First Federal Sav. & Loan Ass'n of Wisconsin v. Dade Federal Sav. & Loan Ass'n, 80-968

• Decision Date: 16 September 1981
• Docket Number: No. 80-968,80-968
• Citation: 403 So.2d 1097
• Court: Florida District Court of Appeals
• Parties: FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF WISCONSIN, etc., Appellant, v. DADE FEDERAL SAVINGS & LOAN ASSOCIATION, etc., Appellee.

Page 1097

403 So.2d 1097

FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF WISCONSIN, etc., Appellant, v. DADE FEDERAL SAVINGS & LOAN ASSOCIATION, etc., Appellee.

No. 80-968.

District Court of Appeal of Florida, Fifth District.

Sept. 16, 1981.

Ted R. Brown of Maguire, Voorhis & Wells, P.A., Orlando, for appellant.

Fred M. Peed of Peed & King, P.A., Orlando, for appellee.

FRANK D. UPCHURCH, Jr., Judge.

Appellant appeals from entry of summary final judgment on two counts of a complaint which was based on appellee's failure to collect taxes pursuant to a sales and servicing agreement between the parties dated December 15, 1972.

Orlando Federal Savings and Loan sold a motel construction note and mortgage to appellant. Orlando Federal and appellant entered into the sales and servicing agreement whereby Orlando Federal agreed to service the loan for appellant. Appellee Dade Federal Savings and Loan acquired, through merger, Orlando Federal and assumed its obligations. Under the terms of the servicing agreement, it was represented to appellant that "the terms of the mortgage have in no way been changed" and that "the premiums..on the policies of fire and hazard insurance...plus taxes... next due on the mortgaged property..." would be collected monthly and escrowed by appellee.

In November of 1972, following completion of the motel and prior to the sale of the loan to appellant, the senior vice-president for mortgage loans with Orlando Federal, at the request of the mortgagors, agreed not to require escrow of additional monies for 1973 real estate taxes. When the 1973 tax bill which amounted to $32,550.00 was received, appellee discovered that insufficient funds existed in the escrow account to pay the bill. In January, 1974, appellee attempted to collect the 1973 taxes from the mortgagors but was unsuccessful.

In February, 1974, the mortgagors were delinquent in their payments and appellant requested information on the loan. Appellee notified appellant by letter that:

Through a mutual agreement the lower escrow was established with a commitment from the owners to make any additional payment in April, 1974. ¹

On February 14, 1978, appellant filed suit for breach of the servicing agreement because of appellee's failure to collect the 1973 taxes. The complaint was amended on April 17, 1979, by adding counts for breach of warranty and fraud.

On motion for summary judgment, the court held that the counts for fraud and breach of warranty were barred by the statute of limitations.

The first question is whether the four-year statute of limitation ² for fraud expired prior to appellant's filing of the action for fraud.

In cases of fraud, the statute of limitations ordinarily begins to run with the discovery of the fraud. Tullo v. Horner, 296 So.2d 502 (Fla. 3d DCA 1974). Section 95.11(5)(d), Florida Statutes (1973), stated:

An action for relief on the ground of fraud, the cause of action in such case not to be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud....

"Discovery...of the facts" as used in this section is defined by an objective, not subjective standard and means knowledge of facts which would have been discovered in the exercise of due diligence. Matthews v. Matthews, 222 So.2d 282 (Fla. 2d DCA 1969). See also Codding v. Phillips, 296 So.2d 554 (Fla. 3d DCA 1974). ³ As stated in Hudak v. Economic Research Analysts, Inc., 499 F.2d 996 (5th Cir. 1974), under Florida law, a party is charged with knowledge of facts which would have been discovered in the exercise of due diligence for purposes of determining when a cause of action for fraud accrues. The court in Hudak went on to explain, however, that while the law of fraud does not endorse a "hear no evil, see no evil approach," neither does it require that an aggrieved party have proceeded from the outset as though he were dealing with thieves. 499 F.2d at 1002.

Appellant first alleged a count for fraud in its amended complaint filed on April 17, 1979. The trial court found that appellant, by the exercise of due diligence, should have discovered that the agreement to waive the 1973 tax escrow predated the sale of the mortgage and that the four-year statute of limitations barred suit on this claim in 1979.

Appellant suggests two bases mandating reversal of the trial court. First, it argues that the servicing agreement made appellee an agent of appellant and created a fiduciary relationship, imposing a duty on appellee to disclose.

Appellee was clearly appellant's agent pursuant to the agreement and as such had the duty to make full disclosure to appellant of all material facts relevant to the agency and this duty did not terminate when the employment ended. See Connelly v. Special Road and Bridge District, 99 Fla. 456, 126 So. 794 (1930); Hershey v. Keyes Co., 209 So.2d 240 (Fla. 3d DCA 1968). ⁴ Under this principal, when appellant's vice-president wrote to Orlando Federal's vice-president on April 3, 1974, requesting complete information on the loan, Orlando Federal had the duty to make full disclosure, including explication regarding the escrow waiver.

Nardone v. Reynolds, 333 So.2d 25 (Fla.1976), which supports such a conclusion, also discussed the theory of fraudulent concealment. Fraudulent concealment, the court declared, will toll the statute of limitations where plaintiff shows: (1) successful concealment of the cause of action, and (2) the use of fraudulent means to achieve that concealment. 333 So.2d at 37.

Nardone was a medical malpractice action wherein the court explained that:

(A)lthough generally the fraud must be of such a nature as to constitute active concealment to prevent inquiry or elude investigation or to mislead a person who could claim a cause of action, we do recognize the fiduciary, confidential relationship of physician-patient, imposing on the physician a duty to disclose; but, this is a duty to disclose known facts, and not conjecture and speculation as to possibilities.... Where an adverse condition is known to the doctor or readily available to him through efficient diagnosis, he was a duty to disclose and his failure to do so amounts to a fraudulent withholding of the facts, sufficient to toll the running of the statute. (Emphasis added.)

333 So.2d at 39.

Nardone discussed the "confidential, fiduciary relationship" of a physician and patient. Here, a fiduciary relationship existed between appellant, as principal, and appellee, as agent. Appellee was aware of the adverse fact (that the escrow waiver was agreed to prior to December 15, 1972) but failed to disclose this when appellant wrote on April 3, 1974, requesting complete information on the loan. Under Nardone this could constitute a...