Richard O. Conboy, et al v. Black Diamond Properties, Inc., et al

FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
DECEMBER 21, 2011
JOHN LEY
CLERK
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 10-13768
________________________
D.C. Docket No. 5:08-cv-00236-GRJ
RICHARD O. CONBOY, derivated on behalf of nominal
defendant Black Diamond Club, Inc.,
ROBERT H. THUNE, derivated on behalf of nominal
defendant Black Diamond Club, Inc.
JANET B. THUNE, derivated on behalf of nominal
defendant Black Diamond Club, Inc.,
Plaintiffs - Appellants,
versus
BLACK DIAMOND PROPERTIES, INC.,
STANLEY C. OLSEN,
MARINA TAYLOR,
JOSEPH G. CAPPUCCILLI,
BLACK DIAMOND CLUB, INC.,
LANDMAR GROUP, LLC,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(December 21, 2011)

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Before EDMONDSON and PRYOR, Circuit Judges, and BOWDRE, District Judge.*
PER CURIAM:
This derivative action involves a sprawling residential golf community in
Lecanto, Florida. Black Diamond is known for its top-ranked courses, famously
designed by Tom Fazio. Three members of this private community, Richard O.1
Conboy, Robert H. Thune, and Janet B. Thune, sued the community’s developer,
Stanley Olsen, on behalf of Black Diamond Club, Inc. (“the Club”), the Florida
not-for-profit organization formed to plan the community development. Not to be
confused with the Club, Black Diamond Properties, Inc. (“Properties, Inc.”) is a
Florida corporation formed to develop the community, and specifically to hold
title to its facilities. In addition to Olsen and Properties, Inc., Conboy and the
Thunes also sued several of the Club’s directors, alleging various wrongs related
to the development of Black Diamond.
The parties filed cross-motions for summary judgment on certain counts
before the district court. The magistrate judge assigned to the case issued a
detailed report and recommendation, which the district judge adopted and
Honorable Karon O. Bowdre, United States District Judge for the Northern District of*
Alabama, sitting by designation.
Golf Digest has consistently ranked Black Diamond’s Quarry Course—which features a1
three-hole stretch that plays through an abandoned rock quarry—among the top 100 courses in
the United States. See Black Diamond for Sale, GOLF DIGEST, Apr. 26, 2010,
www.golfdigest.com/golf-courses/blogs/golf-real-estate/2010/04/black-diamond-for-sale.html.
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approved, denying the Plaintiffs’ motion and granting in part the Defendants’
motion. Only one count—breach of fiduciary and other duties—remained for
trial; however, the district judge granted the Defendants’ motion to strike the
Plaintiffs’ jury demand. The parties consented to trial before the magistrate judge,
who held a four-day bench trial. In a lengthy memorandum decision and order, the
magistrate judge directed the Clerk to enter final judgment in favor of the
Defendants as to all of the Plaintiffs’ claims.
The Thunes appeal the adverse rulings against them, raising myriad issues.2
After careful review, we affirm.
I.
The long and somewhat complex history of this case is well chronicled by
the magistrate judge’s several opinions; we need not restate it here. One aspect of
the background, however, is central to the issues before us and worth noting.
Count III of the Second Amended Complaint sought a declaratory judgment that
the “Club Purchase Agreement” between the Club and Properties, Inc. was void
and unenforceable, as well as a declaration that certain purported waivers of
fiduciary duties of the Club’s officers and directors were also void and
Mr. Conboy, one of the original derivative Plaintiffs, resigned his Club membership,2
and the magistrate judge found that he lost standing once his membership sold and transferred to
another owner. Consequently, the court dismissed him as a party plaintiff for lack of subject
matter jurisdiction.
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unenforceable. The other counts of the complaint included claims for breach of
fiduciary and other duties, for sums wrongfully paid from the Club to Properties,
Inc. in relation to an allegedly unenforceable “option” contract, and for injunctive
relief to impose an equitable trust upon the funds transferred from the Club to
Properties, Inc.
In addition to compensatory damages, equitable relief, attorney’s fees, and
costs and expenses, the Plaintiffs generally sought punitive damages to punish and
deter each Defendant from further wrongful conduct. Specifically, they sought
punitive damages for breach of fiduciary and other duties.
II.
The Thunes raise a variety of issues on appeal, implicating all manner of
common law contract and property principles, from the business judgment rule to
the rule against perpetuities. The Thunes also raise interesting theories such as
equitable estoppel of a fiduciary to assert the statute of limitations. However, after
reviewing the record below, the magistrate judge’s opinions, and the briefs on
appeal, we find all issues largely without merit. The only issue we briefly pause to
address involves the federal right to a jury.
Based on their request for punitive damages, the Thunes argue that the
district court erred in denying their federal right to a jury. Under the Seventh
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Amendment, the Thunes may be correct. See Curtis v. Loether, 415 U.S. 189, 196,
94 S. Ct. 1005, 1009 (1974); Day v. Woodworth, 54 U.S. 363, 371, 14 L. Ed. 181,
181 (1851); Hill v. Winn-Dixie Stores, Inc., 934 F.2d 1518, 1524 (11th Cir. 1991).
Though none of the authorities cited by the Thunes directly supports the
proposition that a federal right to a jury exists in every case in which a plaintiff
seeks punitive damages, those authorities at least support the idea that such a right
may exist in certain cases. However, we need not decide that question here. Even
assuming that the Thunes had the right to a jury on their claim for punitive
damages in this case, the question of damages would not have reached the jury
because the magistrate judge correctly ruled against the Thunes on all their claims
as a matter of law. Therefore, any possible error in denying the Thunes’ asserted
right to a jury on punitive damages is harmless. See Burns v. Lawther, 53 F.3d
1237, 1242 (11th Cir. 1995) (explaining that “a harmless error analysis may be
applied to denials of a jury trial . . . where the issues could have been disposed of
on summary judgment or judgment as a matter of law” (citations omitted)).
III.
The magistrate judge authored a thorough, well-reasoned opinion based on
his findings after a four-day bench trial. He correctly stated and applied the law to
the convoluted facts of this case, and the issues raised on appeal present no reason
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to disturb his sound ruling.
Accordingly, we affirm the decision of the district court.
AFFIRMED.
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