MAGGY HURCHALLA v. LAKE POINT PHASE I, LLC and LAKE POINT PHASE II, LLC

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

MAGGY HURCHALLA,

Appellant,

v.

LAKE POINT PHASE I, LLC, and LAKE POINT PHASE II, LLC,

Florida Limited Liability Companies,

Appellees.

Nos. 4D18-1221 & 4D18-1632

[June 19, 2019]

Consolidated appeal from the Circuit Court for the Nineteenth Judicial

Circuit, Martin County; William L. Roby, Judge; L.T. Case No. 43-2013-

CA-001321.

Richard J. Ovelmen, Rachel A. Oostendorp, Alix I. Cohen and Dorothy

Kafka of Carlton Fields Jorden Burt, P.A., Miami, Virginia P. Sherlock and

Howard K. Heims of Littman, Sherlock & Heims, P.A., Stuart, Talbot

D’Alemberte of D’Alemberte & Palmer, PLLC, Tallahassee, and Jamie S.

Gorelick, David W. Ogden, David Lehn and Justin Baxenberg of Wilmer

Cutler Pickering Hale and Dorr, LLP, Washington, DC, for appellant.

Michael J. Labbee, Ethan J. Loeb and Jon P. Tasso of Smolker, Bartlett,

Loeb, Hinds & Thompson, P.A., Tampa, for appellees Lake Point Phase I,

LLC, and Lake Point Phase II, LLC.

Richard Grosso of Richard Grosso, P.A., Davie, for Amici Curiae Dr.

Penelope Canan and George W. Pring.

Richard Grosso of Richard Grosso, P.A., Davie, for Amici Curiae

Bullsugar.org, Florida Wildlife Federation, Friends of the Everglades, and

the Pegasus Foundation.

Jack Schramm Cox, Hobe Sound, for Amicus Curiae The Guardians of

Martin County, Inc.

Paul M. Crochet of Weber, Crabb & Wein, P.A., St. Petersburg, for Amici

Curiae First Amendment Foundation, The League of Women Voters of

Florida, Florida Press Association, Florida Society of News Editors, Natural

Resources Defense Council, Sierra Club, American Civil Liberties Union

Foundation of Florida, Fane Lozman, and The Brechner Center.

CONNER, J.

Maggy Hurchalla (“Hurchalla”) appeals the final judgment entered after

a jury found in favor of Lake Point Phase I, LLC and Lake Point Phase II,

LLC (collectively, “Lake Point”), on its claim of tortious interference. Prior

to trial, the South Florida Water Management District (“the District”) and

Martin County (“the County”) were co-defendants, but the claims against

them were settled. Hurchalla argues the trial court erred by: (1) improperly

instructing the jury on her defense of First Amendment privilege to petition

the government; (2) entering the judgment against her when the evidence

was insufficient to defeat her First Amendment privilege; (3) improperly

instructing the jury on her defense of common law privilege to make

statements to a governmental entity for mutual and public interest; (4)

entering the judgment against her when the evidence was insufficient to

defeat her common law privilege; (5) denying her motion for judgment

notwithstanding the verdict (contending insufficient evidence of breach,

causation, and damages); (6) giving an adverse inference jury instruction;

and (7) ordering her to pay attorneys’ fees as a sanction. We affirm on the

issues regarding the First Amendment and common law privileges and

explain our analysis. We affirm as to the other issues raised without

discussion.

As to the jury instructions regarding the privilege defenses, we

determine there was no reversible error. As to the evidentiary arguments,

we determine that the jury was presented with sufficient evidence to

conclude the privileges were negated by malice on the part of Hurchalla.

Background

This appeal involves a 2,266-acre tract of land in Martin County (“the

Property”). The previous owners of the Property planned to develop a

subdivision of twenty-acre “ranchettes,” for which the County issued a

development order (“the Development Order”) for a large segment of the

Property. The Development Order allowed the owners to mine limestone

from the Property. When the real estate market started to decline in 2008,

the previous owners looked to sell the Property. They contacted the

District about buying the Property. The Property was of value to the

District because of its unique location at the intersection of three different

water basins and its potential for storing, cleansing, and then conveying

water to different areas. However, the District was not able to acquire the

funding to purchase the Property in a timely manner. Since Lake Point

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had been a contractor building on the Property for the previous owners, it

“realized that there was a very economical limestone on the [P]roperty” that

the company could use for its heavy highway construction business, so it

purchased the Property.

Lake Point approached the District with a concept for a public-private

partnership to construct a stormwater treatment project (“the Project”) on

the Property. After the District oversaw an in-depth due diligence

investigation, Lake Point and the District entered into an agreement titled

“Acquisition and Development Agreement for Public Works Project” (“the

ADA”) in November 2008. The ADA addressed the Project in two phases,

Phase I and Phase II, based on the fact that a portion of the Property was

under the Development Order. As to the Phase I parcel, mining would

continue under the Development Order. As to the Phase II parcel, which

was not under the Development Order, it was contemplated that Lake

Point would conduct mining to create stormwater treatment facilities, but

as to that parcel, mining permits would be obtained from both the Florida

Department of Environmental Protection (“FDEP”) and the Army Corps of

Engineers (“the Corps”). The Project envisioned that excavation of

limestone would create the stormwater management lakes that could be

used by the District for water storage and conveyance purposes. The

agreement required Lake Point to donate the Property to the District in

phases over a 20-year period, as Lake Point mined limestone from the

property. Because the Development Order was an encumbrance on the

Property, the ADA provided that Lake Point would have the Development

Order vacated as to the portions of the Phase I parcel donated to the

District.

Since the County was a necessary player in accomplishing the Project,

the District and the County entered into an interlocal agreement (“the

Interlocal Agreement”) for the Project in May 2009. The Interlocal

Agreement expressly acknowledged the Project’s numerous “water related

benefits.” Mirroring the ADA, the Interlocal Agreement required that the

Development Order (authorizing mining) had to be vacated as to any

portion of the Phase I parcel donated to the District. The County expressly

agreed that it would take no action to otherwise create any encumbrances

on the Property. The agreement also provided that until portions of the

Property were donated to the District, the Development Order would

remain in full force and effect.

The Interlocal Agreement also allowed Lake Point to mine limestone on

the Phase II portion of the Property, if it obtained permits from both the

FDEP and the Corps. Once Lake Point obtained those permits, additional

permission from the County to mine the Phase II parcel was not required

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because the Project qualified as an exempt public stormwater project. The

Interlocal Agreement also provided that Lake Point would pay the County

an annual monetary contribution based on the amount of limestone

mined.

Over the next several years, Lake Point worked to implement the

Project. Lake Point commissioned additional engineering reports to ensure

the Project’s success. It applied for and obtained the necessary mining

permits from the FDEP and the Corps. During this time, the County

monitored the Project and never identified any problems with the Project.

Hurchalla served as a Martin County Commissioner from 1974 to 1994.

She has received numerous awards for her long commitment to

environmental issues and had served on state and regional environmental

boards and committees. When the County entered into the Interlocal

Agreement in 2009, Hurchalla knew of the Project and expressed a few

concerns, but took no action in protest.

In September 2012, local media published an article about a plan by

Lake Point to convert the Project into one that would supply water to the

City of West Palm Beach for consumptive use. The article alarmed

Hurchalla. Prompted by the news article, by late 2012 Hurchalla became

vehemently opposed to the Project. This was in the same time frame as

the 2012 general election, which saw a change to the composition of the

Board of the Martin County Commission (“BOCC”) with the election of

Hurchalla’s good friend Anne Scott, joining another close friend, Sarah

Heard on the BOCC. Hurchalla began expressing her disagreement with

the Project in a series of emails sent to these close friends on the BOCC

using their private email accounts; messages were also sent to the BOCC

email address of Commissioner Ed Fielding. These emails encouraged the

commissioners to copy and paste Hurchalla’s statements and forward

them in emails to the other county commissioners and county staff.

Hurchalla also began giving explicit instructions in the emails to her

commissioner friends as to how to stop the Project with various

maneuvers.

As found by the jury, the emails resulted in the County changing course

and moving to thwart, or at the least, significantly delay the Project.

In 2013, Lake Point sued the District and the County, asserting claims

for declaratory relief, breach of contract, and tortious interference. In an

amended complaint, Lake Point also asserted two counts against

Hurchalla, individually; one for tortious interference seeking injunctive

relief, the other for tortious interference seeking damages. Regarding

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Hurchalla, Lake Point alleged that there were new members elected to

serve on the BOCC, and that “[l]eading up to and in conjunction with this

change in the BOCC’s composition, Hurchalla started to engage in

surreptitious activities targeted to interfere with Lake Point’s interests.”

Lake Point alleged that Hurchalla scheduled and attended meetings, and

also had email communications with various members of the BOCC,

having a “plan to interfere with the” Interlocal Agreement and ADA. It was

also alleged that Hurchalla “began making numerous false and misleading

statements verbally and in writing to the BOCC, [the District] and others,

outside of normal public meetings.” Lake Point specifically listed in the

amended complaint seven statements Hurchalla made in a January 4,

2013 email sent to all five county commissioners. Finally, Lake Point

alleged that “[a]s a result of and in direct response to Hurchalla’s efforts

and false statements, the County and [the District] have begun breaching

various obligations under the Interlocal Agreement and Development

Agreement with Lake Point[.]”

The District and the County settled with Lake Point, which resulted in

amendments to the ADA and Interlocal Agreement more favorable to Lake

Point, and the County paid Lake Point $12 million. Lake Point abandoned

its count against Hurchalla for an injunction. The only remaining count

at the time of trial was against Hurchalla for damages, focusing on her

alleged tortious interference with the Interlocal Agreement.

The jury returned a verdict for Lake Point, awarding $4.4 million in

damages. The trial court denied Hurchalla’s motion for judgment

notwithstanding the verdict. Hurchalla gave notice of appeal.

Appellate Analysis

Hurchalla argues that the trial court improperly instructed the jury on

her First Amendment privilege to petition her government and her common

law privilege to make statements to a political authority regarding matters

of public concern. Additionally, she argues the evidence presented to the

jury was insufficient to defeat both privileges. We first address the

arguments regarding the jury instructions.

Jury Instructions Regarding the Privilege Defense

On appeal, Hurchalla asserts the trial court erred in instructing the

jury on her defense under the First Amendment privilege to petition her

government and her defense under the Florida common law to make

statements to a political authority regarding matters of public concern.

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Our review of the trial transcript reveals that most of defense counsel’s

charge conference arguments focused on legal principles regarding the

common law privilege. However, there were times when defense counsel

would infuse arguments about the First Amendment privilege, thus

blurring the distinction between the two privileges. It is clear there were

no separate and distinct proposed jury instructions for each privilege

submitted by Hurchalla for the trial court to consider. Similarly, there is

nothing in the record suggesting that Hurchalla attempted to offer two

separate privileges for the jury to consider. Instead, Hurchalla’s counsel

submitted “Defendant’s Proposed Jury Instruction No. 10 First

Amendment Privilege,” which actually contained the elements of the

common law privilege, rather than the First Amendment privilege.

There are important differences between the federal constitutional First

Amendment privilege to petition government and the Florida common law

privilege to speak to another about matters of mutual and public interest.

Our supreme court, in Nodar v. Galbreath, 462 So. 2d 803 (Fla. 1984),

explained the similarities and differences.

Both privileges are qualified, meaning they are not absolute. Id. at 806

(discussing New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710,

11 L. Ed. 2d 686 (1964), regarding the right of a public official to bring a

defamation action and describing the Florida common law privilege as

“conditional” and “qualified”). Both privileges can be overcome by a

showing of malice. Id. However, the types of malice necessary to overcome

the privileges are different. Id. To overcome the First Amendment

privilege, actual malice must be shown. Id. In contrast, express malice

must be shown to overcome the Florida common law privilege. Id. The

supreme court described the difference in the malice standards:

“Actual malice[]” . . . consists of knowledge of falsity or

reckless disregard of truth or falsity, and must be shown by

clear and convincing evidence. Express malice under the

common law of Florida, necessary to overcome the common-

law qualified privilege, is present where the primary motive for

the statement is shown to have been an intention to injure the

plaintiff. The plaintiff need only show this fact by a

preponderance of the evidence, the ordinary standard of proof

in civil cases.

Id. at 806-07 (internal citations omitted). Thus, not only are the standards

of malice different, but so are the burdens of proof to establish the malice.

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The differences between the two privileges are important for

understanding the proper interplay between the First Amendment

privilege and the common law privilege with the elements of tortious

interference with contractual relationships. For example, the two

privileges require different types of malice: actual malice or express malice.

Hurchalla argued only express malice for her defense in the trial court.

While she affirmatively requested an instruction discussing express malice

below, on appeal, she argues the trial court failed to instruct on actual

malice. Additionally, regarding the interplay of privilege with the elements

of tortious interference and the burden of proof as to privilege, defense

counsel briefly argued at one point that it was Lake Point’s burden to

negate Hurchalla’s privileged statements; however, that argument was

virtually abandoned or countermanded by defense counsel’s repeated

assertion that the privilege was an affirmative defense.

Because defense counsel’s submissions and arguments during the

charge conference failed to make important distinctions between the two

privileges, we determine the trial court’s instructions regarding privileged

communication and the privilege defense were not reversible error. 1 See

Universal Ins. Co. of N. Am. v. Warfel, 82 So. 3d 47, 65 (Fla. 2012)

(“Fundamental error is waived where defense counsel requests an

erroneous instruction.”); Goodwin v. State, 751 So. 2d 537, 544 (Fla. 1999)

(“If the error is ‘invited,’ . . . the appellate court will not consider the error

a basis for reversal.” (footnote omitted)).

Sufficiency of Evidence Concerning the First Amendment Privilege

We address the argument by Hurchalla’s appellate counsel that “an

appellate court has an obligation ‘to make an independent examination of

the whole record’ to ensure that ‘the judgment does not constitute a

forbidden intrusion on the field of free expression.’” Bose Corp. v.

Consumers Union of U.S., Inc., 466 U.S. 485, 499, 104 S. Ct. 1949, 1958

80 L. Ed. 2d, 502, (1984) (quoting Sullivan, 376 U.S. at 284-86, 84 S. Ct.

at 728-29); see also Seropian v. Forman, 652 So. 2d 490, 494 (Fla. 4th DCA

1995). In other words, we address Hurchalla’s counsel’s assertion that it

is our responsibility to determine if there was clear and convincing

evidence to support a determination that Hurchalla demonstrated actual

malice by interfering with Lake Point’s contract.

1 Because we determined above that there is no reversible error in the jury

instructions due to the fact that separate instructions for each privilege were not

requested, we do not address Hurchalla’s argument on appeal that express

malice must be the sole, rather than merely the primary, motive in a tortious

interference case.

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As discussed above, actual malice “consists of knowledge of falsity or

reckless disregard of truth or falsity, and must be shown by clear and

convincing evidence.” Nodar, 462 So. 2d at 806. In this case, Hurchalla

sent an email to all five county commissioners on January 4, 2013,

expressing her concerns about the Project. We focus on two statements

in the email that Lake Point contends were false (as alleged in the operative

amended complaint). After discussing the status of the project back in

2008, Hurchalla made the following statement:

At that point[,] [in 2008,] the District staff continued to

suggest some vague storage value but changed the emphasis

to the STA [stormwater treatment area] that would be built on

site as the completion of the project in 20 years. A study was

to follow that documented the benefits [of the stormwater

treatment area]. That study has not been provided.

(emphases added). Several sentences later, Hurchalla wrote in a bullet

point: “Neither the storage nor the treatment benefits have been

documented.” (emphasis added).

These statements are examples of competent substantial evidence that

clearly and convincingly proved that Hurchalla demonstrated actual

malice in interfering with Lake Point’s contracts with the County and the

District, by making statements she either knew were false or with reckless

disregard as to whether they were false. Hurchalla’s comments were

represented as statements of fact, as opposed to statements of pure

opinion. Even if we viewed the statements as “mixed opinions,” the

statements would not be privileged under the First Amendment. See

Zambrano v. Devanesan, 484 So. 2d 603, 606-07 (Fla. 4th DCA 1986)

(determining statements were not privileged opinion “where the speaker or

writer neglects to provide the audience with an adequate factual

foundation prior to engaging in the offending discourse”). The evidence

before the jury showed that Hurchalla admitted that there actually were

documented treatment benefits. At trial, she stated: “As far as the

treatment benefits, there is a study [documenting treatment benefits], and

I did review that study . . . [but i]t’s a preliminary study and other studies

would need to be done.” (emphasis added). Similarly, her expert agreed

that 2008 models showed storage and treatment benefits of the

stormwater treatment area. Therefore, even if Hurchalla thought there

should have been more studies, she admitted that she had reviewed the

study showing treatment benefits, and thus, she was aware that her

statement that there were no documented benefits was false.

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It is also significant that the false statements were emailed to two

recently elected commissioners, Commissioners Scott and Haddox, who

each admitted at trial that they had not read the permits or studies

conducted on the Project, indicating that they were unfamiliar with the

details about the Project (establishing reckless disregard for the truth).

See Zambrano, 484 So. 2d at 606-07. Thus, upon our independent review

of the record, we determine there was sufficient clear and convincing

evidence to refute Hurchalla’s First Amendment privilege to petition her

government as to those two statements.

Sufficiency of Evidence Concerning the Florida Common Law Privilege

Hurchalla also argues the evidence was insufficient to prove she made

false statements with express malice. We determine that Hurchalla has

not shown reversible error.

Case law indicates that there are two ways that express malice can be

proven. Some cases discuss that express malice is proven when the motive

is characterized as “out of spite, to do harm, or for some other bad motive.”

See Nodar, 462 So. 2d at 811 (explaining that “[s]trong, angry, or

intemperate words do not alone show express malice; rather, there must

be a showing that the speaker used his privileged position ‘to gratify his

malevolence’” (quoting Myers v. Hodges, 44 So. 357, 362 (Fla. 1907)));

Boehm v. Am. Bankers Ins. Grp., Inc., 557 So. 2d 91, 97 (Fla. 3d DCA 1990)

(applying the description of express malice in Nodar to a tortious

interference claim). Other cases contend that “even where the defendant’s

motive is not purely malicious, a tortious interference claim may succeed

if improper methods were used,” thus demonstrating the required express

malice. KMS Rest. Corp. v. Wendy’s Int’l, Inc., 361 F.3d 1321, 1327 (11th

Cir. 2004); see also Morsani v. Major League Baseball, 663 So. 2d 653, 657

(Fla. 2d DCA 1995) (reversing dismissal of tortious interference complaint,

holding that allegations of “the use of threats, intimidation, and

conspiratorial conduct” were indicative of malice).

We agree with the proposition that in tortious interference cases, when

a privilege is asserted for the interference, the express malice necessary to

negate the privilege can be proven either by direct or circumstantial

evidence of malice through malevolent intent to harm, or by harm

accomplished by improper methods. In this case, we find that there was

sufficient evidence as to both methods. We address the issue of proof of

express malice by improper methods, followed by our analysis as to

malevolent intent.

Express Malice – Improper Methods

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In his dissent in GNB, Inc. v. United Danco Batteries, Inc., 627 So. 2d

492 (Fla. 2d DCA 1993), Judge Altenbernd expressed his view that

“[i]mproper business methods seem to fall into three distinct categories:

(1) acts which are already proscribed by statute, (2) acts which constitute

separate independent torts, and (3) other ill-defined ‘bad’ acts.” Id. at 494

(Altenbernd, J., dissenting). Here, the trial court’s instruction to the jury

included Judge Alternbernd’s second category of improper methods,

namely, misrepresentation. One of the instructions given to the jury

regarding tortious interference was:

You must render your verdict in favor of Hurchalla on Lake

Point’s tortious interference claim if you find that Hurchalla used

proper methods to attempt to influence Martin County. . . .

However, deliberate misrepresentation of facts are not considered

a proper method.

(emphases added).

Florida Standard Jury Instruction 408.5 applies to intentional

interference with a contract not terminable at will.2 As Hurchalla noted in

her brief, the notes to instruction 408.5 indicate that for most tortious

interference cases there is no “justification” or “privilege”; “[h]owever, in

certain relatively rare factual situations, interference with a contract not

terminable at will may be justified or privileged,” and in those situations,

“instruction 408.5 will have to be modified.” See Fla. Std. Jury Instr. (Civ.)

408.5 notes on use. The notes also point to several sources, including the

Restatement (Second) of Torts § 767 (1979), titled “Factors in Determining

Whether Interference is Improper.” Section 767 states that “[t]he issue is

not simply whether the actor is justified in causing the harm, but rather

whether he is justified in causing it in the manner in which he does cause

it.” Id. (emphasis added). “Thus physical violence, fraudulent

misrepresentation and threats of illegal conduct are ordinarily wrongful

means and subject their user to liability even though he is free to

accomplish the same result by more suitable means.” Id. (emphasis

added). We focus on improper means by fraudulent misrepresentation in

the instant case.

“Fraudulent misrepresentations are . . . ordinarily a wrongful means of

interference and make an interference improper.” Id. “A representation is

fraudulent when, to the knowledge or belief of its utterer, it is false in the

sense in which it is intended to be understood by its recipient.” Id. “[T]here

are four elements of fraudulent misrepresentation: ‘(1) a false statement

2 The parties do not dispute that the contracts were not terminable at will.

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concerning a material fact; (2) the representor’s knowledge that the

representation is false; (3) an intention that the representation induce

another to act on it; and (4) consequent injury by the party acting in

reliance on the representation.’” Butler v. Yusem, 44 So. 3d 102, 105 (Fla.

2010) (quoting Johnson v. Davis, 480 So. 2d 625, 627 (Fla. 1985)).

As we analyzed above, there were two statements in the January 4,

2013 email to all five county commissioners from which the jury could

conclude that Hurchalla intentionally, or at the least, with reckless

disregard, made purportedly factual statements to induce the BOCC not

to go forward with its contract with Lake Point. Using the elements of

misrepresentation described in Butler: (1) Hurchalla made two false

statements concerning a material fact to the BOCC (effectively, the

County); (2) Hurchalla knew that the representations were false; (3)

Hurchalla intended that the representations induce the BOCC (the

County) to act on them; and (4) the County was injured when the BOCC

acted upon the representation and was subsequently sued for its actions

based on the reliance.

The Restatement also discusses the situation where an actor “seek[s]

to promote not solely an interest of his own but a public interest.”

Restatement (Second) of Torts § 767. In the instant case, Hurchalla put

on evidence and maintained that she is a champion for environmental

causes, and that she did not act with the purpose of harming Lake Point,

but “to promote the public interest in the environment.” However:

If the actor [Hurchalla] causes a third person [the County] not

to perform a contract or not to enter into or continue a

contractual relation with the other [Lake Point] in order to

protect the public interest affected by these practices, relevant

questions in determining whether his [or her] interference is

improper are: whether the practices are actually being used

by the other [Lake Point], whether the actor [Hurchalla]

actually believes that the practices are prejudicial to the

public interest, whether his [or her] belief is reasonable,

whether he [or she] is acting in good faith for the protection of

the public interest, whether the contractual relation involved

is incident or foreign to the continuance of the practices and

whether the actor [Hurchalla] employs wrongful means to

accomplish the result.

Id. (emphasis added). According to the evidence, several of the factors

clearly weigh in favor of Hurchalla. However, as we discussed above, there

was sufficient evidence presented for the jury to decide the issue of express

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malice based on Hurchalla using wrongful means to interfere in Lake

Point’s contract with the County by the use of misrepresentations to the

BOCC in her January 4, 2013 email to the commissioners.

Express Malice – Malevolent Intent to Harm

We also conclude that there was sufficient evidence presented to the

jury to prove that Hurchalla demonstrated express malice toward Lake

Point through malevolent intent to harm. In addition to her January 4,

2013 email, there were emails she sent to her commissioner friends

instructing them in detail on what to do at board meetings to work towards

voiding the Interlocal Agreement, signed by her as “Deep Rockpit,” as well

as references to herself in emails as “Ms. Machiavelli.” That evidence,

coupled with evidence of her significant influence with a majority of the

commissioners and her ability over time to have them assert oppositional

positions on a project they knew little-to-nothing about, was sufficient to

support an inference of malevolent intent to harm Lake Point.

Conclusion

Having determined that Hurchalla has not demonstrated trial court

error regarding the jury instructions on the defense of privilege, and the

evidence was sufficient to allow the jury to find in favor of Lake Point on

its claim of tortious interference by Hurchalla, we affirm the trial court

rulings and the judgment entered against Hurchalla.

Affirmed.

DAMOORGIAN and FORST, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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