Warrington

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

BRAD WARRINGTON,

Plaintiff,

v. Case No. 2:22-cv-77-KCD-KRH

RAKESH PATEL and ROCKY

PATEL PREMIUM CIGARS,

INC.,

Defendants.

ORDER

Plaintiff Brad Warrington is a minority shareholder in Defendant Rocky

Patel Premium Cigars (“RPPC”). As Warrington tells it, the company’s

namesake and majority shareholder, Defendant Rocky Patel, treats the

business as a personal piggy bank while starving Warrington of distributions.

Apparently fed up, Warrington attempted to offload his shares to a third party.

But Defendants allegedly thwarted the sale, spurring this lawsuit.

Defendants, for their part, have filed a counterclaim against Warrington for

“breach[ing] his fiduciary duty to the Company by threatening to release

information damaging to the Company and its reputation, solely in order to

enhance leverage for a[n] outsized purchase of his minority position.” (Doc. 194

at 7; see also Doc. 170.)1

Both parties now seek summary judgment on various parts of their

respective claims. (Docs. 413, 416.) For the most part, a jury will have to

untangle the messy factual disputes underlying Warrington’s affirmative

claims. But because Warrington is not, as a matter of law, a majority or

controlling shareholder of RPPC, the Court grants summary judgment on

Defendants’ counterclaim.

I. Background

The broad strokes of this business divorce are uncontested. To the extent

material facts remain in dispute, the Court addresses them in the analysis

below, viewing the record “in the light most favorable to the party opposing the

motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587

(1986).

Warrington’s business relationship with Patel began in 1996, when

Warrington invested roughly $35,000 into RPPC. (Doc. 413 at ¶ 1.) Two years

later, the parties executed a “Buy-Sell Agreement.” (See Doc. 413-1 at 17.)2

Several provisions are relevant here. First, Section 2.01 required “[a]ny

1 Unless otherwise indicated, all internal quotation marks, citations, and alterations have

been omitted in this and subsequent citations.

2 For ease of reference, the Court will cite the page numbers generated by its electronic

filing system for all exhibits.

Stockholder who desires to sell or transfer all or any part of the shares” to

“notify the proposed transferee of the terms of [the Agreement]” and “give

written notice thereof to the Corporation[,]” specifying “the number of shares

to be disposed of, the name of the proposed transferee, and the amount and

terms of the consideration to be reviewed for the shares.” (Id. § 2.01.)

Once a shareholder gives notice, Section 2.02 allows RPPC a 30-day

option to buy the shares itself. (Id. § 2.02.) The company gets a favorable

pricing mechanism, paying the lesser of two amounts: the price offered by the

third party, or a formulaic “value per share” calculated under Article 4 of the

agreement. If the company passes, Section 2.03 gives the remaining

stockholders an additional 30 days “to exercise their option to purchase their

proportionate shares of the common stock not purchased by the Corporation at

the price the Corporation would have been required to pay pursuant to Section

2.02 hereof[.]” (Id. § 2.03.) Finally, if neither RPPC nor one of its stockholders

exercised their option to purchase, “the selling Stockholder shall be entitled to

sell or transfer to the proposed transferees[.]” (Id. § 2.04.)

Warrington first asked RPPC to buy back his shares in 2015. (Doc. 413

at ¶ 13.) Over the next several years, Warrington’s relationship with

Defendants soured. Through a series of contentious emails, the parties

disagreed as to the value of the company, and more importantly, the value of

Warrington’s shares. (Id. ¶¶ 14-15.) The dispute only escalated from there.

Warrington’s counsel, Frank Caruso, lodged formal demands for RPPC’s books

and records in October 2019 and again in January 2020. The parties dispute

whether these demands were ever rescinded. (Doc. 428 ¶ 18.) Finally, in April

2021, RPPC put an offer on the table: $2,831,766 for Warrington’s shares,

relying on a valuation prepared by Dr. Michael Crain. (Doc. 413 at ¶ 24).

Warrington declined the offer. Instead, on June 18, 2021, Caruso sent

RPPC “written notice of [Warrington’s] desire to sell all of his shares” to a third

party, Special Purpose Vehicle Whitefish Bay. (Doc. 416-44.) The letter laid out

the terms of the proposed deal as follows:

In accordance with the Buy-Sell Agreement of

September 1998 and specifically Paragraph 2, this

letter shall serve as written notice of my client’s desire

to sell all of his shares in RPPC as follows:

1. 7,010 shares.

2. Special Purpose Vehicle (“SPV”) Whitefish

Bay.

3. $7,590,000 USD with 10% deposit and

balance upon completion of due diligence and

transfer of shares.

Please be advised that the Corporation has 30 days

from receipt of this letter to exercise its option to

purchase the shares.

(Doc. 416-44.) RPPC confirmed receipt of the letter. (Doc. 416 at ¶ 9.)

When thirty-days passed without word from RPPC, Caruso wrote back

on August 23, 2021, declaring that the company had waived its purchase

option. (Doc. 413 ¶ 29.) RPPC responded, insisting that the proposed

transaction was improper because the June notice failed to comply with the

strict requirements of the Buy-Sell Agreement. Specifically, RPPC complained

that the notice lacked definite terms and rested on an impermissible due

diligence contingency. (Doc. 416-9 at 2-3.)

Caruso then sent another letter that pivoted from the initial deal. He

said that the buyers had agreed to purchase only a “portion” of Warrington’s

shares, while acknowledging that these new shareholders would eventually

need to sign the Buy-Sell Agreement to comply with Section 2.04. On

September 27, 2021, Defendants responded, pointing again to the offer’s

noncompliance with the Buy-Sell Agreement and questioning whether the offer

was bona fide. (Doc. 413 at ¶ 32.)

This lawsuit followed. The complaint paints a picture of a controlling

shareholder run amok, alleging that Patel “repeatedly engaged in conduct that

prioritized his personal wealth over the interests of the corporation, including

self-dealing and misuse of company assets.” (Doc. 1 at 2.) At the heart of the

dispute is the flow of money. Warrington complains that, save for a single

transaction in 2009, his equity stake has yielded him nothing. Even that 2009

payment is fiercely contested: Defendants call it a dividend, while Warrington

insists it was a loan. The parties also spar over RPPC’s books, trading

accusations about whether the company’s financial statements are accurate

and whether Defendants improperly precluded Warrington’s requests to see

them. Finally, the parties dispute Patel’s compensation structure, the

propriety of certain loans RPPC has made to Patel, and whether Patel used

RPPC’s funds to bankroll his lifestyle.

The complaint includes seven claims for relief: Count I Breach of

Contract, Count II Breach of the Covenant of Good Faith and Fair Dealing,

Count III Tortious Interference with a Contract or Business Relationship,

Count IV Breach of Fiduciary Duty–Direct Action, Count V Breach of Fiduciary

Duty–Shareholder Derivative Action, Count VI Securities Fraud, and Count

VII Punitive Damages. (See Doc. 1.)

Defendants have filed a counterclaim for Breach of Fiduciary Duty.

According to RPPC, Warrington made false and disparaging statements about

its management and business practices. Defendants allege this conduct

amounted to outright extortion—featuring threats to instigate government

investigations and a $65 million demand delivered during a settlement

conference—all engineered to force the company into buying his shares at an

inflated price. (See Doc. 170.)

II. Legal Standard

Summary judgment is not a substitute for trial. It is appropriate only

“when a movant shows that there is no genuine dispute as to any material fact

and [he] is entitled to judgment as a matter of law.” Gonzalez v. Indep. Ord. of

Foresters, No. 24-10758, 2025 WL 337898, at *2 (11th Cir. Jan. 30, 2025).

“When deciding a motion for summary judgment, a judge is not himself to

weigh the evidence and determine the truth of the matter but to determine

whether there is a genuine issue for trial.” Las Brisas Condo. Homes Condo.

Ass’n, Inc. v. Empire Indem. Ins. Co., No. 2:21-CV-41-KCD, 2023 WL 8978168,

at *1 (M.D. Fla. Dec. 28, 2023). If the record is so one-sided that a party must

prevail as a matter of law, summary judgment is appropriate.

The mechanics are straightforward. The moving party bears the initial

burden. They must show “that there is an absence of evidence to support the

nonmoving party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The

nonmoving party must then step up, go beyond the pleadings, and point to

specific facts showing a genuine issue for trial. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 250 (1986). “An issue is genuine if a reasonable jury could return

a verdict for the nonmoving party.” Do v. Geico Gen. Ins. Co., No. 1:17-CV-

23041-JLK, 2019 WL 331295, at *2 (S.D. Fla. Jan. 25, 2019). On cross-motions

for summary judgment, as here, we view the facts in the light most favorable

to the nonmoving party on each motion. Daniels v. Exec. Dir. of Fla. Fish &

Wildlife Conservation Comm’n, 127 F.4th 1294, 1301 (11th Cir. 2025); Signor

v. Safeco Ins. Co. of Illinois, 72 F.4th 1223, 1227 (11th Cir. 2023).

III. Discussion

A. Warrington’s Motion for Summary Judgment

We start with Defendants’ counterclaim for breach of fiduciary duty

because it requires much less untangling. Warrington argues that he is

entitled to judgment as a matter of law because Delaware law governs, and

under Delaware law only majority or controlling shareholders (of which he is

neither) owe fiduciary duties to a corporation. (Doc. 416 at 11-13.) Defendants,

however, insist that Warrington waived this choice-of-law argument at the

motion to dismiss stage. “Since September 2023, the parties and the Court

have understood that Florida law applies, and Warrington gives no reason to

depart from that now.” (Doc. 426 at 5.)

As a general rule, “parties cannot waive or forfeit the application of the

correct law.” United States v. Holland, 117 F.4th 1352, 1360 (11th Cir. 2024).

While a choice-of-law argument can sometimes be waived if a party sits on its

hands for too long, that is not the case here. See Riverside Apartments of Cocoa,

LLC v. Landmark Am. Ins. Co., 505 F. Supp. 3d 1293, 1303 (M.D. Fla. 2020).

Neither side asked for a definitive choice-of-law ruling at the pleading stage.

In fact, Defendants urged the Court to defer resolving the nature of

Warrington’s duties “until at least the summary judgment stage.” (Doc. 133 at

5.) Because the choice-of-law question remained undeveloped, Florida law

acted as a convenient placeholder. The Court declines to lock the parties into

that placeholder now—especially after Defendants asked to defer the

reckoning.

Because this Court sits in diversity, Florida’s choice-of-law rules dictate

which substantive law governs the dispute. U.S. Fid. & Guar. Co. v. Liberty

Surplus Ins. Corp., 550 F.3d 1031, 1033 (11th Cir. 2008). Florida follows the

“internal affairs doctrine,” which commands that the law of the state of

incorporation controls claims involving a company’s internal governance,

including fiduciary duty claims against a shareholder. Freedman v. magicJack

Vocaltec Ltd., 963 F.3d 1125, 1133 (11th Cir. 2020). Because RPPC is a

Delaware corporation, Warrington is correct that Delaware law applies to the

counterclaim. See, e.g., Mukamal v. Bakes, No. 07-20793-CIV, 2008 WL

11391157, at *2 (S.D. Fla. May 20, 2008).

“Under Delaware law a shareholder owes a fiduciary duty only if it owns

a majority interest in or exercises control over the business affairs of the

corporation.” Ivanhoe Partners v. Newmont Min. Corp., 535 A.2d 1334, 1344

(Del. 1987). Because Warrington undisputably owns just 6.05% of RPPC’s

shares, Defendants’ breach of fiduciary duty claim survives only if he exercised

control over the company’s business affairs.

“A minority shareholder exercises actual control only when it has such

formidable voting and managerial power that it, as a practical matter, is no

differently situated than if it had majority voting control.” In re Franchise

Servs. of N. Am., Inc., 891 F.3d 198, 211 (5th Cir. 2018). No evidence supports

that finding here. In fact, Patel testified that Warrington was a “passive

shareholder” in RPPC. (Doc. 416-3, Patel Depo. at 25:22-26:3, 47:23.)

Defendants cannot praise Patel for single handedly building RPPC “from

almost nothing to a success” (Doc. 413 at 2), while simultaneously claiming

Warrington ran the show in order to salvage their claim. Accordingly,

summary judgment is granted in favor of Warrington on Defendants’

counterclaim.

Warrington separately asserts that he is entitled to partial summary

judgment on certain portions of his claims against Defendants. Specifically, he

asks the Court to make a binding determination that (1) the June 18, 2021

letter (the Whitefish notice) satisfied the requirements under § 2.01 of the Buy-

Sell Agreement, and (2) “neither RPPC nor any stockholder timely exercised

their option to purchase the shares as provided in the Buy-Sell Agreement or

timely objected in response to Warrington’s notice.” (Doc. 416 at 21.)

Defendants respond that the Whitefish notice was not compliant with § 2.01,

and therefore, raised no other obligations under the agreement. (Doc. 426 at

15-16.)

The Court finds that genuine disputes of material fact preclude

judgment as a matter of law as to the sufficiency of the Whitefish notice. First,

the parties sharply dispute whether the Whitefish offer was bona fide. (See

Doc. 426 ¶ 8.) Moreover, while Warrington contends that the offer complied

with the Buy-Sell Agreement by specifying the name of the proposed transferee

as “SPV Whitefish Bay” (Doc. 428 ¶ 26), Defendants argue that the notice was

insufficient because Whitefish was never formed as a legal entity and its

members were not disclosed until October 15, 2021—rendering the offer “null

and void.” (Doc. 413 at 14.)

Summary judgment allows the Court to “resolve purely legal questions”

but not to weigh evidence. Rodriguez v. Procter & Gamble Co., 465 F. Supp. 3d

1301, 1314 (S.D. Fla. 2020). Resolution of either of the above disputes requires

the Court to weigh key issues of fact for which both parties have proffered

evidence, including deposition testimony from prospective members of

Whitefish Bay and RPPC’s corporate representative. (See Deposition of

William Majcher, Doc. 428-18; Deposition of Jason Sharkey, Doc. 428-11;

Deposition of Eduardo Carneiro, Doc. 428-9). These issues include whether

Whitefish and its members agreed to be bound by the Buy-Sell, possessed the

intent and financing to close the deal, and the effect of the deal’s later

conversion to a much smaller agreement for only 7% of Warrington’s shares.

Because credibility is “ordinarily the province of the fact-finder at

trial[,]” these are jury questions. See Arthur v. Thomas, 974 F. Supp. 2d 1340,

1352 (M.D. Ala. 2013). Succinctly put,

[s]ummary judgment is not a time for fact-finding; that

task is reserved for trial. Rather, on summary

judgment, the district court must accept as fact all

allegations the [nonmoving] party makes, provided

they are sufficiently supported by evidence of record.

So[,] when competing narratives emerge on key

events, courts are not at liberty to pick which side they

think is more credible. Indeed, if “the only issue is one

of credibility,” the issue is factual, and a court cannot

grant summary judgment.

Sconiers v. Lockhart, 946 F.3d 1256, 1263 (11th Cir. 2020). The parties can

address the reach of the § 2.01 notice requirements as needed through motions

in limine and jury instructions.

B. Defendants’ Motion for Summary Judgment

Defendants, for their part, move for summary judgment on each of

Warrington’s claims. Although the Court is mostly unpersuaded, it will

address Defendants’ arguments in turn.3 The parties agree that Florida law

governs most of Warrington’s claims, so the Court will follow suit except where

noted. (See Doc. 412 at 12 n.2.)

i. RPPC’s obligation to provide a “Data Room” and other financial

documents to Whitefish

In his complaint, Warrington alleges that RPPC breached both the Buy-

Sell Agreement and its duty of good faith and fair dealing by “ignore[ing]

requests to provide a virtual data room for due diligence” (Doc. 1 at ¶ 40) and

3 Because the Court has found that issues of material fact preclude summary judgment on

the sufficiency of the Whitefish notice, the Court will not address Defendants’ arguments

regarding the same.

withholding certain financial information. (Doc. 1 at ¶ 51.) Defendants assert

that RPPC was neither obligated to provide a virtual data room under the Buy-

Sell Agreement nor any other financial information under its duty of good faith

and fair dealing. (Doc. 413 at 13-16.)

The Court agrees with Defendants that RPPC had no obligation under

the Buy Sell Agreement to “provide a data room” simply because a third-party

offer included a due diligence contingency. Although Section 2.01 of that

agreement requires the transferor to specify the “terms of consideration,” that

provision does not obligate RPPC to fulfill the seller’s buyer-imposed

contingencies. (Doc. 428-1 § 2.01.)

However, genuine issues of material fact preclude summary judgment

on Warrington’s claim that Defendants breached the duty of good faith and fair

dealing by withholding financial information and thwarting the sale.

As Defendants see it, RPPC was “justified in declining to provide

confidential financial documents to the unnamed and unknown members of

Whitefish” (Doc. 413 at 15), because the corporation reasonably believed that

the offer was fake, and a breach of good faith claim will not lie when the

defendants’ actions arose out of “honest mistake, bad judgment or negligence.”

Resnick v. AvMed, Inc., 693 F.3d 1317, 1329 (11th Cir. 2012). In support,

Defendants present evidence that the Whitefish offer was “orchestrated by

Caruso to manufacture claims for this litigation, not bona fide, and backed by

shadowy figures[,]” including emails sent from Warrington threatening

litigation and expert testimony suggesting such a sale was unlikely. (Doc. 413

at 15-16).

Warrington, for his part, presents deposition testimony from himself,

Caruso, and members of Whitefish demonstrating that “there is ample

evidence Whitefish could and would have completed the sale.” (Doc. 428 at 13-

14). Because the determination of whether Defendants acted in bad faith or

under a reasonable belief turns on competing testimony and witness

credibility, the Court agrees with Warrington that this dispute must be

resolved by a jury.

ii. Tortious Interference Claim

To establish a claim of tortious interference with a business relationship

under Florida law, a plaintiff must show: “(1) the existence of a business

relationship, not necessarily evidenced by an enforceable contract; (2)

knowledge of the relationship on the part of the defendant; (3) an intentional

and unjustified interference with the relationship by the defendant; and (4)

damage to the plaintiff as a result of the breach of the relationship.” Euclid

Turnaround Opportunity Fund LP v. Amerant Equip. Fin., No. 25-CV-20647,

2025 WL 3905174, at *10 (S.D. Fla. Oct. 6, 2025).

Warrington maintains that Defendants tortiously interfered with the

contractual relationship between himself and Whitefish Bay SPV by “fail[ing]

to respond to Warrington’s requests for a virtual data room so that the

purchaser could conduct due diligence, forcing the alteration of the sale

agreement, and refus[ing] to provide Warrington with the shares or share

certificate, preventing Warrington from performing his portion of the sale

contract.” (Doc. 1 at ¶ 59.) Defendants claim that they are entitled to summary

judgment here because (1) any action by RPPC was justified to protect its

interests, and (2) RPPC had a supervisory and/or financial interest in the

relationship between Warrington and the members of Whitefish. (Doc. 413 at

17-18.)

To be sure, Florida law allows a defendant to protect its own economic

interests without facing liability for tortious interference. Horizons Rehab.,

Inc. v. Health Care And Ret. Corp., 810 So. 2d 958, 964 (Fla. Dist. Ct. App.

2002). But RPPC’s theory that withholding due diligence was necessary to

“assure the continuity of the management and control” of RPPC fails on

summary judgment because it requires the Court to resolve several factual

inferences in its favor.

What is more, the record contains multiple facts that muddy Defendants’

narrative. First, RPPC did not learn until discovery that certain Whitefish

members planned to flip their shares after the sale, meaning a reasonable juror

could conclude that its purported evidence (deposition testimony from

members of Whitefish) could not have motivated the refusal at the time.

Second, because Warrington held only a 6% stake in the corporation, a jury

could reasonably conclude that thwarting the sale was unjustified. Whether

the record ultimately support’s RPPC’s defense is a fact question. A reasonable

factfinder might agree with RPPC’s inferences, or it might not. But at this

stage, the Court is not convinced.

iii. RPPC’s obligation to conduct a valuation

As part of his breach of contract claim against Defendants, Warrington

alleges that RPPC “failed to provide regular valuations of the corporation in

accordance with Section 4.02 [of the Buy Sall Agreement.]” (Doc. 1 at 10.)

Section 4.02 defines the term “Value Of The Corporation” and states it “shall

be determined every two years pursuant to . . .” an appraisal process involving

the selling stockholder and the purchasing stockholder. (Doc. 413-1 § 4.02.)

Defendants maintain that they are entitled to summary judgment on this

claim because, as they see it, RPPC’s obligation to conduct such a valuation is

limited to when a stock purchase occurs. (Doc. 413 at 18-19.)

The Court agrees with Defendants. A cardinal rule of contract

interpretation requires courts to read an agreement as a whole, rather than

plucking a single phrase out of context. When read in full, Article 4 governs

the “Purchase Price of Common Stock.” Section 4.01 explicitly kicks in only “[i]f

the Corporation or any Stockholder purchases Common stock.” Section 4.02

then defines how to calculate that price, laying out an appraisal process that

strictly requires the participation of both the “selling” and “purchasing”

stockholders. Warrington’s interpretation—that Section 4.02 requires a semi-

annual valuation—divorces the “every two years” language from its natural

habitat. Reading it as a free-floating obligation to value the company is

incompatible with the surrounding text. RPPC’s duty to conduct an appraisal

is inextricably tethered to an actual stock purchase. It is not a standalone,

biannual chore.

iv. Patel’s transfer of shares to his family members

Defendants also seek summary judgment on Warrington’s claim for

breach of contract as it relates to certain shares of stock that Patel gifted to

members of his family and his trust without undergoing the mandated

appraisal and valuation process. Defendants assert that this claim fails

because Warrington consented to the transfers, and in any event, the five-year

statute of limitations for a contract claim as to the 2010 and 2013 transfers

passed long before the instant litigation. (Doc. 413 at 19). Defendants further

assert that the claim is barred under the doctrine of laches and equitable

estoppel. (Id.) Warrington responds that he did not (and could not) have

consented to such transfers. And further, the breaches of § 4.02 are not time-

barred because “Defendants did not determine the corporation’s value every

two years and, thus, breached the BSA at least twice during the five years

before this lawsuit.” (Doc. 428 at 17.)

Although the Court agrees with Warrington that any breaches within

the five years immediately prior to the instant litigation are not time-barred,

Defendants are correct that the five-year statute of limitations has passed

insofar as Warrington asserts a breach of contract claim related to the 2010

and 2013 transfers. See Jeunesse, LLC v. LifeWave, Inc., No. 6:15-CV-131-0RI-

28, 2015 WL 4911349, at *2 (M.D. Fla. Aug. 17, 2015) (“The Florida statute of

limitations for breach of contract is five years . . . [and] the date of accrual is

the date of the first breach.”). Accordingly, Defendants’ motion is granted as to

the 2010 and 2013 transfers.

v. Warrington’s Breach of Fiduciary Duty claim

Defendants next move for summary judgment on Warrington’s claim for

breach of fiduciary duty. (Doc. 413 at 21). As a preliminary matter, Defendants

assert that Warrington’s claim is barred by the applicable four-year statute of

limitations. (Id. at 27). But as Warrington responds, his fiduciary duty claims

are not barred under the continuing torts doctrine because “Defendants’

breaches of their fiduciary duties never ceased.” (Doc. 428 at 25); See

Goldsworthy v. Dist. Sch. Bd. of Collier Cnty., Fla., No. 2:17-CV-239-JES-CM,

2018 WL 3536081, at *2 n.1 (M.D. Fla. July 23, 2018) (explaining that under

the continuing torts doctrine, “the statute of limitations period runs from the

date the continuing tortious conduct ceases”).

Insofar as Warrington complains that he has not received a dividend

from RPPC since 2009, Defendants posit that RPPC “had a compelling

justification” not to issue such dividends in the form of a complicated and

changing regulatory market which required “access to tens if not hundreds of

millions of dollars.” (Doc. 413 at 23.) As Defendants see it, RPPC’s need for

large cash reserves justifies both the lack of distributions and its “immediately

recoverable” loans to Patel, the majority shareholder. (Id. at 24). As for

Warrington’s allegation that Patel receives “excessive compensation” for his

work as CEO, Defendants maintain that “Warrington has failed to present any

evidence that Patel was overcompensated” and points to testimony from

Warrington that Patel “can have any salary he wants[.]” (Doc. 413 at 25.)

To justify Patel’s compensation in the form of both salary and royalty

payments (for the use of his name) Defendants present testimony from

“compensation expert” Brent Longnecker that Patel was undercompensated in

light of his experience and skills. Defendants also present testimony from

RPPC’s corporate representative, Eduardo Carneiro, highlighting the

corporation’s financial needs.

Warrington, for his part, asserts that the lack of dividends, corporate

loans, and excessive compensation all constituted various ways that RPPC

funneled money to Patel in order to “squeeze out” Warrington. What is more,

according to Warrington, Patel reaped the financial benefits of RPPC while

passing tax liability to Warrington as a Subchapter S corporation. (Doc. 428 at

23-24). In support of his claim, Warrington presents the testimony and report

of his expert James S. Feltman, CPA, CFF concluding that “there is little

evidence that the interests of the minority shareholder are considered or

protected” by RPPC and that Patel is “far and away the largest beneficiary of

[RPPC]’s financial performance.” (Doc. 248-22 at 31-32). The Court finds that

Warrington has presented sufficient evidence to create a dispute of material

fact as to whether Patel was overcompensated.

Finally, to the extent Defendants assert that they are entitled to

judgment as a matter of law because, as they see it, Warrington’s expert failed

to provide an opinion on how the alleged breaches changed the value of his

shares, the Court agrees with Warrington that a reasonable jury could

conclude that “there is little to no commercial value for Warrington’s shares

because they rendered them unmarketable” by Patel and RPPC. (Doc. 428 at

28.) In any event, the Court finds sufficient Warrington’s expert opinion that

“[e]conomic harm to Mr. Warrington relative to his ability to recover market

value of his common share interests is $10.3 million to $12.4 million dollars.”

(Doc. 428-22 at 31.) Any later limitations to that damage amount can be fleshed

out in the form of jury instructions at the time of trial.

vi. Warrington’s Shareholder Derivative Suit

Defendants seek summary judgment on Warrington’s shareholder

derivative claim for two reasons. First, they assert that the derivative claim

fails because Warrington failed to make the requisite pre-suit demand or

adequately plead futility. (Doc. 413 at 31.) Second, Defendants argue that

summary judgment should be granted because Warrington has failed to

present an issue of fact as to any self-dealing on the part of Patel or usurpation

of corporate opportunities related to loans made to Patel’s Burn by Rocky Patel

Cigar Lounges and tobacco farms. (Id. at 30-31.)

“Delaware corporate law requires a shareholder who intends to initiate

a derivative action on behalf of a corporation to either make a demand on the

board of directors to rectify the alleged wrongs or show why demand is

excused.” Whitten v. Clarke, 41 F.4th 1340, 1343 (11th Cir. 2022). One situation

wherein the pre-suit demand requirement is considered excused, is “if a

majority of the board of directors faces a substantial likelihood of liability.” Id.

The Court finds that Warrington has successfully pled and supported demand

futility. (See Doc. 1 at ¶ 77 (“Because Rocky is the president and controlling

shareholder, Warrington believed a demand to the corporation to rectify his

wrongdoing would be futile.”).)

Defendants aver that Warrington waived his demand futility argument

through a letter sent on June 9, 2013—a year after Warrington filed his

complaint. (See Doc. 413-1 at 417-419.) True, “[w]hen a demand is made, the

question of whether demand was excused is moot.” See Spiegel v. Buntrock, 571

A.2d 767, 775 (Del. 1990). Here, however, Warrington sent the letter to RPPC’s

counsel of record a full year after filing suit. Because the letter was sent after

litigation was already underway, the Court finds that it did not (and could not)

constitute a “pre-suit” demand and therefore did not functionally waive

Warrington’s demand-futility argument. The Court also agrees with

Warrington that the same issues of fact precluding summary judgment as to

his direct action for breach of fiduciary duty (Count IV) also preclude judgment

as a matter of law on his shareholder derivative claim (Count V).

vii. Securities Fraud Claim

In Count VI, Warrington brings a claim against Defendants for securities

fraud. Defendants assert that they are entitled to judgment as a matter of law

on this claim because “[t]here is no evidence” that Patel ever made fraudulent

statements to Warrington about the company’s valuation. (Doc. 413 at 33.)

Among other things, a claim for securities fraud requires the defendant

to make “a misrepresentation or omission of a material fact[.]” Gochnauer v.

A.G. Edwards & Sons, Inc., 810 F.2d 1042, 1046 (11th Cir. 1987). In support

of his claim, Warrington presented his own deposition testimony that Patel

had advised him that RPPC was worth $100 million or more. Defendants aver

that because, when pressed for details, Warrington could not remember any

about the timing and concept of Patel’s statements, his deposition testimony is

not sufficient to survive summary judgment. But as Defendants concede within

their own motion, Warrington testified that Patel “proposed a valuation

somewhere between $100 million and $150 million” for RPPC (the what)

“before [a] meeting with Mr. Wang, a potential advisor” (the when). (Doc. 413

at 34.)

In the Eleventh Circuit, “case law recognizes that, even in the absence

of collaborative evidence, a plaintiff’s own testimony may be sufficient to

withstand summary judgment.” Strickland v. Norfolk S. Ry. Co., 692 F.3d

1151, 1160 (11th Cir. 2012). True, “[m]ere conclusions and unsupported factual

al legations are legally insufficient to defeat a summary judgment motion[,]”

Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005), but the Court finds

Warrington’s deposition testimony sufficiently specific, at the summary

judgment stage, to create triable issue of fact as to whether Patel made certain

statements to Warrington about the valuation of RPPC.

Defendants further assert that they are entitled to judgment as a matter

of law on Plaintiff’s Securities Fraud claim because “Warrington’s claimed

damages for lost opportunities—either $7.59 million for the June 18, 2021

attempted sale or $541,370 for the October 15, 2021 attempted sale—cannot

be considered true losses[,]” given the deficient Whitefish notice. As the Court

previously found, an issue of material fact remains as to whether the June 18,

2021 letter constituted sufficient notice under Section 2.01 of the Buy-Sell

Agreement.*

Accordingly, it is now ORDERED:

1. Plaintiffs Motion for Summary Judgment (Doc. 416) is GRANTED

IN PART and DENIED IN PART. Summary Judgment is

GRANTED in favor of Plaintiff and against Defendants, who shall

take nothing, on the counterclaim. The motion is otherwise DENIED.

2. Defendants’ Motion for Summary Judgment (Doc. 413) is GRANTED

as to the issues and claims noted above that cannot survive. The

motion 1s otherwise DENIED.

3. The clerk shall withhold judgment on the counterclaim until the

conclusion of the case.

ENTERED in Fort Myers, Florida on September 8, 2026.

Kyle C. Dudek

United States District Judge

4To the extent Defendants ask the Court to determine which of Warrington’s evidence for his

securities fraud claim are valid under Florida’s two-year statute of limitations, the Court

finds that that determination is more properly addressed through the vehicle of motions in

limine prior to trial.

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