Goodall v. Whispering Woods Center, L.L.C.

• Decision Date: 24 September 2008
• Docket Number: No. 4D08-94.,4D08-94.
• Citation: 990 So.2d 695
• Parties: Michael GOODALL, as assignee of MKJH, L.L.C., Appellant, v. WHISPERING WOODS CENTER, L.L.C., a Florida limited liability company, Appellee.
• Court: Florida District Court of Appeals

990 So.2d 695

Michael GOODALL, as assignee of MKJH, L.L.C., Appellant, v. WHISPERING WOODS CENTER, L.L.C., a Florida limited liability company, Appellee.

No. 4D08-94.

District Court of Appeal of Florida, Fourth District.

September 24, 2008.

Michael P. Hamaway of Mombach, Boyle & Hardin, P.A., Fort Lauderdale, for appellant.

Richard H. Bergman of Bergman & Jacobs, P.A., Hollywood, for appellee.

ROSENBERG, ROBIN, Associate Judge.

The issue in this case is whether Michael Goodall, as assignee of MKJH, LLC, stated a cause of action for reformation against Whispering Woods Center, L.L.C. We hold that Goodall stated a cause of action for reformation and reverse the trial court's dismissal of Goodall's claims for reformation and breach of contract as reformed. We affirm the trial court's dismissal of the remaining claims for rescission and unjust enrichment.

This is an appeal from an amended order of dismissal for failure to state a cause of action. See Fla. R. Civ. P. 1.140(b)(6). In reviewing an order granting a motion to dismiss, this court's "gaze is limited to the four corners of the complaint." Gladstone v. Smith, 729 So.2d 1002, 1003 (Fla. 4th DCA 1999). The facts alleged in the complaint must be accepted as true and all reasonable inferences are drawn in favor of the pleader. See id. "Because a ruling on a motion to dismiss for failure to state a cause of action is an issue of law, it is reviewable on appeal by the de novo standard of review." Fresh Capital Fin. Servs., Inc. v. Bridgeport Capital Servs., Inc., 891 So.2d 1142, 1143 (Fla. 4th DCA 2005) (quoting Bell v. Indian River Mem'l Hosp., 778 So.2d 1030, 1032 (Fla. 4th DCA 2001)).

The complaint alleges that on or about June 15, 2005, Whispering Woods and MKJH entered into the Whispering Woods Center Reservation Deposit Agreement, preparatory to the purchase and sale of certain commercial real property. The planned use of the property was a health club. The Deposit Agreement set out the purchase price and stated: "This price includes the developer raising the ceiling height of the purchaser's suites to a height of 12 feet clear ceiling height." The purchase price was increased from the base rate by $7.00 per square foot in contemplation of the extra costs in providing the twelve foot ceilings. The purchase price for the building, as recited in the Deposit Agreement, was approximately $1,422,600. The Deposit Agreement required an initial deposit of $70,000.

On August 22, 2005, MKJH entered into a Purchase and Sale Agreement with Whispering Woods for the purchase and sale of the property.¹

The complaint further alleges that prior to execution, Whispering Woods represented that it would prepare the Purchase Agreement with identical substantive terms as set forth in the Deposit Agreement. Specifically, Whispering Woods represented that it would prepare the Purchase Agreement with the same price as agreed upon in the Deposit Agreement and with the same obligations to raise the ceiling height to "twelve feet clear ceiling" to accommodate the planned health club facility.

While the Purchase Agreement recites essentially the same purchase price as the Deposit Agreement ($1,422,652), it provides for only ten foot ceilings. According to the complaint, at the time that MKJH executed the Purchase Agreement, neither MKJH nor its representatives were aware that the contract term regarding "12 foot clear ceiling height" had been changed to ten foot ceiling height in the Purchase Agreement.

The complaint further alleges that Whispering Woods surreptitiously intended to deceive and defraud MKJH by recovering a windfall for itself to which it would not otherwise be entitled. In the alternative, the complaint alleges that the execution of the Purchase Agreement was the result of mutual mistake by the parties as the ten foot ceiling height does not express the parties' intent. As written, the Purchase Agreement would create a windfall to Whispering Woods and the resulting building would not be suitable for its intended purpose as a health club.

Paragraph 24 of the Purchase Agreement, attached to the complaint, states:

24. Entire Agreement. PURCHASER CERTIFIES THAT PURCHASER HAS READ EVERY PROVISION OF THIS AGREEMENT AND EACH ADDEDUM ATTACHED HERETO (IF ANY) AND THAT THIS AGREEEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PURCHASER AND SELLER. THIS AGREEMENT IS THE ENTIRE AGREEMENT FOR THE SALE AND PURCHASE OF THE UNIT AND ONCE THIS AGREEMENT IS SIGNED THIS AGREEMENT CAN ONLY BE AMENDED IN WRITING. PRIOR AGREEMENTS, REPRESENTATIONS, UNDERSTANDINGS, AND ORAL STATEMENTS NOT REFLECTED IN THS AGREEMENT HAVE NO EFFECT AND ARE NOT BINDING ON SELLER. PURCHASER ACKNOWLEDGES THAT PURCHASER HAS NOT RELIED ON ANY REPRESENTATION, NEWSPAPER, RADIO OR TELEVISION ADVERTISEMENTS, WARRANTIES, WHATSOEVER, WHETHER WRITTEN OR ORAL, MADE BY SELLER, SALESPERSONS, AGENTS, OFFICERS, EMPLOYEES, CO-OPERATING BROKERS (IF ANY) OR OTHERWISE EXCEPT AS HEREIN SPECIFICALLY REPRESENTED. PURCHASER HAS BASED PURCHASER'S DECISION TO PURCHASE THE UNIT ON PERSONAL INVESTIGATION, OBSERVATION AND THE CONDOMINIUM DOCUMENTS.

After the Purchase Agreement was executed, the commercial space was built-out with ten foot ceilings. On March 13, 2006, MKJH assigned its interest in the Purchase Agreement to Michael Goodall.

On March 27, 2007, Goodall sent a letter declaring Whispering Woods in default for delivering ten foot ceilings and demanding that Whispering Woods raise the ceiling height to twelve feet or refund the deposit. Whispering Woods refused both demands. A deposit in the amount of $284,530.40 currently is held in escrow.

Goodall filed a four-count complaint against Whispering Woods for reformation of the Purchase Agreement, breach of the contract as reformed, rescission and unjust enrichment. Whispering Woods moved to dismiss for failure to state a cause of action, relying primarily on the merger and integration clause in paragraph 24 of the Purchase Agreement. The trial court granted the motion, dismissing the complaint with prejudice, without explanation. This appeal follows.

A court of equity has the power to reform a written instrument where, due to a mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties to the instrument. Tobin v. Mich. Mut. Ins. Co., 948 So.2d 692 (Fla.2006) (quoting Providence Square v. Biancardi, 507 So.2d 1366, 1369 (Fla.1987)); Blumberg v. Am. Fire & Cas. Co., 51 So.2d 182 (Fla.1951); Brandsmart U.S.A. of W. Palm Beach, Inc. v. Dr. Lakes, Inc., 901 So.2d 1004, 1005 (Fla. 4th DCA 2005); USAA Cas. Ins. Co. v. Threadgill, 729 So.2d 476, 478 (Fla. 4th DCA 1999); Circle Mortgage Corp. v. Kline, 645 So.2d 75, 77 (Fla. 4th DCA 1994); Malt v. R.J. Mueller Enters., Inc., 396 So.2d 1174 (Fla. 4th DCA 1981).

The principle of reformation is applicable to instruments of conveyance of real property as well as to contracts. Providence Square, 507 So.2d at 1369; Crompton v. Kirkland, 157 Fla. 89, 24 So.2d 902 (1946). In reforming a written instrument, an equity court in no way alters the agreement of the parties. Instead, the reformation only corrects the defective instrument so that it accurately reflects the true terms of the agreement actually reached. Providence Square, 507 So.2d at 1370; Porter v. Meigs, 74 So.2d 82 (Fla.1954).

A mistake is mutual when the parties agree to one thing and then, due to either a scrivener's error or inadvertence, express something different in the written instrument. See Providence Square, 507 So.2d at 1372; Blumberg, 51 So.2d at 184; Circle Mortg. Corp., 645 So.2d at 78. The allegations in the complaint that Whispering Woods' failure to provide the agreed upon twelve-foot ceiling height was the result of a mutual mistake and not expressive of the parties' true intent is sufficient to state a cause of action for reformation based on mutual mistake.

Reformation also is proper when there is a mistake on the part of one side of the transaction and inequitable conduct on the part of the other side. Providence Square, 507 So.2d at 1372 n. 3; Noack v. Blue Cross Blue Shield of Fla., Inc., 859 So.2d 608, 610-611 (Fla. 1st DCA 2003). As an alternative to mutual mistake, the complaint alleges that Whispering Woods' omission of the twelve-foot ceiling height provision in the Purchase Agreement was intended to deceive and defraud MKJH, thus causing a unilateral mistake on the part of MKJH in executing the Agreement. This allegation also states a cause of action for reformation based on Whispering Woods' inequitable conduct.

The trial court erroneously found Hillcrest Pacific Corp. v. Yamamura, 727 So.2d 1053 (Fla. 4th DCA 1999), controlling in this case. Hillcrest holds that one cannot state a cause of action for fraud based on alleged misrepresentations that are adequately covered or expressly contradicted in a later written contract. Hillcrest Pacific Corp., 727 So.2d at 1056. In Hillcrest, the agreement which was attached as an exhibit to the amended complaint, plainly contradicted the allegations of the complaint and thus, was inconsistent with Pacific's claim for fraud in the inducement. Id. Although Pacific alleged that the appellees misrepresented the "price" of the property, the price was clearly stated in the agreement.

In its holding, Hillcrest relied upon the well settled law in Florida that any document attached to a complaint as an exhibit is considered a part of the pleading. Geico Gen. Ins. Co. v. Graci, 849 So.2d 1196 (Fla. 4th DCA 2003); Nicholas v. Ross, 721 So.2d 1241, 1243 (Fla. 4th DCA 1998); Fla. R. Civ. P. 1.130(b). When there are conflicts between the allegations of a complaint and the documents attached as exhibits to the complaint, the plain language of the documents control. Geico Gen. Ins. Co., 849 So.2d at 1199.

However, Hillcrest deals with a tort claim for fraudulent inducement and not with the reformation of a contract as alleged in this case. Unlike...