Opinion
No. 3D10-366 Lower Tribunal No. 06-644
02-01-2012
Laura Demchak and Michael Demchak, Appellants, v. Elaine Davia and John Michael Piranio, Appellees.
Nancy Little Hoffmann (Fort Lauderdale), for appellants. Wayne LaRue Smith (Key West), for appellees.
Not final until disposition of timely filed motion for rehearing.
An Appeal from the Circuit Court for Monroe County, Mark Jones, Judge.
Nancy Little Hoffmann (Fort Lauderdale), for appellants.
Wayne LaRue Smith (Key West), for appellees. Before RAMIREZ, SHEPHERD, and SALTER, JJ.,
RAMIREZ, J.
Laura and Michael Demchak appeal the trial court's final judgment for fraudulent misrepresentation and breach of contract after a jury verdict, and the denial of their motion for directed verdict as to the fraudulent inducement claim. Because we conclude that there was no evidence to support part of the award, we reverse in part, but otherwise affirm the denial of the motions.
This appeal arises out of a dispute between two parties who purchased property in Key West, with the intent to renovate it, and "flip" it for sale at a profit. After Hurricane Wilma, the real estate market took a downturn, the project ran out of money, and the house remained unsold. Elaine Davia and her husband, John Michael Piranio, brought suit against Laura and Michael Demchak seeking money damages. The lawsuit ultimately proceeded to trial on counts II (fraud in the inducement) and III (breach of contract) against the Demchaks.
The facts developed at trial were that, in May of 2004, the Piranios entered into an oral agreement with the Demchaks to purchase and resell the property located at 1327 White Street, Key West. Viewing the evidence in the light most favorable to the non-moving party, see Posner v. Walker, 930 So. 2d 659, 665 (Fla. 3d DCA 2006), the Piranios were supposed to invest $450,000, and the Demchaks $1 million in the project. In consideration for the investment of $450,000, the Demchaks signed a promissory note to Davia in that amount, which was to be repaid from the sale proceeds of the property. Accordingly, Davia transferred $450,000. The Piranios were to be installed as officers of the corporation 1327 White Street, Inc. and receive 31% ownership of stock based on the parties' respective investment into the startup capital of the corporation. On November 8, 2004, the corporation took title to the property.
Instead of investing the agreed-upon sum, the Demchaks borrowed $1 million from TIB Bank using the corporate property as collateral. The Piranios knew nothing of this and would not have entered into an agreement had they known this fact. Additionally, the Demchaks presented themselves to TIB Bank as if they were the only purchasers in the subject property.
Davia liquidated all of the equity in her home to provide her portion of the investment. The Demchaks used their $450,000 for the down payment on the $1 million loan and represented to the bank that the $450,000 was their own. Also unbeknownst to the Piranios, the Demchaks borrowed another $213,000 against the White Street property and deposited $35,000 of the $213,000 into their own personal accounts. On June 30, 2005, the Demchaks placed another $75,000 in the corporate account as a result of another loan.
After Hurricane Wilma, although the house sustained no damages, the bank advised the parties that the property had gone down in value. Because the Demchaks could not continue to pay two mortgages, they sold their own home and moved into the 1327 White Street home. The Demchaks arranged for periodic work to be done on the house, but when the receipts were presented to the Piranios, the Piranios claimed they were "bogus" and refused to spend any more money. The parties agreed to list the house for $2.55 million. The Piranios then filed this lawsuit. The house did not sell and, at the time of the trial, the house had no value beyond the balance owed on the TIB mortgage. The jury awarded the plaintiffs $450,000 for both counts and $75,000 for breach of contract. The trial court entered final judgment in favor of the Piranios: $660,846.58 for fraudulent inducement and $110,097.95 for breach of contract, both of which included prejudgment interest. The Demchaks moved for directed verdict on count II (fraud in the inducement). The trial court denied their motion.
The standard of review on appeal of the trial court's ruling on a motion for directed verdict is de novo. Health Options, Inc. v. Palmetto Pathology Servs., P.A., 983 So. 2d 608, 613 (Fla. 3d DCA 2008). "A party moving for a directed verdict admits the truth of all facts in evidence and every reasonable conclusion or inference which can be drawn from such evidence favorable to the non-moving party." Wald v. Grainger, 64 So. 2d 1201, 1205 (Fla. 2011); Williamson v. Superior Ins. Co., 746 So. 2d 483, 485 (Fla. 2d DCA 1999). A directed verdict is proper when the evidence and all inferences from the evidence, considered in the light most favorable to the non-moving party, support the movant's case as a matter of law and there is no evidence to rebut it. State Farm Mut. Auto. Ins. Co. v. Orr, 660 So. 2d 1061, 1062 (Fla. 4th DCA 1995).
Applying these standards, we conclude that there was ample evidence to support the jury's verdict on the $450,000 for either count. There is no evidence, however, to justify the jury award of $75,000. The only evidence regarding this sum was that the Demchaks had agreed to contribute an additional $75,000 to address the shortfall of funds needed to complete the project. If the Demchaks had done that, perhaps the property could have been sold and the plaintiff could have recovered their investment. The failure to make the additional contribution may have made the project more likely to fail, but it did not increase the damage suffered by the Piranios.
We thus affirm the award of $660,846.58 for fraudulent inducement, but reverse the award of $110,097.95 for breach of contract.
Affirmed in part; reversed in part.
SALTER, J., concurs.
SHEPHERD, J., dissenting.
I would reverse the entire judgment and order the case be dismissed as premature. The house had not been sold at the time of trial. By their complaint, Davia and Piranio elected to affirm the contract. The measure of damages on a fraudulent inducement claim is either the "benefit of the bargain" rule, which awards as damages the difference between the actual value of the property and its value had the alleged facts regarding it been true, or the "out-of-pocket" rule, which awards as damages the difference between the purchase price and the real or actual value of the property. Martin v. Brown, 566 So. 2d 890, 891-92 (Fla. 4th DCA 1990). In actions for breach of contract, the goal is to award a sum which is equivalent to the performance of the bargain and to place the plaintiff in the position he would be in had the contract been fulfilled. Ashland Oil, Inc. v. Pickard, 269 So. 2d 714, 723 (Fla. 3d DCA 1972). Damages for breach of contract are to be measured from the date of the breach. CIMA Capital Partners, LLC v. PH Cellular, Inc., 69 So. 3d 293, 294 (Fla. 3d DCA 2010). The jury awarded Davia and Piranio rescission damages, relief based upon a cause of action and remedy not sought by Davia and Piranio.
The jury rather clearly agreed the Demchaks breached the terms of their agreement with Davia and Piranio. However, the extent of their loss cannot be known until the house is sold, or perhaps title transferred through a foreclosure (or deed in lieu), if that be the case. Until one of those occurrences, there are no provable damages. See Schimpf v. Reger, 691 So. 2d 579, 579 (Fla. 2d DCA 1997) (stating damages cannot be based on speculation or guesswork but rather must have some reasonable basis in fact); George Hunt, Inc. v. Dorsey Young Constr., Inc., 385 So. 2d 732, 733 (Fla. 4th DCA 1980) ("[E]vidence as to the amount of damages cannot be based on speculation or conjecture, but must be proven with certainty.").
I would reverse the judgments on appeal and dismiss the case without prejudice.