Stuart H. Bornstein v. Ira Marcus, individually, Ira Marcus, P.A., a Florida corporation, and Granada, LLC, a Florida limited liability company
169 So. 3d 1239
Fla. Dist. Ct. App.2015Background
- In 2009 Stuart Bornstein, Granada, LLC, and Alan Potamkin retained Ira Marcus, P.A. under a contingency retainer providing the firm 40% of gross recovery and two retainers totaling $50,000; the agreement stated the $50,000 would be credited against any recovery.
- Bornstein personally and Granada made multiple payments to the firm; Bornstein signed the agreement both individually and as a managing member of Granada.
- The case settled for $1.45 million; the firm accepted a reduced fee of $450,000 and Granada received a net distribution of approximately $880,816 after fees and expenses.
- Bornstein (and later amended to add Granada) sued the firm and its principal for breach of contract and torts (breach of fiduciary duty, conversion, civil theft), claiming the $50,000 retainer was not credited properly.
- During discovery Bornstein testified and his tax returns reflected that he treated the $50,000 as a capital contribution to Granada; the firm moved to strike Bornstein’s pleadings as a sham under Fla. R. Civ. P. 1.150 and moved to dismiss tort claims under the economic loss rule.
- The trial court struck Bornstein’s pleadings as a sham, entered final judgment for the firm and its principal, and dismissed tort counts against the firm under the economic loss rule; the Fourth District reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bornstein’s individual pleadings were a sham under Fla. R. Civ. P. 1.150 | Bornstein argued he personally had not been credited the $50,000 and thus had standing to sue despite tax treatment | Firm argued Bornstein admitted (testimony and tax returns) treating the $50,000 as a capital contribution to Granada, so his individual claim was patently false and only Granada could sue | Reversed: pleadings were not shown to be "undoubtedly false"; tax-treatment/capital-contribution did not automatically bar Bornstein’s personal claim |
| Whether tort claims (breach of fiduciary duty, conversion, civil theft) were barred by the economic loss rule | Bornstein argued economic loss rule does not apply outside products-liability context per Florida Supreme Court | Firm argued tort claims were contract-based and barred by the economic loss rule | Reversed: under Tiara the economic loss rule is limited to products liability and does not bar these tort claims in this case |
Key Cases Cited
- Rhea v. Hackney, 157 So. 190 (Fla. 1934) (defines sham pleading standard: pleading must be palpably or inherently false to be struck)
- Meadows v. Edwards, 82 So. 2d 733 (Fla. 1955) (motion to strike sham pleading tested by summary-judgment-like standard)
- Furst v. Blackman, 819 So. 2d 222 (Fla. 4th DCA 2002) (all doubts resolved in favor of pleading when evaluating sham motion)
- Tiara Condominium Ass’n v. Marsh & McLennan Cos., 110 So. 3d 399 (Fla. 2013) (economic loss rule applies only in products-liability context)
- One Country, LLC v. Johnson, 101 A.3d 933 (Conn. 2014) (tax characterization or capital-contribution treatment does not necessarily eliminate a plaintiff’s contractual/right-to-recover claim)