IN THE SUPREME COURT OF FLORIDA CASE NO.: SC DISTRICT COURT CASE NO.: 5D

Transcription

1 IN THE SUPREME COURT OF FLORIDA CASE NO.: SC DISTRICT COURT CASE NO.: 5D GENCOR INDUSTRIES, INC., vs. Petitioner, DELOITTE & TOUCHE LLP, et al. Respondents. / RESPONDENT'S BRIEF ON JURISDICTION On Review from the District Court of Appeal, Fifth District, State of Florida JAMES S. TOSCANO, ESQUIRE Florida Bar No Lowndes, Drosdick, Doster, Kantor & Reed, P.A. 215 North Eola Drive Post Office Box 2809 Orlando, Florida Telephone: (407) Facsimile: (407) JENNIFER L. CONN, ESQUIRE (pro hac vice motion pending) MICHAEL G. HONEYMAR, JR. ESQUIRE (pro hac vice motion pending) Gibson, Dunn & Crutcher LLP 200 Park Avenue, 48th Floor New York, New York Telephone: (212) Facsimile: (212) Attorneys for Respondent, The U.K. General Partnership Of Deloitte & Touche

2 TABLE OF CONTENTS Page TABLE OF AUTHORITIES...ii I. COUNTERSTATEMENT OF THE CASE AND FACTS...1 II. III. SUMMARY OF THE ARGUMENT...4 ARGUMENT...4 A. The Opinion Does Not Conflict With Third District Cases...5 B. The Opinion Does Not Conflict With Another Fifth District Case...9 C. The Opinion Does Not Conflict With A Decision Of This Court...9 IV. CONCLUSION...10 ii

3 TABLE OF AUTHORITIES Cases Pages Colonia Insurance Co. v. Assuranceforeningen Skuld, 588 So. 2d 1009 (Fla. 3d DCA 1991)...7, 8 Deloitte & Touche v. Gencor Industries, Inc., Case No. 5D , 929 So. 2d 678 (Fla. 5th DCA 2006)... passim Jenkins v. State, 385 So. 2d 1356 (Fla. 1980)...4 Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285 (11th Cir. 1998)...5 Manrique v. Fabbri, 493 So. 2d 437 (Fla. 1986)... 9, 10 Pozo v. Roadhouse Grill, Inc., 790 So. 2d 1255 (Fla. 5th DCA 2001)...9 Procedo Gesellschaft Fur Exportfactoring, D. Klindworth MBH v. Juli-And Holding of Florida, Inc., 691 So. 2d 1143 (Fla. 3d DCA 1997)...8 Swarovski North America, Ltd. v. House of China, Crystal & Silver, Inc., 848 So. 2d 452 (Fla. 4th DCA 2003)...10 Tuttle's Design-Build, Inc. v. Florida Fancy, Inc., 604 So. 2d 873 (Fla. 2d DCA 1992)...5 Wood v. Wall, 666 So. 2d 984 (Fla. 3d DCA 1996)...8 World Vacation Travel, S.A. v. Brooker, 799 So. 2d 410 (Fla. 3d DCA 2001)...5, 6 XR Co. v. Block & Balestri, P.C., 44 F. Supp. 2d 1296 (S.D. Fla. 1999)...5 iii

4 Rules Florida Rules of Appellate Procedure 9.030(a)(2)(A)(iv) (d) (d)(10)...1 iv

5 Respondent The U.K. General Partnership Of Deloitte & Touche ("DTGP") respectfully submits this brief in opposition to the application of Petitioner Gencor Industries, Inc. ("Gencor") seeking to invoke this Court's discretionary jurisdiction to review the Fifth District Court of Appeal's decision in Deloitte & Touche v. Gencor Industries, Inc., Case No. 5D , 929 So. 2d 678 (Fla. 5th DCA 2006), rendered on May 19, 2006 (the "Opinion"). 1 As explained below, this Court lacks jurisdiction to review this Opinion. I. COUNTERSTATEMENT OF THE CASE AND FACTS In its Second Amended Complaint, Gencor brought claims against DTGP for professional negligence and negligent misrepresentation concerning audit work performed in the United Kingdom relating to Gencor ACP, a United Kingdom wholly-owned subsidiary of Gencor. Opinion at 2. Gencor alleged that DTGP conducted reviews of Gencor ACP's financial statements for quarterly periods in 1998 for purposes of Gencor's 10Q returns, rendered an opinion on ACP Holdings' (the predecessor company to Gencor ACP) balance sheet dated September 30, 1 Having failed to serve its jurisdictional brief on DTGP within the 10-day period mandated by Fla. R. App. P (d), Gencor filed a motion in this Court seeking leave to file an untimely brief. DTGP opposed that motion and crossmoved to strike Gencor's notice invoking this Court's discretionary jurisdiction. Although these motions are pending, in light of Fla. R. App. P (d)(10), which excepts motions filed in this Court from the general rule that motions toll the time schedule until disposition of the motion, DTGP is serving its jurisdictional brief on Gencor within the time prescribed by Fla. R. App. P (d). DTGP maintains, however, that this Court should not even reach this briefing because Gencor's motion to file an untimely brief should be denied. 1

6 1997, and audited ACP's financial statements for the nine month period ended September 30, 1997, but failed to uncover a scheme on the part of Gencor ACP's senior management to conceal the company's true financial condition. Id. 2 On November 1, 2004, DTGP filed a motion to dismiss on the grounds that the trial court lacked personal jurisdiction over DTGP, that venue in Florida was improper, and that Gencor's claims were barred by the applicable statute of limitations. Id. at 3. In decisions dated April 20 and May 10, 2005, the trial court denied DTGP's motion, and DTGP appealed the trial court's decision on the grounds of jurisdiction and venue. Id. Although there was no dispute "that DTGP does not have an office, place of business, employees, agents, mailing address telephone listing, real estate or property in Florida" or that "no one from DTGP ever traveled to Florida on business for Gencor or any related entity," id. at 4, the Fifth District affirmed the trial court's decision with respect to jurisdiction. The Fifth District, however, "reverse[d] the trial court's decision that DTGP has no right to enforce the mandatory forum selection clause contained in the letter of engagement between Gencor ACP and DTGP to require Gencor to litigate its claims in the United Kingdom." Id. at 10. The Fifth District recognized that the 2 This work was performed pursuant to an engagement letter between DTGP and Gencor ACP which included a mandatory forum selection clause stating: "You and we irrevocably agree that the Courts of England shall have exclusive jurisdiction to settle any dispute (including claims for set-off and counterclaims) which may arise in connection with the validity, effect, interpretation or performance of, or the legal relationship established by this agreement or otherwise arising in connection with this agreement. You submit irrevocably to the jurisdiction of the English Courts." 2

7 "Florida courts have enforced contract terms, including forum selection clauses, against non-signatories," id. (citations omitted), "particularly... where, as here, there exists a close relationship between the non-signatory and signatory and the interests of the non-signatory are derivative of the interests of the signatory." Id. (citations omitted). As the Fifth District explained: Gencor ACP is Gencor's wholly owned subsidiary. The work performed under the engagement letter between DTGP and Gencor ACP is the work at issue in Gencor's claims. As parent and owner of Gencor ACP, Gencor had to have its subsidiary's books reviewed and audited in order to comply both with U.S. law and British law. Even though it was the subsidiary that did the hiring of DTGP, the work was intended in part for Gencor to use in preparing its reports and financial statement and for its use in supervising its own asset. According to the record, DTGP was paid by Gencor ACP for all this work that Gencor has alleged was supplied by DTGP for Gencor's benefit. At the core of Gencor's claim is the fact that Gencor incorporated DTGP's audit into its consolidated financial statements.... Here, Gencor's claim is completely derivative of the professional engagement of DTGP by its wholly owned subsidiary and the work to be performed was plainly intended to be used by Gencor. Indeed, Gencor is expressly identified in the contract as a recipient of some of the work to be performed: Additional procedures[:] We shall carry out a review of each quarter's results for the purposes of Gencor's 10Q return. Id. at Accordingly, the Fifth District properly held that "Gencor is bound by its subsidiary's agreement that disputes arising out of the engagement would be litigated in the United Kingdom." Id. at 12. 3

8 II. SUMMARY OF THE ARGUMENT This Court has discretionary jurisdiction to review District Court of Appeal decisions that expressly and directly conflict with a decision of another District Court of Appeal or of this Court. Here, Gencor contends that the Fifth District's Opinion conflicts with three decisions by the Third District, one decision by the Fifth District itself, and one decision by this Court. As explained more fully below, however, there exists no conflict here. Indeed, the cases Gencor relies on to demonstrate this purported conflict are either factually inapposite or actually support DTGP's, not Gencor's, position. Accordingly, this Court lacks jurisdiction to review the Fifth District's Opinion. III. ARGUMENT Gencor seeks review of the Fifth District's decision pursuant to Fla. R. App. P (a)(2)(A)(iv), which vests this Court with discretionary jurisdiction to review District Court of Appeal decisions that "expressly and directly conflict with another district court of appeal or of the supreme court on the same question of law." Fla. R. App. P (a)(2)(A)(iv). As this Court has held, the words "express and direct" must be given meaning, and it is not enough to suggest that a potential conflict exists. To be "express," the conflict must be present "in an express manner." Cf. Jenkins v. State, 385 So. 2d 1356, 1359 (Fla. 1980). In reversing the trial court's denial of DTGP's motion to dismiss on the ground of improper venue, the Fifth District properly recognized that the "Florida courts have enforced contract terms, including forum selection clauses, against 4

9 non-signatories." Opinion at The Fifth District further explained that this "is particularly true where, as here, there exists a close relationship between the nonsignatory and signatory and the interests of the non-signatory are derivative of the interests of the signatory." Opinion at Applying these principles, the Fifth District held that under the circumstances present in this case, Gencor was bound by its wholly-owned subsidiary's agreement that disputes arising out of the engagement would be litigated in the United Kingdom. See Opinion at A. The Opinion Does Not Conflict With Third District Cases Citing three cases, Gencor claims that the Fifth District's decision here conflicts with the position of the Third District on the issue of whether a nonsignatory may be bound by a forum selection clause. Gencor, however, conveniently ignores the fact that in a case decided after the cases it cites (and one cited by the Fifth District in its Opinion here), the Third District expressly upheld a forum selection clause against a non-signatory. See World Vacation Travel, S.A. v. Brooker, 799 So. 2d 410 (Fla. 3d DCA 2001). 3 Citing World Vacation Travel, S.A. v. Brooker, 799 So. 2d 412 (Fla. 3d DCA 2001) (forum selection clause against non-signatory proper where the claims are directly out of the agreement and the commercial relationship of the parties); Tuttle's Design-Build, Inc. v. Florida Fancy, Inc., 604 So. 2d 873, (Fla. 2d DCA 1992) (recognizing that a reasonable forum selection clause would be enforced against a non-signatory). 4 Citing XR Co. v. Block & Balestri, P.C., 44 F. Supp. 2d 1296, 1299 (S.D. Fla. 1999) (enforcing forum selection clause against sole shareholder of contracting corporation where the shareholder's interests in the contract were derivative of the contracting party and the contract inured to the non-signatory's benefit); Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285, 1300 (11th Cir. 1998). 5

10 In World Vacation Travel, plaintiffs sued a number of parties for breach of a time-sharing agreement which was only signed by one defendant. Id. at 412. Although not all defendants were signatories, the Third District enforced the agreement's mandatory forum selection clause against all defendants, and dismissed the case. The Third District found that plaintiffs' claims "arise solely out of the agreement. It logically follows that the mandatory nature of the forum selection clause of the time-sharing agreement equally applies to the non-signatory defendants due to the fact that the claims arise directly from the agreement, as well as due to the nature of the commercial relationship of the parties as it relates to the agreement itself." Id. at (emphasis added). Similarly here, as the Fifth District recognized, Gencor's claims against DTGP arise directly from the audit work performed pursuant to the engagement letter between DTGP and Gencor's wholly-owned subsidiary, which requires all claims arising in connection with services rendered to be venued in England. Because Gencor's claims arise from the work performed under the engagement letter, it is of no consequence that Gencor did not sign the contract. As for the Third District cases Gencor purportedly relies on to the contrary, each of those cases are factually inapposite. For example, in Colonia Insurance Co. v. Assuranceforeningen Skuld, 588 So. 2d 1009 (Fla. 3d DCA 1991), an excess insurance carrier, Colonia, sued a primary insurance carrier, Skuld, to recover the costs of defending and settling a wrongful death suit against the insured, Poseidon. 6

11 Attempting to invoke the doctrine of equitable subrogation, Skuld claimed that Colonia should be bound by the forum selection clause in the contract between Skuld and Poseidon providing that actions between Skuld and Poseidon would be litigated in Norway. Although it recognized that there was "no doubt of the enforceability" of such forum selection clauses in general, the Third District concluded that the dispute between Skuld and Colonia was not encompassed by the forum selection clause at issue because the case was only a direct action to determine which of the two insurance carriers would pay. Id. at It was not "'a dispute between the [a]ssociation (Skuld) and a [m]ember [Poseidon],' but one only between Skuld and Colonia." Id. at 1010 (quoting clause). Colonia is readily distinguishable from the Fifth District's Opinion in this case. First, far from the parent-subsidiary relationship between Gencor and Gencor ACP in this case, there was no comparable close relationship among the parties in Colonia that would have justified Skuld holding Colonia to a contract it was not a party to. Second, in contrast to the broad forum clause at issue here, the Third District noted that the forum selection clause in Colonia was particularly narrow, and that had it been a broader one, the Court may have enforced it. Id. at Procedo Gesellschaft Fur Exportfactoring, D. Klindworth MBH v. Juli-And Holding of Florida, Inc., 691 So. 2d 1143 (Fla. 3d DCA 1997), is also easily distinguished. In that case, although there existed certain contracts with forum selection clauses among various entities, the parties in the action had not agreed to 7

12 litigate in a particular forum and the bills of exchange that Procedo had purchased and sued upon did not contain any forum selection clause. As the Third District stated: "[T]he parties now in litigation in Florida did not agree to resolve any disputes between themselves in any particular forum. Pursuant to [the applicable Florida statute], [Appellant], the obligee on the bills of exchange, could sue either on the underlying obligation, or the instruments themselves. [Appellant] clearly sued on the instruments, and was not bound by a forum selection clause that was not found in those instruments." Id. at B. The Opinion Does Not Conflict With Another Fifth District Case In addition to claiming the existence of a conflict between the Fifth and Third District Courts of Appeal, Gencor also maintains that there exists a conflict within the Fifth District itself on this issue. See Gencor Br. at 6. There is nothing in the Fifth District's Opinion, however, to suggest that it was somehow in direct conflict with any of its own prior decisions. In support of this argument, Gencor cites Pozo v. Roadhouse Grill, Inc., 790 So. 2d 1255 (Fla. 5th DCA 2001), a case Gencor cited to the Fifth District in its papers below. Pozo, however, is entirely inapposite. There, the Fifth District held 5 Gencor's reliance on Wood v. Wall, 666 So. 2d 984 (Fla. 3d DCA 1996), is similarly misplaced. Among other reasons, the Third District refused to enforce the forum selection clause in that case because the alleged duplicity occurred before the agreement was signed and the forum selection clause was limited to litigation arising "under the terms of this agreement." Id. at

13 that a forum selection clause could not be enforced by plaintiff Roadhouse against a non-signatory because Roadhouse also was a non-signatory and thus "lacked standing to enforce the provision." Id. at Indeed, in Pozo, the signatory, a defendant in an underlying litigation, already had waived the forum selection clause. Id. at C. The Opinion Does Not Conflict With A Decision Of This Court Finally, Gencor contends that the Opinion conflicts with this Court's decision in Manrique v. Fabbri, 493 So. 2d 437 (Fla. 1986). Manrique, however, actually supports the Fifth District's enforcement of the forum selection clause in this case. In Manrique, this Court held that forum selection clauses are entitled to a presumption of validity and should be upheld absent a showing by the party seeking to escape the provision that enforcement would be unreasonable or unjust. See Manrique, 493 So. 2d at Here, Gencor has not made (and cannot make) such a showing. Indeed, Gencor never even raised this issue in the courts below. 6 In support of its position, Gencor also cites without discussion to Swarovski North America, Ltd. v. House of China, Crystal & Silver, Inc., 848 So. 2d 452 (Fla. 4th DCA 2003). In Swarovski, however, the Fourth District, recognizing "that unambiguous mandatory forum selection clauses contained in contract documents are presumptively valid and should be enforced in the absence of a showing that enforcement would be unreasonable or unjust," dismissed plaintiff's complaint for improper venue. Id. at

14 IV. CONCLUSION For all of the foregoing reasons, DTGP respectfully submits that this Courtlacks jurisdiction to review the Fifth District Court of Appeal's Opinion. CERTIFICATE OF COMPLIANCE I certify that this brief complies with the font requirements of Fla. R. App. P (a)(2) in that the font type, size and style used in this brief is Times New Roman 14-point. /s/ James S. Toscano JAMES S. TOSCANO, ESQUIRE Florida Bar No Lowndes, Drosdick, Doster, Kantor & Reed, P.A. 215 North Eola Drive Post Office Box 2809 Orlando, Florida Telephone: (407) Facsimile: (407) JENNIFER L. CONN, ESQUIRE MICHAEL G. HONEYMAR, JR., ESQUIRE Gibson, Dunn & Crutcher LLP 200 Park Avenue, 48th Floor New York, New York Telephone: (212) Facsimile: (212) Attorneys for Respondent, The U.K. General Partnership Of Deloitte & Touche 10

15 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was furnished by facsimile and U.S. Mail to the following named addresses, this 12 th day of July, 2006: Walter A. Ketcham, Jr., Esquire Grower, Ketcham, More, Rutherford, Noecker, Bronson, Eide & Telan, P.A. 390 North Orange Avenue Suite 1900 Orlando, Florida Telephone: (407) Facsimile: (407) Counsel for Gencor Industries, Inc. Suzanne E. Gilbert, Esquire Holland & Knight, LLP 200 South Orange Avenue Suite 1526 Orlando, Florida Telephone: (407) Facsimile: (407) Counsel for Deloitte & Touche L.L.P H. Lee Godfrey, Esquire Susman Godfrey, L.L.P Louisiana, Suite 5100 Houston, Texas Telephone: (713) Facsimile: (713) Counsel for Gencor Industries, Inc. Warren T. Burns, Esquire Susman Godfrey, L.L.P. 901 Main, Suite 5100 Dallas, Texas Telephone: (214) Facsimile: (214) Counsel for Gencor Industries, Inc. James M. Kaplan, Esquire Wilson, Elser, Moskowitz, Edelman & Dicker, LLP 100 S.E. Second Street Suite 3800 Miami, Florida Telephone: (305) Facsimile: (305) Counsel for Royal Insurance Company of America John M. George, Jr., Esquire Chad W. Pekron, Esquire Sidley Austin LLP 1 South Dearborn Street Chicago, Illinois Telephone: (312) Facsimile: (312) Counsel for Deloitte & Touche L.L.P. /s/ James S. Toscano JAMES S. TOSCANO 11