Cat Cay Yacht Club, Inc. v. Diaz

Citation: 264 So. 3d 1071Docket: No. 3D18-2368

Court: District Court of Appeal of Florida; January 30, 2019; Florida; State Appellate Court

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SALTER, J. 1073Cat Cay Yacht Club, Inc. (CCYC) and fourteen current and former board members, referred to as the "Director Defendants," have requested the Court to issue a writ of certiorari to quash a circuit court order permitting Manuel C. Diaz to file a fifth amended complaint that includes claims for punitive damages in his ongoing lawsuit. The lawsuit, initiated in 2012, alleges wrongful actions by CCYC aimed at expelling Diaz from the private club in the Bahamas. The Court found that the circuit court's order allowing the amendment deviated from essential Florida statutory requirements and controlling legal precedent, and that the issue could not be adequately addressed in a later appeal, leading to the granting of the petition and the quashing of the order.

Diaz has been associated with Cat Cay for approximately forty years, initially joining CCYC as a summer member and later purchasing property on the island. He contributed significantly to CCYC, including fundraising efforts following Hurricane Andrew in 1992. He served as CCYC president until disputes arose after a new president was elected in 2009, culminating in a purported "scheme" to remove him from the club. This scheme allegedly involved a flawed audit, defamatory statements from the Director Defendants, and a unanimous board vote to expel him in February 2012, based on accusations of "actions prejudicial to the Club" as outlined in CCYC's bylaws. An appellate committee denied his appeal of the expulsion.

In January 2014, Diaz filed an initial complaint seeking damages, reinstatement of his membership, and punitive damages, among other relief. His complaint faced multiple dismissals, resulting in a motion to amend to include punitive damages. During the hearing on this motion, the trial court noted that the Director Defendants did not contest the evidence presented, yet failed to issue written findings supporting the basis for punitive damages as required under Florida law. The court granted the amendment without providing clear rationale or distinguishing between the various defendants, prompting the certiorari petition.

To obtain relief, petitioners must demonstrate that the trial court violated essential legal requirements, resulting in significant harm without adequate remedy on appeal, as established in Allstate Ins. Co. v. Langston. Review of a trial court's order allowing punitive damages requires assessing compliance with section 768.72's procedural standards, without evaluating evidence sufficiency. Two key aspects are examined: (1) the conduct of the hearing on the punitive damages motion and (2) legal barriers to such claims.

The hearing on Diaz's motion to amend revealed extensive documentation submitted by counsel, focusing on Diaz's expulsion from the CCYC social club due to disagreements with the board and claims for service credits. The board's actions are characterized as a "witch-hunt," with allegations of attempts to control the club and claims of missing documents. Following Diaz's expulsion, the appeal board allegedly endorsed the board's decision without thorough review, and the board's actions reportedly rendered Diaz's property unsaleable, resulting in financial losses.

Despite the trial court's inquiries, it failed to specify the evidence that justified a statutory "reasonable basis" for amending the complaint to include punitive damages. The court's simple approval of the motion represented a procedural deviation from legal standards, as detailed in Fetlar, LLC v. Suarez, where mere allegations are insufficient to substantiate a punitive damages claim. This case contrasts sharply with prior instances where the plaintiff provided detailed evidence and the court conducted multiple hearings to evaluate the punitive damages claims against corporate defendants.

Defendants articulated their opposition to plaintiff’s motion to amend through written arguments, during hearings, and in response to a court-ordered memorandum. The trial court confirmed its application of the correct law, granting the amendment based on evidence that supported a reasonable basis for punitive damages recovery under Florida Statutes § 768.72. However, the trial court did not address legal insufficiencies raised by CCYC and the Director Defendants, particularly the right of social organizations to regulate their membership. Florida law does not mandate that individuals be allowed to associate against the will of a group. Previous claims by Diaz regarding expulsion and reinstatement had been dismissed, complicating the relationship between claims of expulsion and other allegations, such as property rights interference. The amendment seeking punitive damages was deemed insufficient as it failed to demonstrate how expulsion impacted Diaz's equity shares or real estate value, contrary to the bylaws. Additionally, procedural requirements under § 768.72 were not met, as mere amendments do not allow for punitive damage claims without proper assessment. Defendants also invoked the one-year statute of limitations from the Florida Not For Profit Act, which mandates that challenges to expulsion must be filed within a year of the action. Diaz's lawsuit was filed well beyond this period, and the motion to amend did not distinguish between barred expulsion claims and unrelated claims against CCYC or individual directors.

The trial court's procedure in this case deviated from the essential legal requirements, particularly regarding the authorization for an amendment to include a claim for punitive damages. Such amendments are viewed as significantly impactful in litigation, potentially leading to intrusive financial discovery, which constitutes irreparable harm necessary for the Court's certiorari jurisdiction. Notably, prior cases have highlighted the need for a review of appellate rules concerning the appealability of such amendments. The petition to quash the order allowing the amendment was granted. Additionally, it was noted that one defendant, Scott Morrison, had passed away in 2016 and his estate was substituted, but punitive damages were not pursued against the estate. Another defendant, Maylene Jimenez, had not been served. The trial court's comments regarding the scope of claims and defendants in the fifth amended complaint were vague, as the complaint had not been filed or shared with the defendants. The court questioned the necessity for intervention, given that CCYC is not a sovereign entity and that regulatory matters fall under the jurisdiction of the Commonwealth of The Bahamas.