ED SKODA FORD, INC., A FLORIDA CORPORATION, D/B/A FLAMINGO FORD, APPELLANT,
v.
P & P PAINT AND BODY SHOP, INC., A FLORIDA CORPORATION, APPELLEE

Fla. 3d DCA | 1973-05-15
No. 72-1364
Before PEARSON, CHARLES CARROLL and HAVERFIELD, JJ.
277 So. 2d 818 Florida District Court of Appeal, Third District (1973) Positive Treatment
Cited by 14 cases

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Synopsis

A lessor (Flamingo Ford) appeals a damages judgment in a breach of business lease case, challenging both the use of a special master to determine damages and the master's accounting methodology that treated the corporate lessee as a partnership. The court upheld the appointment of the special master but reversed the damages calculation because the master improperly excluded officers' salaries from income statements.


Holding

The appointment of a special master to determine damages was proper where the accounting was lengthy and technical, and the defendant did not object and participated fully in the hearing. However, the special master's treatment of the corporation's income statements as a partnership and the resulting exclusion of officers' salaries from the profit calculation was clear error that violated principles against piercing the corporate veil.


Headnotes

[1] Referring a case to a special master is proper when the accounting involved is likely to be lengthy and technical.

[2] A party who participates fully in a hearing before a special master without objection waives the right to later challenge the referral of the issue to the special master.

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Key Quotes

“where the record revealed and order of reference found that the accounting was likely to be lengthy and technical in nature [...] referring the cause to an accountant as special master is proper”

Establishes the proper use of special masters in cases involving complex accounting issues

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Facts & Procedural History

P & P Paint and Body Shop, Inc., a Florida corporation, leased business premises from Ed Skoda Ford, Inc. (d/b/a Flamingo Ford). Flamingo Ford breache…

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Opinion of the Court
PER CURIAM.

PER CURIAM.

Defendant-appellant seeks review of a final judgment based upon the ratification of findings of fact of a special master who found the damages suffered by plaintiff-appellee to be $29,975.17.

Plaintiff-appellee, P & P Paint and Body Shop, Inc., as lessee filed suit against Ed Skoda Ford, Inc. d/b/a Flamingo Ford, as lessor for breach of a business lease. A default judgment was entered with regard to liability against Flamingo Ford, defendant-appellant, and on July 31, 1972 a non-*819jury trial was held as to the issue of damages which involved complicated accounting and/or economic theories. After partial testimony was received, the court appointed a certified public accountant as a special master pursuant to RCP 1.490(b), 30 F.S.A. to hear the damage claim. On September 12, 1972 such a hearing was held by the special master. Thereafter on September 28, 1972, the trial court received the master’s report, issued its order ratifying the findings of fact contained therein, and then entered final summary judgment awarding plaintiff $29,975.17 as recommended by the special master. Defendant-appellant filed exceptions to the report and after a hearing thereon, the court denied them.

On appeal, the appellant argues that the trial court erred in submitting the entire issue of damages to a special master and accepting the master’s report thereon.

As in the case sub judice, where the record revealed and order of reference found that the accounting was likely to be lengthy and technical in nature, referring the cause to an accountant as special master is proper. See Conner v. McNew, Fla. App.1970, 237 So.2d 190. In addition, defendant-appellant made no objection at the time the trial court decided to appoint a special master and in fact, appellant participated fully in the hearing before the master on September 12, 1972. Accordingly, with respect to submitting the question of damages to a special master, appellant’s argument must fail.

However, we do take issue with regard to the acceptance by the trial judge of the following portion of the master’s report:

“I agree with the opinion of expert witnesses produced by the plaintiff that no equitable estimate of damages can be made without the elimination of ‘officers’ salaries’ from the statements of income of the plaintiff, both before and after the cancellation of the lease. In other words, I am treating the statements of income of the plaintiff as if P. & P. Paint & Body, Inc. were a partnership whose profits are available to its partners in whatever form they chose to draw them. In the small corporation whose stockholders are employees, officers’ salaries are set at amounts convenient to the stockholders, taking into account income tax and other considerations and their elimination clarifies the issues in this case.”

The record reveals that P & P Paint and Body Shop, Inc. is a Florida corporation and not a partnership. In addition, plaintiff’s own witness testified that it was not a sub-chapter “S” corporation. Nevertheless, the special master treated the income statements of P & P Paint and Body Shop, Inc. as a partnership whose profits are available to its partners in whatever form they chose to draw them. The acceptance of this finding by the trial judge was clearly error. Florida jurisprudence indicates a reluctance to “pierce the corporate veil” unless disregard of the corporate entity is necessary to prevent injustice. House of Koscot Dev. Corp. v. American Line Cosmetics, Inc., 468 F.2d 64 (5th Cir.972) and cases cited therein. Further,’the officers of the plaintiff corporation cannot avail themselves of the corporate shield when it suits their purpose and discard the same when it does not appear advantageous. See DeSilva Construction Corp. v. Herrald, 213 F.Supp. 184 (M.D.Fla.1962).

Therefore, the trial judge should enter an order finding that the “officers’ salaries” must be included in the statements of income of the plaintiff corporation both before and after the cancellation of the lease, thereby reducing the annual profit and the special master’s computation of $29,975.71 as the damages suffered by the plaintiff corporation.

Accordingly, the judgment of the lower court is affirmed in part, reversed in part and remanded with the modifications directed herein.

It is so ordered.

*820PEARSON, Judge

(concurring special-iy)-

My view is that the trial judge did err at the time he made the reference. An order of reference to an accountant to determine facts that he is especially qualified to determine is proper, but a person not a member of the bar should not be directed to decide legal issues, i. e., the amount of damages caused by a specific act. I'agree that this error is not available on this record; therefore, I concur in the decision.

Concurrence
PEARSON, Judge

[*820] PEARSON, Judge

(concurring special-iy)-

My view is that the trial judge did err at the time he made the reference. An order of reference to an accountant to determine facts that he is especially qualified to determine is proper, but a person not a member of the bar should not be directed to decide legal issues, i. e., the amount of damages caused by a specific act. I'agree that this error is not available on this record; therefore, I concur in the decision.


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Citator

Cited By

  • Sostchin v. Doll Enters., Inc., 847 So. 2d 1123 (Fla. 3d DCA 2003)
    …Ltd. v. Shamrock Auto Rentals, Inc., 386 So. 2d 1273, 1274 (Fla. 3d DCA 1980)(where evidence only pertains to gross receipts or fails to account for expenses lost profits award will be reversed); Ed Skoda Ford, Inc. v. P & P Paint & Body Shop, Inc., 277 So. 2d 818, 819 (Fla. 3d DCA 1973) cert. den. 284 So. 2d 395 (Fla.1973)(officers’ salaries must be accounted for on corporation’s income statement, thereby reducing calculation of annual profit). Whether, as King Shoes’ argues, the compensation of its owner/o…
  • Resorts Int'l, Inc. v. Charter AIR Ctr., Inc., 503 So. 2d 1293 (Fla. 3d DCA 1987)
    …defense but may not be removed at will by the stockholders for the purposes of seeking affirmative relief. See State v. Barreiro, 432 So. 2d 138 (Fla. 3d DCA), review denied, 441 So. 2d 631 (Fla.1983); Ed Skoda Ford, Inc. v. P & P Paint & Body Shop, 277 So. 2d 818 (Fla. 3d DCA), cert. denied, 284 So. 2d 395 (Fla.1973); see also Soclof v. State Road Dep't, 169 So. 2d 510 (Fla. 1st DCA 1964). . Although Resorts contends that Charter's expectation damages are too speculative to recover, the law requires only th…
  • …Certiorari denied. 277 So. 2d 818. ROBERTS, Acting C. J., and ERVIN, ADKINS, BOYD and McCAIN, JJ., concur.…

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