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Flatirons Bank v. Alan W. Steinberg Limited Partnership

Florida Court of Appeals, Third District

December 6, 2017

Flatirons Bank, Appellant,
v.
The Alan W. Steinberg Limited Partnership, Appellee.

         Not final until disposition of timely filed motion for rehearing.

         An Appeal from the Circuit Court for Miami-Dade County Lower Tribunal No. 13-4048, Stanford Blake and Barbara Areces, Judges.

          Perez & Rodriguez, P.A., and Javier J. Rodriguez, Johanna Castellon-Vega, and Freddy X. Muñoz, for appellant.

          Schwed Kahle & Kress, P.A., and Lloyd R. Schwed and Douglas A. Kahle (Palm Beach Gardens), for appellee.

          Before ROTHENBERG, C.J., and SALTER and SCALES, JJ.

          SCALES, J.

          Appellant, plaintiff below, Flatirons Bank ("Flatirons") appeals the trial court's final judgment in favor of Appellee, defendant below, The Alan W. Steinberg Limited Partnership ("Steinberg"). We affirm because the trial court's determination that Steinberg was not unjustly enriched is supported by competent, substantial evidence; and because Flatirons's unjust enrichment claim against Steinberg was filed beyond the applicable statute of limitations. Further, Flatirons's claim under the Colorado civil theft statute was properly dismissed.

         I. Facts

         While somewhat complicated, the relevant facts are not in dispute. Flatirons is a small community bank located in Boulder, Colorado. In early 2009, Flatirons's former board chairman and president, Mark Yost, arranged for Flatirons to issue bogus lines of credit which enabled Yost to steal approximately $3, 845, 000.00 from Flatirons.

         Flatirons discovered Yost's fraud in August of 2010. In March of 2012, Flatirons's resulting investigation revealed that, on January 20, 2009, Yost transferred $1, 000, 000.00 from one of the bogus lines of credit to an account at Elevations Credit Union in Colorado. The Elevations account receiving the funds was owned by ICP II LP, an entity controlled by Yost.

         Later on January 20, 2009, Yost transferred the sum of $1, 050, 000.00 from the ICP II LP account at Elevations to another account at Elevations owned by the Yost Partnership. The Yost Partnership was a Colorado limited partnership that operated from October of 1991 until August of 2010. The Yost Partnership was an investment vehicle controlled by Yost. Limited partners of the Yost Partnership invested cash into the Yost Partnership with the expectation that their investments would be responsibly managed by Yost and would realize positive returns.

         Later that same day on January 20, 2009, the Yost Partnership transferred $1, 000, 000.00 from the Yost Partnership account, through an account at Merrill Group in New York, to a Florida bank account owned by Steinberg. Steinberg is a New York limited partnership that also was a limited partner and investor in the Yost Partnership.[1] From January of 2000 through January of 2004, Steinberg invested a total of $2, 200, 000.00 into the Yost Partnership.

         As it turns out, not only was Yost embezzling funds from Flatirons, he was grossly misleading the Yost Partnership investors and limited partners regarding the status of their investments. For example, in 2005, the total assets for the Yost Partnership were approximately $11, 500, 000.00, but were reported to investors at over $30, 000, 000.00. In January of 2009, total Yost Partnership assets were approximately $1, 200, 000.00, but were reported at over $28, 000, 000.00.

         Indeed, on January 20, 2009, the date on which the Yost Partnership transferred $1, 000, 000.00 to Steinberg, the actual value of Steinberg's interest in the Yost Partnership was only $138, 179.90 - a far cry from the $2, 200, 000.00 Steinberg had invested in the Yost Partnership.[2]

         Seeking to recoup some of the stolen funds, on February 1, 2013, Flatirons filed a three-count complaint against Steinberg in the Miami-Dade Circuit Court. Flatirons alleged that: (i) Steinberg was unjustly enriched by Yost's conduct (Count I); (ii) under Colorado's civil theft statute, Steinberg was required to repay the $1, 000, 000.00 to Flatirons (Count II); and (iii) Steinberg had converted Flatirons's funds and was therefore liable to Flatirons (Count III).

         The trial court dismissed Flatirons's statutory and conversion claims. The case proceeded to a bench trial on Flatirons's unjust enrichment claim, and Steinberg's two principal affirmative defenses to same (that Flatirons's claim was barred by Florida's four-year statute of limitations and that Flatirons had unclean hands).

         After the trial, the trial court made several findings of fact:

- Flatirons and Steinberg had no relationship with each other;
- Steinberg received the $1, 000, 000.00 in good faith and without knowledge of Yost's fraud;
- Upon receiving the $1, 000, 000.00 transfer, Steinberg actually suffered a net loss of approximately $1, 200, 000.00 as a result of the Yost Partnership's fraud and misconduct;
- As a result of Steinberg's investment into the Yost Partnership, Steinberg had paid adequate consideration for the $1, 000, 000.00 that the Yost Partnership transferred to Steinberg; and
- Flatirons conferred no direct benefit on Steinberg.

         Ultimately, the trial court entered final judgment for Steinberg, determining that Flatirons failed to establish its unjust enrichment claim against Steinberg. The trial court also determined that Flatirons's unjust enrichment claim against Steinberg was barred by Florida's four-year statute of limitations. Flatirons timely appealed this final judgment, including the trial court's earlier dismissal of Flatirons's claim under Colorado's civil theft statute.[3]

         II. Standard of Review

         We review de novo both the trial court's dismissal of Flatirons's statutory civil theft claim and the trial court's determination that Flatirons's unjust enrichment claim was barred by Florida's statute of limitations. Saltponds Condo. Ass'n, Inc. v. Walbridge Aldinger Co., 979 So.2d 1240, 1241 (Fla. 3d DCA 2008). We review the trial court's findings of fact regarding Flatirons's unjust enrichment claim to determine whether those findings are supported by competent, substantial evidence. Reimbursement Recovery, Inc. v. Indian River Mem'l Hosp., Inc., 22 So.3d 679, 682 (Fla. 4th DCA 2009).

         III. Analysis

         A. Flatirons's claim based on Colorado's civil theft statute

         The trial court dismissed Flatirons's claim under Colorado's civil theft statute, [4] holding that Colorado's civil theft statute was inapplicable to claims based primarily on activity occurring in Florida. The trial court reasoned that because the Florida Legislature has enacted a civil theft statute, [5] Florida's statute - rather than Colorado's - would apply because Flatirons's claim against Steinberg was premised entirely upon Steinberg's receipt of the stolen funds occurring exclusively in Florida.[6]

          On appeal, Flatirons argues that the trial court erred by not applying Florida "conflict of laws" tort jurisprudence to determine which civil theft statute applied. Flatirons argues that the trial court should have performed the "significant relationships test" required by Bishop v. Florida Specialty Paint Co., 389 So.2d 999 (Fla. 1980) (adopting the significant relationships test to determine which forum's law applies in a tort action brought in Florida); and that, had the trial court correctly applied the Bishop test, Colorado's civil theft statute would govern Flatirons's claim because Colorado, rather than Florida, has the most significant relationships to the occurrence and the parties.

         The record reflects that the trial court reviewed the four corners of Flatirons's complaint, along with its extensive exhibits, in search of a nexus between the state of Colorado and Flatirons's claim against Steinberg. We engage in the same exercise, de novo, Morejon v. Mariners Hosp., Inc., 197 So.3d 591, 593 (Fla. 3d DCA 2016), and agree with the trial court. While Yost's theft of Flatirons's funds may have occurred in Colorado, nothing alleged in Flatirons's complaint or reflected in its exhibits, reveals any conduct, activity or omission by Steinberg that would warrant subjecting Steinberg to a Colorado statutory cause of action. Because Flatirons's complaint is devoid of allegations establishing any nexus between Steinberg and Colorado, we need not speculate on what allegations may be sufficient to require a party, in a Florida state court, to defend against another state's purely statutory cause of action. Suffice to say that when, as here, a complaint is devoid of allegations of conduct, activities or omissions occurring in another state, a Florida trial court has no basis to subject a defendant to a cause of action created by another state's legislature.[7]

         The dissent adopts Flatirons's argument and suggests that the trial court reversibly erred by not conducting the significant relationships test established in Bishop. See dissenting opinion at 18. Bishop holds that, in a personal injury case, the law of the state where the injury occurred generally determines the rights and liabilities of the parties, except that the law of another state will govern a particular issue in the case if that other state has a more significant relationship to that issue. Bishop, 389 So.2d at 1001.

         Flatirons neither provides authority that would expand Bishop's significant relationships test to a cause of action based on a state statutory remedy nor provides authority that would expand Bishop's significant relationships test to a contract action. Flatirons mis-focuses its analysis on Yost's fraudulent conduct occurring in Colorado, rather than on Steinberg's innocent conduct resulting from its contractual relationship with the Yost Partnership, i.e., its receipt of funds in Florida.[8] Absent at least some controlling, or even persuasive, authority, we are not inclined to subject a Florida defendant to another state's civil theft statute when there is no allegation or inference that the Florida defendant undertook (or omitted) any activity in the other state; and of further consideration, when Florida maintains its own civil theft statute.

         B. Flatirons's unjust enrichment claim

         After conducting an extensive evidentiary hearing on Flatirons's unjust enrichment claim, the trial court entered a detailed final judgment in Steinberg's favor. Essentially, the trial court found that Flatirons had failed to establish the elements of unjust enrichment.[9] We affirm because the trial court's findings are supported by competent, substantial evidence. Specifically, the record supports the trial court's factual finding that Steinberg had no knowledge that the sums it received on January 20, 2009, were tainted in any way, or, for that matter, originated from Flatirons. Thus, the trial court correctly determined that Flatirons had not established that Steinberg knowingly and voluntarily accepted any direct benefit conferred upon it by Flatirons. E & M Marine Corp. v. First Union Nat'l Bank, 783 So.2d 311, 312-13 (Fla. 3d DCA 2001); Coffee Pot Plaza P'ship v. Arrow Air Conditioning & Refrigeration, Inc., 412 So.2d 883, 884 (Fla. 2d DCA 1982); Nursing Care Servs., Inc. v. Dobos, 380 So.2d 516, 518 (Fla. 4th DCA 1980).[10]

         Additionally, and alternately, the trial court held that Flatirons's unjust enrichment claim was precluded by Florida's four-year statute of limitations.[11] The trial court concluded that Flatirons's cause of action accrued on January 20, 2009, when the Yost Partnership transferred the funds to Steinberg's Florida account. Flatirons's filed its complaint on February 1, 2013, more than four years after the alleged benefit was conferred.

         The statute of limitations for an unjust enrichment claim begins to run at the time the alleged benefit is conferred and received by the defendant. Beltran, M.D., 125 So.3d at 859; Barbara G. Banks, P.A. v. Thomas D. Lardin, P.A., 938 So.2d 571, 577 (Fla. 4th DCA 2006); Swafford v. Schweitzer, 906 So.2d 1194, 1195-96 (Fla. 4th DCA 2005).

         As it did below, Flatirons argues on appeal that, because its cause of action against Steinberg was "founded upon fraud, " Florida's delayed discovery doctrine[12] applies, and the statute of limitations did not begin to run until Flatirons knew or should have known of Yost's theft, which at the earliest occurred in August of 2010. While a feature of Flatirons's unjust enrichment claim might have been Yost's fraud and deceit, Flatirons's unjust enrichment claim against Steinberg is not "founded upon fraud" so as to implicate Florida's delayed discovery doctrine.[13]Further, our Supreme Court has made clear that the delayed discovery doctrine is inapplicable to extend the limitations period for unjust enrichment claims. Davis v. Monahan, 832 So.2d 708 (Fla. 2002); Brooks Tropicals, Inc. v. Acosta, 959 So.2d 288, 296 (Fla. 3d DCA 2007).[14] Therefore, the trial court correctly ruled that Flatirons's unjust enrichment claim was barred by Florida's four-year statute of limitations.

          IV. Conclusion

         The trial court properly dismissed Flatirons's statutory claim against Steinberg and correctly ruled that Flatirons's unjust enrichment claim was precluded by Florida's statute of limitations. Additionally, the trial court's factual findings regarding Flatirons's unjust enrichment claim are supported by competent, substantial evidence.

         Affirmed.

          SALTER, J., concurs.

          ROTHENBERG, C.J. (dissenting).

         Flatirons Bank ("Flatirons"), a Colorado bank and the plaintiff below, appeals: (1) the trial court's order dismissing Count II of the amended complaint, which asserts a claim for civil theft under Colorado's rights in stolen property statute, Colo. Rev. Stat. §18-4-404 (2013), against the defendant below, the Alan W. Steinberg Limited Partnership ("Steinberg"); and (2) a final judgment entered in favor of Steinberg following a non-jury trial as to Flatirons' claim for unjust enrichment pled in Count I of the amended complaint. As will be demonstrated in this dissent, the trial court clearly erred by dismissing Count II and by entering final judgment in favor of Steinberg as to Count I.

         First, the trial court erred by dismissing Count II without first performing a conflict of laws analysis, which requires the court to determine which state has the most significant relationship to the matter and, thus, which state's law should be applied. The majority attempts to cure this obvious error, but it too has erred because it has failed to follow clear precedent from the Florida Supreme Court and this Court specifying the analysis that must be performed and instead applies its own test. The record, however, reflects that had the requisite analysis been performed, the unassailable conclusion would have been that Colorado has the most significant relationship to the matter, and therefore, Colorado law should be applied. And, under Colorado law, Flatirons has a viable "rights in stolen property" claim. Second, as to Count I, Flatirons' unjust enrichment claim, the majority affirms the trial court's findings that Flatirons failed to meet its burden of proof and that Flatirons' unjust enrichment claim is precluded by Florida's statute of limitations. I respectfully disagree as to both findings.

         THE ...


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