Fotomat Corp. of Florida v. Chanda, 83-1756

• Decision Date: 28 February 1985
• Docket Number: No. 83-1756,83-1756
• Citation: 464 So.2d 626,10 Fla. L. Weekly 525
• Parties: 10 Fla. L. Weekly 525, 40 UCC Rep.Serv. 795 FOTOMAT CORPORATION OF FLORIDA, etc., Appellant, v. Joseph J. CHANDA, Appellee.
• Court: Florida District Court of Appeals

Page 626

464 So.2d 626

10 Fla. L. Weekly 525, 40 UCC Rep.Serv. 795

FOTOMAT CORPORATION OF FLORIDA, etc., Appellant, v. Joseph J. CHANDA, Appellee.

No. 83-1756.

District Court of Appeal of Florida Fifth District.

Feb. 28, 1985.

Stewart B. Capps of Nohrr, Nohrr, Boyd, Brushwood, Howze & Ellis, P.A., Melbourne, for appellant.

R. Frazier Solsberry of Nabors, Potter, McClelland, Griffith & Jones, P.A., Melbourne, for appellee.

ORFINGER, Judge.

The defendant appeals from a final judgment awarding damages of $9,500 to plaintiff, resulting from the loss of film which plaintiff had delivered to defendant for processing. We reverse.

Plaintiff Chanda, a medical doctor, after reading a magazine article indicating that the deterioration of movie film could be avoided by transferring the images on the film to videotape, and having read a flyer distributed by defendant which advertised the availability of such service, delivered 28 rolls of already developed Super-8 movie film to one of defendant's outlets in Melbourne, Florida in April of 1980. Defendant's clerk prepared an order form which contained information necessary to identify the customer, type of film and type of videocassette ordered, and other matters incidental to the transaction, and which also contained in a conspicuous place on the sheet and in bold type, the following language:

IMPORTANT

THE WARRANTY BELOW GIVES YOU SPECIFIC LEGAL RIGHTS AND LIMITATIONS. PLEASE READ IT CAREFULLY.

By depositing film or other material with Fotomat, customer acknowledges and agrees that Fotomat's liability for any loss, damage, or delay to film during the processing service will be limited to the replacement cost of a non-exposed roll of film and/or a blank cassette of similar size. Except for such replacement, Fotomat shall not be liable for any other loss or damage, direct, consequential, or incidental, arising out of customer's use of Fotomat's service.

________________

Customer Signature

Dr. Chanda read this clause, asked the clerk about it, and then signed it.

The film was lost and never made its way back to the plaintiff. Despite every effort on the part of defendant to locate it, it was never found nor could anyone account for its disappearance. Dr. Chanda testified that the film was of great sentimental value to him and to his family because it contained depictions of his honeymoon, the graduation ceremony at his medical school, movies of his son's birth and early life, and many memorable vacations which he and his wife had taken. In proving his damages, he was permitted to testify, over objection, on how much time and expense would be involved in duplicating so much of the lost film as was capable of duplication. This claim included travel expenses, lodging, meals, child care for his two children at home, and the overhead expense he would incur in his medical practice while he was away.

At an in-camera hearing prior to the commencement of the jury trial, the court determined that the limitation of liability clause was unconscionable at the time it was made. See section 672.302, Florida Statutes (1981). At the conclusion of the evidentiary portion of the trial, the court instructed the jury to disregard the loss limitation provision of the agreement in arriving at their verdict. Defendant contends that the trial court erred in permitting evidence as to plaintiff's consequential damages, and in its ruling that the limitation of liability clause was invalid as unconscionable. Because we agree that the court erred in holding the limitation of liability provision to be invalid, we need not discuss the damage issue.

Florida has adopted the Uniform Commercial Code in dealing with commercial transactions. Section 672.2-302 of the Florida Statutes (1979) states:

(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

The code does not attempt to define "unconscionability." ¹ Consequently, those courts which have dealt with the problem have often looked to the common law of their respective jurisdictions because, in most, this code provision is, in reality, a codification of the common law rules. In the seminal case of Williams v. Walker-Thomas Furniture Company, 350 F.2d 445 (C.A.D.C.1965), the court was faced with a contract entered into before the adoption by Congress of the Uniform Commercial Code for the District of Columbia, but decided after its adoption. First determining that the code provision followed the common law of the District, the court discussed unconscionability in terms of its elements:

Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. Whether a meaningful choice is present in a particular case can only be determined by consideration of all the circumstances surrounding the transaction. In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power. The manner in which the contract was entered is also relevant to this consideration.

Did each party to the contract, considering his obvious education or lack of it, have a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print and minimized by deceptive sales practices? Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But when a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all the terms. In such a case the usual rule that the terms of the agreement are not to be questioned should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld. (Footnotes omitted).

Id. at 449-450.

Florida has long recognized the principle that the courts are not concerned with the wisdom or folly of contracts, Duvall v. Walton, 107 Fla. 60, 144 So. 318 (1932), but where it is perfectly plain to the court that one party has overreached the other and has gained an unjust and undeserved advantage which it would be inequitable to permit him to enforce, a court will grant relief even though the victimized parties owe their predicament largely to their own stupidity. Peacock Hotel, Inc. v. Shipman, 103 Fla. 633, 138 So. 44 (1931). Decisions in Florida since the adoption of the Uniform Commercial Code appear to follow the principles espoused in the earlier cases.

In Kohl v. Bay Colony Club Condominium, Inc., 398 So.2d 865 (Fla. 4th DCA), review denied, 408 So.2d 1094 (Fla.1981), the court reviewed the authorities on the subject and concluded that:

The authorities appear to be virtually unanimous in declaring (or assuming) that two elements must coalesce before a case for unconscionability is made out. The first is referred to as substantive unconscionability and the other procedural unconscionability.

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A case is made out for substantive unconscionability by alleging and proving that the terms of the contract are unreasonable and unfair.

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Procedural unconscionability, on the other hand, speaks to the individualized circumstances surrounding each contracting party at the time the contract was entered into. This is thoughtfully discussed by the court in Johnson v. Mobil Oil Corp., 415 F.Supp. 264, 268 (E.D.Mich.1967):

The various factors considered by the courts in deciding questions of unconscionability have been divided by the commentators into "procedural" and "substantive" categories. See J. White & R. Summers, supra, at 118-30. Under the "procedural" rubric come those factors bearing upon what in the Weaver case was called the "real and voluntary meeting of the minds" of the contracting parties: age, education, intelligence, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, whether alterations in the printed terms were possible, whether there were alternative sources of supply for the goods in question. The "substantive" heading embraces the contractual terms themselves, and requires a determination whether they are commercially reasonable. According to J. White & R. Summers, supra, at 128:

Most courts take a "balancing approach" to the unconscionability question, and to tip the scales in favor of unconscionability, most courts seem to require a certain quantum of procedural plus a certain quantum of substantive unconscionability.

Id. at 867-68. See also, Bennett v. Behring Corp., 466 F.Supp. 689, 696 (S.D.Fla.1979).

This court has approved the "procedural-substantive" analysis in determining the question of unconscionability, and has approved Kohl. State v. De Anza Corporation, 416 So.2d 1173 (Fla. 5th DCA), review denied, 424...