BROWARD COUNTY — The 5th District Court of Appeal has reversed and remanded a case in which a dispute arose following the purchase a business.
Appellant E-Commerce Coffee Club bought a business from the appellees, Miga Holdings Inc., Global Trading & Marketing LLC, Jason Elsner, Luca Minna and Espresso Italiano Holding LLC, in an action that resulted in three different claims. The appeal was filed after both sides tried to come to a conclusion with a settlement agreement, and E-Commerce Coffee Club attempted to enforce the terms of the agreement in the appeal.
The legal woes began when Miga Holdings brought on accountant, Phil Shechter of Global Trading & Marketing LLC, to assess the value of the business it was selling to the coffee club, according to court records. Shechter created a report that said the company was worth $1.2 million in “Report 1.” The report allegedly said that the amount only included the information Shechter had, and it could be updated if any new data was presented.
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Miga Holdings followed up with a statement from Elsner that said the business took on $662,000 in marketing costs in 2011.
E-Commerce Coffee Club and Miga Holdings then entered into a settlement agreement in an effort to end the pending litigation, court records state. The agreement said both parties recognized Shechter was creating a Revised Supplemental Valuation Report (RSVR) and both sides would agree and “be bound by” Shechter’s final report. Both had the opportunity to challenge Shechter’s findings.
Shechter then provided “Report 2,” which was described as an “Updated Expert Report.”
The accountant said that unlike the circumstances for Report 1, he had been hired by both the appellant and appellees for Report 2. In the latter analysis, Shechter said the value of the business was either $527,000 or $821,000. The end number would be determined if overhead or marketing costs were included.
Afte the second report was provided, the other appellees asked the court to require a settlement agreement, while the coffee club wanted the overhead and marketing costs to be included in the second report. Shechter subsequently provided a follow-up analysis, “Report 3," in which the value of the business was $190,000 and the $662,000 in market expenses based on Elsner’s information was considered.
E-Commerce Coffee Club motioned for the court to acknowledge and enforce the third report as the RSVR, as explained in the settlement agreement. The coffee club sought to submit the first report and other documentation involved before reaching an agreement to prove the purpose of the RSVR. The trial court ruled that paperwork prior to the agreement was irrelevant to the current matter before leaving the bench.
The lower court said the Elsner Affidavit was fraudulent for not being “properly executed.” The court dismissed evidence related to the affidavit, including Report 3. The appellant attempted to justify Report 3’s amount of $662,000 for marketing expenses but the trial court was not persuaded. The lower court ultimately decided Report 2 should be the RSVR that is executed in the settlement agreement.
The appeals court disagreed with the trial court for multiple factors, including the lower court’s “error” in not allowing evidence in the case and dismissing E-Commerce Coffee Club’s motion to bring more documentation. The appeals court ruled permitting the evidence would have helped solve concerns of ambiguity. It also said the trial court was incorrect when it left the bench during the hearing.
It reversed the lower court’s decision in the motion for it to enforce the settlement agreement. It remanded the case back to the lower court for a new hearing where that court was ordered to consider the evidence when decided whether Report 2 or Report 3 will be the RSVR for the settlement agreement. The appellant would also be permitted to submit evidence beyond Elsner’s report, which could confirm the amount for Report 3.