IN THE SUPREME COURT OF FLORIDA. CASE NO. p L.T. CASE NO.: 06 2008 CA 013970 AXXX 2 SMOOK, INC. Petitioner, v. ALBERT J. PRIETO, etc., et al., Respondents. PETITIONER'S AMENDED JURISDICTIONAL BRIEF Paul K. Silverberg, Esq. Florida Bar No. 147877 Kraig S. Weiss, Esq. Florida Bar No. 63193 Silverberg & Weiss, P.A. Attorneys for Petitioner 1290 Weston Road, Suite 218 Weston, Florida 33326 (954) 384-0998
TABLE OF CONTENTS TABLE OF CONTENTS ii TABLE OF CITATIONS iii CERTIFICATE OF TYPE SIZE AND STYLE iv STATEMENT OF THE FACTS AND THE CASE 1-5 SUMMARY OF ARGUMENT 5 JURISDICTIONAL STATEMENT 6 ARGUMENT 6-10 CONCLUSION 10 CERTIFICATE OF SERVICE 11 2
SC12-2488 TABLE OF CITATIONS Price v. Winter, 15 Fla. 66 (Fla. 1875) 6,8 Witt v. La Gorce Country Club, Inc., 35 So. 3d 1033 (Fla. 3 d DCA 2010) 10 Board of Public Instruction of Dade County v. Martin and Son, Inc., 97 So. 2d 23 (Fla. 1957) 7,8 D&M Jupiter v. Frieddopfer, 853 So. 2d 485 (Fla. 4th DCA 2000) 6,9 Output, Inc. v. Danka Business Systems Inc., 991 So. 2d 941 (Fla. 4th DCA 2008) 9 Phillip Morris USA v. Naugle, 2012 WL 2361748 (Fla. 4th DCA 2012) 7,9 3
CERTIFICATE OF TYPE SIZE AND STYLE Undersigned counsel certifies that the font used in this brief is Courier New 12 pt. By: K Weiss, Esq.
STATEMENT OF FACTS AND THE CASE The Fourth District Court of Appeal's August 29, 2012 opinion conflicts with the prevailing case law of this Court, 'as well as with its own prior opinions and that of the Third District, which allows for omissions as an element of fraud and a finding of fraud may be collected and inferred from the nature and circumstances of the transaction. The basis for this Court's conflict and discretionary jurisdiction, is the fact that he Fourth's finding conflicts with the facts that (1) a fraud dan be in the form of an omission of a material fact, (2) fraud may be inferred from the nature and circumstances of the transaction, and (3) whether a party has made a fraudulënt misrepresentation or om1ss1on 1s a question of fact and not reviewable on appeal. The above captioned appeal is an effort by the Petitioner to have this Court review the opinion of tihe Fourth District Court of Appeal issued August 29, 2012. The effect of the District Court's Opinion was to partially reverse a fraud Final Judgment that had been entered by the Circuit Court in favor of Petitioner and against the individual Respondent, Albert Prieto ("Prieto"). The basis for the Circuit Court' s entry of Final Judgment in favor of the Petitioner, after a full trial on its merits, was that Prieto had committed a fraud in the inducement against 1
SC12-2488 the Petitioner. The Circuit Court made several findings of fact based on the evidence procured at trial, that Prieto, a Sargeant in the Economic Crimes Division of Miami Beach Pol ce Department, concocted a scheme to defraud the Petitioner by offering a Promissory Note with an interest rate of Thirty (3 %) Percent and then using a criminal usury defense to collectiðn. In its August 29, 2012 opinion, the Fourth District Court of Appeals reversed the entry of the fraud in the inducement finding in the Final Judgment against Prieto only, conclud ng that since Prieto did not specifically state to the Petitioner that 30% was a legal interest rate and since there was no evidence that Prieto did not intend to päy at the time the Promissory Note was entered, that the elements of fraud in the inducement were not present. The factual background which led to the initiation of this litigation begins with Prieto's desire to procure a loan from the Petitioner. On or about June 23, 2006, the corpordte Respondent Manor Development (hereinafter referred to as "Manar" if used apart from the general Respondents), through its agent and alter-ego, Prieto, entered into a.promissory Note ( he "Note") for the total principle sum of One Hundred Seventy Five Thousand ($175,000) Dollars, with a maturity date of June 23, 2007 with the Petitioner. 2
It was uncontroverted that, at all times pertinent, Prieto was a Sergeant in charge of the Economic Crimes Division,of Miami Beach Police Department. As such, and in his position as a Sergeant, Prieto offered to Petitioner, through Petitioner's agent Rick Silverberg ("Silverberg") as enticement, that the interest rate of the Note could be 30% per year. Prieto a so made representations to Silverberg that he could not default based on his Sergeant position of Economic Crime with the Mi$mi Beach Police Department, and that he was a mortgage broker, that the Note was enforceable. Based on these representations by Prieto, Petitioner testfified, he was induced to enter into the Note. At trial, other lenders testified and presented a promissory note into evidence that Prieto enticed them w'th interest rates at 2.1% per month, which - would also act as a shield to repayment. The evidence at trial showed that the fact that Prieto added the "0.1%" to the 2% per month, catapulted he annualized rate to criminal usury by just "0.2%". On or about July 27, 2007, the parties executed an Addendum to the Note which reduced the interest rate to eighteen (18%) per annum retroactive to the date of the Note. On or about September 25, 2007, Petitioner (through its counsel) sent the 3
statutory reformation notice, as to the Note and the Addendum, to the Respondents pursuant to Florida Statute 687.04. At trial, Petitioner Richard Silverberg testified as follows: Q: Did Mr. Prieto make any promises to you before ýou entered into the subject promissory note? A: Yes. He came to me to borrow the money. [Prieto] came to me and asked me to loan him the money. He promised me that he stood behind it, that it was him, that I was loaning him [Prieto] the money. And that as a Miami Beach police officer he could not, not pay me back because that was something that he couldn't do, something to do with his position. (Trial Transcript Vol. 1 93:3-20) The Lower Court's findings were clear as it stated "[b]ecause I'm convinced from the evidence and the totality of the circumstances that this - since this was a creation of the borrower to create a usurious rate, that I'm not about to allow to him take advantage..." (Id. 537:13-18). "The president of a corporation can be held legally liable for fraud in the inducement and an intentional tort if the evidence supports it. I found the evidence support it." (Id. 543:20-23). The Lower Court found that the Respondents, including Prieto, by the 4
greater weight of the evidence, committed a Fraud in the Inducement. (Trial Transcript Vol. 4, 535:3-11). The Court specifically found, based on the evidence presented, that, "the interest rate was created totally in the mind of [Prieto], the corporate defendant through its representative Mr. Prieto was the one who fashioned this. I am convinced that it was not the creation of the lender [Petitioner]" (Id. 537:2-10). As such, on or about April 11, 2011, the Lower Court entered a judgment for the Petitioner Øor Fraud in the Inducement in the amount of $175,000, plus prejudgment interest. Petitioner has timely initiated the instant proceeding before this Court with a Notice to Invoke this Court's Discretionary Jurisdiction. This Brief on Jurisdiction is being timely filed. SUMMARY OF THE ARGUMENT The Petitioner is requesting that this Court exert its discretionary jurisdiction to review the Fourth District Cogrt of Appeal's August 29, 2012 opinion, because it constitutes a direct and expressed conflict with this Court's long standing decisions regarding fraud in the inducement; as well as the Fourth District case law regarding fraud in he inducement. 5.
SC12-2488 This Court's conflict and discretionary jurisdiction, is based on the fact that this Court, and others, have found that (1) a fraud can be in the form of an omission of a material fact, (2) fraud may be inferred from the nature änd circumstances of the transaction, and (3) whether a party has made a fraudulent misrepresentation or om1ss1on 1s a question of fact and not reviewable on appeal. JURISDICTIONAL STATEMENT The Florida Supreme Court has discretionary jurisdiction to review a decision of a District Court of.appeal that expressly and directly conflicts with a decision of the Supreme Court or another District Court of Appeal on the same point of law. Art. V, Section (3) (b) (3) (2011). ARGUMENT The Petitioner is requesting that this Court exert its discretionary jurisdiction to review the Fourth District Court of Appeal's August 29, 2012 opinion, because it constitutes a direct and expressed conflict with this Court's long standing decisions regarding fraud in the inducement, as annunciated in cases such as Price v. Winter, 15 Fla. 66 (Fla. 1875); 67 Fla. 324 (Fla. 1914); as well as the Fourth District cases such as D&M Jupiter v. Frieddopfer, as well as the recent case of 6
Phillip Morris USA v. Naugle, 2012 WL 2361748 (Fla. 4th DCA 2012). As early as 1875, this Court has recognized that fraud, "properly includes all arts, omissions or concealments which involve a breach of a legal or equitable duty, trust or confidence, justly reposed, and injurious to another". Winter, 15 Fla. at 71. As this Court has stated, "fraud may be collected and inferred from the nature and circumstances of the transaction as being a breach of trust or confidence or imposition of deceit on another person". Id. (emphasis added) In 1957, this Court in the matter of Board of Public Instruction of Dade County v. Martin and Son, Inc., 97 So. 2d 23 (Fla. 1957), stated that: "Where representation is made in positive terms as to a fact actually or presumptively within t he speakers knowledge, and contains nothing so improbable as to cause doubt of its truth, the hearer may rely upon it without investigation...[s]ince the very purpose of fraud is to cheat the victim by making him neglect the precautions essential to prevent injury..." Id. Contrary to this Court's pronouncement in these cases, the Fourth District predicated its decision on its own facttal determination that "there was no evidence that Prieto ever represented that 30% was a legal interest rate". In other
words, the Fourth District overturned the judgment with a finding that Prieto did not use the exact words "legal interest rate". This flies in the face of the facts of this Court's decisions which allow fraud to be "collected and inferred ffom the nature and circumstances of the transaction as being a breach of trust or confidence or imposition of deceit on another person". Winter, 15 Fla. at 71 (emphasis added). The Fourth District failed to give credence to the lower court's observation of the facts and circumstances as to the testimony of the other lenders as to Prieto's additi'on of "O.1%" to their interest rate to create criminal usury. The Fourth District's opinion is also in conflict with this Court's long standing rule that fraud does not have be initiated only by spoken statement, but also by omissions of mater al facts which are known or presumptively known to the speaker would have caused the injured party to react differently, had he or she known the truth, or to forego investigation. Winter, 15 Fla. at 71; Board of Public Instruction of Dade County v. Martin and Son, Inc., 97 So. 2d 23 (Fla. 1957). The Lower Court ad made specific findings of fact, and evidence was procured, which showed in the very least that Prieto had, or presumptively had, greater information to give the Petitioner (such as the knowledge that 30% interest was usurious), but omitted this 8
SC12-2488 fact. The testimony of Prieto, coupled with the additional testimony from other lenders, whom Prieto committed the same scheme, certainly provided a basis for the Lower Court to f nd fraud. In mandating that Prieto actually had to use the wo ds "illegal interest rate" in his inducement,. equates to the Fou th District's disregarding the Lower Court's specific finding th$t, "I'm convinced from the evidence and the totality of the circumstances that this - since this was a creation of the borrower to create a usurious rate..." (Id. 537:13-18). The Fourth District decision also conflicts with stare decisis in its own decisions, such as Output Inc. v. Danka Business Systems Inc., 991 So. 2d 941 (Fla. 4th DCA 2008); D&M Jupiter v. Frieddopher, 853 So. 24 485 (Fla. 4th DCA 200 ); Phillip Morris, USA, Inc., v. Naugle, 2012 WL 2361748 (Fla. 4th DCA 2012). These cases also define fraud in the inducement as requ1r1ng a "statement or omission". In Naugle, the Fourth District specifically held that the cigarette company omitted relevant information, which it knew or presumptively knew, about the health effects of cigarettes. The District Court in Naugle, did not require an actual statement to find fraud actionable, but rather that, "[f]raud can occur by omission, and one who undertakes to disclose se material information has a duty to disclose that information fully". Id. The fact that the Fourth 9
SC12-2488 District, in the instant case, required a "statement" but ignored the "omission" places its decision herein in conflict with its own pronouncements. Finally, the Fourth District's decision, which overturned a finding of fraud, is in direct conflict with the ThÅrd District's statement that whether a party has made an intentional fraudulent misrepresentation is a question of fact, which is not reviewable on appeal. See Witt v. La Gorce Country Club, Inc., 35 So.3d 1033 (Fla. 3rd DCA 2010) (finding that once a party presented elements of fraud in the inducement, it was in the fact finders province to determine if fraud existed). Here with have the Fourth District replacing its review of the facts as to fraud in the inducement in contradiction to the fcjct finding powers of the Lower Court, who heard the testimony, saw the witnesses' expressions and reviewed the trial exhibits. CONCLUSION WHEREFORE, for these stated reasons, the Fourth District's opinion constitutes a direct and expressed conflict for which this Court should exert its discretionary jurisdiction to review the August 29, 2012 decision, and further that this Court should direct the parties to submit Briefs on the merits. 10
CERTIFICATE OF SERVICE I certify that a true and correct copy hereof has been furnished to Benjamin E. Olive, Esq., via e-mail at ben@olivelaw. com on this day of March 2013. Respectfully Submitted, SILVERBERG & WEISS, P.A. Attorneys for Petitioner 1290 Weston Road, Suite 218 Weston, Florida 33326 Primary e-mail: Attorney@pkslegal.com Secondary e-mail: Secretary@pkslegal.com (954) 384-09.98 tel. (954) 384-5390 fax. By: K S' erberg Flor a Bar No. 147877 Kraig S. Weiss Florida Bar No. 63193