Entron, Inc. v. General Cablevision of Palatka

• Decision Date: 14 December 1970
• Docket Number: No. 29187.,29187.
• Citation: 435 F.2d 995
• Parties: ENTRON, INC., etc., Plaintiff-Appellant, v. GENERAL CABLEVISION OF PALATKA, etc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

435 F.2d 995 (1970)

ENTRON, INC., etc., Plaintiff-Appellant, v. GENERAL CABLEVISION OF PALATKA, etc., Defendant-Appellee.

No. 29187.

United States Court of Appeals, Fifth Circuit.

December 14, 1970.

J. Kennedy Hutcheson, Clark, Rumph, Franson & Hutcheson, Jacksonville, Fla., for plaintiff-appellant.

John A. DeVault, III, C. Harris Dittmar, Jacksonville, Fla., for defendantappellee; Bedell, Bedell, Dittmar, Smith & Zehmer, Jacksonville, Fla., of counsel.

Before TUTTLE, DYER and SIMPSON, Circuit Judges.

TUTTLE, Circuit Judge:

This is an appeal from a verdict and judgment in favor of the Defendant-Appellee on its counterclaim when it was sued for the balance due on a construction contract wherein the plaintiff agreed to construct, and did construct, a cable television system for the defendant.

It was agreed by the parties in the pre-trial stipulation that the appellant, the plaintiff below, Entron, Inc., was entitled to a judgment in the sum of $27,505.30, being the balance of the contract payment agreed upon. There remained for trial three grounds of a counterclaim asserted by the defendants. The jury found in favor of the defendant on Count One of the counterclaim, which was based on an implied warranty "that the said system would be well constructed of workmanlike quality and suitable for the purposes for which it was intended," and found damages on this counterclaim to amount to $56,000. The jury found against counterclaim number two, which was based upon a failure of the plaintiff to complete the work in accordance with the terms of the contract, the said contract having contained no penalty clause for failure to perform within the period of sixty days during which the plaintiff undertook to complete the contract. The jury found in favor of the defendant on counterclaim number three, which was based upon alleged false representations as to the plaintiff's knowledge and intent that it could and would complete the contract within the sixty day period, upon which the defendant relied by entering into the contract, and which knowledge or intent did not in truth exist, all to the damage of the defendants. The jury found that such false representation did exist, and returned a verdict on this count in the sum of $21,591.

The issues before the court on appeal are: (1) Did the court properly submit to the jury the question of breach of implied warranty of fitness for use intended where the contract purported to waive all warranties except as expressly stated in the contract, and (2) was there sufficient evidence from which the jury could have found that the plaintiff made a fraudulent misrepresentation to the defendant.

We deal with the questions in reverse order.

This case being a diversity action, is, of course, to be decided by Florida substantive law. However, in determining what is the Florida law on a given subject, this court may well be controlled by what we have previously said is the state law in a certain field of jurisprudence where nothing has occurred since the prior decision of this court, either by the passage of a statute, or by a subsequent state court decision to permit a different result. Applying this test, we look to the decision of this court in Bobby Jones Garden Apartments, Inc. v. Suleski, 391 F.2d 172, 177 (5 Cir., 1968), which says:

"The Florida law of actionable misrepresentation was recently capsulated into the following elements in Kutner v. Kalish, Fla.Dist.Ct.App., 1965, 173 So.2d 763, 765 cert. denied, (Fla.), 183 So.2d 210:

`(1) a misrepresentation of material fact.

(2) a knowledge of the representor of the misrepresentation, or, b representations made by the representator without knowledge as to either truth or falsity, or, c representations made under circumstances in which the representor ought to have known, if he did not know, of the falsity thereof,

(3) an intention that the representation induce another to act on it, and

(4) resulting injury to the party acting in justifiable reliance on the representation.\'"

We now look at the facts in this case, which are substantially undisputed so far as they deal with the element of actionable misrepresentation. The contract, entered into after repeated statements by Bernard Karlen, Vice President of General Cablevision, that his company was strictly limited to the requirement that it have the job completed within sixty days, contained an express promise that Entron would construct and turn over a system on a "turnkey" basis within sixty days after beginning construction; the contract was not only not turned over within sixty days but was not offered for final acceptance until approximately three times that long, some 175 days after the contract was signed. Even this tender was not accepted by General Cablevision, because the system failed to operate properly, and it was not until nearly three months later that the system began operating completely satisfactorily; substantial damage accrued to General Cablevision as a result of this failure of Entron to live up to its promise of performance, since General Cablevision opened offices and started selling service to prospective customers on the assumption that the sixty day completion would be carried out; in response to questions asked by defendant of the president of Entron that he name several comparable jobs performed by Entron, several were named, including one in Laurinburg, North Carolina; the Laurinburg job required four or five calendar months for completion; the president of Entron testified that as far as he could recall this was the shortest time Entron had ever required to build and install a CATV System of comparable type.

It has been said that "the state of a man's mind is as much a fact as the state of his digestion." If this be true, if at the time a seller makes a statement as to what he proposes to do for the future when the true state of his mind would disclose that he knows he cannot do so, this is a misrepresentation of a material fact. The same would be true if the seller represents what he proposes to do at a time when he is either without knowledge as to his ability to perform or if he represents what he proposes to do under circumstances in which he should have known, but may not have known, of his inability to carry out his promise. These standards we derive from what has been quoted above as the Florida law. Here, also, there is no contention made by the appellant that whatever representations were made as to the sixty-day performance were not made for the purpose of inducing General Cablevision to act on them. Moreover, it is clear that General Cablevision did rely on the representation and this reliance resulted in injury.

Although not expressly argued on behalf of the appellee, we consider the very gross failure to perform the contract, even if standing alone, as strong evidence of the inability of the plaintiff-appellant to do what it promised to do — that is to complete the system within sixty days. Assuming, as we should, that when parties enter into a solemn written obligation to perform a contract involving a reasonably complicated mechanism and system as to which the promisor is presumed to be an expert, this should of itself be taken to be a holding out of a belief that the undertaking could be carried out, the failure of the promisor to carry out his agreement fully and adequately within anything like the terms of the formal contract is some evidence that the party did not intend to do it in the first place. To this there is to be added the testimony of the president of the appellant that the company had never performed a job of comparable size in a period of even twice as many days as the sixty-day period contemplated in this contract. We think this is sufficient to permit the jury to find...