CONTINENTAL CONNECTIONS USA LLC BDB REAL ESTATE LLC TG MIAMI INVESTMENTS LLC MID TEXAS REAL ESTATE LLC DAVID MORDEKHAY HEART REALTY LLC PROBATE PROPERTIES LLC v. HOLDINGS LLC (2023)

The focus of this appeal is the nature of a compulsory counterclaim. Multiple investors appeal a final summary judgment for an investment company. They argue the trial court erred in deciding the plaintiffs’ claims were compulsory counterclaims in a prior lawsuit and thus barred from raising anew. We agree and reverse.

A. Facts

Two investors, Darmon and Mordekhay, equally owned D.O.D. Investments, LLC (“Investments”), a real estate company used to renovate and “flip” or rent properties. In late 2013, Investments decided to purchase a property (“the property”), deciding to fund 50% of the purchase price and solicit investors for the remaining 50%.

Mordekhay approached his friends and brother-in-law with the opportunity. All three agreed to invest. The two friends invested through their joint entity, S.B., taking a 33.35% interest in the property. Mordekhay's brother-in-law invested through his entity, Beraz Investments, LLC, taking a 16.65% interest.

These parties (collectively, “the investors”), by and through their respective entities, then formed D.O.D. Holdings (“Holdings”) to jointly hold and manage the investment property. Holdings was a manager-managed limited liability company; each member was designated a manager. Holdings’ operating agreement provided the managers could not make “major decisions” without all members’ consent. A “major decision” was “any change[ ] that [altered Holdings’] financial structure[.]”

Everything ran smoothly from 2013 until 2015 when Mordekhay and Darmon had a disagreement. Mordekhay and others created a fraudulent operating agreement, in which he substituted his company Continental Communications (“Continental”) for Investments as half owner of Holdings to acquire a $750,000 loan in Holdings’ name from City First Mortgage Corporation (“the City First Loan”). Mordekhay used the property to secure the City First Loan but did not obtain Darmon's consent.

1. The 2016 lawsuit

Darmon subsequently discovered the loan and sued Holdings, Investments, Continental, Mordekhay, Gary Otto, Tom Grinberg, and Erica Rodriguez for breach of the duty of loyalty regarding the City First Loan.¹ Darmon alleged Mordekhay engaged in tortious acts to obtain the City First Loan in Holdings’ name and wrongfully diverted those proceeds to himself and others.

Initially, Darmon sued in his individual and derivative capacities as a member of Holdings, Investments, S.B. Miami Development, LLC (a Florida limited liability company), and Beraz Investment, LLC (a Florida limited liability company).² In the Fourth Amended Complaint, Darmon sued Holdings only in his derivative capacity as a member of Holdings, Investments, S.B. Miami Development, LLC, and Beraz Investment, LLC.

Darmon alleged Mordekhay engaged in various tortious acts to obtain the City First Loan in Holdings’ name. Mordekhay then wrongfully diverted those proceeds to himself and others.

The defendants asserted Mordekhay secured the $750,000 loan to reimburse Holdings, Investments, Continental, Otto, Grinberg, Rodriguez, and himself for their initial investment in Holdings. Mordekhay and Grinberg, who had both loaned money to Darmon, both counterclaimed, alleging Mordekhay failed to repay money lent. The counterclaim did not mention Continental or Heart Realty.

Holdings argued at trial the advances were neither loans nor due and had “no maturity date.” Holdings suggested Mordekhay used the loan proceeds for his personal benefit. The loan monies were not used to operate or renovate Holdings or pay back any of Holdings’ investors.

After a bench trial, the trial court found Mordekhay violated the operating agreement and breached his duty of loyalty. The trial court found Mordekhay was not authorized to take out the City First Loan in Holdings’ name because Holdings’ operating agreement mandated unanimous consent for decisions altering the company's financial structure. Holdings’ other members did not approve the City First Loan. The trial court also found the other defendants liable for participating in the fraudulently obtained loan.

The trial court further found that Mordekhay had used the funds for his own personal use and not for repayment of any monies lent. The trial court removed Mordekhay as a member of Investments. It entered money judgments against all the defendants, totaling $750,000 plus interest.

2. The 2021 lawsuit

In 2021, Continental, BDB, TG, Mid Texas, Heart Realty, and Probate Properties (“the 2021 plaintiffs”) sued Holdings, each alleging they lent Holdings money as an initial investment. Continental, BDB, TG, and Mid Texas also alleged they loaned, or “advanced,” monies to Holdings at various times from 2014 to 2020.³ To recover these alleged funds, the 2021 plaintiffs brought claims for (1) money lent, (2) unjust enrichment, (3) and declaratory judgment.

Holdings raised statute of limitations, compulsory counterclaim, res judicata, and claim preclusion affirmative defenses. Holdings alleged Mordekhay was the 100% owner of Continental, BDB, TG, and Mid Texas. Holdings also alleged Mordekhay was an owner of Probate Properties and a 50% owner of Heart Realty. The evidence, however, did not clearly establish Mordekhay's ownership of those entities.

Holdings moved for summary judgment. It argued the 2021 plaintiffs’ claims were barred by the statute of limitations, res judicata and collateral estoppel. Holdings also argued the claims were waived by the 2021 plaintiffs’ failure to file them as a counterclaim in the 2016 lawsuit.

In response, the 2021 plaintiffs argued they never made a demand for repayment of the investment monies, so the statute of limitations did not bar their claims. The 2021 plaintiffs also claimed they were different entities from the 2016 plaintiffs and were not bound by the final judgment.

The trial court found that although Mordekhay allegedly took out the City First Loan to enforce his right to repayment in the 2016 suit, neither he nor his entities counterclaimed or filed suit to enforce their rights. Accordingly, any rights Mordekhay or the other 2021 plaintiffs had to enforce the alleged loans were waived.

The trial court stated:

I'm going to grant the Motions for Summary Judgment on the grounds that this should have been a compulsory counterclaim. I'm not going to make any other findings at this time.

From the final summary judgment, the plaintiffs now appeal.

B. Analysis

On appeal, the plaintiffs argue the trial court erred in granting the defendants’ motion for summary judgment for three reasons. First, the plaintiffs’ claims in the 2021 lawsuit are not barred by the statute of limitations because they were not ripe in the 2016 lawsuit. Second, the plaintiffs’ claims in the 2021 lawsuit were not compulsory counterclaims in the 2016 lawsuit because (1) the 2021 claims do not have the requisite “logical relationship” to Holdings’ City First Loan claim in the 2016 lawsuit, and (2) Holdings is judicially estopped from making a compulsory counterclaim argument. And third, the doctrines of res judicata and collateral estoppel do not bar the claims made in the 2021 lawsuit because the requisite identity of parties and issues do not exist.⁴

The defendants make three responses. First, the statute of limitations bars the plaintiffs’ claims in the 2021 lawsuit because Mordekhay and his related entities believed they were owed money from Holdings, as conceded in the 2016 lawsuit. Second, the plaintiffs’ claims were compulsory counterclaims to the 2016 lawsuit because they were logically related. And third, res judicata and collateral estoppel effectively barred the plaintiffs’ claims because they were heavily litigated in the 2016 lawsuit, and previously rejected by the trial court.

We review de novo an order granting summary judgment. Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000). A trial court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fla. R. Civ. P. 1.510(a).

A pleading must state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, provided it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction.

Fla. R. Civ. P. 1.170(a) (emphasis added).

Our supreme court has decided the logical relationship test “is the yardstick for measuring whether a claim is compulsory.” Londono v. Turkey Creek, Inc., 609 So. 2d 14, 20 (Fla. 1992).

[A] claim has a logical relationship to the original claim if it arises out of the same aggregate of operative facts as the original claim in two senses: (1) that the same aggregate of operative facts serves as the basis of both claims; or (2) that the aggregate core of facts upon which the original claim rests activates additional legal rights in a party defendant that would otherwise remain dormant.

Id. (alteration in original) (emphasis omitted) (quoting Neil v. S. Fla. Auto Painters, Inc., 397 So. 2d 1160, 1164 (Fla. 3d DCA 1981)).

Here, under Londono, the loan repayment claims at issue did not constitute compulsory counterclaims in the 2016 lawsuit. A logical relationship does not exist between the City First Loan and the plaintiffs’ investments they now seek to recover. This is because the City First Loan was separate and distinct from the loans at issue here.

The City First Loan claims were against Mordekhay and the other defendants for wrongdoing in fraudulently obtaining a loan secured by the property. It was not an action brought to repay the plaintiffs’ investments.

Here, the claims seek to recoup monies lent to Holdings for the property over various periods of time, some of which occurred after 2016. Those monies were lent by multiple plaintiffs, most of which were not even parties in the City First Loan lawsuit. Only plaintiffs Continental and Mordekhay were named. The basis of their liability, however, was Mordekhay's use of Continental as an alleged partner in Holdings to secure the City First Loan.⁵ The claims here to recoup monies lent are independent of the defendants’ wrongdoing in fraudulently securing the City First Loan in the 2016 action.

For these reasons, we reverse and remand the case to the trial court.

Reversed and remanded.

FOOTNOTES

1.   Otto, Grinberg, and Rodriguez are not parties in the 2021 lawsuit.

2.   S.B. Miami Development, LLC, and Beraz Investment, LLC are not parties in the 2021 lawsuit.

3.   The specific amounts loaned were:• $468,328.69 lent by Continental from 2014–2020;• $24,650.00 lent by BDB from 2015–2018;• $6,900.00 lent by TG in 2015;• $7,585.84 lent by Mid Texas from 2017–2018;• $694,000.00 lent by Mordekhay from 2013–2020;• $675,600.00 lent by Heart Realty from 2014–2015; and• $255,675.00 lent by Probate Properties from 2014–2018.

4.   Because the trial court ruled only on the compulsory counterclaim defense, we do not reach the statute of limitations, res judicata, and collateral estoppel defenses.

5.   While Mordekhay's explanation of the City First Loan was that he secured it to repay his investment in Holdings, the trial court found he used the money for his own personal benefit. That lawsuit focused on the defendants’ wrongdoings in securing the City First Loan. In fact, the only counterclaim filed in the 2016 action related to money Mordekhay and Grinberg allegedly lent to Darmon individually, which was rendered moot when Darmon amended the complaint to sue only in his derivative capacity.

May, J.

Warner and Forst, JJ., concur.