Delgado v. J.W. Courtesy Pontiac GMC-Truck, Inc.

• Decision Date: 21 March 1997
• Docket Number: INC,No. 96-01692,GMC-TRUC,96-01692
• Parties: 22 Fla. L. Weekly D744 Michael L. DELGADO and Joyce L. Delgado, Appellants, v. J.W. COURTESY PONTIAC, Appellee.
• Court: Florida District Court of Appeals

Page 602

693 So.2d 602

22 Fla. L. Weekly D744

Michael L. DELGADO and Joyce L. Delgado, Appellants, v. J.W. COURTESY PONTIAC GMC-TRUCK, INC., Appellee.

No. 96-01692.

District Court of Appeal of Florida Second District.

March 21, 1997.

Scott T. Borders of Clark, Charlton & Martino, P.A., Tampa, for Appellants.

Hala A. Sandridge of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, for Appellee.

LAZZARA, Judge.

The appellants, Michael and Joyce Delgado, seek review of the trial court's order granting the appellee's, J.W. Courtesy Pontiac GMC-Truck, Inc.'s, motion for judgment on the pleadings on the basis that Florida's economic loss rule barred their causes of action against the appellee founded on common law fraud and the Florida Deceptive and Unfair Trade Practices Act, sections 501.201-501.213, Florida Statutes (1991) (the FDUTPA). Because we conclude that the trial court erroneously invoked the economic loss rule to exclude the bringing of these claims, we reverse and remand for further proceedings. In doing so, we also certify to the Florida Supreme Court a question of great public importance regarding whether the rule has eliminated a consumer's cause of action brought under the substantive provisions of the FDUTPA when the action is based on a written sales contract.

We begin our resolution of this case with a recognition of the well-settled law of Florida that in ruling on a defendant's motion for judgment on the pleadings filed pursuant to Florida Rule of Civil Procedure 1.140(c), "all allegations in the complaint must be accepted as true and all allegations in the answer, which are automatically denied, must be accepted as false, the fundamental question being whether a cause of action would be established by proving the plaintiff's allegations." Robert L. Turchin, Inc. v. Gelfand Roofing, Inc., 450 So.2d 554, 556 (Fla. 3d DCA), review dismissed, 453 So.2d 1365 (Fla.1984). We also adhere to the fundamental principle that a plaintiff is not required to file a reply denying an affirmative defense in order to treat that defense as denied for purposes of a motion for judgment on the pleadings. See, e.g., Kitchen v. Kitchen, 404 So.2d 203, 205 (Fla. 2d DCA 1981). Accordingly, in deciding this case, we must accept the allegations of the appellants' complaint as true and deem any affirmative defense interposed by the appellee as denied.

The appellants' preliminary allegations reflect that in September of 1992 they purchased from the appellee what they believed was a new motor vehicle as defined in section 320.60(10), Florida Statutes (1991), that is, a vehicle for which the equitable or legal title had never been transferred to an ultimate purchaser. They further alleged that the purchase was based on a written retail installment sales contract, a copy of which they attached to their complaint. The appellants also claimed that the appellee was a motor vehicle dealer licensed and doing business under the provisions of section 320.27, Florida Statutes (1991). They concluded with the critical assertion that the appellee violated the duty imposed on such a dealer by section 320.27(9)(n), in failing to disclose to them that, prior to the purchase, the vehicle had sustained various property damage in an accident and that the repair cost of the damage exceeded three percent of the manufacturer's suggested retail price. Based on these core facts, the appellants sought damages in two counts of their complaint.

In count one, founded on the FDUTPA, the appellants claimed that the purchase of the vehicle from the appellee was a consumer transaction within the meaning of section 501.203. They further alleged that the appellee's failure to disclose the fact that the vehicle had been damaged and repaired constituted a deceptive act under section 501.204. As a consequence of the appellee's alleged deception, the appellants claimed their entitlement to damages pursuant to section 501.211, plus attorney's fees and court costs under section 501.2105.

In count two, based on common law fraud, the appellants asserted that the appellee intentionally failed to disclose the material fact of the damage and repair to the vehicle, in violation of a duty imposed by law, in order to induce the appellants to purchase the vehicle. They also alleged that had the appellee disclosed this fact they would not have purchased the vehicle or, in the alternative, would not have purchased it at the price paid. As a result of the appellee's alleged fraud, the appellants sought relief in the form of a general prayer for damages, as well as interest and costs.

After filing an answer and affirmative defense, the appellee filed a motion for judgment on the pleadings. The appellee alleged that because the appellants' claims were based on, or arose out of, the parties' written contract, and because the appellants allegedly suffered purely economic damages, the economic loss rule barred the appellants from stating causes of action based on fraud and the FDUTPA and, therefore, it was entitled to a judgment as a matter of law. Following a hearing on the motion, during which the trial court expressed concern over the appellants' failure to pursue a breach of contract claim, the trial court agreed with the appellee's argument and entered a written order in which it determined that the appellants' claims were "barred by the economic loss doctrine in Florida." ¹

Our resolution of the correctness of the order as it relates to the fraud count does not require an extended discussion because it is directly governed by the supreme court's recent decision in HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238 (Fla.1996), which, we note, the supreme court had not decided at the time the trial court entered its order. In that case, the court rejected the contention, made within the context of a contractual relationship, "that the economic loss rule has obliterated causes of action for independent torts such as fraudulent inducement." Id. at 1239. It held, instead, that "[t]he economic loss rule has not eliminated causes of action based upon torts independent of the contractual breach even though there exists a breach of contract action." Id. The court further explained that "[w]here a contract exists, a tort action will lie for either intentional or negligent acts considered to be independent from acts that breached the contract." Id.

In this case, the allegations of the appellants' complaint, when accepted as true, are consistent with the holding of HTP, Ltd. in that they reflect that the appellee perpetrated a fraud independent of the contract. The complaint also sufficiently alleges that the fraud was comprised of intentionally failing to disclose a material fact concerning the condition of the vehicle in violation of a statutory duty compelling disclosure of that fact. See Gutter v. Wunker, 631 So.2d 1117, 1118 (Fla. 4th DCA), cause dismissed, 637 So.2d 235 (Fla.1994); Franklin v. Brown, 159 So.2d 893, 898 (Fla. 1st DCA 1964). Accordingly, we reverse the trial court's judgment on the pleadings as to the fraud count.

As to the FDUTPA count, we also determine that the economic loss rule has not eliminated this claim. Our reasons for arriving at this conclusion warrant a more extensive analysis.

In 1973, the Florida legislature created the FDUTPA. Ch. 73-124, § 1, at 188-195, Laws of Fla. (codified at §§ 501.201-501.213, Fla.Stat. (1973)). In doing so, it expressly mandated in section 501.202 that this new legislation was to "be construed liberally to promote" three distinct but interrelated "policies":

(1) To simplify, clarify, and modernize the law governing consumer sales practices.

(2) To protect consumers from suppliers who commit deceptive and unfair trade practices.

(3) To make state regulation of consumer sales practices consistent with established policies of federal law relating to consumer protection.

To further these policy objectives, the legislature declared that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce" were unlawful. § 501.204(1). Although it did not define what it meant by "unfair or deceptive acts or practices," the legislature expressed its intent that "in construing subsection (1) of this section, due consideration and great weight shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to s.5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1))," which prohibits such acts or practices in the federal domain.

To effectuate these underlying policy considerations, the legislature conferred on "a consumer who has suffered a loss as a result of a violation" of the FDUTPA the right to bring an "individual action" to "recover actual damages, plus attorney's fees and court costs." § 501.211(2). It limited such damages, however, to "the property that is the subject of the consumer transaction" and specifically excluded claims for personal injury or death or damage to other property. § 501.212(3). The legislature specifically defined the type of property which is the subject of such a transaction for which actual damages were recoverable to include "an item of goods, a consumer service, or an intangible." § 501.203(1). It further provided that a consumer who prevails in civil litigation brought under the FDUTPA was entitled to receive reasonable attorney's fees and costs. § 501.2105. Finally, the legislature expressed its clear intent that the remedies afforded by this new legislation were to be "in addition to remedies otherwise available for the same conduct under state or local law." § 501.213(1).

We note at this juncture that the 1973 provisions of the FDUTPA which we have quoted and analyzed are found virtually word for word in the 1991 version which is at issue in this case. We also point out that in 1993 the legislature amended some of these provisions. Ch. 93-38, § 1, at 207 ...