Espirito Santo Bank v. Rego

• Decision Date: 11 April 2007
• Docket Number: No. 3D06-2156.,3D06-2156.
• Citation: 990 So.2d 1088
• Parties: ESPIRITO SANTO BANK, Petitioner, v. Mercio Goncalves REGO, Respondent.
• Court: Florida District Court of Appeals

990 So.2d 1088

ESPIRITO SANTO BANK, Petitioner, v. Mercio Goncalves REGO, Respondent.

No. 3D06-2156.

District Court of Appeal of Florida, Third District.

April 11, 2007.

Order Denying Rehearing and Rehearing En Banc September 17, 2008.

Robert W. Stewart; Silver, Garvett & Henkel and Tim D. Henkel, Miami, for petitioner.

Bernardo Burstein, Miami, for respondent.

Before RAMIREZ and LAGOA, JJ., and SCHWARTZ, Senior Judge.

LAGOA, Judge.

Petitioner Espirito Santo Bank ("ES Bank") seeks a Writ of Certiorari quashing the trial court's order granting Respondent, Mercio Goncalves Rego's ("Rego") motion to amend his complaint to seek punitive damages in connection with his claim for fraudulent inducement. Because the trial court departed from the essential requirements of the law, we grant the petition for certiorari.¹

I. FACTUAL AND PROCEDURAL HISTORY

Rego, a former customer of ES Bank in Brazil, sued ES Bank asserting the following four claims: fraudulent inducement (Count I); fraudulent misappropriation (Count II); breach of fiduciary duty (Count III); and negligence (Count IV). During the course of litigation, Rego filed a Motion for Leave to Amend the Complaint to Seek Punitive Damages. During the hearing on the motion, the trial court concluded that the evidence offered by Rego did not support an amendment for punitive damages. Despite finding insufficient evidentiary support for the amendment, the trial court granted Rego's motion as to his claim for fraudulent inducement, based on Rego's argument that this Court's opinion in Perlman v. Prudential Ins. Co. of America, 686 So.2d 1378 (Fla. 3d DCA 1997), requires, as a matter of law, punitive damages wherever a fraud claim has been alleged.² As evidenced by the trial court's statement during the hearing, but for Rego's counsel's argument regarding

Perlman, the trial court would have denied the amendment in its entirety for lack of evidentiary support:

I'm only allowing it [the request for punitive damages] for the fraud claim. And I'm only doing it based on the fact the Perlman v. Prudential Insurance Company [case] says I have to because I will tell you, but for that case I wouldn't have allowed it at all.

In my opinion the conduct for which punitive damages is allowable is supposed to be gross negligence or intentional misconduct. I do not find, even taking all the evidence in the light most favorable to the plaintiff that it rises to that level in this case. So but for the Perlman decision I wouldn't be allowing the amendment at all, based on the facts, even if they were undisputed ... I'm only allowing it in a fraud count and I'm only allowing it because the Third District says that I must.

(emphasis added).

II. STANDARD FOR AMENDING COMPLAINT TO INCLUDE PUNITIVE DAMAGES

Under section 768.72, Florida Statutes (2005), a plaintiff is required to obtain leave from the trial court to amend the complaint before punitive damages may be asserted and is further required to make an evidentiary showing that would provide a reasonable basis for recovery of such damages. See Simeon, Inc. v. Cox, 671 So.2d 158, 160 (Fla.1996). The statutory procedure must be followed and cannot be circumvented. Id. See also, Cypress Aviation, Inc. v. Bollea, 826 So.2d 1091, 1092 (Fla. 2d DCA 2002).

III. ANALYSIS

Rego's reliance on Perlman is misplaced. Rego's argument confuses allegations of fraudulent inducement sufficient to survive a motion to dismiss with evidence supporting those allegations sufficient to meet the requirements of section 768.72. In Perlman, this Court reversed the trial court and concluded that, after a week-long trial in which the trial court granted a directed verdict, plaintiff had presented sufficient evidence both to submit his fraud claim to the jury and to permit the assertion of a punitive damages claim.³ Perlman, 686 So.2d at 1379, 1382.

Perlman thus stands for the proposition that, because a claim for fraudulent inducement contains an intentionality element, when a party has presented sufficient facts in support of a fraudulent inducement claim that would entitle him to an award of compensatory damages, he has also presented sufficient facts that would support a request for punitive damages. Id. Accord, e.g., First Interstate Dev. Corp. v. Ablanedo, 511 So.2d 536, 539 (Fla.1987); Cruise v. Graham, 622 So.2d 37, 41 (Fla. 4th DCA 1993). In this case, the trial court's error was in reading Perlman expansively to allow a punitive damages claim in each instance when fraud is alleged, instead of only when a reasonable evidentiary basis has been submitted in support of the fraud claim.

As the trial court noted, Rego merely presented a complaint that sufficiently alleged the ultimate facts necessary to proceed on a fraudulent inducement claim. These allegations, by themselves, do not entitle Rego to amend his complaint to include a claim for punitive damages. See Cypress Aviation, 826 So.2d at 1092; Turner v. S.G. Fitzsimmons, IV, 673 So.2d 532, 535-36 (Fla. 1st DCA 1996). In order to be so entitled, Rego was required to present an evidentiary basis in support of his fraud claim. See Section 768.72, Florida Statutes (2005); Cypress Aviation, 826 So.2d at 1092. The trial court found that Rego failed to do so, and the trial court's allowance of the amendment to assert a claim for punitive damages in spite of its finding of insufficient evidence therefore constitutes a departure from the essential requirements of the law.

The dissent asserts that we have gone beyond the bounds of certiorari review to evaluate the merits of the trial court's finding that a sufficient evidentiary basis exists for a punitive damages claim. Not so. We agree that certiorari jurisdiction does not lie to review the merits of a trial court's ruling that sufficient evidence exists to assert a punitive damages claim under section 768.72. See Simeon, Inc. v. Cox, 671 So.2d 158, 160 (Fla.1996). We do have certiorari jurisdiction, however, to review whether the trial court met the statute's procedural requirements for granting leave to amend a complaint to include a claim for punitive damages. Id.

The dissent contends the plaintiff's compliance with the five step procedural process insulates the trial court's order from certiorari review. By taking the view that if the trial court followed the procedural steps, its ruling must be an evidentiary one, the dissent fails to consider the legal consequences of the trial court's ruling. Finding that the plaintiff did not provide a sufficient evidentiary basis to make a claim for punitive damages, the trial court made a legal ruling that the mere allegation of fraud entitled the plaintiff to amend the complaint as a matter of law.

The trial court's legal ruling constituted a procedural error because it found no evidentiary basis for a punitive damages claim and nevertheless allowed the amendment. We agree that certiorari review does not provide a vehicle for this Court to reweigh the evidence presented at the hearing, and had the trial court actually found a sufficient evidentiary basis we would agree that such a finding could not be disturbed, or even evaluated, on certiorari review. The trial court, however, found that "even taking all the evidence in the light most favorable to the plaintiff" there was no evidentiary basis for a punitive damages claim. Despite this evidentiary ruling, the trial court felt confined by this Court's Perlman decision to make a legal ruling that punitive damages claims are allowed absent an evidentiary basis when fraud is alleged. Our holding today is entirely confined to reversing this second prong of the trial court's reasoning. An allegation of fraud, on its own and without any evidentiary support, does not satisfy the requirements of section 768.72, Florida Statutes (2005).

Our holding is consistent with the treatment of this issue by our sister courts in Turner v. S.G. Fitzsimmons, IV, 673 So.2d 532 (Fla. 1st DCA 1996), and Cypress Aviation, Inc. v. Bollea, 826 So.2d 1091 (Fla. 2d DCA 2002). Faced with similar facts, both the First District and the Second District rejected the same argument advanced by Rego. In both cases, the First and Second District concluded that, even when a party's pleadings allege fraud, the procedure under section 768.72 must be followed and an evidentiary basis for punitive damages must be provided before the party can assert a claim for them. See Turner, 673 So.2d at 535-36; Cypress Aviation, 826 So.2d at 1092.

Because the trial court did not follow the required statutory procedure set forth in section 768.72, Florida Statutes (2005), we grant the petition for certiorari and quash the trial court's order granting Rego leave to amend his complaint to add a claim for punitive damages.

SCHWARTZ, Senior Judge, concurs.

RAMIREZ, J., (dissenting).

As the majority opinion states in footnote 1, "[t]his Court has certiorari jurisdiction to review a claim alleging failure to comply with the procedural requirements of section 768.72, Florida Statutes (2005)." (emphasis added). I disagree that the trial court failed to comply with the procedural requirements of the statute when it allowed the claim for punitive damages. I therefore respectfully dissent.

I. Procedural Requirements

Even if the trial court misinterpreted the holding in Perlman v. Prudential Ins. Co. of America, Inc., 686 So.2d 1378 (Fla. 3d DCA 1997), and I do not believe it did,⁴ the trial court followed the procedural dictates of section 768.72 and thus certiorari relief is inappropriate in this case.

Section 768.72(1) states:

In any civil action, no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages. The claimant may move to amend her or his complaint to assert a claim for punitive damages as allowed by the rules of civil procedure.

In Solis v. Calvo,...