Kallberg Industries, LLC v. Automotive Experts, Inc.
20-10087
| 11th Cir. | Jun 24, 2021Background
- After Hurricane Maria, Louis Berger contracted Kallberg Florida to service generators in Puerto Rico; Kallberg Florida used Kallberg Tennessee, which subcontracted Automotive Experts (no written contract between Kallberg TN and Automotive).
- Automotive provided equipment (Oct 2017–Feb 2018) and mechanics (Oct 2017–Nov 2018); Louis Berger paid Kallberg Florida, which paid Kallberg Tennessee.
- Kallberg Tennessee delayed and underpaid Automotive despite receiving payment from Berger and tendered a significantly lower check; it also filed suit in Florida state court.
- Automotive removed to federal court, counterclaimed for breach of contract and unjust enrichment; two-day bench trial followed.
- The district court found (1) breach of an oral $50/day referral fee for mechanics and awarded $287,700, and (2) unjust enrichment for use of Automotive’s equipment and disgorged amounts Kallberg received from Berger (corrected to $1,447,325). The court denied prejudgment interest.
- Both parties appealed: Kallberg challenged remedial measures, calculation, and preservation of unclean-hands defense; Automotive cross-appealed denial of prejudgment interest. The Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper remedy for unjust enrichment (disgorgement) | Automotive: disgorgement (or equivalent) is proper to return the benefit received | Kallberg: disgorgement is equitable only and was improper here | Court: remedy labeled disgorgement was appropriate; Florida law allows recovery based on value to unjustly enriched party; Kallberg waived objection pretrial |
| Basis for disgorgement calculation: gross receipts vs net profit | Automotive: recover amount Kallberg was enriched (what Berger paid) | Kallberg: award should be limited to net profit after expenses | Court: no clear error; used amount Kallberg was paid; Kallberg conceded exhibit figures and failed to prove expenses reduced profit |
| Breach damages for $50/day referral fee — duration/entity liability | Automotive: entitled to $50/day per mechanic referred to "Kallberg" for all labor days listed | Kallberg: Kallberg Florida (not TN) hired mechanics after Feb 2018, so Kallberg TN not liable for later days | Court: upheld $287,700 award; documents listed only "Kallberg," trial evidence supported that Kallberg TN remained responsible; no clear error |
| Preservation of unclean-hands defense | Kallberg: unclean hands defense pleaded; should have been considered | Automotive: contested; district court treated defense as not preserved in pretrial filings | Court: Kallberg waived by failing to include defense in pretrial stipulations and proposed findings; denial of reconsideration not an abuse |
| Prejudgment interest | Automotive: entitled to prejudgment interest on damages | Kallberg: procedural and mitigation defenses; district court reasonable to deny | Court: affirmed denial — Automotive failed to plead prejudgment interest in counterclaim or pretrial filings; district court didn’t abuse discretion |
Key Cases Cited
- Alvarez v. All Star Boxing, Inc., 258 So. 3d 508 (Fla. Dist. Ct. App. 2018) (unjust enrichment damages measured by market value or value to enriched party)
- Bailey v. St. Louis, 268 So. 3d 197 (Fla. Dist. Ct. App. 2018) (disgorgement as deterrent to wrongful conduct)
- G.I.C. Corp. v. United States, 121 F.3d 1447 (11th Cir. 1997) (parties bound by pretrial stipulations)
- Shuford v. Fidelity Nat. Prop. & Cas. Ins. Co., 508 F.3d 1337 (11th Cir. 2007) (standard: abuse of discretion for motion to alter/amend judgment)
- Maytronics, Ltd. v. Aqua Vac Sys., Inc., 277 F.3d 1317 (11th Cir. 2002) (standard: abuse of discretion for prejudgment interest review)
- Morro v. City of Birmingham, 117 F.3d 508 (11th Cir. 1997) (courts enforce pretrial orders; defenses can be waived by omission)
- Day v. Liberty Nat'l Life Ins. Co., 122 F.3d 1012 (11th Cir. 1997) (similar principle on pretrial preservation)