IN THE SUPREME COURT OF THE STATE OF FLORIDA CASE NO. 03 -

Transcription

1 IN THE SUPREME COURT OF THE STATE OF FLORIDA ASAL PRODUCTS, INC., a Florida Corporation, vs. Plaintiff/Petitioner, OFFICE PAVILION SOUTH FLORIDA, INC., a Florida Corporation, CASE NO. 03-4DCA CASE NO. 4D BROWARD COUNTY L.T. CASE NO CACE 13 Defendant/Respondent. / PETITIONER S BRIEF ON JURISDICTION IN SUPPORT OF NOTICE TO INVOKE DISCRETIONARY JURISDICTION TO REVIEW DECISION OF THE FOURTH DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA Keith T. Grumer, Esquire Rowena D. Reich, Esquire GRUMER & LEVIN, P.A. Attorneys for Petitioner One East Broward Boulevard, Suite 1501 Ft. Lauderdale, Florida (954) ; (954) Fax

2 TABLE OF CONTENTS Page No. TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT...iv STATEMENT OF THE CASE AND FACTS... 1 SUMMARY OF THE ARGUMENT... 4 ARGUMENT... 5 IN HOLDING AN EXECUTED CONTRACT ILLUSORY FOR WANT OF CONSIDERATION, THE DECISION OF THE DISTRICT COURT IMPOSED PRE-PERFORMANCE CONTRACT REQUIREMENTS ON AN EXECUTED CONTRACT; PERFORMANCE IS CONSIDERATION, AND PERFORMANCE EXTINGUISHES ANY MANDATE FOR MUTUALITY OF OBLIGATION CONCLUSION CERTIFICATE OF SERVICE CERTIFICATE OF COMPLIANCE i-

3 TABLE OF AUTHORITIES Case Law Page(s) Allington Towers North, Inc. v. Rubin, 400 So. 2d 86 (Fla. 4th DCA 1981)... 7 Bayshore Royal Co. v. Doran Jason Co. of Tampa, Inc., 480 So.2d 651 (Fla. 2nd DCA 1985)... 8 City of South Miami v. Dembinsky, 423 So.2d 988 (Fla. 3rd DCA 1982)... 4, 6 Clark v. State, 651 So. 2d 1309 (Fla. 3d DCA 1995) rev. den. 660 So.2d 712 (Fla.1995)... 4, 5 Florida-Georgia Chemical Co., Inc. v. National Laboratories, Inc., 153 So.2d 752 (Fla. 1st DCA 1963)... 4, 7 Gull Laboratories, Inc., v. Diagnostic Technology, Inc., 695 F. Supp (D. Utah 1988)... 8 LeNoir v. McDaniel, 80 Fla. 500, 86 So. 435 (Fla. 1920)... 4, 6 Murry v. Zynyx Marketing Communications, Inc., 774 So. 2d 714 (Fla. 3d DCA 2000)... 4, 7 PNR, Inc. v. Beacon Property Management, Inc., 842 So. 2d 773 (Fla. 2003)... 9 Ponce Development Company v. Espino, 449 So. 2d 317 (Fla. 3d DCA 1984).. 4, 6 Rohlfing v. Tomorrow Realty & Auction Co., Inc., 528 So.2d 463 (Fla. 5th DCA 1988)... 4, 7 Russell v. Martin, 88 So. 2d 315 (Fla. 1956)... 4, 6 Sanchez v. Crandon Wholesale Drug Co., 173 So. 2d 687 (Fla. 1965)... 4, 6 Tampa Northern R.Co. v. City of Tampa, 104 Fla. 481, 140 So. 311 (Fla. 1932) reh g den Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623 (Fla. 4th DCA 1982) ii-

4 Other Authorities Corbin on Contracts 6.1, at 197 (Joseph M. Perillo ed., rev. ed.1995)... 7 E. Coke on Littleton 222 (1628)... 9 E. Farnsworth, Contracts 2.11 (1982)... 8 Fla. Const. Art. V 3(b)(3) Fla. Rule App. P (a)(2)(A)(iv)... 1, 10 -iii-

5 PRELIMINARY STATEMENT Petitioner, ASAL PRODUCTS, INC., a Florida Corporation ("ASAL"), was the Plaintiff below in the Circuit Court of the 17 th Judicial Circuit in and for Broward County, Florida. Respondent, OFFICE PAVILION SOUTH FLORIDA, INC., a Florida Corporation ("PAVILION"), was the Defendant in the case. PAVILION was the Appellant in the Fourth District Court of Appeal and ASAL was the Appellee. In this brief, Petitioner, ASAL PRODUCTS, INC., will be referred to as "ASAL" and Respondent, OFFICE PAVILION SOUTH FLORIDA, INC., will be referred to as "PAVILION". Citations to the Appendix filed by ASAL shall be designated as: (App., P. ). The Decision of the Fourth District Court of Appeal dated May 21, 2003 shall be referred to as the Decision. -iv-

6 STATEMENT OF THE CASE AND FACTS 1 This is a petition to invoke the discretionary jurisdiction of this Court pursuant to Fla. Rule App. P (a)(2)(A)(iv). The Decision became final for appellate purposes by virtue of the Fourth District s order denying ASAL's Motion For Rehearing and/or En Banc Rehearing dated July 29, ASAL timely filed a notice to invoke the discretionary jurisdiction of this Court on August 26, ASAL, an office supply wholesaler, sued PAVILION, an office supply distributor, for breach of contract after PAVILION rejected ASAL's orders for office chairs. The trial court, based upon a jury verdict, which included a special interrogatory finding a valid and enforceable contract, entered a $4,000, judgment in favor of ASAL representing lost profits for the two-year duration of the contract. The District Court reversed the final judgment and held the trial court had erred in denying PAVILION's motion for directed verdict. The District Court held the contract was unenforceable because, without a quantity term for Aeron chairs, ASAL s promise was illusory and thus the contract amendment failed for want of consideration. (App.1, P. 4). In December 1998, ASAL and PAVILION entered into a two-year contract for the purchase of keyboard trays and accessories (the "Contract"). The Contract stated that its purpose was for PAVILION to supply and ASAL to purchase a minimum of 1,000 trays per year (up to a maximum of 2,000 per month) at a price that would be 1 This statement recites the facts for jurisdictional purposes only. If this Court accepts jurisdiction, ASAL will address additional facts and matters. -1-

7 established by a separate writing. Three orders for keyboard trays were placed and filled without incident. In March, the parties amended the Contract by letter agreement to include Herman Miller s Aeron chairs. The amendment adopted all of the terms and conditions of the December Contract with respect to the chairs except for those concerning delivery time and quantities, and an addendum thereto specified chair prices. A new paragraph addressing delivery times for Aeron chairs was added to the Contract. The District Court accurately cites the following facts, all of which establish ASAL s performance of the Contract as amended to include Aeron chairs: 1. ASAL marketed the chairs in addition to the keyboard trays (App.1, P. 2); 2. ASAL purchased six chairs from PAVILION to display at a trade show in Germany (App.1, P. 2); 3. Following a successful show, ASAL reevaluated its sales forecasts (pursuant to the terms of the Contract, as amended) and delivered the updated forecasts to PAVILION at a meeting with it s sales manager, Gary Kemp (App.1, P. 2); 4. ASAL s sales manager, Oliver Asel, presented orders to Kemp at that meeting for 2,450 chairs to cover sales from the trade show (App.1, P. 2-3); 5. ASAL ordered thirty additional chairs to use as samples (App.1, P. 2-3); and 6. Oliver Asel brought a deposit check for $633,000 to the meeting with Kemp (App.1, P. 3). When ASAL presented PAVILION with orders for Aeron chairs, PAVILION -2-

8 rejected the orders because Herman Miller, Inc. (which was not a party to the Contract) barred the sales. At PAVILION s request, ASAL reduced the order to one thousand chairs with a deposit of $255,000. PAVILION rejected the modified order, whereupon ASAL filed this breach of contract action. -3-

9 SUMMARY OF THE ARGUMENT It is well settled that an executed contract is enforceable even if there had been a lack of consideration or mutuality at inception. Sanchez v. Crandon Wholesale Drug Co., 173 So. 2d 687 (Fla. 1965); Russell v. Martin, 88 So. 2d 315 (Fla. 1956); LeNoir v. McDaniel, 80 Fla. 500, 86 So. 435 (Fla. 1920); Rohlfing v. Tomorrow Realty & Auction Co., Inc., 528 So.2d 463 (Fla. 5th DCA 1988); Murry v. Zynyx Marketing Communications, Inc., 774 So. 2d 714 (Fla. 3d DCA 2000); Clark v. State, 651 So. 2d 1309 (Fla. 3d DCA 1995) rev. den. 660 So.2d 712 (Fla.1995); Ponce Development Company v. Espino, 449 So. 2d 317 (Fla. 3d DCA 1984); City of South Miami v. Dembinsky, 423 So.2d 988 (Fla. 3rd DCA 1982); Florida-Georgia Chemical Co., Inc. v. National Laboratories, Inc., 153 So.2d 752 (Fla. 1st DCA 1963). The Fourth District Court of Appeal strays from established contract doctrine by relying upon authority that barred enforceability of executory agreements to invalidate the executed Contract in this case. The Decision represents a significant departure from basic principles governing the law of contracts by invalidating an entire class of previously enforceable contracts. Discretionary jurisdiction exists because the Decision in this case expressly and directly conflicts with decisions of this Court and of other districts by holding that the Contract as amended was illusory and unenforceable notwithstanding performance by the promisee. -4-

10 ARGUMENT IN HOLDING AN EXECUTED CONTRACT ILLUSORY FOR WANT OF CONSIDERATION, THE DECISION OF THE DISTRICT COURT IMPOSED PRE-PERFORMANCE CONTRACT REQUIREMENTS ON AN EXECUTED CONTRACT; PERFORMANCE IS CONSIDERATION, AND PERFORMANCE EXTINGUISHES ANY MANDATE FOR MUTUALITY OF OBLIGATION. By applying pre-performance standards to a performed agreement, the District Court Decision required formalities previously relegated solely to executory agreements. In the Decision, the District Court cites facts conclusively establishing that ASAL performed the Contract as amended for Aeron chairs. The Decision creates a precedent altering the historically distinct legal analysis for executory and executed contracts. The Court recognizes ASAL s ongoing marketing efforts and sales of the chairs, and it cites numerous other facts establishing ASAL s performance. (App.1, P. 2-3) Yet, the Court rejects these as valid consideration, because the Contract, as it was written, did not obligate ASAL to market chairs. (App.1, P. 3-4) The Court imposed a requirement for mutuality of obligation on an executed contract and absolved PAVILION of any obligation notwithstanding ASAL s performance. The Decision's application of executory contract standards to an executed agreement directly conflicts with precedent by this Court and the District Courts of Appeal deciding the same issue. No Florida court has previously allowed want of mutuality of obligation as a defense to an executed contract. See, e.g., Clark v. State, 651 So. 2d 1309,

11 (Fla. 3d DCA 1995) rev. den. 660 So.2d 712 (Fla.1995) (want of mutuality is no defense in the case of an executed contract and a promise lacking mutuality at its inception becomes binding on the promisor after performance by the promisee.) (citing City of South Miami v. Dembinsky, 423 So.2d 988, 989 (Fla. 3rd DCA 1982) and Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623, 627 (Fla. 4th DCA 1982)). If the Contract lacked mutuality at its inception, as long as it remained a bilateral, executory agreement (neither party performed), it was unenforceable against PAVILION. 2 However, when the Contract became executed by ASAL s performance (except insofar as that performance was impeded by PAVILION), the defect of lack of mutuality of obligation was cured and could not be a defense to enforcement of the Contract. Ponce Development Company v. Espino, 449 So. 2d 317, 319 (Fla. 3d DCA 1984) (relying on Russell v. Martin, 88 So. 2d 315 (Fla. 1956), LeNoir v. McDaniel, 80 Fla. 500, 86 So. 435 (Fla. 1920) and Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623 (Fla. 4th DCA 1982)). This Court has repeatedly rejected lack of mutuality as a defense to an executed contract. Although unenforceable at its inception because of such defect, once executed by performance of the promisee, the contract becomes binding on the parties. LeNoir v. McDaniel, 80 Fla. 500, 506, 86 So. 435, 437 (Fla. 1920). See also, Russell v. Martin, 88 So. 2d 315, 317 (Fla. 1956) (Lack of mutuality is no defense to 2 For the sake of this discussion, ASAL assumes the Contract was illusory and unenforceable at inception. If this Court accepts jurisdiction, ASAL will address this issue in its brief on the merits. -6-

12 an executed contract.) In Sanchez v. Crandon Wholesale Drug Co., 173 So. 2d 687 (Fla. 1965), this Court ordered reinstatement of a breach of contract claim and adopted the correct rule of decision announced in Florida-Georgia Chemical Co., Inc. v. National Laboratories, Inc., that: Although cases have consistently held that contracts, void for lack of mutuality of obligation, cannot so far as they are executory be enforced by specific performance nor may one party thereto enjoin the cancellation or breach by the other, however,... one party may be liable to the other in an action at law for damages for the period during which the contract was performed. Florida-Georgia Chemical Co., Inc. v. National Laboratories, Inc., 153 So.2d 752, 755 (Fla. 1st DCA 1963) (citations omitted) (emphasis in original). Certain districts have rejected outright the requirement of mutuality of obligation. As the Fifth District Court articulated in Rohlfing v. Tomorrow Realty & Auction Co., Inc., 528 So.2d 463, (Fla. 5th DCA 1988), the application of the legal principal of mutuality of obligation is:... nothing more than a smoke screen defense. The very nature of an executory contract is such that the second party accepts an offer or promise made by the first party by doing an act which the second party did not have a contractual obligation to do. If and when the act by the second party is performed, the first party has received consideration and is then obligated to perform on his promise. Similarly, the Third District Court has noted that, the so-called requirement of mutuality of obligation is now widely discredited. It is consideration... that is necessary, not mutuality of obligation. Murry v. Zynyx Marketing Communications, Inc., 774 So. 2d 714, 715 (Fla. 3d DCA 2000) (citing Arthur Linton Corbin, Corbin -7-

13 on Contracts 6.1, at 197 (Joseph M. Perillo ed., rev. ed.1995). 3 Performance is consideration, and, once ASAL performed, it cured any defect in the written agreement concerning consideration. 4 Any act of the plaintiff from which the defendant derives a benefit, or any "labor, detriment or inconvenience, however small, sustained by the plaintiff, if such act as performed or inconvenience suffered is by the consent express or implied of the defendant," constitutes sufficient consideration for a binding contract. Tampa Northern R.Co. v. City of Tampa, 104 Fla. 481, 485, 140 So. 311, (Fla. 1932) reh g den. (emphasis added). The Decision redefines consideration narrowly to require the promisee's detriment be expressly required by the contract terms: "The benefit PAVILION received from ASAL s ongoing marketing efforts and sales of the chairs... do[es] not constitute consideration.... [because] the contract did not obligate ASAL to market the chairs. (App.1 P.4). Contract law does not tie consideration to a specific covenant in the contract, because to do so would undo the peppercorn theory; that is, the delivery 3 The Decision relies upon cases prohibiting enforcement of executory agreements. For example, in Allington Towers North, Inc. v. Rubin, 400 So. 2d 86, 87 (Fla. 4th DCA 1981), the court identified the subject contracts as executory as to both obligations. The Court also cites Gull Laboratories, Inc., v. Diagnostic Technology, Inc., 695 F. Supp (D. Utah 1988) in which the subject bilateral executory agreement granting a license to sell the licensor s products was an indefinite quantities contract and was unenforceable, under Utah law, for lack of consideration and mutuality. 4 The Decision claims that ASAL s $255,000 deposit check submitted with its modified order for chairs was returned for insufficient funds. This superfluous finding, which goes to PAVILIONS s defense of failure of consideration (as opposed to want of consideration), is not within the purview of this brief and will be addressed by ASAL if this Court accepts jurisdiction. -8-

14 of a mere peppercorn, regardless of the subject matter of the contract, is sufficient. Bayshore Royal Co. v. Doran Jason Co. of Tampa, Inc., 480 So.2d 651, 656 (Fla. 2nd DCA 1985) citing E. Farnsworth, Contracts 2.11, at 66 n. 2 (1982), quoting from E. Coke on Littleton 222 (1628) ("and yet if the rent were by one graine of wheat, or one seed of comyn, or one pepper corne..."). To link consideration to a covenant is to impose mutuality of obligation on a performed contract, a concept uniformly rejected. The District Court s Decision creates a new requirement for mutuality of obligation as a condition to the enforcement of an executed contract and thereby directly conflicts with numerous decisions of this Court and other appellate districts. The Decision articulates a rule and sets precedent allowing a promisor to avoid contractual obligations after performance by the promisee. In kind, the precedent creates uncertainty for promisees who, having incurred a detriment, will have no recourse under Florida law should the promisor choose not to fulfill its reciprocal obligations. Thus, the Decision cannot coexist with other decisions of this Court and other appellate districts, and it is the constitutional responsibility of this Court to resolve this interdistrict conflict. See, PNR, Inc. v. Beacon Property Management, Inc., 842 So. 2d 773, 777 (Fla. 2003). -9-

15 CONCLUSION This Court may exercise discretionary jurisdiction to review any decision of a district court of appeal that "expressly and directly conflicts with a decision of another district court of appeal or of the supreme court on the same question of law" in accordance with Fla. R. App. P (a)(2)(A)(iv) and Fla. Const. Art. V 3(b)(3). ASAL respectfully requests that this Court accept jurisdiction in this case based upon the express and direct conflict created by the decision of the Fourth District Court of Appeal. This Court should accept jurisdiction to resolve the conflict and preserve uniformity of the law. -10-

16 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was mailed this of September 2003 to: MARK D. SOLOV, ESQ., Stearns Weaver, Museum Tower, Suite 2200, 150 West Flagler Street, Miami, Florida GRUMER & LEVIN, P.A. Attorneys for Petitioner One East Broward Boulevard Suite 1501 Ft. Lauderdale, Florida (954) (Broward) (954) (Fax) By: KEITH T. GRUMER Fla. Bar No By: ROWENA D. REICH Fla. Bar No

17 CERTIFICATE OF COMPLIANCE Counsel for Appellant hereby certifies that this brief was typed in Times New Roman 14- point font in compliance with the font requirements of Fla. R. App. P GRUMER & LEVIN, P.A. Attorneys for Petitioner One East Broward Boulevard Suite 1501 Ft. Lauderdale, Florida (954) (Broward) (954) (Fax) By: KEITH T. GRUMER Fla. Bar No By: ROWENA D. REICH Fla. Bar No