Opinion
Nos. 2D21-517, 2D21-521 CONSOLIDATED.
02-24-2023
Charles Wesley MADDOX, Appellant, v. Vicki Lynn MADDOX, Appellee, Petronex Technologies, LLC, Appellant, v. Vicki Lynn Maddox, Appellee.
Matthew J. Conigliaro of Carlton Fields, P.A., Tampa, for Appellants. Kymberly A. Starr of Starr Law, P.A., Lakeland (withdrew after briefing); Aaron Proulx of Proulx Law, Palm Harbor (substituted as counsel of record), for Appellee.
Matthew J. Conigliaro of Carlton Fields, P.A., Tampa, for Appellants.
Kymberly A. Starr of Starr Law, P.A., Lakeland (withdrew after briefing); Aaron Proulx of Proulx Law, Palm Harbor (substituted as counsel of record), for Appellee.
BLACK, Judge.
These appeals have been consolidated for purposes of this opinion. In appellate case number 2D21-521, Petronex Technologies, LLC, appeals from the final judgment dissolving the marriage of Charles Maddox, the former husband, and Vicki Lynn Maddox, the former wife. Petronex, the former husband's employer, argues in part that the entry of the judgment violated its due process rights because certain provisions of the equitable distribution substantially affect Petronex's interests despite that Petronex had not been made a party to the proceeding until after the judgment had been entered and had otherwise not been given notice that its interests would be at issue. In appellate case number 2D21-517, the former husband appeals from the dissolution judgment, raising multiple challenges to the court's determinations, including errors in its valuation of the former husband's business, its calculation of the former husband's income, and its distribution of intellectual property. We find merit in the arguments raised by Petronex and the former husband and reverse the final judgment in part.
The parties were married in 1986 and separated in 2016. The former wife filed the petition for dissolution of marriage in 2017. The matter proceeded to a final hearing only as to the issues of equitable distribution and alimony. Importantly, although the former wife accused the former husband of being deceptive about his income and assets, requested equitable distribution of "known and hidden assets," and claimed entitlement to an ownership interest in Petronex, the former wife did not seek distribution of any intellectual property or claim as a marital asset any intellectual property.
The former wife, who appeared pro se at the hearing, called William Horner, the owner of Petronex, as a witness. Petronex was organized as an entity in 2019, after the dissolution petition had been filed. Mr. Horner explained that the former husband had been hired by Petronex to manage the research and development of an improved oil filtration system. The former wife elicited testimony from Mr. Horner about the former husband's income; she also elicited testimony from Mr. Horner relating to loans that had been made to the former husband. On cross-examination, Mr. Horner explained that while the former husband "basically manag[es] Petronex," he does not have an ownership interest in Petronex. According to Mr. Horner, Petronex is seeking to develop an oil filtration system that will keep oil clean longer, which will serve a great benefit to electric companies. Although oil filtration systems have been in existence for decades, Petronex is seeking to perfect the system, obtain a patent for the invention, and then monetize it. Mr. Horner further testified that while Petronex has not yet succeeded in inventing the improved oil filtration system, should the system eventually come to fruition, it would be owned by him.
Mr. Horner also testified regarding the former husband's involvement with Orbitron Companies, a now-dissolved corporation, in which Mr. Horner had invested. C.W. Maddox, Inc., a marital asset solely owned by the former husband, was involved with Orbitron before its dissolution. As part of Orbitron's winding down, the former husband received $147,675 in one-time income. The parties produced promissory notes by and between C.W. Maddox, Orbitron, Mr. Horner, and Horner Environmental Professionals, Inc. Some of those notes purported to be backed by the assets and receivables of C.W. Maddox; however, no evidence of C.W. Maddox's assets or receivables was produced.
The record is unclear whether there is more than one C.W. Maddox entity and, if there is only one, whether that entity is a corporation or a limited liability company. Various references are made to C.W. Maddox, Inc., C.W. Maddox, LLC, and C.W. Maddox & Co. The record is likewise unclear about the capacity in which that entity or those entities had been involved with Orbitron.
The former wife also called the former husband as a witness. The former husband testified that as an employee of Petronex, he is responsible for managing a small team of people who are trying to invent new oil filtration technology. The former husband explained that he has no ownership interest in Petronex but that he is "in possession of the intellectual property," though Petronex had not yet been able to "make it work." The court later requested clarification from the former husband regarding this testimony. The former husband initially stated that the specifications for the improved oil filtration system are "all in [his] head" and had not been patented. But he later clarified that "drawings" and "specifications" for an oil filtration system do exist but continue to evolve through trial and error because Petronex has not yet been successful in developing an improved oil filtration system. The court then asked the former husband who owns the intellectual property, and the former husband responded, "Horner." The court asked whether a document existed memorializing that agreement, and the former husband responded, "It's a handshake over the car." Thereafter, the former husband clarified that "[t]here is no [intellectual property] to speak of. There's trial and error until we're blue in the face." The former husband also testified that until Petronex's efforts are successful, the technology has no value.
Several months after the hearing, the trial court issued the final judgment of dissolution. With regard to Petronex, which was not yet a party to the proceeding, the trial court found that "the main purpose of Petronex appears to be developing intellectual property owned by the [former husband]." The trial court further found that the former husband had testified about an assignment of "the intellectual property that was in his head" but that the former husband had "failed to produce anything other than self-serving testimony to show he had assigned his rights to his intellectual property to anyone." The trial court thus found that the assignment "was done purposefully to thwart the [former wife's] interest in the intellectual property" and ruled that "any assignment is unenforceable as a matter of law." The trial court further found that based on the former husband's testimony, "the intellectual property was substantially complete at the time of the final hearing." The trial court then found that "all rights, title and interest in and to existing or potential intellectual property relating to [the oil filtration system] conceived by the [former husband] jointly or severally with others, is marital property which should be equitably distributed." The trial court awarded the former wife a one-half interest in the intellectual property related to the oil filtration system. Though the trial court acknowledged that no evidence as to the value of the intellectual property had been presented, the court found the former husband's testimony that the intellectual property currently had no value lacked credibility. And so the trial court "reserve[d] jurisdiction as to all current and future issues regarding the equitable distribution of any proceeds, royalties, financial gain, or other benefit or remuneration generated from the intellectual property that was developed during the marriage and substantially complete at the time of trial." Finally, the trial court ordered the former husband to "assure that each entity and licensee having acquired or acquiring any rights in the future to any existing and future intellectual property relating to [the oil filtration system] create and maintain sufficient books and records permitting the correctness and accuracy of the [former wife's] one-half interest to be ascertained."
With regard to equitable distribution and alimony, and as relevant to the issues raised by the former husband, the trial court found that the former husband had "failed to produce discovery or mandatory documents and information" and acknowledged that this case had been "wrought with discovery deficiencies." The trial court also acknowledged that the former husband had failed "to produce evidence that would allow the [former wife's] CPA to determine" the value of the former husband's business(es) and that "without complete documents produced, it is impossible for the [c]ourt, as it was impossible for a forensic accountant, to determine the [former husband's] actual income or the value of his business interests." Nonetheless, the trial court set a net value for the former husband's business and ordered the former husband to pay to the former wife an equalizing payment of $79,338.60, representing one-half of the net value identified by the court. The trial court also found that $2,000 in monthly permanent periodic alimony, in addition to $97,378.68 in lump sum alimony, was appropriate.
Upon learning of the final judgment of dissolution, Petronex sought to intervene in the proceeding. See Fla. Fam. L. R. P. 12.230 ("Anyone claiming an interest in pending litigation may, at any time, be permitted to assert a right by intervention, but the intervention must be in subordination to, and in recognition of, the propriety of the main proceeding, unless otherwise ordered by the court in its discretion."). The trial court granted the motion to intervene, and then Petronex filed a motion for rehearing of the final judgment of dissolution. That motion was denied, and this appeal followed.
Petronex argues on appeal that the trial court violated its due process rights by entering a judgment that substantially affects its interests in the oil filtration system that it is in the process of developing despite that it had not been made a party to the proceeding until after the final judgment had been entered and had otherwise not been given notice that its interests would be adjudicated. We agree.
"Whether the trial court has complied with the guarantees of due process is subject to de novo review." Sanders v. Peterson-Sanders, 321 So.3d 802, 805 (Fla. 4th DCA 2021) (quoting VMD Fin. Servs., Inc. v. Loan Purchase Assocs., 68 So.3d 997, 999 (Fla. 4th DCA 2011)). "Notice to legally interested parties so that they can assert their claims is the essence of the procedural due process protections provided by the Florida Constitution." In re Adoption of a Minor Child, 593 So.2d 185, 189 (Fla. 1991) (citing Art. I, § 9, Fla. Const.). "The denial of due process rights, including the opportunity to be heard, to testify, and to present evidence, is fundamental error." Weiser v. Weiser, 132 So.3d 309, 311 (Fla. 4th DCA 2014) (citing Slotnick v. Slotnick, 891 So.2d 1086, 1089 (Fla. 4th DCA 2004)).
In this case, Petronex claims an interest in the oil filtration system, which the trial court found to be intellectual property owned by the former husband and subject to equitable distribution as a marital asset. But prior to the entry of the final judgment of dissolution, Petronex had no notice that the ownership interest in the oil filtration system would be a subject of the litigation. Nor had Petronex been made a party to the action until after the final judgment had been entered. As such, Petronex was not afforded the opportunity to demonstrate to the court during the evidentiary hearing its ownership interest in the oil filtration system under development or to disclaim the former husband's ownership interest in the system and to any related intellectual property. See In re Adoption of a Minor Child, 593 So. 2d at 189 ("An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." (quoting Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950))). And so the findings and rulings concerning the intellectual property cannot stand. See generally Moretto v. Staub, 370 So.2d 1220, 1221 (Fla. 3d DCA 1979) ("[T]he Florida courts have universally recognized that the rights of an individual cannot be adjudicated in judicial proceedings to which he or she has not been made a party and from which he or she has been excluded by the failure of the moving party to bring him properly into court."); cf. Ehman v. Ehman, 156 So.3d 7, 8 (Fla. 2d DCA 2014) ("[T]he trial court did not have the power or authority to transfer the property of a corporation without the joinder of that entity."); Austin v. Austin, 120 So.3d 669, 674 (Fla. 1st DCA 2013) (same). On remand, Petronex shall be given an opportunity to be heard and to present evidence concerning its asserted interest in the oil filtration system and any related intellectual property.
Because the due process issue is dispositive, we need not address the other issues raised by Petronex. And so while both Petronex and the former husband argue on appeal that no competent substantial evidence was presented establishing that intellectual property exists or that it is a marital asset, we address these issues below only as they pertain to the former husband.
The court's rulings with regard to the oil filtration system and related intellectual property necessarily require reconsideration of the equitable distribution scheme not only for the reasons discussed above, but because, as the former husband argues, the former wife did not seek distribution of intellectual property or claim intellectual property as a marital asset. See Lykkebak v. Lykkebak, 323 So.3d 328, 330 & 330 n.1 (Fla. 5th DCA 2021); Austin, 120 So. 3d at 674-75. Moreover, there was no evidence supporting that any intellectual property existed, much less that it was a marital asset. Cf. Gulbrandsen v. Gulbrandsen, 22 So.3d 640, 644 (Fla. 3d DCA 2009) ("[A] patent is personal property that may be the subject of equitable distribution when the inventor and his or her spouse dissolve their marriage."). Compounding these errors, the court valued the former husband's business and set an income figure based on assumed or speculative figures not supported by the evidence. While we sympathize with the trial court in its apparent frustration with the former husband's failure to provide a complete, current picture of his finances, the trial court's findings must be supported by competent substantial evidence. See Callwood v. Callwood, 221 So.3d 1198, 1203 (Fla. 4th DCA 2017); Jordan v. Jordan, 127 So.3d 794, 796 (Fla. 4th DCA 2013); see also Rich v. Rich, 337 So.3d 138, 144 n.4 (Fla. 2d DCA 2022) (discussing the former husband's failure to comply with discovery obligations and resulting trial court orders compelling discovery, holding the former husband in contempt, and sanctioning the former husband). For these reasons, the alimony award must similarly be revisited on remand. In doing so, the trial court must consider and determine whether permanent periodic alimony is the only fair and reasonable form of alimony and include such a finding in the amended final judgment. See § 61.08(8), Fla. Stat. (2021).
Based on the foregoing, we reverse those portions of the final judgment related to equitable distribution and alimony and remand for further proceedings. The final judgment of dissolution is otherwise affirmed.
Affirmed in part, reversed in part, and remanded.
CASANUEVA and KELLY, JJ., Concur.