Deprince v. Starboard Cruise Servs., Inc., No. 3D16-1149

• Court: Court of Appeal of Florida (US)
• Writing for the Court: LUCK, J.
• Citation: 271 So.3d 11
• Decision Date: 01 August 2018
• Docket Number: No. 3D16-1149
• Parties: Thomas DEPRINCE, Appellant, v. STARBOARD CRUISE SERVICES, INC., Appellee.

271 So.3d 11

Thomas DEPRINCE, Appellant,
v.
STARBOARD CRUISE SERVICES, INC., Appellee.

No. 3D16-1149

District Court of Appeal of Florida, Third District.

Opinion filed August 1, 2018

McDonald Hopkins, and Robert A. Cohen, Mario M. Ruiz and Joelle H. Dvir, Miami, for appellant.

Isicoff Ragatz and Eric D. Isicoff, Teresa Ragatz and Carolina A. Latour, Miami, for appellee.

Before ROTHENBERG, C.J., and SUAREZ, LAGOA, SALTER, EMAS, FERNANDEZ, LOGUE, SCALES, LUCK and LINDSEY, JJ.

On Motion for Rehearing En Banc

LUCK, J.

In 1965, our state Supreme Court held that Florida law allowed for rescission of a contract based on unilateral mistake. Maryland Cas. Co. v. Krasnek, 174 So.2d 541, 542 (Fla. 1965) ("Although there is little doubt that the statement in the District Court's opinion that unilateral mistake provides no basis for rescission of a contract or for other equitable relief therefrom, represents the majority view, we are of opinion that it does not accurately reflect Florida case law." (citations omitted) ). But what elements are required to prove unilateral mistake? Our court has read Krasnek to answer the question in two ways. In one line of cases, we have read Krasnek to require that the party seeking rescission prove "the mistake was induced by the party seeking to benefit from the mistake." DePrince v. Starboard Cruise Servs., Inc., 163 So.3d 586, 592 (Fla. 3d DCA 2015) ( DePrince I ); Rachid v. Perez, 26 So.3d 70, 72 (Fla. 3d DCA 2010) ; Lechuga v. Flanigan's Enters., Inc., 533 So.2d 856, 857 (Fla. 3d DCA 1988). In another line of cases, we have not required the party seeking rescission to prove that she was induced to make the mistake. See U.S. Alliance Corp. v. Tobon, 715 So.2d 1122, 1123 (Fla. 3d DCA 1998) ; Penn. Nat'l Mut. Cas. Ins. Co. v. Anderson, 445 So.2d 612, 613 (Fla. 3d DCA 1984). To address the lack of uniformity, we grant Starboard Cruise Service's motion for rehearing en banc, vacate the panel opinion, DePrince v. Starboard Cruise Servs., Inc., 43 Fla. L. Weekly D171, ––– So.3d ––––, 2018 WL 443153 (Fla. 3d DCA Jan. 17, 2018) ( DePrince II ), and recede from Lechuga, Rachid, and DePrince I to the extent they

271 So.3d 13

require inducement as an element of unilateral mistake. We conclude that a party seeking rescission of a contract based on a unilateral mistake does not have to prove that she was induced into making the mistake by the other party, and affirm the judgment for Starboard.

FACTUAL AND PROCEDURAL BACKGROUND

1. The cruise. On February 11, 2013, Thomas DePrince, a passenger aboard a cruise ship, visited the ship's jewelry boutique, operated by Starboard, where he indicated his interest in purchasing a fifteen to twenty carat loose diamond.¹ DePrince specified he wanted an emerald cut, high quality, color D, E, or F diamond with a G.I.A. certificate.² Because the shipboard jewelry store did not have such a diamond, the store's manager, Mr. Rusan, electronically mailed Starboard's corporate office.

Ms. Jimenez, at the corporate office, reached out to Starboard's diamond vendor in California, Sophia Fiori. Mr. Bachoura from Sophia Fiori, with some reservations because he did not believe a sale of this magnitude should take place aboard a ship, called a diamond broker in New York, Julius Klein, for its available inventory. Julius Klein sent Mr. Bachoura a list of diamonds available with the desired specifications. The list provided a per-carat price and a net price for each diamond. Mr. Bachoura selected two diamonds from the inventory listing, and electronically mailed the following information to Ms. Jimenez:

These prices are ship sailing prices based on the lowest tier diamond margin we have. Let me know if you have any questions.

EC 20.64 D VVS2 GIA VG G NON selling price $235,000

EC 20.73 E VVS2 GIA EX EX FNT selling price $245,000

Ms. Jimenez forwarded this information to Mr. Rusan on the ship. Mr. Rusan, in turn, presented the information to DePrince and his partner, Mr. Crawford.

Neither Ms. Jimenez nor Mr. Rusan had ever sold a large loose diamond before, and did not realize the quoted price was per carat. Mr. Crawford, who was a certified gemologist, asked the opinion of DePrince's sister, a graduate gemologist. Ms. DePrince warned that something was not right because the price for a diamond of that size should be in the millions and recommended not buying the diamond.

Disregarding his sister's advice, DePrince contracted with Starboard to purchase the 20.64 carat diamond for the quoted $235,000 price, paying with his American Express credit card. Shortly after the sale, Starboard discovered that the $235,000 price was per carat. Starboard immediately notified DePrince of the error and reversed the charges to his credit card. DePrince then filed this complaint seeking to enforce the parties' contract.³

2. DePrince I. The trial court initially granted summary judgment in favor of Starboard on June 20, 2014, based on Starboard's defense of unilateral mistake. This court reversed that judgment in

271 So.3d 14

DePrince I . There, the court reviewed the various tests for determining whether a party's agreement could be rescinded based on a unilateral mistake. Concluding that the panel and trial court were bound by the "four-prong test to establish unilateral mistake," the court

held that in order to rescind an otherwise-valid contract based on a unilateral mistake, the party seeking to avoid the contract must show:

(1) [T]he mistake was induced by the party seeking to benefit from the mistake, (2) there is no negligence or want of due care on the part of the party seeking a return to the status quo, (3) denial of release from the agreement would be inequitable, and (4) the position of the opposing party has not so changed that granting the relief would be unjust.

Id. at 592 (quotation omitted; footnote omitted). The court explained that "this panel – along with the trial court – is of course bound by" the four-prong test. Id. at 591. Later in the opinion, the court "reiterate[d] our position" that we "currently adhere[ ] to the four-prong test." Id. at 594. The court then went on to apply the four-prong test to the facts in the record at the summary judgment hearing.

The court concluded that there was a genuine issue of material fact on the inducement prong because "knowledge of an error is markedly different than inducement of that error." Id. at 592. As an example of inducement, the court quoted the test for fraudulent inducement, and explained in a footnote:

We do not hold that the burden to establish inducement for purposes of the first prong of a unilateral mistake defense is the same as proving the elements for a fraudulent inducement defense, but merely use fraudulent inducement by way of example to demonstrate that inducement requires some type of action, not mere knowledge. In fact, the burden of proof cannot be the same because such a requirement would render the unilateral mistake of fact defense completely obsolete by requiring a party seeking to avoid a contract on that basis to prove fraudulent inducement, which is itself sufficient to render a contract voidable by the aggrieved party.

Id. at 592 n.6 (emphasis added).

The court also concluded that there was a genuine issue of material fact on the negligence prong. "[W]hether Starboard made a reasonable and understandable mistake or acted negligently in its handling of the sale is a disputed issue of fact," the court explained. Id. at 593. Based on this, the court reversed the summary judgment for Starboard and remanded for further proceedings because "[t]here remain genuine issues of material fact to be resolved." Id. at 598.

3. The trial. The case went to trial on April 4, 2016 on DePrince's claim of breach of contract, and Starboard's defense of unilateral mistake. By the end of the case the issues had been whittled down. The parties did not dispute that they entered into an agreement; the only issue was whether Starboard was excused from that agreement because it made a unilateral mistake. The trial court instructed the jury on the elements of the unilateral mistake affirmative defense, including inducement: "To establish this defense Starboard must prove ... the mistake was induced by the party, here Mr. DePrince, seeking to benefit from the mistake. Inducement may occur through misrepresentations, statements, or omissions which cause the contracting party to enter into a transaction."

The jury found that Starboard should be excused from performing under the contract because it committed a unilateral mistake. The trial court denied DePrince's

271 So.3d 15

motion for directed verdict on the unilateral mistake affirmative defense, and entered judgment for Starboard consistent with the jury's verdict. This appeal followed.

4. DePrince II. In DePrince II, a divided panel of the court, being bound by DePrince I, reversed the judgment for Starboard and remanded for a new trial because the trial court's jury instruction on the inducement prong of the unilateral mistake test was inconsistent with DePrince I. The trial court defined inducement to include DePrince's omission of...