Corinthian Investments, Inc. v. Reeder, 88-03100

• Decision Date: 03 November 1989
• Docket Number: No. 88-03100,88-03100
• Citation: 14 Fla. L. Weekly 2559,555 So.2d 871
• Parties: 14 Fla. L. Weekly 2559 CORINTHIAN INVESTMENTS, INC., a Florida corporation, and Coastal Acquisition, Inc., a Florida corporation, Appellants, v. Robert H. REEDER and Mary L. Reeder, his wife, Appellees.
• Court: Florida District Court of Appeals

Page 871

555 So.2d 871

14 Fla. L. Weekly 2559

CORINTHIAN INVESTMENTS, INC., a Florida corporation, and Coastal Acquisition, Inc., a Florida corporation, Appellants, v. Robert H. REEDER and Mary L. Reeder, his wife, Appellees.

No. 88-03100.

District Court of Appeal of Florida,

Second District.

Nov. 3, 1989.

Rehearing Denied Jan. 24, 1990.

Steven G. Nilsson, Clearwater, for appellants.

O. Stephen Thacker of Thacker & Smitherman, Clearwater, for appellees.

LEHAN, Acting Chief Judge.

This is an appeal from a final judgment which reformed an agreement for deed. The reformation resulted in the agreement providing that 9 1/2 percent per annum interest is owed on a particular balance due from appellant Corinthian who entered into the agreement as purchaser of the real property involved. Among the issues on appeal is whether the reformation action was barred by so-called "statutory laches" under section 95.11(6), Florida Statutes (1985). The trial court decided it was not. We agree. We conclude that section 95.11(6) is not applicable to an equitable reformation action. For that and other reasons explained in this opinion, we affirm.

The written agreement did not provide for interest on the balance due which is involved here, although it did provide for interest on another specified balance. The balance involved here represents the amount owed under a mortgage which appellees had placed on the property calling for 9 1/2 percent per annum interest; the other balance represents the amount owed for appellees' equity in the property. There was substantial evidence supporting the trial court's conclusion that the failure to provide for interest was a mutual mistake resulting from a scrivener's error. In fact, it is undisputed that both parties to the agreement had understood and agreed to the interest provided for in the agreement as reformed by the trial court. This was reflected in their testimony as well as that of appellees' lawyer who admitted responsibility for the mistake and upon whom there was testimony that appellees placed reliance.

Some months before the filing by appellees of this suit for reformation of the agreement for deed, Corinthian contracted to sell its interest in the property to appellant Coastal who was to pay off Corinthian's obligations under the agreement. A dispute then arose concerning the payoff figure on the agreement. Corinthian had been making the monthly payments on the balance involved here as required by the agreement, each of which had been in the same amount as that of the monthly payment made by appellees on the mortgage which that balance represented. The amount of the payoff figure under the agreement depended upon whether the payments Corinthian had been making on that balance included, as appellees contended, 9 1/2 percent per annum interest or, on the other hand, had, as appellants contended, been entirely against principal. If those payments had been entirely against principal, there would, contrary to the agreement and understanding of all concerned, be a substantial windfall at the expense of appellees in the amount of the interest unpaid by Corinthian and paid by appellees on the mortgage. It is undisputed that Coastal was aware of the mistaken omission of interest in the agreement for deed when it entered into its contract with Corinthian.

Appellants contend that appellees' suit was barred by statutory laches under section 95.11(6) because the suit was not brought until 1986, which was seven years after the execution of the 1979 agreement for deed. Section 95.11(6) in pertinent part provides:

Laches shall bar any action unless it is commenced within the time provided for legal actions concerning the same subject matter regardless of lack of knowledge by the person sought to be held liable that the person alleging liability would assert his rights and whether the person sought to be held liable is injured or prejudiced by the delay.

Appellants' contention is to the effect that under section 95.11(6) the "time provided for legal actions concerning the same subject matter" is four years through the application of the statute of limitations under section 95.11(3)(k) concerning an action "on a contract ... not founded on a written instrument" and that the four year period began in 1979.

We need not address whether if section 95.11(3)(k) controlled, the four year period under that statute would have begun in 1979. (Appellants' argument is that the four year period began in 1979 because appellees then had a duty to know what the agreement said and were not prevented by appellants from so knowing; on the other hand, appellees' argument includes the position that the four year period did not begin to run until 1986 because appellants placed reliance in 1979 upon their attorney for the correct drafting of the instrument and the mistake was not brought to their attention until 1986.) We conclude that section 95.11(3)(k) does not control. ¹ The reason is that a legal action "on a contract" to which that section applies connotes an action to enforce a contract in the sense of holding a party to the stated terms of the contract. See Fla.Stat.Ann. § 95.11(2)(b), (3)(k) annotations of cases (West 1982 & Supp.1989). Such an action in our view is not, within the meaning of section 95.11(6), a "legal action[ ] concerning the same subject matter" as that of this equitable reformation action, as we will explain.

We readily agree with the observation that "with the passage of section 95.11(6) ... an element of uncertainty emerged into what had been an established area of the law." Note, The Doctrine of Laches in Florida: A Statutory Hybrid?, 13 Stetson L.Rev. 446, 448 (1984). That uncertainty included whether with regard to a particular equitable action like that involved here there exists, within the meaning of section 95.11(6), a "legal action[ ] concerning the same subject matter."

Engle v. Acopian, 432 So.2d 113 (Fla. 5th DCA 1983), appears to have been read as having interpreted section 95.11(6) to mean that the expiration of a statute of limitations period governing a legal action which is analogous to the equitable action in issue bars the equitable action. See Note, supra at 454, 455, 460. However, the Engle opinion contains no explanation of its interpretation of section 95.11(6) which resulted in the expiration of the five year statute of limitations period under section 95.11(2)(b) (concerning suits "on a contract ... founded on a written instrument") barring the equitable action to enforce a real estate restriction which was involved in that case. Nonetheless, the foregoing reading of Engle appears to be a rational explanation of Engle's interpretation of section 95.11(6). The legal action which section 95.11(2)(b) bars and the type of equitable action involved in Engle were each to enforce a contract in the sense described above. Thus, those two actions were analogous to that extent.

Yet, we do not conclude that Engle calls for a reversal in this case through the application, as argued by appellants, of section 95.11(3)(k), which, like section 95.11(2)(b) which was involved in Engle, concerns an action "on a contract." We conclude that such an action within the meaning of section 95.11(3)(k), which, as does section 95.11(2)(b), appears to connote an action to enforce a contract in the sense described above, is not sufficiently like or analogous to the equitable action involved here, which is to change the stated terms of a contract to reflect the mutual intentions of the parties. The basis for this conclusion is further explained below in our adoption of the interpretation by another appellate court of section 95.11(6).

That other appellate court interpretation is in City of Miami v. Gates, 393 So.2d 586 (Fla. 3d DCA 1981). Under the Gates interpretation, a "legal action[ ] concerning the same subject matter" as that of an equitable action within the meaning of section 95.11(6) must be the "equivalent to" the equitable action. Id. at 589 n. 9. In this context we construe the term "equivalent to" as referring to the cause of action and to connote "the same as," as will be explained further below. Under this Gates interpretation, which we adopt, we conclude, as we also did under the foregoing Engle interpretation, that section 95.11(3)(k) does not bar the equitable action in this case. The reason is that an action "on a contract" under that section appears to connote, as we have said, an action to enforce a contract in the sense described above, which is not equivalent to an action like that involved here which is, again, to change the stated terms of a contract to reflect the mutual intentions of the parties. ² Nor do we conclude that there is any other statute of limitations governing a legal action which is equivalent to the equitable cause of action involved in this case.

The foregoing interpretation of "equivalent" action to connote the same cause of action in deciding whether there is a statute of limitations governing a legal action which is equivalent to an equitable action is proper in our view for a number of reasons. For one thing, section 95.11(6) refers to a statute of limitations applicable to a legal action having "the same subject matter" (emphasis added) as that of the equitable action involved, and, as we have indicated, we interpret the term "subject matter" to mean the cause of action, as we conclude is a proper...