In the Supreme Court of Florida CASE NO. SC12-403 CUSTOM SCREENING & CRUSHING INC., and CUSTOM CRUSHING & MATERIAL, INC. Petitioners, vs. GLOBETEC CONSTRUCTION, LLC Respondent. ON PETITION FOR DISCRETIONARY REVIEW FROM THE DISTRICT COURT OF APPEAL, THIRD DISTRICT OF FLORIDA PETITIONERS JURISDICTIONAL BRIEF WASSON & ASSOCIATES, CHARTERED Courthouse Plaza Suite 600 28 West Flagler Street Miami, FL 33130 (305) 372-5220 Telephone (305) 372-8067 Facsimile annabel@wassonandassociates.com LAW OFFICES OF RAUL E. GARCIA JR. P.A. 9200 South Dadeland Blvd Suite 311 Miami, FL 33156 305-670-5158 Telephone 305-670-3466 Facsimile Counsel for Petitioners
TABLE OF CONTENTS TABLE OF AUTHORITIES... : ii STATEMENT OF THE CASE AND OF THE FACTS... : 1 SUMMARY OF THE ARGUMENT... : 2 ARGUMENT: I. THE THIRD DISTRICT S DECISION EXPRESSLY AND DIRECTLY CONFLICTS WITH DECISIONS OF THIS AND OTHER COURTS SETTING FORTH THE REQUIREMENTS IN AN ACTION FOR FRAUD IN THE INDUCEMENT... : 3 II. THIS COURT SHOULD EXERCISE ITS DISCRETIONARY JURISDICTION BECAUSE THE ISSUE OF WHETHER THE EXISTENCE OF A CONTRACT BETWEEN THE MISREPRESENTOR AND THE PARTY INDUCED TO ACT IS NECESSARY FOR A FRAUD IN THE INDUCEMENT... CLAIM IS ONE OF GREAT PUBLIC IMPORTANCE : 6 CONCLUSION... : 9 CERTIFICATE OF SERVICE... : 10 CERTIFICATE OF COMPLIANCE... : 11 APPENDIX... : App. 1 i
TABLE OF AUTHORITIES CASES PAGE A.M. Kidder & Co. v. Clement A. Evans & Co.,...142 S.E.2d 269 (Ga. App. 1965) : 8 Berliner v. Crosslands Federal Savings Bank,... 886 F. Supp. 325 (S.D.N.Y. 1994) :7 Biscayne Boulevard Properties, Inc. v. Graham, 65 So. 2d 858 (Fla. 1953)... :2, 3, 4 Black Diamond Properties, Inc. v. Haines,... 69 So. 3d 1090 (Fla. 5th DCA 2011) :2, 3 Channel Master Corp. v. Aluminum Limited Sales, Inc.,... 115 N.E.2d 823 (N.Y. App. 1958) :7 GlobeTec Construction, LLC v. Custom Screening & Crushing, Inc.,... 37 Fla. L. Weekly D33 (Fla. 3d DCA December 28, 2011) :1 La Pesca Grande Charters, Inc. v. Moran, 704 So. 2d 710 (Fla. 5th DCA 1998)... :6 Lou Bachrodt Chevrolet, Inc. v. Savage,... 570 So. 2d 306 (Fla. 4th DCA 1990) :2, 3, 5 McCullers v. McCullers, 28 So. 2d 823 (Fla. 1947)... :2, 3, 4 Output, Inc. v. Danka Business Systems, Inc.,... 991 So. 2d 941 (Fla. 4th DCA 2008) :2, 3, 4 Williams v. Bear Stearns & Co., 725 So. 2d 397 (Fla. 5th DCA 1998)... :6 OTHER AUTHORITIES PAGE ii
Fla. R. App. P. 9.030(a)(2)(A)(iv)... :3 iii
STATEMENT OF THE CASE AND FACTS This is a proceeding for discretionary review of the Third District in GlobeTec Construction, LLC v. Custom Screening & Crushing, Inc., No. 3D11-1265, 37 Fla. L. Weekly D33 (Fla. 3d DCA December 28, 2011). App. 1. The Third District mandated the trial court to dismiss the complaint, holding that Custom Screening s action for fraud in the inducement fails because there was no contract between GlobeTec and Custom Screening and a plaintiff must show that the fraudulent act induced the formation of a contract between the parties. (Emphasis added) App. 1 at 3-4. Custom Screening brought suit against GlobeTec for fraud in the inducement. App. 1 at 2. GlobeTec moved to compel arbitration of the tort claim, arguing that Custom Screening s claim arose solely from a contract entered into by Panamanian companies, neither of which are subsidiaries of either GlobeTec or Custom Screening. App. 1 at 2. The trial court denied the motion to compel arbitration and GlobeTec appealed. App. 1 at 1. There was no issue as to the sufficiency of the complaint. 1
The Third District affirmed the denial of the motion to compel arbitration, holding that Custom Screening was not a party to the arbitration agreement and therefore the agreement could not be enforced against it. The Third District then went further and also held that where there is no contract between the parties there can be no suit for fraudulent inducement. App. 1 at 2. The Third District remanded with instructions to the trial court to dismiss the complaint because it is axiomatic that where there is no contract between the parties by the plaintiff s own admission, he cannot possibly demonstrate inducement. App. 1 at 3-4. SUMMARY OF THE ARGUMENT This Court has discretionary jurisdiction to review the Third District s decision because it directly and expressly conflicts with this Court s decisions in McCullers v. McCullers, 28 So. 2d 823 (Fla. 1947) and Biscayne Boulevard Properties, Inc. v. Graham, 65 So. 2d 858 (Fla. 1953); and conflicts with the Fourth District in Output, Inc. v. Danka Business Systems, Inc., 991 So. 2d 941 (Fla. 4th DCA 2008), as well as Lou Bachrodt Chevrolet, Inc. v. Savage, 570 So. 2d 306 (Fla. 4th DCA 1990), and the Fifth District in Black Diamond Properties, Inc. v. Haines, 69 So. 3d 1090 (Fla. 5th DCA 2011) where the courts held that in order to establish fraud in the inducement, the plaintiff must prove 1) a 2
misrepresentation of material fact, 2) the representor knew or should have known the statement was false, 3) the representor intended that the representation induce another to rely and act on it, and 4) the party acting in justifiable reliance on the representation was thereby injured. There is no requirement that the party be induced specifically into a contract, but merely being induced to act in some manner to his detriment. ARGUMENT I. THE THIRD DISTRICT S DECISION EXPRESSLY AND DIRECTLY CONFLICTS WITH DECISIONS OF THIS AND OTHER COURTS SETTING FORTH THE REQUIREMENTS IN AN ACTION FOR FRAUD IN THE INDUCEMENT Jurisdiction in this case is proper under Fla. R. App. P. 9.030(a)(2)(A)(iv). The Third District s opinion expressly and directly conflicts with this Court s decisions in McCullers and Biscayne Boulevard Properties, and conflicts with the Fourth District s decision in Output, Inc. v. Danka Business Sytems, Inc., 991 So. 2d 941 (Fla. 4th DCA 2008) and Lou Bachroadt Chevrolet, Inc. v. Savage, 570 So. 2d 306 (Fla. 4th DCA 1990) as well as the Fifth District s holding in Black Diamond Properties, Inc. v. Haines, 69 So. 3d 1090 (Fla. 5th DCA 2011) as to the allegations necessary to sustain a cause of action for fraud in the inducement. 3
This Court has consistently held that fraudulent inducement consists of a false representation of material fact, made with knowledge of its falsity, with intention that it be acted upon, followed by reliance upon and action thereon amounting to a substantial change of position. McCullers, 28 So. 2d at 824. See also Biscayne Blvd. Props., 65 So. 2d at 859. This Court never has held that a necessary element of a fraud in the inducement claim is that the plaintiff be induced to enter into a contract with the defendant. The Third District s decision in this case expressly and directly conflicts with McCullers and Biscayne Boulevard Properties in that the Third District held that the fraudulent act must induce a contract, not merely a detrimental act or change in position. The Third District s decision also directly and expressly conflicts with the Fourth District s decision in Output, 991 So. 2d 941, where a buyer brought a claim for fraud in the inducement against a non-party manufacturer to a purchase agreement. The Fourth District delineated the requirements of the claim: To state a cause of action for fraud in the inducement, a plaintiff must allege the following: 1. A misrepresentation of a material fact; 2. That the representor knew or should have known of the statement s falsity; 4
3. That the representor intended that the representation would induce another to rely on it; and 4. That the plaintiff suffered injury in justifiable reliance on the representation. Key to the Fourth District s reversal was the fact that the manufacturer was not a party to the contract between the plaintiff buyer and the seller. These same requirements were delineated in Lou Bachrodt Chevrolet, Inc. v. Savage, 570 So. 2d 306, 308 (Fla. 4th DCA 1990), and relied on by the Third District in this case. However, although the fraudulent misrepresentations resulted in the purchase of an automobile, the Fourth District made no mention that the representation must induce another to enter into a contract, but only that it act on it. Although the damage may be based on a decision to contract that would otherwise not be made, there is no requirement that the misrepresentation result in a contract. In this case, the Plaintiff clearly alleged that it was induced into sending valuable rock mining and crushing equipment to Panama due to the false representations by the Defendant s representatives. These misrepresentations were intended to induce the Plaintiff into sending equipment to Panama and Plaintiff did so in reliance on the misrepresentations. 5
Therefore, the Plaintiff alleged a cause of action for fraud in the inducement and the Third District erroneously directed that the claim be dismissed because, without a contract between the parties, the Plaintiff cannot possibly demonstrate inducement. App. 1 at 4. Although in the majority of cases dealing with a claim of fraudulent inducement, the injured party was induced into entering into a contract with the representor, no case holds that the misrepresentation must result in a contract. The cases only hold that the injured party must be induced to act or change his position to his detriment by reliance on the false representation. See, e.g., Williams v. Bear Stearns & Co., 725 So. 2d 397 (Fla. 5th DCA 1998)(recognizing viability of fraud in the inducement claims even where there is no contract between the parties). See also, La Pesca Grande Charters, Inc. v. Moran, 704 So. 2d 710 (Fla. 5th DCA 1998)(holding that fraud in the inducement claim is separate and distinct from a breach of contract claim). The Third District in its opinion misapprehends the law insofar as it concludes that the existence of a contract between the plaintiff and defendant is necessary to support a cause of action for fraudulent inducement. II. 6
THIS COURT SHOULD EXERCISE ITS DISCRETIONARY JURISDICTION BECAUSE THE ISSUE OF WHETHER THE EXISTENCE OF A CONTRACT BETWEEN THE MISREPRESENTOR AND THE PARTY INDUCED TO ACT IS NECESSARY FOR A FRAUD IN THE INDUCEMENT CLAIM IS ONE OF GREAT PUBLIC IMPORTANCE Resolution by this Court of whether a claim of fraud in the inducement requires that the party relying on the false representation be induced into a contract with the representor is one of great public importance because the Third District s holding changes the law. Until now, fraudulent inducement required an act or change in position, not necessarily being induced to contract. Other jurisdictions have held that fraud in the inducement is entirely independent of any contractual relation between the parties. Justice Sonia Sotomayor, sitting as a district court judge in the Southern District of New York, in a ruling denying a defendant s motion for summary judgment on a fraudulent inducement count, held that [a] party that misrepresents its intent to enter into a contract may be liable under tort theory of fraud in the inducement, even if no contract was actually formed. Berliner v. Crosslands Federal Savings Bank, 886 F. Supp. 325, 330 (S.D.N.Y. 1994)(emphasis added). This cause of action [for fraudulent inducement] is entirely independent of the formation of a contractual relation between the parties because it is based upon the 7
reliance created by the false evidence that a party intends to enter into a contract. Id. One of the cases cited in support of Judge Sotomayor s ruling was Channel Master Corp. v. Aluminum Limited Sales, Inc., 115 N.E.2d 823 (N.Y. App. 1958). That case held that no contract need be shown to support an action for fraud because the inducement of the plaintiff to take action is properly remediable in a fraud action, even though no contract was created. To maintain an action based upon fraudulent representations... in tort for damages, it is sufficient to show that the defendant knowingly uttered a falsehood intending to deprive the plaintiff of a benefit and that the plaintiff was thereby deceived and damaged. Id. at 835. That case noted the lack of need to demonstrate a contractual relationship between the parties to a fraud action as follows: The present action is in tort, not contract, depending not upon an agreement between the parties, but rather upon deliberate misrepresentation of fact, relied on by the plaintiff to his detriment. In other words, the legal relations binding the parties are created by the utterance of a falsehood with a fraudulent intent and by reliance thereon... and the cause of action is entirely independent of contractual relations between the parties. Id. at 836 (emphasis added). Another decision recognizing the availability of a cause of action for fraud inducing the plaintiff to act even in the absence of a contract induced by the 8
fraud is A.M. Kidder & Co. v. Clement A. Evans & Co., 142 S.E.2d 269 (Ga. App. 1965). In that case the Georgia Court of Appeals affirmed the trial court s overruling of demurrers to the plaintiff s petition based on fraud and conspiracy to commit fraud. The court described the posture of the parties claims as follows: This is an action for damages sustained by Evans as a result of a conspiracy in which the defendants made to Evans fraudulent misrepresentations which induced Evans to act to its detriment. There was no contract between Evans and Kidder. Id. at 273 (emphasis added). There is no authority know to Petitioners supporting the proposition that the only actionable fraudulent inducement is inducement to enter into a contract. Thus, this Court should exercise its discretionary jurisdiction to clarify the law in Florida. CONCLUSION WHEREFORE, due to express and direct conflict with this Court and the Fourth and Fifth Districts, that the elements of a claim for fraud in the inducment require an act in reliance of the false representation without specifically requiring that the act be entering into a contract with the representor, this Court has discretionary jurisdiction to review the decision rendered by the Third District in this case. The Court should exercise its discretion because the issue of whether a 9
contract between the parties is a necessary element to a fraudulent inducement claim is one of great public importance. 10
Respectfully submitted, WASSON & ASSOCIATES, CHARTERED Courthouse Plaza Suite 600 28 West Flagler Street Miami, FL 33130 (305) 372-5220 Telephone (305) 372-8067 Facsimile annabel@wassonandassociates.com LAW OFFICES OF RAUL E. GARCIA JR. P.A. 9200 South Dadeland Blvd Suite 311 Miami, FL 33156 305-670-5158 Telephone 305-670-3466 Facsimile Counsel for Petitioner By: ANNABEL C. MAJEWSKI Fla. Bar No. 181684 CERTIFICATE OF SERVICE I HEREBY CERTIFY that true and correct copies of the foregoing were served by U.S. Mail upon Barry R. Davidson and Anna Lazarus, Hunton & Williams, LLP, Counsel for Appellant, 1111 Brickell Avenue, Suite 2500, Miami, FL 33131, and hand delivery upon Gary S. Glasser, Gary S. Glasser, P.A., Co- Counsel for Appellee, 28 West Flagler Street, Suite 608, Miami, FL 33130; on this the 5th day of March, 2012. By: ANNABEL C. MAJEWSKI Fla. Bar No. 181684 11
CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that this brief has been computer generated in 14 point Times New Roman font and complies with the requirements of Rule 9.210(a)(2). By: ANNABEL C. MAJEWSKI Fla. Bar No. 181684 12