Gilchrist Timber Co. v. ITT Rayonier, Inc.

• Decision Date: 18 November 1997
• Docket Number: No. 94-3521,94-3521
• Citation: 127 F.3d 1390
• Parties: 11 Fla. L. Weekly Fed. C 757 GILCHRIST TIMBER CO., C.L. Brice, L.A. Brice, Andy M. Brice, Sam Brice, Plaintiffs-Appellants, v. ITT RAYONIER, INC., Defendant-Appellee, v. NATURAL RESOURCE PLANNING SERVICES, INC. and Andrew V. Santangini, Third-Party-Defendants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1390

127 F.3d 1390

11 Fla. L. Weekly Fed. C 757

GILCHRIST TIMBER CO., C.L. Brice, L.A. Brice, Andy M. Brice, Sam Brice, Plaintiffs-Appellants, v. ITT RAYONIER, INC., Defendant-Appellee, v. NATURAL RESOURCE PLANNING SERVICES, INC. and Andrew V.

Santangini, Third-Party-Defendants.

No. 94-3521.

United States Court of Appeals Eleventh Circuit.

Nov. 18, 1997.

Leonard E. Ireland, Jr., Gainesville, Florida, for Plaintiffs-Appellants.

Thomas M. Baumer, Rebecca B. Creed, Baumer, Bradford & Walters, Jacksonville, Florida, John Roscow, III, Gainesville, Florida, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Florida.

Before EDMONDSON and DUBINA, Circuit Judges, and LOGAN ^*, Senior Circuit Judge.

LOGAN, Senior Circuit Judge:

In this diversity action plaintiffs, Gilchrist Timber Company, C.L. Brice, L.A. Brice, Andy M. Brice, and Sam Brice, ¹ alleged that defendant ITT Rayonier, Inc. made a material false representation of the zoning of a large block of Florida timberland that it sold to plaintiffs, causing them economic injury. After a jury found in favor of plaintiffs the district court granted defendant judgment notwithstanding the verdict. Plaintiffs appealed, asserting the district court (1) made erroneous and irrelevant findings of fact; and the district court erred in ruling that the jury could not reasonably have found (2) plaintiffs justifiably relied on defendant's representation; and (3) plaintiffs sustained the damages awarded. Our review of the record and the law convinced us of the merit of plaintiffs' claims except with respect to one unsettled question of Florida law. Deciding that the unsettled question would be determinative of the appeal we certified it to the Florida Supreme Court. See Gilchrist Timber Co. v. ITT Rayonier, Inc., 95 F.3d 1033 (11th Cir.1996). We now have reviewed the court's answer, and proceed to address all of the issues raised on appeal.

We review de novo a district court's order granting judgment notwithstanding the verdict, Sherrin v. Northwestern Nat'l Life Ins. Co., 2 F.3d 373, 377 (11th Cir.1993), applying the same standard as the district court:

[W]e consider all the evidence, and the inferences drawn therefrom, in the light most favorable to the nonmoving party. If the facts and inferences point overwhelmingly in favor of one party, such that reasonable people could not arrive at a contrary verdict, then the motion was properly granted. Conversely, if there is substantial evidence opposed to the motion such that reasonable people, in the exercise of impartial judgment, might reach differing conclusions, then such a motion was due to be denied.

Id. (quotation omitted). We must determine "whether the evidence is such that, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable men could have reached." Rabun v. Kimberly-Clark Corp., 678 F.2d 1053, 1057 (11th Cir.1982).

I

In 1985, Jimmy Ray Mincy, a timber broker, became interested in purchasing a tract of timberland (the timberland) from defendant. He solicited C.L. Brice, who was involved in timber, ranching and real estate, to join him in making the purchase. Brice and Mincy went to look at the 22,641-acre tract. Brice was familiar with the timberland because it was part of a larger tract on which he had been outbid when he tried to obtain a purchase option in 1949. The roads and improvements that ITT had made, along with the timber, impressed Brice. Mincy and Brice agreed they would offer defendant $550 per acre for the timberland. ² Brice and Mincy presented evidence at trial that they planned to cut and sell the timber and then to sell a significant portion of the land in small tracts for farming or residential development.

Mincy and Brice met with ITT's representatives to discuss purchasing the timberland. Brice testified that at this first meeting Kent Smith, then ITT's Director of Forest Land Management, gave Brice and Mincy a copy of an April 1984 appraisal that ITT had obtained when it decided to sell various timberlands to raise cash. ³ The document included a land appraisal by Andrew Santangini and a timber appraisal by Natural Resource's Tom Mastin. The appraisal stated that the timberland was zoned for agriculture, which allows residential usage. Mincy and Brice testified they decided to buy the timberland only because the zoning allowed residential development. Uncontroverted evidence at trial indicated that the parties never discussed zoning, although the information contained in the timber appraisal--such as the quantity and quality of timber--was discussed at length.

After negotiations, the parties contracted separately for the purchase and sale of the land and the timber. Although there were two contracts, each was dependent upon the other. Mincy and Brice paid a total of $12,452,550 for the property, including $6,226,275 for the land and pre-merchantable timber ($275 per acre) and $6,226,275 for the merchantable timber (also $275 per acre). Defendant financed the purchase of the timber and Florida National Bank and Gainesville State Bank financed the purchase of the land.

Immediately after the closing, Brice and Mincy conveyed the land and timber to their partnership, Gilchrist Timber Company. More than a year after the purchase, when Gilchrist Timber had removed some timber and attempted to sell some acreage, plaintiffs learned that the vast majority of the timberland was actually zoned "preservation," a classification permitting no residential use. ⁴ Brice and Mincy unsuccessfully attempted to change the zoning. Plaintiffs asserted that they could not sell the land as planned and lost the benefit of their bargain. They brought this suit, alleging defendant misrepresented that the land was zoned agricultural. ⁵ The jury found in favor of plaintiffs and awarded damages of $1,676,500, but the district court granted defendant ITT's motion for judgment notwithstanding the verdict, finding that plaintiffs failed to present evidence to support a jury finding on several elements of negligent misrepresentation.

The district court relied on the statements of the elements to prove negligent misrepresentation set out in Baggett v. Electricians Local 915 Credit Union, 620 So.2d 784 (Fla. 2d D.C.A.1993). The plaintiffs must show:

(1) there was a misrepresentation of material fact; (2) the representer either knew of the misrepresentation, made the misrepresentation without knowledge of its truth or falsity, or should have known the representation was false; (3) the representer intended to induce another to act on the misrepresentation; and (4) injury resulted to a party acting in justifiable reliance upon the misrepresentation.

Id. at 786. Although Baggett stated the elements somewhat differently than Restatement (Second) of Torts § 552 (1977), adopted by the Florida Supreme Court in response to our certification order, see Gilchrist Timber Co. v. ITT Rayonier, Inc., 696 So.2d 334, 337, 339 (Fla.1997), there is no substantial difference.

After listing numerous factual conclusions based on what it characterized as undisputed evidence, ⁶ the district court found that (1) assuming zoning "was a material fact to Mr. Brice and to Mr. Mincy, this was never communicated to ITT, either verbally or in writing"; (2) "ITT did not knowingly misrepresent the zoning classification of the subject property. ITT was itself unaware of the property's zoning, and had no cause to know that the zoning classification stated in the appraisal report was inaccurate"; (3) "and most importantly, there is a complete void of any evidence that would tend to establish that ITT intended to induce the plaintiffs to act on the representation." 7 R. tab 273 at 6. On appeal, plaintiffs take issue with these three findings, arguing that they are "either incorrect or irrelevant, or both." Initial Brief of Appellant at 25. We agree.

II

A

Whether plaintiffs told defendant ITT that the zoning was important to them is not controlling; the question is whether zoning was a material fact. Under Florida law, a fact is material if it made a difference in plaintiffs' decision to enter the contract. See Revitz v. Terrell, 572 So.2d 996, 998 (Fla. 3d D.C.A.1990) (fact is material if it substantially affects value of property, or if but for alleged misrepresentation party would not have entered contract). Evidence that plaintiffs never communicated to defendant that zoning was important might tend to show that it was not material--because a buyer would likely tell a seller if zoning was important--but it does not preclude a contrary conclusion.

Defendant argues that plaintiffs failed to produce any evidence from which a jury could find the zoning was material, pointing to evidence that plaintiffs decided on their offering price before reviewing the appraisal misstating the zoning. But Mincy and Brice testified they set the price assuming that zoning was agricultural; the appraisal confirmed their assumption, so they did not change the price. Thus, the evidence that the buyers set a firm price does not mean that zoning was immaterial.

Defendant points out that several witnesses testified that plaintiffs had no plan to sell parcels for residential use, and argues that the lack of such a plan belies plaintiffs' argument that zoning made a difference in their decision to enter the contract. But plaintiffs introduced evidence that from the beginning they did intend to sell off parcels of land to repay the financing banks. The conflict created a factual issue for the jury.

Defendant also argues that under Florida law the contract's silence as to zoning conclusively demonstrates that zoning was not material to plaintiffs, relying on Saunders Leasing Sys., Inc. v. Gulf Cent. Distribution Ctr., Inc., 513 So.2d 1303 (Fla. 2d D.C.A.1987), review denied, 520 So.2d 584 (Fla.1988). In...