered moot by Plaintiff's misconduct, including but not limited to attorneys” fees
for trial preparation, jury selection, and the trial itself; costs of support staff and trial
technology vendors; and other expenses.
ARGUMENT
Florida law authorizes the Court to award a party its fees and expenses arising from a
mistrial where the mistrial was caused by the opposing party’s or opposing counsel’s misconduct.
See Pub. Health Tr. of Miami-Dade Cty. v. Denson, 189 So. 3d 1013, 1015 (Fla. 3d DCA 2016)
(trial court properly awarded fees for “preparation for and conduct of the first trial” after party
caused mistrial through improper discussion with witness in presence of juror); Prater_v.
Comprehensive Health Ctr.. LLC, 185 So. 3d 559, 560-61 (Fla. 3d DCA 2016) (proper remedy
for untimely disclosure of evidence at time of jury selection was either to prohibit use of the
evidence at trial or declare a mistrial accompanied by payment of fees and costs). Florida law
similarly provides that it is proper for a Court to require payment of fees and expenses when a
party obtains an untimely continuance of trial after the opposing party has already incurred trial-
related expenses. See Dep’t of Children & Families v. M.G., 838 So. 2d 703, 703-04 (Fla. 5 DCA
2003) (trial court properly awarded trial-preparation fees to party after opposing party obtained
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Attorneys-at-Lawcontinuance on the eve of trial); Ice Legal, P.A. v. U.S. Bank Nat. Ass’n, 182 So, 3d 858, 859 (Fla.
4th DCA 2016) (affirming award of costs as sanctions for “last-minute continuance” of trial).
Finally, Florida law acknowledges that a Court possesses inherent authority to award fees and
expenses as a sanction when a party or attorney engages in bad faith conduct that prejudices an
opposing party. See Moakley v. Smallwood, 826 So. 2d 221, 223-24 (Fla. 2002) (discussing
development of inherent authority to enter bad faith sanctions and finding such sanctions
applicable to attorneys as well as parties). Each of these principles — in addition to basic concepts
of fairness and equity — require that Plaintiff compensate Defendants for the unnecessary fees and
expenses they occurred in preparing for and litigating the trial proceeding that was untimely
terminated due to Plaintiffs misconduct and Plaintiff's affirmative decision to choose a mistrial
rather than proceed without raising the improper issues.
By Plaintiff's own admission, Plaintiff allegedly has possessed the intention to argue that
his membership interest was misappropriated or converted since at least March 21, 2018. See
Plaintiffs Response to Motion to Exclude, dated July 13, 2018 (alleging that the matter was raised
in an expert report on that date). At that time, Plaintiff had already entered into the Initial Pretrial
Stipulation, which stipulated that Plaintiff continued to hold his 25% membership interest and did
not reflect any claim for misappropriation or conversion, consistent with Plaintiffs Second
Amended Complaint. At no time between March 21, 2018 and the commencement of trial on July
16, 2018, did Plaintiff make any attempt whatsoever to amend his pleadings to include a claim for
misappropriation or conversion or otherwise seek payment of the alleged value of Plaintiff's
membership interest. Plaintiff similarly made no attempt to add this issue to the Pretrial Stipulation
until July 9, 2019 — a mere 7 days before trial — but Plaintiff then removed that issue from the draft
Stipulation upon Defendant’s objection.
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Attorneys-at-LawHad Plaintiff wished to present such a claim at trial, Plaintiffs proper course of action
would have been to seek leave to amend his pleadings as soon as possible, request a timely
continuance of the trial calendar, and provide the parties and the Court with sufficient time to
litigate and resolve any issues regarding the potential additional claims prior to a rescheduled trial
date. For example, as is reflected in the Court’s various rulings and comments at trial, significant
questions exist as to matters such as: whether this type of damages is available at all given that it
is stipulated that Plaintiff remains a 25% owner of the Company Defendants, whether Plaintiff can
seek such damages under whichever claims or damages theories Plaintiff ultimately elects to plead,
and whether any alleged valuation of the interests could be submitted to a jury rather than to the
Court as an equitable question. See, e.g., Ex. “1”, Trial Excerpts, pg. 28 (indicating that valuation
issue cannot be resolved until the parties provide related legal briefing) and 26-27 (disputing
Plaintiff's contention that valuation-related damages may be obtained under a jury claim for breach
of fiduciary duty). Instead, Plaintiff declined to take any such action, disregarded multiple rulings
by the Court determining that these issues were not properly framed for trial, and persisted in
pursuing such issues until the Court was forced to halt the proceedings. At that point Plaintiff
voluntarily accepted a mistrial, negating weeks of trial preparation by the parties and the Court
and effectively receiving the benefit of a mid-trial continuance such that he can correct his mistakes
and try again.
Where a party or attorney causes a mistrial or untimely continuance, it is proper for the
Court to order the party and/or attorney to compensate the other parties for resulting expenses. See
Denson, 189 So. 3d at 1015; Prater, 185 So. 3d at 560-61; Dep’t of Children & Families, 838 So.
2d at 703-04; Ice Legal, P.A., 182 So. 3d at 859. Here, the misconduct by Plaintiff and his attorney
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Attorneys-at-Lawin repeatedly attempting to raise improper issues in contradiction to the Court’s rulings, the
pleadings, the Pretrial Stipulation, and the Verdict Form, directly caused the mistrial.
The relief Plaintiff obtained when voluntarily accepting the “mistrial” option also is
indistinguishable from a continuance, as the trial will now be rescheduled for a later date with
Plaintiff receiving the benefit of additional time to reframe his pleadings and prepare arguments
regarding the issues that were not properly raised prior to the trial. While Defendants acknowledge
that Florida courts prefer to avoid barring parties from litigating claims on the merits, and therefore
take the position that issues of unfair prejudice or “surprise” generally should be cured through a
continuance rather than an outright preclusion of untimely or improperly raised issues, the courts
have repeatedly held that such a continuance should be conditioned, where appropriate, on
payment of legal fees and other expenses arising from the continuance. See Carib Ocean Shipping.
Inc. v. Armas, 854 So. 2d 234, 237 (Fla. 2d DCA 2003) (proper remedy for prejudice due to matters
constituting “surprise” is to grant a continuance “conditioned, if appropriate, upon the [movant’s]
payment of any costs and expenses incurred by the [opposing party] because of the delay”); Prater,
185 So. 3d at 560-61 (proper remedy for untimely disclosure of evidence at time of jury selection
was either to prohibit use of the evidence at trial or declare a mistrial accompanied by payment of
fees and costs); Flea Mkt., U.S.A., Inc. v. Cohen, 490 So. 2d 210, 210 (Fla. 3d DCA 1986) (“We
find no abuse of discretion in the order under review, which conditioned granting the appellant's
eve-of-trial motion for continuance upon the payment of the appellees’ attorney's fees caused by
the delay.”). Because Plaintiff chose to take the Court’s offer of an opportunity to end the trial and
“reframe” his pleadings such that the improper issues could potentially be raised at a later date, it
is only fair that Plaintiff be required to compensate Defendants for the expenses they incurred as
a result of Plaintiffs actions as contemplated by these authorities. See Ex. “1”, Trial Excerpts, pg.
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Attorneys-at-Law19 and 27-28 (offering Plaintiff option of accepting mistrial to reframe pleadings or continue with
trial with improper issues severed or otherwise removed).
This Court also has inherent authority to award fees and other expenses as sanctions for
bad faith conduct of Plaintiff and Plaintiffs attorney. See Moakley v. Smallwood, 826 So. 2d 221,
223-24 (Fla. 2002). Here, Plaintiff and Plaintiffs attorney knowingly and willfully pursued
matters at trial despite express Court Orders requiring them to refrain from doing so and despite
full knowledge that those matters were outside the scope of the pleadings, the Pretrial Stipulation,
and the Verdict Form. Even accepting as true Plaintiff's argument that it has intended to raise these
issues for months and had previously mentioned them in Court or through discovery, Plaintiff and
Plaintiff's counsel knowingly and willfully failed to make any attempt to formally present those
matters as actual claims and issues for trial such that the parties and the Court could have timely
resolved any related issues prior to trial and avoided the need for a mistrial or continuance. Instead,
Plaintiff consistently rested on his prior pleadings and participated in the preparation of Pretrial
Stipulations and a Verdict Form that excluded these alleged issues, resulting in the Court’s Order
confirming that the parties should prepare for trial consistent with those documents. Defendants
have incurred attorneys’ fees, costs, and expenses as a direct result of Plaintiff’s and Plaintiff's
counsel’s bad faith conduct in the form of the substantial expenses incurred in preparing for and
litigating the first two days of trial — including several hours of costs relating to jury selection and
voir dire — and numerous other trial expenses.
Defendants therefore respectfully request that this Court determine that Defendants are
entitled to compensation for their reasonable attorneys’ fees and other expenses arising from (1)
Plaintiff's untimely receipt of a continuance to reframe his pleadings and address improperly raised
issues, and/or (2) Plaintiff's and Plaintiff's counsel’s bad faith conduct resulting in the mistrial.
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Attorneys-at-LawDefendants request that the Court thereafter schedule a separate hearing to determine the
reasonable amount of such fees and expenses, which Defendants will separately brief.
WHEREFORE, Defendants respectfully request that this Court enter an Order requiring
Plaintiff and/or Plaintiff's counsel to compensate Defendants for their reasonable fees, costs, and
expenses incurred as a result of the mistrial and grant any further relief the Court deems just and
proper.
Respectfully submitted,
HACKLEMAN, OLIVE & JUDD, P.A. WATERWAY BLACK P.A.
2426 East Las Olas Boulevard 1401 E. Broward Blvd., Suite 204
Fort Lauderdale, FL 33301 Fort Lauderdale, FL 33301
(954) 334-2250 Telephone: (954) 320-6220
(954) 334-2259 (fax) Facsimile: (954) 320-6005
/s/ Benjamin E. Olive /s/ Kenneth W. Waterway
Benjamin E. Olive, Esquire Kenneth W. Waterway, Esq.
bolive@hojlaw.com kww@waterwayblack.com
Fla. Bar No.: 387983 Fla. Bar No.: 0994235
Matthew C. Sanchez, Esq.
msanchez@hojlaw.com
Fla. Bar No.: 72748
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on August 2, 2018, a true and correct copy of the foregoing was
served via Florida’s E-Filing Portal to: Ken Waterway, Esq., Waterway Black, 1401 E. Broward
Blvd., Victoria Park Centre, Suite 204, Fort Lauderdale, FL 33301 at kww@waterwayblack.com;
Harold Patricoff, Esq., Shutts & Bowen, LLP, 200 South Biscayne Blvd., Suite 4100, Miami, FL
33131-4328 at Hpatricoff@shutts.com; and to Adam J. Lamb, Esq., Hall, Lamb And Hall, P.A.,
2665 South Bayshore Drive - Penthouse One, Miami, Florida 33131 at alamb@hlhlawfirm.com.
By: — /s/ Benjamin E. Olive
Benjamin E. Olive
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Honorable Judge Jack Tuter
July 16, 2018
IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT
IN AND FOR BROWARD COUNTY, FLORIDA
CASE NO.: CACE 16-011606 (07)
YARIV ALIMA,
Plaintiff,
-vs-
ATMOS TECHNOLOGY LLC, ATMOS
INVESTMENTS LLC, CESY GROUP LLC,
ELH PRODUCTS, LLC ATMOS NATION
LLC, SMJ MARKETING, INC., IMPORT
NATION, LLC, CHARLY BENASSAYAG,
P.A., ELI EROCH, SHLOMI BITON,
and CHARLY BENASSAYAG,
Defendants.
JURY TRIAL BEFORE THE HONORABLE JUDGE JACK TUTER
EXCERPT OF PROCEEDINGS
Pages 1 through 31
Monday, July 16, 2018
Tuesday, July 17, 2018
BROWARD COUNTY COURTHOUSE, COURTROOM 15150
201 Southeast 6th Street
Fort Lauderdale, Florida
Stenographically Reported By:
CHRISTINE HOPWOOD, FPR
Florida Professional Reporter
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these exhibits, that's 50 minutes lost just marking
exhibits. So we'll deal with any objections outside
the presence of the Jury, so we can keep the trial
moving.
This is going to be in your guys way, isn't it,
this podium?
MR. OLIVE: We prefer it not be there. Yes.
THE COURT: I don't know where were going to
move it. We can move it up there, I guess. It's
going to block somebody no matter what.
Are we ready to go?
MR. OLIVE: The only thing is, Your Honor, we
had e-mailed back and forth. I think you ruled on
Friday by e-mail that you had indicated regarding
limiting Mr. Lamb's opening and his arguments to
pleadings and the pretrial stip, specifically the
stipulation that his client remains and always has
been a member precluding him from --
THE COURT: Well, you all are limited now
because you've agreed upon a verdict form, so
whatever is on that verdict form is what you guys
should be talking about and arguing about, nothing
more, nothing less.
MR. OLIVE: The only reason I mention it is you
said in your e-mail on Friday -- not trying to be
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argumentative with you, but just reminding you --
that you wanted us to put this on the record.
THE COURT: Okay, you're right. Well, you
filed a document, so it's in there, right?
MR. OLIVE: We filed --
THE COURT: You filed your motion?
MR. OLIVE: We filed the motion. And I think
your order read in one sentence: The parties are
advised the Court reviewed the motion and replied the
case will be tried on the pleadings and stipulation
for trial.
They should prepare their arguments accordingly
which we have. And I mention it, Your Honor, because
I don't want in opening here these issues brought in
front of the Jury that are contrary to the pretrial
stip specifically that Mr. Alima claims that his
membership interest was stolen which we had
stipulated in the stip that he's still a 25 percent
member.
THE COURT: Is there anything on the verdict
form about that question?
MR. LAMB: No, Your Honor but --
THE COURT: Then why are you arguing it? You
can't argue it if it's not on the verdict form.
MR. OLIVE: Thank you, Your Honor.
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THE COURT: It's not an issue.
MR. LAMB: Your Honor, this is an important
issue that we need to clear up before the trial
starts.
We believe that our issues are in the
pleadings, and the pleadings state in Section G of
Count 1 -- which is the breach of fiduciary duty
count. We tried to keep the verdict form simple.
The jury instructions are going to layout what the
Jury needs to do.
And it says that part of the breach of
fiduciary duty is that they breached their fiduciary
duty by excluding Alima in bad faith from the
businesses after he left for Israel in March 2016 as
part of the scheme to misappropriate his membership
interest income derived therefrom for themselves
without compensation to Alima, and then we asked for
damages.
THE COURT: Isn't that Question 1?
Do you find that the Member Defendants breached
their fiduciary duty to the Plaintiff?
MR. LAMB: Yes, Your Honor. We plead it. We
have an expert that testified.
THE COURT: You can argue exactly what's in the
verdict form, and you can argue exactly what's in the
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Complaint. How's that? Whatever that is, okay?
MR. SANCHEZ: Your Honor, may we just say one
thing that we believe is in the motion -- your
ruling. Your Honor, the motion specifically is
addressing the allegation that his membership
interest was converted and misappropriated and his
damages on the conversion and misappropriated theory,
that cause of action, those elements --
THE COURT: Then what are you worried about?
It's not on the verdict form. It's not on the
verdict form. I don't see misappropriation anywhere
on the verdict form.
MR. SANCHEZ: I believe he's going to say that
on the record.
THE COURT: So he can state whatever he wants
to state. It's not on the verdict form. I'm going
to tell the Jury, you guys can say whatever you want
to say for an opening argument, but if it's not on
the verdict form, that's all you can argue is what's
on the verdict form at the end of the case.
MR. LAMB: But it's part of our damages that
they've affectively misappropriated his membership.
THE COURT: Okay. I warned you all Friday, I
was not going to get involved in the minutia of every
single argument in this case because we are not going
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to finish this case if that's what's going to happen.
As I just made a ruling -- I made a ruling
Friday, and I'm making a ruling now. You are limited
to the issues that are framed in the stipulation to
which stipulation, and what's pled in the Complaint,
and how you phrased the damages question on the
verdict form. That's what you're limited to.
What you say is a different thing. Okay.
That's what you're limited to. So you can phrase it
anyway you want to phrase it. And I'll tell the
Jury, as I said before, whatever the lawyers say is
not evidence in the case. They should be bound by
the evidence in the case.
I don't have anything to read them as to what
this case is about except for this impartial
statement of facts. Do you want me to read all of
this? This goes on for two full pages. Do you want
me to read all of this?
MR. OLIVE: Or we can just do openings, Your
Honor, whatever.
THE COURT: Well, I've got to read them some
preliminaries, so --
MR. OLIVE: Your Honor, just to close a little,
and I'll be quiet about it. The reason we had sent
that on Friday is, we don't want Mr. Lamb talking
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about millions of dollars worth of damages because
his membership interest is stolen.
He's stipulated he still owns 25 percent.
Mr. Lamb in the last month of this case has brought
this issue that's not in the pleading. I don't want
the Jury to hear consulting fees, etcetera. You've
heard that for years, Your Honor.
What I don't want him to say, oh, and my client
no longer is a 25 percent interest holder, and our
accountant says that's worth three million dollars.
That's not --
THE COURT: The stipulating fact says the
Plaintiff is a 25 percent member -- is a 25 percent
member of each of the defendant companies. So what
are we arguing about?
MR. OLIVE: That's what --
MR. LAMB: Because, Your Honor, we allege that
they've --
MR. OLIVE: Mr. Lamb, let me just finish, and I
promise I'll let you finish.
MR. LAMB: Okay.
MR. OLIVE: It's not in the -- it's not in the
Complaint. It's not -- it's stipulated to the
contrary. I agree we have a real disagreement as to
consulting fees, salaries, and tax issues that people
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are going to talk about.
That's different than saying you converted and
stole my membership interest, and pay me millions of
dollars. That is not in his Complaint. That's not
in -- it's contrary to the stipulation.
Respectfully, I don't want the Jury to hear it
because it's not part of what we've been defending.
THE COURT: All right.
MR. LAMB: Your Honor, they have been defending
it. It's pled in our Complaint that they
misappropriated -- that they've excluded him, and
they -- the scheme to misappropriate his membership
interest.
THE COURT: Mr. Lamb, as I said, you can argue
what's in the Complaint and what's in the
stipulation. That's what you can argue. Okay. If
it's not in there, don't argue it.
MR. LAMB: Thank you.
THE COURT: All right. Are they ready?
THE BAILIFF: Yes.
THE COURT: Bring the jury in.
MR. LAMB: Your Honor, I just -- we believe
it's in the Complaint. We've litigated it. They
didn't file a motion for summary judgement on this
issue to say you own shares, so you can't bring this
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had:)
claim. There's a Fourth District --
THE COURT: Mr. Lamb, whatever is in the
Complaint and whatever is in the stipulation, you are
allowed to argue it. If it's in there, you can argue
it. If it's not, you can't argue it.
MR. LAMB: I understand.
THE COURT: That's as simple as I can put it.
MR. LAMB: Thank you.
ek
(The following excerpt of the proceedings were
MR. OLIVE: Your Honor, can we address one
issue before the Jury comes in?
THE COURT: Yes.
MR. OLIVE: Your Honor, you may recall, who's
next is Mr. Shechter, the expert.
THE COURT: Yes.
MR. OLIVE: We had a motion that we would like
to renew to limit Mr. Shechter's testimony.
THE COURT: All right. I'm going to look at
his testimony, but I'm inclined to let him testify as
you've lead me to believe he's going to testify, take
those issues under advisement pending the jury's
decision so --
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MR. OLIVE: Okay. Your Honor, just if I could
just on the record one other -- two other issues:
One, specifically as it relates to the pretrial
stipulation that Mr. Alima retained the 25 percent
interest requesting that there not be testimony as to
the perceived value of 25 percent and asking the Jury
because it's not in the pleadings. It's not in the
pretrial stip.
THE COURT: I don't get that part of this
lawsuit. I have to tell everybody that I don't get
that part of the lawsuit. He's a 25 percent owner.
You're wanting me to dissolve the corporation.
There's been no testimony as to the valuation as of
the date that he was allegedly --
MR. LAMB: That's what Mr. Shechter's going to
provide.
THE COURT: Okay. Well, I don't think that
that's proper to do that in this context, sir. If
you're going to bring him in to tell us what the
value of the corporation was then, I don't see that
framed in the pleadings anywhere.
MR. LAMB: Your Honor --
MR. OLIVE: Your Honor, that's our point. Let
me just finish before you respond. That's why we're
asking Your Honor for Mr. Shechter to get on and say
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it's worth millions and millions, 25 percent because
it's not in the pleadings and it's contrary to the
pretrial stip.
Certainly, the meat and potatoes of his
testimony as set forth in his report is this
consulting fee. He thinks they're one thing. The
other side says another. That's a disputed issue the
Jury's going to determine. He certainly has the
right -- each expert is going to give their opinion
on that.
As it relates to something, a conversion or a
misappropriation is not in the pleadings and is
contrary to the pretrial stip. Your Honor, that is
not --
THE COURT: Okay. Are you saying that the
Defendants have done valuations also of what the --
MR. LAMB: Yes.
THE COURT: Sir, I'm not talking to you.
MR. LAMB: Oh, I thought you were asking me.
THE COURT: Are you saying the Defendants have
already prepared valuations as well?
MR. OLIVE: Only because at the 11-hour
Mr. Shechter came up at his depo with these huge
numbers. It's not part of the pleadings. It's not
consented to. It's, as I indicated, directly
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contrary to the parties --
THE COURT: I didn't think under the LL statute
that you could ask for a jury trial on that, that
that was a question for the judge to resolve. So lI
don't even know if that's an issue I can submit to
the Jury.
MR. SANCHEZ: Your Honor, if you're referring
to the dissolution, just for the record, the verdict
form only has interrogatories for the dissolution.
Just so Your Honor's clear, the parties that are
being dissolved are not the same parties that there's
an alleged valuation --
THE COURT: You're right about one thing
because I've looked at this verdict form about 10
times. There's not a single question on there about
the valuation of this company.
MR. LAMB: It's part of our damages, Your
Honor.
THE COURT: Mr. Lamb, tell me where on this
proposed verdict form or -- let me look in the
stipulation again -- where there's anything in the
stipulation about testimony from an expert on the
valuation of this company. Show me those places.
MR. LAMB: Your Honor, Section J of the
stipulation, the Plaintiff's issues, it says:
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Whether the Member Defendants excluded or froze out
Alima in bad faith from the businesses after he left
for Israel in March 2016 as part of a scheme to
misappropriate his membership interest and income
derived therefrom for themselves without compensation
to Alima.
THE COURT: There's not a single thing in there
about the valuation.
MR. LAMB: And then Letter T says: The amount
of damages suffered by Alima as a result of the
companies --
THE COURT: Where in your proposed agreed upon
verdict form is there anything about the valuation of
the company?
MR. LAMB: It's in the damages. It's part of
our damages. It's always been part of our damages.
THE COURT: You've got a breach of fiduciary
duty claim, and you've got an evidence -- a question
about paid distributions.
MR. LAMB: No, Your Honor. We also have a
claim -- we have an allegation in the Complaint
that's been there for a long time that says: Whether
the members excluded or froze him out after he left
for Israel as part of a scheme to misappropriate his
membership interest.
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THE COURT: Where in the verdict form is there
a question that you're posing to the Jury about the
value of the company.
MR. LAMB: It's part of our damages. If we
want to break it up into two categories, value and
distribution, we can do that. And we are
following --
THE COURT: Sir -- sir, this is classic blind
siding the opponent doing this. This is classic,
sir. Okay.
MR. LAMB: Your Honor, it's really not classic.
If you would give me one minute to explain. We have
it in a motion. We have it in our response to their
motion in detail, and I'd like to take two seconds to
go through it.
THE COURT: I'm not asking about a motion that
was filed whenever it was filed. I'm asking you:
What is in the stipulation that is ready for trial,
and what is in the verdict form that was agreed to.
MR. LAMB: Your Honor, you're saying that we
blind sided them. We gave them an expert report on
March 21st in accordance with the deadline. Those
were part of the damages in the expert report.
THE COURT: So what? What is in the verdict
form that you agreed to, and what is on the
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stipulation where valuation of the company was an
issue.
MR. LAMB: It's part of our damages for breach
of fiduciary duty. And we have the Acoustic
Innovations verses Schafer Fourth District case that
we're relying on because we allege that --
THE COURT: I think what I'm going to do, sir,
is just declare a mistrial because I think this is
grossly unfair. So you have a choice, whichever one
you do, I'm not going to permit this testimony. It's
not in the proposed verdict form that was agreed to.
It's just made up now based on your argument.
MR. LAMB: Your Honor --
THE COURT: Mr. Lamb, I'm the judge. I get to
talk. I don't interrupt you or I try not to. And
it's not in the stipulation. So what is your
preference, me declare a mistrial right now and let's
all go home. You can reframe these pleadings and
start all over again.
MR. LAMB: I would just like to make my record
and tell you what our side of this is. And then I
can just confer with the client about the mistrial.
THE COURT: Do whatever you want to do, sir.
MR. LAMB: So Your Honor, we pled that they
excluded Alima in bad faith from the businesses which
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was part of a scheme to misappropriate membership
interest. The expert reports were due on the 21st of
March. We timely complied with that. We had the
business valuation in there, and we identified the
damages.
In April you asked me in open court what our
damages were on this Count 1. And I explained in
open court that it was 2.7 million dollars were part
of the damages because it inappropriately --
improperly froze an amount of the businesses and
misappropriated interest, and we wanted the
distribution.
In May in response to a Motion for Summary
Judgement, we had a motion that that is part of our
damages. We cited in the motion eight or nine times
that we said that that is part of our claim that they
summarily excluded and froze him out of the
businesses affectively misappropriating his
membership interests.
And Mr. Alima filed an affidavit. And in the
affidavit --
THE COURT: Joe, if they're standing out there,
put them back in the jury room.
THE BAILIFF: I put them back already.
THE COURT: Okay, thank you.
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MR. LAMB: In Mr. Alima's affidavit --
THE COURT: Everybody can be seated, please.
MR. LAMB: And I didn't know we were going to
argue this right now, so I apologize. I just have to
find Mr. Alima's affidavit.
In Mr. Alima's affidavit filed with a Motion
for Summary Judgement, he said: Through their
actions in freezing me out, the Member Defendants
have misappropriated my membership interest and
income derived therefrom without compensation to me.
THE COURT: Where is it in the Florida
Dissolution Statute that you get a jury trial?
MR. LAMB: This isn't a dissolution statute
claim. We have a claim for judicial dissolution of
the Florida companies, but we're not asking for that.
This damage is not part of that claim.
It's part of our breach of fiduciary duty
claim. It's in Count 1. And it's been in Count 1
the entire time. So they got an expert report on
March 21st disclosing the damages. On April 3rd I
sent --
THE COURT: Your argument to me, sir, is that
under a breach of fiduciary count, you can assert a
valuation of the limited liability company. That's
the argument you're advancing to me?
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MR. LAMB: That freezing an amount, they
affectively misappropriated his interest.
THE COURT: Sir, you're asking me to permit the
expert to give an opinion on valuation?
MR. LAMB: Yes, Your Honor.
THE COURT: What date did you pick for
valuation?
MR. LAMB: March 31st, 2016, the date he was
excluded.
THE COURT: Okay. Show me a case that says
you're entitled to a jury trial for that.
MR. LAMB: Sir, here, it's a breach of
fiduciary duty claim.
THE COURT: It's not a breach of fiduciary duty
claim, sir. So you can show me any case you want of
breach of fiduciary duty --
MR. LAMB: Yeah. Just hold on one second, Your
Honor. I have a highlighted version.
MR. OLIVE: Are you going to show Your Honor
the Acoustics case?
MR. LAMB: Yes.
MR. OLIVE: Okay. I can tell Your Honor why
that has nothing to do with this.
THE COURT: I still don't know why this isn't
in the pleadings -- I mean, in the stipulation.
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MR. OLIVE: It's not in the pleadings either,
Your Honor.
THE COURT: I don't know what's in the
pleadings, but right now I'm bound by the pretrial
stipulation not the pleadings -- what's in the
pretrial stipulation.
MR. OLIVE: He's specifically agreed and
stipulated he's a 25 percent owner. So now to come
and say, oh, at the same time, I need you to pay me
out.
THE COURT: Well, as I said earlier, I don't
understand the defense's side of that. You're saying
he's a 25 percent owner; yet, from whatever
circumstances you're not paying him for whatever the
share of that company would have been at the time of
the --
MR. OLIVE: Your Honor, respectfully, you
haven't heard the defenses.
THE COURT: Well, I know now, but you've
admitted he's a 25 percent owner. I understand the
arguments about dissolution and not working and all
that but --
MR. SANCHEZ: Your Honor, just on that point,
the distinction is that it's been stipulated the
companies are manager managed rather than member
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managed.
So the things he's been excluded from are
consistent with not being a manager. In Florida and
Nevada when they're manager managed the managers and
trust the day-to-day operations and all those things.
And as we all know there's a difference between
distributions and profits for members and payments to
managers. And we're all fighting as to what those
payments are.
MR. OLIVE: And Your Honor, the manager manage
component of this which is critical is also
stipulated in the pretrial stip.
MR. LAMB: So in this Schafer case --
THE COURT: Look, I'm not going to do this.
I'm not going to do it. I'm telling you right now
Mr. Lamb, I am not going to do this.
I'm not going up on the record on this under
the status of the way these pleadings are framed.
I'll go upstairs and read your case. There's a
substantial likelihood here, sir, I'll declare a
mistrial when I get back. We'll be in recess for
15 minutes.
(A recess was taken from 1:15 p.m. to 1:35
(The following proceedings were had outside the
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presence of the Jury:)
THE COURT: All right. What's the defense have
to say about this issue?
MR. OLIVE: Your Honor, we had filed a motion
to preclude this a couple of days before the trial.
I'm going to let Mr. Sanchez just quickly review it
regarding our position and the timeliness or as we
should say the untimeliness --
THE COURT: I need your response, please. I
don't have it.
MR. OLIVE: Okay. Your Honor, may I approach?
THE COURT: Yes.
MR. OLIVE: Mr. Lamb, I'm handing the July 12th
motion that you replied to, Defendant's Motion to
Exclude Reference to the Conversion of Membership
Interest from trial.
MR. LAMB: Did you ask for our response?
MR. OLIVE: He just asked the defense's
position, and I handed our position --
MR. LAMB: Oh, I thought he asked for the
response.
THE COURT: This brief, I've read in terms of
the misappropriation issue which we discussed on
Monday. It's not necessarily framed specifically to
the valuation issue.
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On the valuation issue, Mr. Lamb, is that an
equitable claim or a legal claim, sir?
MR. LAMB: It's part of the damages for breach
of fiduciary duty.
THE COURT: Mr. Lamb, please, you really
frustrate me when you don't answer my questions. I
asked you a specific question.
Is the claim for valuation of this alleged
25 percent interest a claim in equity or a claim in
law?
MR. LAMB: I'm trying to answer. It's part of
-- it's Count 1 of fiduciary duty, part of the
damages. It's not a separate claim for valuation.
THE COURT: The statute of the cases that
discuss breach of fiduciary duties in the context of
limited liability corporations specifically speak to
the issue of whether you can get a jury trial ona
breach of fiduciary duty as to one which is either
equitable or one which is legal.
So if your claim is that you can obtain damages
on a valuation through a breach of fiduciary claim, I
disagree because it's a claim in equity. The
valuation of the ownership interest of these four
persons is not a legal issue. It's an equitable
issue. And almost uniformly in business cases, those
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are left to the judge to decide, not to the jury.
So what you're asking me to do is in a breach
of fiduciary count send to the jury what is
realistically an equity claim, not a legal claim. So
you're not even entitled to a jury trial on that much
less submitting it to the jury.
So if you've got some law that says I'm wrong,
I'm going to have to look up this same issue because
this has come up time and time again with lawyers
trying to assert issues for juries in LLC cases and
the law is restricted. You don't get a jury trial in
everything in an LLC break up. That's why the
statute's written the way it is.
There are some things such as conversion and
other factual disputes that I can send by special
interrogatory, but I've never seen a case where the
jury is asked to evaluate the valuation of damages in
a breach of fiduciary duty when it pertains to the
valuation of the company.
And just because the case law says specifically
-- I went and looked up these cases. Just because
you claim it's damages doesn't mean that you're
entitled to a jury trial.
So here's what I'm going to do. You have two
choices, sir. I don't believe this is part of a jury
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trial claim. I will sever this claim out on
valuation and try that case separately in whatever
way we have to try it or I'll declare a mistrial,
whichever one you want to do.
MR. LAMB: Can I confer with my client for five
minutes?
THE COURT: Sure, of course.
MR. LAMB: So it's mistrial or sever the claim.
THE COURT: Sever the claim on valuation, and
it will be tried separately when both sides can brief
it and advise whether that is something you're
entitled to a jury trial on or not. And if necessary
if I'm convinced, seek another jury at another time,
so that this issue is not something that I have to
worry about on appeal for two years, and this whole
case comes crashing back to me so -- all right, so
take five minutes, sir.
MR. LAMB: It's not an option for you to decide
that issue in this trial?
THE COURT: Not without the briefing.
Honestly, Adam, I do not see one single w
Preview
Filing # 75903091 E-Filed 08/02/2018 03:14:47 PM IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA YARIV ALIMA, CASE NO: CACE-16-011606 (07) Plaintiff, v. ATMOS TECHNOLOGY LLC, et al., Defendants. / DEFENDANTS’ JOINT MOTION FOR FEES AND COSTS RESULTING FROM MISTRIAL All Defendants (collectively “Defendants”), hereby file their Motion for Fees and Costs incurred as a result of the mistrial and/or continuance of the trial in this case that occurred as a result of misconduct by Plaintiff and Plaintiff's counsel, and state: INTRODUCTION The Court declared a mistrial on the second day of the jury trial in this case, after Plaintiff repeatedly insisted upon presenting issues to the jury that were not properly framed in the pleadings nor included in the parties’ Pretrial Stipulation. The Court determined that these matters could not be submitted to the jury, and therefore offered Plaintiff a choice between accepting a mistrial and reframing his pleadings or proceeding without presenting the improper issues to the jury. Plaintiff selected the former option and a mistrial was declared. The result of the mistrial is that Plaintiff has effectively received the benefit of an untimely continuance to correct his mistakes and bring the case to trial a second time, with Defendants suffering both the substantial fees and expenses relating to the aborted trial proceeding as well as the prospect of incurring duplicative fees and expenses when the matter is again set for trial. Under Florida law, it is proper for a party or attorney who causes a mistrial, last-minute continuance, or other improper delay in the proceedings to be required to compensate the opposing parties for 1 Hackleman, Olive & Judd, P.A. Attorneys-at-Law *4* FILED: BROWARD COUNTY, FL BRENDA D. FORMAN, CLERK 8/2/2018 3:14:47 PM.****resulting fees and expenses. The Court similarly possesses inherent authority to sanction a party or attorney for bad faith conduct that prejudices another party. It would be inequitable and unjust for Plaintiff to receive the benefit of a continuance without compensating Defendants for the wholly unnecessary expenses they incurred as a result of Plaintiff's misconduct that caused this to happen mid-trial. Defendants therefore request that this Court require Plaintiff to compensate Defendants for such fees and expenses in accordance with applicable Florida law. MATERIAL FACTS Plaintiff filed his Second Amended Complaint against Defendants on June 5, 2017. That pleading asserts two claims for damages: a claim for breach of fiduciary duty against certain defendants (the “Member Defendants”) and a claim for alleged statutory violations by the remaining defendants (the “Company Defendants”), both of which principally concern a failure to pay certain alleged distributions of profits to Plaintiff. The trial on these claims originally was set to proceed on the trial docket for the first quarter of 2018, but the trial ultimately was scheduled to start on July 16, 2018. The Parties filed an initial Pretrial Stipulation on March 13, 2018. The Pretrial Stipulation was consistent with the Second Amended Complaint and confirmed that the claims for breach of fiduciary duty and statutory violations would be the only claims for damages presented by Plaintiff at trial. On July 6, 2018 Plaintiff circulated a draft “Final Pretrial Stipulation,” which again was consistent with the Second Amended Complaint in the same manner. On July 9, 2018 — one week before trial — Plaintiff for the first time proposed revising the Pretrial Stipulation to add a new “issue” to the list of matters to be resolved at trial, which 5 Hackleman, Olive & Judd, P.A. Attorneys-at-Lawasserted that the Member Defendants’ “misappropriated” or stole Plaintiff's ownership interest in the Company Defendants. Defendant promptly objected on the basis that Plaintiff's Second Amended Complaint does not contain a claim for conversion or misappropriation of the membership interest and that the parties have stipulated that Plaintiff remains a 25% owner of the Company Defendants to date. Plaintiff voluntarily removed the proposed revision in response to Defendants’ objection, and parties filed a Final Pretrial Stipulation in a form that did not list any alleged misappropriation or conversion of Plaintiff's membership interest as an issue to be resolved at trial. When the Court later advised the parties that it wished to resolve any preliminary evidentiary issues before trial, Defendants filed a motion seeking to exclude any reference to a claim for misappropriation or conversion of Plaintiff's membership interest as contemplated in Plaintiff's proposed revision to the Stipulation. The Motion to Exclude, which provides further detail regarding the aforementioned facts regarding this issue, was filed July 12, 2018. Plaintiff responded by filing a Response on July 13, 2018, confirming that Plaintiff did in fact intend to argue at trial that Plaintiff's membership interest at trial had been misappropriated or stolen and that the value of such interest would be sought as damages. . Upon review of the filings, this Court sent correspondence to the parties on Friday, July 13, 2018, ruling that “the case will be tried on the pleadings and stipulation for trial” consistent with Defendants’ Motion and advising the parties to “prepare their arguments accordingly.” See July 13, 2018 Correspondence, attached hereto as Exhibit “2”. 3 Hackleman, Olive & Judd, P.A. Attorneys-at-Law13. . On July 15, 2018, Plainti . Defendants and their counsel accordingly spent the remainder of July 13, 2018 and the entire weekend preparing for trial in accordance with the Court’s ruling that the issues would be limited to those in the pleadings and Stipulation. urished the Court with a Verdict Form that did not include any reference to conversion or misappropriation of Plaintiff's membership interests nor any reference to a valuation of such interest by the jury. A copy of the Verdict Form is attached hereto as Exhibit “3”. At no time did Plaintiff's various Complaints, the parties’ filed Pretrial Stipulations, or the Verdict Form contain any claim for conversion of Plaintiff's membership interests nor reflect that the jury would be asked to determine or award Plaintiff the alleged value of his ownership interests. . However, notwithstanding these facts, Plaintiff's counsel confirmed on the morning of July 16, 2018, at the outset of trial, that Plaintiff intended to persist in asserting that his membership interest had been misappropriated or converted and seeking damages for the alleged value of that interest. . The Court again ruled that the trial would be conducted solely on the basis of the pleadings and Pretrial Stipulation and instructed Plaintiff's counsel to refrain from straying from the matters framed in those documents. Representative rulings and statements by the Court included: I made a tuling Friday, and I’m making a ruling now. You are limited to the issues that are framed in the stipulation to which stipulation, and what’s pled in the Complaint, and how you phrased the damages question on the verdict form. 4 Hackleman, Olive & Judd, P.A. Attorneys-at-Law16. 17. 18. THE COURT: Mr. Lamb, whatever is in the Complaint and whatever is in the stipulation, you are allowed to argue it. If it’s in there, you can argue it. If it’s not, you can’t argue it. MR. LAMB: I understand. THE COURT: That's as simple as I can put it. MR. LAMB: Thank you. See Excerpts of Trial Transcripts, attached hereto as Exhibit “1”, at pg. 10 and 13. The trial then commenced, during which Plaintiff's counsel asserted in opening argument that Plaintiff had been deprived of his membership interest and indicated that Plaintiff would be seeking damages for the value of the interest, over objection by Defendants. On the second day of trial, Plaintiff sought to present testimony of an expert witness specifically regarding the alleged value of Plaintiff's membership interest, for the purpose of asserting that such value constituted damages for alleged misappropriation or conversion of Plaintiff's interests. The Court once again admonished Plaintiff that this issue was not properly framed in the pleadings, the Pretrial Stipulation, or the Verdict Form, and described Plaintiff's repeated attempts to improperly raise the issue as “classic blind siding the opponent.” See Ex. “1”, Trial Excerpts, pg. 18; see also Ex. “1”, Trial Excerpts, pg. 128 (“Honestly . . . [do not see one single word in the verdict form [or] one single word in the stipulation about valuation of his 25 percent interest.”). . The Court further indicated that the Court did not believe the issue regarding the value of Plaintiff's interest in the Company Defendants was a proper issue for resolution by a jury in either event, but rather constituted a matter of equity for resolution by the Court. See Ex. “1”, Trial Excerpts, pg. 26-27. 5 Hackleman, Olive & Judd, P.A. Attorneys-at-Law20. Following argument on these issues, the Court provided Plaintiff with the choice of either accepting a mistrial in order to reframe his pleadings or proceeding with the trial without the improper issue. See Ex. “1”, Trial Excerpts, pg. 19 and 27-28. 21. Plaintiff chose the option of a mistrial to attempt to reframe the pleadings to address the disputed issues, and the jury was discharged shortly thereafter. Ex. “1”, Trial Excerpts, pg. 30. 22. Defendants incurred substantial fees and expenses as a result of the trial proceeding that was rendered moot by Plaintiff's misconduct, including but not limited to attorneys” fees for trial preparation, jury selection, and the trial itself; costs of support staff and trial technology vendors; and other expenses. ARGUMENT Florida law authorizes the Court to award a party its fees and expenses arising from a mistrial where the mistrial was caused by the opposing party’s or opposing counsel’s misconduct. See Pub. Health Tr. of Miami-Dade Cty. v. Denson, 189 So. 3d 1013, 1015 (Fla. 3d DCA 2016) (trial court properly awarded fees for “preparation for and conduct of the first trial” after party caused mistrial through improper discussion with witness in presence of juror); Prater_v. Comprehensive Health Ctr.. LLC, 185 So. 3d 559, 560-61 (Fla. 3d DCA 2016) (proper remedy for untimely disclosure of evidence at time of jury selection was either to prohibit use of the evidence at trial or declare a mistrial accompanied by payment of fees and costs). Florida law similarly provides that it is proper for a Court to require payment of fees and expenses when a party obtains an untimely continuance of trial after the opposing party has already incurred trial- related expenses. See Dep’t of Children & Families v. M.G., 838 So. 2d 703, 703-04 (Fla. 5 DCA 2003) (trial court properly awarded trial-preparation fees to party after opposing party obtained 6 Hackleman, Olive & Judd, P.A. Attorneys-at-Lawcontinuance on the eve of trial); Ice Legal, P.A. v. U.S. Bank Nat. Ass’n, 182 So, 3d 858, 859 (Fla. 4th DCA 2016) (affirming award of costs as sanctions for “last-minute continuance” of trial). Finally, Florida law acknowledges that a Court possesses inherent authority to award fees and expenses as a sanction when a party or attorney engages in bad faith conduct that prejudices an opposing party. See Moakley v. Smallwood, 826 So. 2d 221, 223-24 (Fla. 2002) (discussing development of inherent authority to enter bad faith sanctions and finding such sanctions applicable to attorneys as well as parties). Each of these principles — in addition to basic concepts of fairness and equity — require that Plaintiff compensate Defendants for the unnecessary fees and expenses they occurred in preparing for and litigating the trial proceeding that was untimely terminated due to Plaintiffs misconduct and Plaintiff's affirmative decision to choose a mistrial rather than proceed without raising the improper issues. By Plaintiff's own admission, Plaintiff allegedly has possessed the intention to argue that his membership interest was misappropriated or converted since at least March 21, 2018. See Plaintiffs Response to Motion to Exclude, dated July 13, 2018 (alleging that the matter was raised in an expert report on that date). At that time, Plaintiff had already entered into the Initial Pretrial Stipulation, which stipulated that Plaintiff continued to hold his 25% membership interest and did not reflect any claim for misappropriation or conversion, consistent with Plaintiffs Second Amended Complaint. At no time between March 21, 2018 and the commencement of trial on July 16, 2018, did Plaintiff make any attempt whatsoever to amend his pleadings to include a claim for misappropriation or conversion or otherwise seek payment of the alleged value of Plaintiff's membership interest. Plaintiff similarly made no attempt to add this issue to the Pretrial Stipulation until July 9, 2019 — a mere 7 days before trial — but Plaintiff then removed that issue from the draft Stipulation upon Defendant’s objection. 7 Hackleman, Olive & Judd, P.A. Attorneys-at-LawHad Plaintiff wished to present such a claim at trial, Plaintiffs proper course of action would have been to seek leave to amend his pleadings as soon as possible, request a timely continuance of the trial calendar, and provide the parties and the Court with sufficient time to litigate and resolve any issues regarding the potential additional claims prior to a rescheduled trial date. For example, as is reflected in the Court’s various rulings and comments at trial, significant questions exist as to matters such as: whether this type of damages is available at all given that it is stipulated that Plaintiff remains a 25% owner of the Company Defendants, whether Plaintiff can seek such damages under whichever claims or damages theories Plaintiff ultimately elects to plead, and whether any alleged valuation of the interests could be submitted to a jury rather than to the Court as an equitable question. See, e.g., Ex. “1”, Trial Excerpts, pg. 28 (indicating that valuation issue cannot be resolved until the parties provide related legal briefing) and 26-27 (disputing Plaintiff's contention that valuation-related damages may be obtained under a jury claim for breach of fiduciary duty). Instead, Plaintiff declined to take any such action, disregarded multiple rulings by the Court determining that these issues were not properly framed for trial, and persisted in pursuing such issues until the Court was forced to halt the proceedings. At that point Plaintiff voluntarily accepted a mistrial, negating weeks of trial preparation by the parties and the Court and effectively receiving the benefit of a mid-trial continuance such that he can correct his mistakes and try again. Where a party or attorney causes a mistrial or untimely continuance, it is proper for the Court to order the party and/or attorney to compensate the other parties for resulting expenses. See Denson, 189 So. 3d at 1015; Prater, 185 So. 3d at 560-61; Dep’t of Children & Families, 838 So. 2d at 703-04; Ice Legal, P.A., 182 So. 3d at 859. Here, the misconduct by Plaintiff and his attorney 8 Hackleman, Olive & Judd, P.A. Attorneys-at-Lawin repeatedly attempting to raise improper issues in contradiction to the Court’s rulings, the pleadings, the Pretrial Stipulation, and the Verdict Form, directly caused the mistrial. The relief Plaintiff obtained when voluntarily accepting the “mistrial” option also is indistinguishable from a continuance, as the trial will now be rescheduled for a later date with Plaintiff receiving the benefit of additional time to reframe his pleadings and prepare arguments regarding the issues that were not properly raised prior to the trial. While Defendants acknowledge that Florida courts prefer to avoid barring parties from litigating claims on the merits, and therefore take the position that issues of unfair prejudice or “surprise” generally should be cured through a continuance rather than an outright preclusion of untimely or improperly raised issues, the courts have repeatedly held that such a continuance should be conditioned, where appropriate, on payment of legal fees and other expenses arising from the continuance. See Carib Ocean Shipping. Inc. v. Armas, 854 So. 2d 234, 237 (Fla. 2d DCA 2003) (proper remedy for prejudice due to matters constituting “surprise” is to grant a continuance “conditioned, if appropriate, upon the [movant’s] payment of any costs and expenses incurred by the [opposing party] because of the delay”); Prater, 185 So. 3d at 560-61 (proper remedy for untimely disclosure of evidence at time of jury selection was either to prohibit use of the evidence at trial or declare a mistrial accompanied by payment of fees and costs); Flea Mkt., U.S.A., Inc. v. Cohen, 490 So. 2d 210, 210 (Fla. 3d DCA 1986) (“We find no abuse of discretion in the order under review, which conditioned granting the appellant's eve-of-trial motion for continuance upon the payment of the appellees’ attorney's fees caused by the delay.”). Because Plaintiff chose to take the Court’s offer of an opportunity to end the trial and “reframe” his pleadings such that the improper issues could potentially be raised at a later date, it is only fair that Plaintiff be required to compensate Defendants for the expenses they incurred as a result of Plaintiffs actions as contemplated by these authorities. See Ex. “1”, Trial Excerpts, pg. 9 Hackleman, Olive & Judd, P.A. Attorneys-at-Law19 and 27-28 (offering Plaintiff option of accepting mistrial to reframe pleadings or continue with trial with improper issues severed or otherwise removed). This Court also has inherent authority to award fees and other expenses as sanctions for bad faith conduct of Plaintiff and Plaintiffs attorney. See Moakley v. Smallwood, 826 So. 2d 221, 223-24 (Fla. 2002). Here, Plaintiff and Plaintiffs attorney knowingly and willfully pursued matters at trial despite express Court Orders requiring them to refrain from doing so and despite full knowledge that those matters were outside the scope of the pleadings, the Pretrial Stipulation, and the Verdict Form. Even accepting as true Plaintiff's argument that it has intended to raise these issues for months and had previously mentioned them in Court or through discovery, Plaintiff and Plaintiff's counsel knowingly and willfully failed to make any attempt to formally present those matters as actual claims and issues for trial such that the parties and the Court could have timely resolved any related issues prior to trial and avoided the need for a mistrial or continuance. Instead, Plaintiff consistently rested on his prior pleadings and participated in the preparation of Pretrial Stipulations and a Verdict Form that excluded these alleged issues, resulting in the Court’s Order confirming that the parties should prepare for trial consistent with those documents. Defendants have incurred attorneys’ fees, costs, and expenses as a direct result of Plaintiff’s and Plaintiff's counsel’s bad faith conduct in the form of the substantial expenses incurred in preparing for and litigating the first two days of trial — including several hours of costs relating to jury selection and voir dire — and numerous other trial expenses. Defendants therefore respectfully request that this Court determine that Defendants are entitled to compensation for their reasonable attorneys’ fees and other expenses arising from (1) Plaintiff's untimely receipt of a continuance to reframe his pleadings and address improperly raised issues, and/or (2) Plaintiff's and Plaintiff's counsel’s bad faith conduct resulting in the mistrial. 10 Hackleman, Olive & Judd, P.A. Attorneys-at-LawDefendants request that the Court thereafter schedule a separate hearing to determine the reasonable amount of such fees and expenses, which Defendants will separately brief. WHEREFORE, Defendants respectfully request that this Court enter an Order requiring Plaintiff and/or Plaintiff's counsel to compensate Defendants for their reasonable fees, costs, and expenses incurred as a result of the mistrial and grant any further relief the Court deems just and proper. Respectfully submitted, HACKLEMAN, OLIVE & JUDD, P.A. WATERWAY BLACK P.A. 2426 East Las Olas Boulevard 1401 E. Broward Blvd., Suite 204 Fort Lauderdale, FL 33301 Fort Lauderdale, FL 33301 (954) 334-2250 Telephone: (954) 320-6220 (954) 334-2259 (fax) Facsimile: (954) 320-6005 /s/ Benjamin E. Olive /s/ Kenneth W. Waterway Benjamin E. Olive, Esquire Kenneth W. Waterway, Esq. bolive@hojlaw.com kww@waterwayblack.com Fla. Bar No.: 387983 Fla. Bar No.: 0994235 Matthew C. Sanchez, Esq. msanchez@hojlaw.com Fla. Bar No.: 72748 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on August 2, 2018, a true and correct copy of the foregoing was served via Florida’s E-Filing Portal to: Ken Waterway, Esq., Waterway Black, 1401 E. Broward Blvd., Victoria Park Centre, Suite 204, Fort Lauderdale, FL 33301 at kww@waterwayblack.com; Harold Patricoff, Esq., Shutts & Bowen, LLP, 200 South Biscayne Blvd., Suite 4100, Miami, FL 33131-4328 at Hpatricoff@shutts.com; and to Adam J. Lamb, Esq., Hall, Lamb And Hall, P.A., 2665 South Bayshore Drive - Penthouse One, Miami, Florida 33131 at alamb@hlhlawfirm.com. By: — /s/ Benjamin E. Olive Benjamin E. Olive 11 Hackleman, Olive & Judd, P.A. Attorneys-at-Law10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE NO.: CACE 16-011606 (07) YARIV ALIMA, Plaintiff, -vs- ATMOS TECHNOLOGY LLC, ATMOS INVESTMENTS LLC, CESY GROUP LLC, ELH PRODUCTS, LLC ATMOS NATION LLC, SMJ MARKETING, INC., IMPORT NATION, LLC, CHARLY BENASSAYAG, P.A., ELI EROCH, SHLOMI BITON, and CHARLY BENASSAYAG, Defendants. JURY TRIAL BEFORE THE HONORABLE JUDGE JACK TUTER EXCERPT OF PROCEEDINGS Pages 1 through 31 Monday, July 16, 2018 Tuesday, July 17, 2018 BROWARD COUNTY COURTHOUSE, COURTROOM 15150 201 Southeast 6th Street Fort Lauderdale, Florida Stenographically Reported By: CHRISTINE HOPWOOD, FPR Florida Professional Reporter U.S. LEGAL SUPPORT EXHIBIT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 these exhibits, that's 50 minutes lost just marking exhibits. So we'll deal with any objections outside the presence of the Jury, so we can keep the trial moving. This is going to be in your guys way, isn't it, this podium? MR. OLIVE: We prefer it not be there. Yes. THE COURT: I don't know where were going to move it. We can move it up there, I guess. It's going to block somebody no matter what. Are we ready to go? MR. OLIVE: The only thing is, Your Honor, we had e-mailed back and forth. I think you ruled on Friday by e-mail that you had indicated regarding limiting Mr. Lamb's opening and his arguments to pleadings and the pretrial stip, specifically the stipulation that his client remains and always has been a member precluding him from -- THE COURT: Well, you all are limited now because you've agreed upon a verdict form, so whatever is on that verdict form is what you guys should be talking about and arguing about, nothing more, nothing less. MR. OLIVE: The only reason I mention it is you said in your e-mail on Friday -- not trying to be U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 argumentative with you, but just reminding you -- that you wanted us to put this on the record. THE COURT: Okay, you're right. Well, you filed a document, so it's in there, right? MR. OLIVE: We filed -- THE COURT: You filed your motion? MR. OLIVE: We filed the motion. And I think your order read in one sentence: The parties are advised the Court reviewed the motion and replied the case will be tried on the pleadings and stipulation for trial. They should prepare their arguments accordingly which we have. And I mention it, Your Honor, because I don't want in opening here these issues brought in front of the Jury that are contrary to the pretrial stip specifically that Mr. Alima claims that his membership interest was stolen which we had stipulated in the stip that he's still a 25 percent member. THE COURT: Is there anything on the verdict form about that question? MR. LAMB: No, Your Honor but -- THE COURT: Then why are you arguing it? You can't argue it if it's not on the verdict form. MR. OLIVE: Thank you, Your Honor. U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 THE COURT: It's not an issue. MR. LAMB: Your Honor, this is an important issue that we need to clear up before the trial starts. We believe that our issues are in the pleadings, and the pleadings state in Section G of Count 1 -- which is the breach of fiduciary duty count. We tried to keep the verdict form simple. The jury instructions are going to layout what the Jury needs to do. And it says that part of the breach of fiduciary duty is that they breached their fiduciary duty by excluding Alima in bad faith from the businesses after he left for Israel in March 2016 as part of the scheme to misappropriate his membership interest income derived therefrom for themselves without compensation to Alima, and then we asked for damages. THE COURT: Isn't that Question 1? Do you find that the Member Defendants breached their fiduciary duty to the Plaintiff? MR. LAMB: Yes, Your Honor. We plead it. We have an expert that testified. THE COURT: You can argue exactly what's in the verdict form, and you can argue exactly what's in the U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 Complaint. How's that? Whatever that is, okay? MR. SANCHEZ: Your Honor, may we just say one thing that we believe is in the motion -- your ruling. Your Honor, the motion specifically is addressing the allegation that his membership interest was converted and misappropriated and his damages on the conversion and misappropriated theory, that cause of action, those elements -- THE COURT: Then what are you worried about? It's not on the verdict form. It's not on the verdict form. I don't see misappropriation anywhere on the verdict form. MR. SANCHEZ: I believe he's going to say that on the record. THE COURT: So he can state whatever he wants to state. It's not on the verdict form. I'm going to tell the Jury, you guys can say whatever you want to say for an opening argument, but if it's not on the verdict form, that's all you can argue is what's on the verdict form at the end of the case. MR. LAMB: But it's part of our damages that they've affectively misappropriated his membership. THE COURT: Okay. I warned you all Friday, I was not going to get involved in the minutia of every single argument in this case because we are not going U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 10 to finish this case if that's what's going to happen. As I just made a ruling -- I made a ruling Friday, and I'm making a ruling now. You are limited to the issues that are framed in the stipulation to which stipulation, and what's pled in the Complaint, and how you phrased the damages question on the verdict form. That's what you're limited to. What you say is a different thing. Okay. That's what you're limited to. So you can phrase it anyway you want to phrase it. And I'll tell the Jury, as I said before, whatever the lawyers say is not evidence in the case. They should be bound by the evidence in the case. I don't have anything to read them as to what this case is about except for this impartial statement of facts. Do you want me to read all of this? This goes on for two full pages. Do you want me to read all of this? MR. OLIVE: Or we can just do openings, Your Honor, whatever. THE COURT: Well, I've got to read them some preliminaries, so -- MR. OLIVE: Your Honor, just to close a little, and I'll be quiet about it. The reason we had sent that on Friday is, we don't want Mr. Lamb talking U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 11 about millions of dollars worth of damages because his membership interest is stolen. He's stipulated he still owns 25 percent. Mr. Lamb in the last month of this case has brought this issue that's not in the pleading. I don't want the Jury to hear consulting fees, etcetera. You've heard that for years, Your Honor. What I don't want him to say, oh, and my client no longer is a 25 percent interest holder, and our accountant says that's worth three million dollars. That's not -- THE COURT: The stipulating fact says the Plaintiff is a 25 percent member -- is a 25 percent member of each of the defendant companies. So what are we arguing about? MR. OLIVE: That's what -- MR. LAMB: Because, Your Honor, we allege that they've -- MR. OLIVE: Mr. Lamb, let me just finish, and I promise I'll let you finish. MR. LAMB: Okay. MR. OLIVE: It's not in the -- it's not in the Complaint. It's not -- it's stipulated to the contrary. I agree we have a real disagreement as to consulting fees, salaries, and tax issues that people U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 12 are going to talk about. That's different than saying you converted and stole my membership interest, and pay me millions of dollars. That is not in his Complaint. That's not in -- it's contrary to the stipulation. Respectfully, I don't want the Jury to hear it because it's not part of what we've been defending. THE COURT: All right. MR. LAMB: Your Honor, they have been defending it. It's pled in our Complaint that they misappropriated -- that they've excluded him, and they -- the scheme to misappropriate his membership interest. THE COURT: Mr. Lamb, as I said, you can argue what's in the Complaint and what's in the stipulation. That's what you can argue. Okay. If it's not in there, don't argue it. MR. LAMB: Thank you. THE COURT: All right. Are they ready? THE BAILIFF: Yes. THE COURT: Bring the jury in. MR. LAMB: Your Honor, I just -- we believe it's in the Complaint. We've litigated it. They didn't file a motion for summary judgement on this issue to say you own shares, so you can't bring this U.S. LEGAL SUPPORT www.uslegalsupport.com10 il 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 13 had:) claim. There's a Fourth District -- THE COURT: Mr. Lamb, whatever is in the Complaint and whatever is in the stipulation, you are allowed to argue it. If it's in there, you can argue it. If it's not, you can't argue it. MR. LAMB: I understand. THE COURT: That's as simple as I can put it. MR. LAMB: Thank you. ek (The following excerpt of the proceedings were MR. OLIVE: Your Honor, can we address one issue before the Jury comes in? THE COURT: Yes. MR. OLIVE: Your Honor, you may recall, who's next is Mr. Shechter, the expert. THE COURT: Yes. MR. OLIVE: We had a motion that we would like to renew to limit Mr. Shechter's testimony. THE COURT: All right. I'm going to look at his testimony, but I'm inclined to let him testify as you've lead me to believe he's going to testify, take those issues under advisement pending the jury's decision so -- U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 14 MR. OLIVE: Okay. Your Honor, just if I could just on the record one other -- two other issues: One, specifically as it relates to the pretrial stipulation that Mr. Alima retained the 25 percent interest requesting that there not be testimony as to the perceived value of 25 percent and asking the Jury because it's not in the pleadings. It's not in the pretrial stip. THE COURT: I don't get that part of this lawsuit. I have to tell everybody that I don't get that part of the lawsuit. He's a 25 percent owner. You're wanting me to dissolve the corporation. There's been no testimony as to the valuation as of the date that he was allegedly -- MR. LAMB: That's what Mr. Shechter's going to provide. THE COURT: Okay. Well, I don't think that that's proper to do that in this context, sir. If you're going to bring him in to tell us what the value of the corporation was then, I don't see that framed in the pleadings anywhere. MR. LAMB: Your Honor -- MR. OLIVE: Your Honor, that's our point. Let me just finish before you respond. That's why we're asking Your Honor for Mr. Shechter to get on and say U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 15 it's worth millions and millions, 25 percent because it's not in the pleadings and it's contrary to the pretrial stip. Certainly, the meat and potatoes of his testimony as set forth in his report is this consulting fee. He thinks they're one thing. The other side says another. That's a disputed issue the Jury's going to determine. He certainly has the right -- each expert is going to give their opinion on that. As it relates to something, a conversion or a misappropriation is not in the pleadings and is contrary to the pretrial stip. Your Honor, that is not -- THE COURT: Okay. Are you saying that the Defendants have done valuations also of what the -- MR. LAMB: Yes. THE COURT: Sir, I'm not talking to you. MR. LAMB: Oh, I thought you were asking me. THE COURT: Are you saying the Defendants have already prepared valuations as well? MR. OLIVE: Only because at the 11-hour Mr. Shechter came up at his depo with these huge numbers. It's not part of the pleadings. It's not consented to. It's, as I indicated, directly U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 16 contrary to the parties -- THE COURT: I didn't think under the LL statute that you could ask for a jury trial on that, that that was a question for the judge to resolve. So lI don't even know if that's an issue I can submit to the Jury. MR. SANCHEZ: Your Honor, if you're referring to the dissolution, just for the record, the verdict form only has interrogatories for the dissolution. Just so Your Honor's clear, the parties that are being dissolved are not the same parties that there's an alleged valuation -- THE COURT: You're right about one thing because I've looked at this verdict form about 10 times. There's not a single question on there about the valuation of this company. MR. LAMB: It's part of our damages, Your Honor. THE COURT: Mr. Lamb, tell me where on this proposed verdict form or -- let me look in the stipulation again -- where there's anything in the stipulation about testimony from an expert on the valuation of this company. Show me those places. MR. LAMB: Your Honor, Section J of the stipulation, the Plaintiff's issues, it says: U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 17 Whether the Member Defendants excluded or froze out Alima in bad faith from the businesses after he left for Israel in March 2016 as part of a scheme to misappropriate his membership interest and income derived therefrom for themselves without compensation to Alima. THE COURT: There's not a single thing in there about the valuation. MR. LAMB: And then Letter T says: The amount of damages suffered by Alima as a result of the companies -- THE COURT: Where in your proposed agreed upon verdict form is there anything about the valuation of the company? MR. LAMB: It's in the damages. It's part of our damages. It's always been part of our damages. THE COURT: You've got a breach of fiduciary duty claim, and you've got an evidence -- a question about paid distributions. MR. LAMB: No, Your Honor. We also have a claim -- we have an allegation in the Complaint that's been there for a long time that says: Whether the members excluded or froze him out after he left for Israel as part of a scheme to misappropriate his membership interest. U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 18 THE COURT: Where in the verdict form is there a question that you're posing to the Jury about the value of the company. MR. LAMB: It's part of our damages. If we want to break it up into two categories, value and distribution, we can do that. And we are following -- THE COURT: Sir -- sir, this is classic blind siding the opponent doing this. This is classic, sir. Okay. MR. LAMB: Your Honor, it's really not classic. If you would give me one minute to explain. We have it in a motion. We have it in our response to their motion in detail, and I'd like to take two seconds to go through it. THE COURT: I'm not asking about a motion that was filed whenever it was filed. I'm asking you: What is in the stipulation that is ready for trial, and what is in the verdict form that was agreed to. MR. LAMB: Your Honor, you're saying that we blind sided them. We gave them an expert report on March 21st in accordance with the deadline. Those were part of the damages in the expert report. THE COURT: So what? What is in the verdict form that you agreed to, and what is on the U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 19 stipulation where valuation of the company was an issue. MR. LAMB: It's part of our damages for breach of fiduciary duty. And we have the Acoustic Innovations verses Schafer Fourth District case that we're relying on because we allege that -- THE COURT: I think what I'm going to do, sir, is just declare a mistrial because I think this is grossly unfair. So you have a choice, whichever one you do, I'm not going to permit this testimony. It's not in the proposed verdict form that was agreed to. It's just made up now based on your argument. MR. LAMB: Your Honor -- THE COURT: Mr. Lamb, I'm the judge. I get to talk. I don't interrupt you or I try not to. And it's not in the stipulation. So what is your preference, me declare a mistrial right now and let's all go home. You can reframe these pleadings and start all over again. MR. LAMB: I would just like to make my record and tell you what our side of this is. And then I can just confer with the client about the mistrial. THE COURT: Do whatever you want to do, sir. MR. LAMB: So Your Honor, we pled that they excluded Alima in bad faith from the businesses which U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 20 was part of a scheme to misappropriate membership interest. The expert reports were due on the 21st of March. We timely complied with that. We had the business valuation in there, and we identified the damages. In April you asked me in open court what our damages were on this Count 1. And I explained in open court that it was 2.7 million dollars were part of the damages because it inappropriately -- improperly froze an amount of the businesses and misappropriated interest, and we wanted the distribution. In May in response to a Motion for Summary Judgement, we had a motion that that is part of our damages. We cited in the motion eight or nine times that we said that that is part of our claim that they summarily excluded and froze him out of the businesses affectively misappropriating his membership interests. And Mr. Alima filed an affidavit. And in the affidavit -- THE COURT: Joe, if they're standing out there, put them back in the jury room. THE BAILIFF: I put them back already. THE COURT: Okay, thank you. U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 21 MR. LAMB: In Mr. Alima's affidavit -- THE COURT: Everybody can be seated, please. MR. LAMB: And I didn't know we were going to argue this right now, so I apologize. I just have to find Mr. Alima's affidavit. In Mr. Alima's affidavit filed with a Motion for Summary Judgement, he said: Through their actions in freezing me out, the Member Defendants have misappropriated my membership interest and income derived therefrom without compensation to me. THE COURT: Where is it in the Florida Dissolution Statute that you get a jury trial? MR. LAMB: This isn't a dissolution statute claim. We have a claim for judicial dissolution of the Florida companies, but we're not asking for that. This damage is not part of that claim. It's part of our breach of fiduciary duty claim. It's in Count 1. And it's been in Count 1 the entire time. So they got an expert report on March 21st disclosing the damages. On April 3rd I sent -- THE COURT: Your argument to me, sir, is that under a breach of fiduciary count, you can assert a valuation of the limited liability company. That's the argument you're advancing to me? U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 22 MR. LAMB: That freezing an amount, they affectively misappropriated his interest. THE COURT: Sir, you're asking me to permit the expert to give an opinion on valuation? MR. LAMB: Yes, Your Honor. THE COURT: What date did you pick for valuation? MR. LAMB: March 31st, 2016, the date he was excluded. THE COURT: Okay. Show me a case that says you're entitled to a jury trial for that. MR. LAMB: Sir, here, it's a breach of fiduciary duty claim. THE COURT: It's not a breach of fiduciary duty claim, sir. So you can show me any case you want of breach of fiduciary duty -- MR. LAMB: Yeah. Just hold on one second, Your Honor. I have a highlighted version. MR. OLIVE: Are you going to show Your Honor the Acoustics case? MR. LAMB: Yes. MR. OLIVE: Okay. I can tell Your Honor why that has nothing to do with this. THE COURT: I still don't know why this isn't in the pleadings -- I mean, in the stipulation. U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 23 MR. OLIVE: It's not in the pleadings either, Your Honor. THE COURT: I don't know what's in the pleadings, but right now I'm bound by the pretrial stipulation not the pleadings -- what's in the pretrial stipulation. MR. OLIVE: He's specifically agreed and stipulated he's a 25 percent owner. So now to come and say, oh, at the same time, I need you to pay me out. THE COURT: Well, as I said earlier, I don't understand the defense's side of that. You're saying he's a 25 percent owner; yet, from whatever circumstances you're not paying him for whatever the share of that company would have been at the time of the -- MR. OLIVE: Your Honor, respectfully, you haven't heard the defenses. THE COURT: Well, I know now, but you've admitted he's a 25 percent owner. I understand the arguments about dissolution and not working and all that but -- MR. SANCHEZ: Your Honor, just on that point, the distinction is that it's been stipulated the companies are manager managed rather than member U.S. LEGAL SUPPORT www.uslegalsupport.com10 il 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 24 managed. So the things he's been excluded from are consistent with not being a manager. In Florida and Nevada when they're manager managed the managers and trust the day-to-day operations and all those things. And as we all know there's a difference between distributions and profits for members and payments to managers. And we're all fighting as to what those payments are. MR. OLIVE: And Your Honor, the manager manage component of this which is critical is also stipulated in the pretrial stip. MR. LAMB: So in this Schafer case -- THE COURT: Look, I'm not going to do this. I'm not going to do it. I'm telling you right now Mr. Lamb, I am not going to do this. I'm not going up on the record on this under the status of the way these pleadings are framed. I'll go upstairs and read your case. There's a substantial likelihood here, sir, I'll declare a mistrial when I get back. We'll be in recess for 15 minutes. (A recess was taken from 1:15 p.m. to 1:35 (The following proceedings were had outside the U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 25 presence of the Jury:) THE COURT: All right. What's the defense have to say about this issue? MR. OLIVE: Your Honor, we had filed a motion to preclude this a couple of days before the trial. I'm going to let Mr. Sanchez just quickly review it regarding our position and the timeliness or as we should say the untimeliness -- THE COURT: I need your response, please. I don't have it. MR. OLIVE: Okay. Your Honor, may I approach? THE COURT: Yes. MR. OLIVE: Mr. Lamb, I'm handing the July 12th motion that you replied to, Defendant's Motion to Exclude Reference to the Conversion of Membership Interest from trial. MR. LAMB: Did you ask for our response? MR. OLIVE: He just asked the defense's position, and I handed our position -- MR. LAMB: Oh, I thought he asked for the response. THE COURT: This brief, I've read in terms of the misappropriation issue which we discussed on Monday. It's not necessarily framed specifically to the valuation issue. U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 26 On the valuation issue, Mr. Lamb, is that an equitable claim or a legal claim, sir? MR. LAMB: It's part of the damages for breach of fiduciary duty. THE COURT: Mr. Lamb, please, you really frustrate me when you don't answer my questions. I asked you a specific question. Is the claim for valuation of this alleged 25 percent interest a claim in equity or a claim in law? MR. LAMB: I'm trying to answer. It's part of -- it's Count 1 of fiduciary duty, part of the damages. It's not a separate claim for valuation. THE COURT: The statute of the cases that discuss breach of fiduciary duties in the context of limited liability corporations specifically speak to the issue of whether you can get a jury trial ona breach of fiduciary duty as to one which is either equitable or one which is legal. So if your claim is that you can obtain damages on a valuation through a breach of fiduciary claim, I disagree because it's a claim in equity. The valuation of the ownership interest of these four persons is not a legal issue. It's an equitable issue. And almost uniformly in business cases, those U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 27 are left to the judge to decide, not to the jury. So what you're asking me to do is in a breach of fiduciary count send to the jury what is realistically an equity claim, not a legal claim. So you're not even entitled to a jury trial on that much less submitting it to the jury. So if you've got some law that says I'm wrong, I'm going to have to look up this same issue because this has come up time and time again with lawyers trying to assert issues for juries in LLC cases and the law is restricted. You don't get a jury trial in everything in an LLC break up. That's why the statute's written the way it is. There are some things such as conversion and other factual disputes that I can send by special interrogatory, but I've never seen a case where the jury is asked to evaluate the valuation of damages in a breach of fiduciary duty when it pertains to the valuation of the company. And just because the case law says specifically -- I went and looked up these cases. Just because you claim it's damages doesn't mean that you're entitled to a jury trial. So here's what I'm going to do. You have two choices, sir. I don't believe this is part of a jury U.S. LEGAL SUPPORT www.uslegalsupport.com10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honorable Judge Jack Tuter July 16, 2018 28 trial claim. I will sever this claim out on valuation and try that case separately in whatever way we have to try it or I'll declare a mistrial, whichever one you want to do. MR. LAMB: Can I confer with my client for five minutes? THE COURT: Sure, of course. MR. LAMB: So it's mistrial or sever the claim. THE COURT: Sever the claim on valuation, and it will be tried separately when both sides can brief it and advise whether that is something you're entitled to a jury trial on or not. And if necessary if I'm convinced, seek another jury at another time, so that this issue is not something that I have to worry about on appeal for two years, and this whole case comes crashing back to me so -- all right, so take five minutes, sir. MR. LAMB: It's not an option for you to decide that issue in this trial? THE COURT: Not without the briefing. Honestly, Adam, I do not see one single w