Opinion
No. 3D21-0446
11-17-2021
DSLRPROS, INC., et al., Appellants, v. Eyal LALO, Appellee.
Xander Law Group, P.A., and Wayne R. Atkins, for appellants. Law Offices of Shelley Senecal, and Shelley Ray Senecal (Ft. Lauderdale), for appellee.
Xander Law Group, P.A., and Wayne R. Atkins, for appellants.
Law Offices of Shelley Senecal, and Shelley Ray Senecal (Ft. Lauderdale), for appellee.
Before LOGUE, LINDSEY, and LOBREE, JJ.
LINDSEY, J.
This is an appeal from an amended final judgment entered following cross-motions for summary judgment. The order on appeal awards Appellee Eyal Lalo repayment of the principal and interest of a loan. Because Appellants Donald and Aarthi Scott unambiguously agreed to be held personally liable for the principal, interest, and all other amounts payable under the loan, we affirm.
I. BACKGROUND
The relevant facts are undisputed. Appellants are two dissolved companies, DSLRPros, Inc. and Tayzu, Inc. (the "Companies"), and two individual shareholders of the Companies, Donald and Aarthi Scott. In 2014, Appellee Eyal Lalo loaned the Companies $750,000. This transaction involved two agreements: (1) a Loan Agreement, which was signed by Donald Scott as an officer of the Companies and (2) a Pledge Agreement, which was signed by the Scotts individually.
There were originally two lenders: Lalo and Alberto Romano. Romano assigned his rights to Lalo and is not a party below or on appeal.
The Loan Agreement required repayment within 180 days of disbursement and provided that "[a]ll amounts outstanding on the Loan from time to time shall bear interest at an annual rate of 3% three percent." It is undisputed the Companies defaulted and failed to make any payments due under the Loan Agreement.
Under the Pledge Agreement, the Scotts, who together owned 5000 shares and 100% of the Companies, pledged 450 shares (9%) of each company as collateral. The parties disagree about whether the Scotts are personally liable for the loan under the Pledge Agreement.
Following the undisputed default, Lalo brought the underlying action for breach. The Operative Complaint asserts, inter alia , claims against the Companies and the Scotts for breach of the Loan Agreement and against the Scotts for breach of the Pledge Agreement.
Lalo initially sued the Companies, but not the Scotts individually, for breach of the Loan Agreement. In May 2017, counsel for DSLRPros filed a motion to withdraw. The trial court inadvertently permitted counsel to withdraw for both DSLRPros and Tayzu. The trial court then entered default judgment against the Companies. On appeal, this Court reversed. DSLRPros, Inc. v. Lalo, 257 So. 3d 548 (Fla. 3d DCA 2018).
The Complaint also asserts claims against the Scotts for tortious interference (Count IV), breach of fiduciary duties (Count V), and breach of duties to corporate creditors (Count VI).
In his deposition, Mr. Scott admitted that in November 2015, DSLRPros sold nearly all its assets to Neat Brands Inc., and Tayzu sold substantially all its assets to Tayzu UAV Robotics Inc. When asked if he tried to sell any shares in the Companies after selling substantially all their assets to Neat Brands and Tayzu UAV Robotics, Mr. Scott answered no "[b]ecause it would be, you know, useless and there's nothing –– no value." It is undisputed that the Companies were subsequently dissolved.
Eventually, the parties filed cross-motions for partial summary judgment. The primary dispute at the summary judgment hearing was whether the Scotts were personally liable for the loan pursuant to the terms of the Pledge Agreement. The lower court ultimately granted summary judgment in Lalo's favor on Count I (DSLRpro's breach of the Loan Agreement), Count II (Tayzu's breach of the Loan Agreement), and Count III (the Scotts' breach of the Loan and Pledge Agreements). Because this rendered the other counts in the Operative Complaint moot, the trial court entered final summary judgment in favor of Lalo. Appellants timely appealed.
In his Answer Brief, Lalo mentions that Appellants never filed a transcript of the summary judgment hearing. Though "the absence of a transcript is not necessarily fatal to review of a trial court's decision at a summary judgment hearing," Umana v. Citizens Prop. Ins. Corp., 282 So. 3d 933, 934 (Fla. 3d DCA 2019), Appellants filed a motion to supplement the record with the transcript, which we granted.
Below, Lalo moved to amend the final judgment asserting the lower court should have applied the statutory rate of interest instead of the 3% rate set forth in the Loan Agreement. The lower court agreed and entered an amended final judgment, awarding Lalo "the principal sum of $761,156.84, plus pre-judgment interest at the rate of 4.75% per annum, from March 25, 2015, up to and including February 9, 2021, in the amount of $212,858.45 for the total amount of $974,015.29 that shall bear interest at the statutory rate from February 10, 2021 until such time as this judgment is satisfied and paid in full ...." Appellants then filed an amended notice of appeal.
II. ANALYSIS
We review orders entering final summary judgment de novo. See, e.g., Tropical Glass & Const. Co. v. Gitlin, 13 So. 3d 156, 158 (Fla. 3d DCA 2009). "Matters of contract interpretation are also reviewed de novo, construing the terms according to their plain language." Diaz v. Kosch, 250 So. 3d 156, 163 (Fla. 3d DCA 2018) (citing Dirico v. Redland Estates, Inc., 154 So. 3d 355, 357 (Fla. 3d DCA 2014) ). There are two issues on appeal. First, whether the Scotts are personally liable for the loan under the terms of the Pledge Agreement. Second, whether the trial court erred in applying the statutory interest rate instead of the contractual interest rate.
A. The Scotts' Personal Liability
It is undisputed the Scotts signed the Pledge Agreement in their individual capacities. The Scotts maintain that they only pledged stock as collateral but that they did not personally guarantee the loan. We disagree.
One of the stated purposes of the Pledge Agreement is to "secure full and prompt payment when due of the principal, interest and all other amounts payable under the Loan Agreement (the ‘Secured Obligations’) ...." Donald and Aarthi Scott are designated as the "Pledgors." Lalo and the other lender are referred to as the "Pledgees." Importantly, the Agreement contains a section on the rights and remedies upon default. Relevant here is section 6.1:
6.1 Rights and Remedies of Secured Parties . In the event of any Event of Default Pledgees shall be entitled, without further notice to Pledgors, and without necessity for legal proceedings, to sell any or all of the Pledged Shares and, if any of the Secured Obligations remains unsatisfied following such foreclosure, to seek payment of such unsatisfied amount from Pledgors pursuant to the terms of the Loan Agreement.
(Emphasis added).
Based on the clear language set forth in the Pledge Agreement, Lalo (as Pledgee/Lender) is entitled to sell the stock that was provided as collateral. And, importantly, if any "Secured Obligations" (defined as principal, interest, and all other amounts) remain unsatisfied, Lalo is entitled seek payment of the unsatisfied amount from the Scotts (the Pledgors). Despite the Scotts' arguments to the contrary, the language in section 6.1 is unambiguous: the Scotts agreed in a signed writing to be held personally liable for the principal, interest, and all other amounts due under the Loan Agreement.
Lalo never attempted to sell the "Pledged Shares" that were provided as collateral. It is clear this would have been futile based on Mr. Scotts's own deposition testimony that the shares had no value after substantially all of the Companies' assets were sold. Moreover, the undisputed record evidence shows that the Companies have been dissolved.
B. The Statutory Interest Rate
The original final judgment used a 3% interest rate. Lalo moved to amend the judgment, arguing that under the Loan Agreement, he was entitled to 3% interest for the term of the loan, and after the loan was due, he was entitled to the statutory rate of 4.75%. The trial court agreed and amended the final judgment, calculating the interest rate after default at the statutory rate.
On appeal, the Scotts argue that the lower court should have applied the 3% interest rate set forth in the Loan Agreement and not the higher statutory interest rate. By default, the statutory interest rate applies. See § 687.01, Fla. Stat. (2021) ("In all cases where interest shall accrue without a special contract for the rate thereof, the rate is the rate provided for in s. 55.03."). This default rule, of course, may be modified by contract. See, e.g., Republic Srvs., Inc. v. Calabrese, 939 So. 2d 225, 226 (Fla. 5th DCA 2006) ("[T]he statutory rate applies when the contract is silent on the matter."). "However, in order for a contract rate to apply in lieu of the statutory rate, the contract must actually provide for a specific post-maturity/default interest rate." Trigeorgis v. Trigeorgis, 240 So. 3d 772, 776 (Fla. 4th DCA 2018).
The pertinent language in the Loan Agreement is as follows:
1.3 Interest . All amounts outstanding on the Loan from time to time shall bear interest at an annual rate of 3% three percent.
According to Appellants, the lower court found that the Loan Agreement's bearing interest "from time to time" was not clear whether it would encompass a default. Further, in its order granting Lalo's motion to amend, the court concluded that "[t]he subject Loan Agreement does not provide a specific post-maturity/default interest rate." We agree. It is not at all clear what the phrase "from time to time" means. The ordinary meaning of the phrase is something that occurs occasionally but not frequently or regularly. See Fonseca v. Wal-Mart Stores, East, LP, No. 18-62768-CIV, 2019 WL 7371813, at *3 (S.D. Fla. Sept. 23, 2019) (quoting from the definition of "time" in the Merriam-Webster Dictionary). This definition sheds no light on the phrase's meaning in the Loan Agreement, and neither party attempts to explain what this phrase means. Moreover, the trial court correctly concluded that the provision does not provide for a specific post-maturity/default interest rate. See Trigeorgis, 240 So. 3d at 776.
Appellants have not provided a transcript of the hearing on Lalo's motion to amend the final judgment.
III. CONCLUSION
Because Appellants Donald and Aarthi Scott unambiguously agreed to be held personally liable for the principal, interest, and all other amounts payable under the loan, we affirm the trial court's entry of final summary judgment. We also affirm the trial court's use of the statutory interest rate in the amended final judgment because the parties did not provide for a specific post-maturity/default interest rate.
Affirmed.