Invo Florida, Inc. v. Somerset Venturer, Inc.

• Decision Date: 15 March 2000
• Docket Number: No. 3D98-3174.,3D98-3174.
• Citation: Invo Florida, Inc. v. Somerset Venturer, Inc., 751 So.2d 1263 (Fla. App. 2000)
• Parties: INVO FLORIDA, INC., Appellant, v. SOMERSET VENTURER, INC., et al., Appellees.
• Court: Florida District Court of Appeals

751 So.2d 1263

INVO FLORIDA, INC., Appellant, v. SOMERSET VENTURER, INC., et al., Appellees.

No. 3D98-3174.

District Court of Appeal of Florida, Third District.

March 15, 2000.

Hoffman & Hertzig and Carl H. Hoffman, Jr. and H.K. Skip Pita, Coral Gables, for appellant.

Goldstein & Tanen, Miami; Yelen & Yelen and Jan A. Yelen, Coral Gables, for appellees.

Before SCHWARTZ, C.J., SORONDO, J., and NESBITT, Senior Judge.

PER CURIAM.

Invo Florida, Inc. (Invo) appeals the trial court's Final Summary Judgment and Order Granting Motion For Partial Summary Judgment entered upon the trial judge's conclusion that Counts II, III, IV and V of Invo's amended complaint were barred by the economic loss rule. We disagree and reverse.

Invo's cause of action arises from the alleged violation of an agreement settling a 1980 lawsuit between Invo and Somerset Venturer, Inc. (Somerset). Invo claims that an agreement it entered into with Somerset in 1989 was subsequently breached in several ways, mainly by the alleged failure of Somerset to give Invo a right of first refusal with respect to the sale of the asset of the business venture known as "Somerset Venturer, Inc.," and by failing to give Invo a share of the profits allegedly realized from the disposition of that asset. At the time the agreement was executed, the Somerset assets consisted of a promissory note and mortgage on real property located in Broward County. Somerset subsequently obtained a judgment on that note and foreclosed on the property. It then maintained the property for some years at a loss, until both the mortgage on the Broward property held by Capital Bank and the tax obligations on the property fell into default.

At that time, Somerset sold the Broward property to Somerset P & Q (P & Q), a partnership comprised of entities created by Carol Cohen Landa and Leo Landau— the wife and cousin, respectively, of a principal of Somerset, William Landa (Landa)—which accepted Somerset's obligations to Capital Bank, brought the loan current and paid off the outstanding taxes. Somerset, P & Q, Landau and Carol Cohen Landa contend that neither Somerset nor its principals received any money in this transaction, the consideration going entirely to pay Capital Bank and the tax debt on the property.

There is a dispute between the parties regarding whether or not Invo was given the right of first refusal with respect to this sale. Somerset asserts it did send Invo notice, and Invo denies this. Once the sale occurred, there were no remaining assets of Somerset, and the corporation was ultimately administratively dissolved.

Invo's Third Amended Complaint raised claims against Somerset, William Landa and Michael Ambrosio, individually and as trustees of the assets of Somerset, C & L Somerset Lakes, Inc., and L & L on Oakland Park Blvd., individually and as partners d/b/a Somerset P & Q, the transferee, Carole Cohen Landa and Leo Landau. In Count I for breach of contract, Invo alleged that Somerset, Landa and Ambrosio breached the Agreement with Invo by not providing Invo with annual financial statements throughout the term of the agreement, not granting Invo the right of first refusal with respect to the sale, not giving Invo the opportunity to assume Somerset's rights and obligations after the only asset was sold and the corporation was allowed to dissolve, and not distributing a share of the alleged profits to Invo upon the sale.

Together with this breach of contract claim, Invo, asserting it is a creditor of Somerset by virtue of the breach of the agreement, also raised claims under Chapter 726, Florida Statutes (1991), Florida's Uniform Fraudulent Transfer Act (UFTA). Invo alleged in Count II, fraudulent transfer as to present creditors (§ 726.106(1), Florida Statutes), against Somerset, Landa, Ambrosio, individually and as trustees of the assets of Somerset, C & L Somerset Lakes, Inc., L & L on Oakland Park Blvd., Inc., Carole Cohen Landa; and Leo Landau; in Count III, fraudulent transfer between insiders (§ 726.106(2), Florida Statutes), against Somerset, Landa, Ambrosio, individually and as trustees of the assets of Somerset, C & L Somerset Lakes, Inc., L & L on Oakland Park Blvd., Inc., Carole Cohen Landa and Leo Landau; and in Count IV, fraudulent transfer as to present and future creditors (§ 726.105, Florida Statutes), against Somerset, Landa, Ambrosio, individually and as trustees of the assets of Somerset; C & L Somerset Lakes, L & L on Oakland Park Blvd., Inc., Carole Cohen Landa and Leo Landau, asserting that Landa and Ambrosio on behalf of Somerset, transferred the property to P & Q for no value with actual intent to hinder, delay or defraud Invo and thereby escape the obligations owed by Somerset to Invo under the agreement.

In Count V, Invo alleged breach of fiduciary duty by Somerset, Landa and Ambrosio, individually and as trustees of the assets of Somerset, by virtue of the sale to P & Q, asserting that a fiduciary duty was owed to Invo because it was a creditor as a result of Somerset's breach of the agreement. Count VI alleged conspiracy to effect a fraudulent transfer against Somerset, Landa and Ambrosio, individually and as trustees of the assets of Somerset, C & L Somerset Lakes, Inc., L & L on Oakland Park Blvd., Inc., Carole Cohen Landa and Leo Landau, and Count VII was a demand for an accounting against all defendants.

The defendants moved to dismiss the Third Amended Complaint on numerous grounds, including as to Counts II-VI that those claims were barred by the economic loss rule. That motion was denied without prejudice. Following this court's decision in Comptech Int'l, Inc. v. Milam Commerce Park, Ltd., 711 So.2d 1255 (Fla. 3d DCA 1998), rev'd, 753 So.2d 1219 (Fla. 1999), the defendants moved for partial summary judgment as to Counts II-VI, claiming the same thing they did in their motion to dismiss, namely that the economic loss rule barred Counts II-VI. They did not challenge the facts. The trial court granted that motion stating, "Each of said Counts are for economic damages that flow directly from the breach of contract claim alleged in Count I; therefore, said Counts are barred by the economic loss rule." Final Summary Judgment was entered as to those counts. Invo appeals.

The defendants moved to dismiss the appeal on the basis that the counts of the Third Amended Complaint on which summary judgment was entered arose out of and depended upon the same set of common facts and dealt with the same issue as the claims that remained pending (the breach of contract and request for an accounting claims). After this Court denied the defendants' motions to dismiss the appeal with instructions to the trial court, the trial court entered new orders on the motions for summary judgment.

The first order entitled "Final Summary Judgment" disposed of the action as to Carole Cohen Landa, Leo Landau, C & L Somerset Lakes, L & L Oakland Park Boulevard, and Somerset P & Q. The second order entitled "Order Granting Motion For Partial Summary Judgment" disposed of all fraud counts against Somerset, Landa, and Ambrosio.

On appeal, Invo claims that the trial court erred in holding that the economic loss rule abolished Invo's rights under the UFTA. We agree.

We begin our analysis by noting that there was no summary judgment hearing transcript provided for review because the trial court took the matter under advisement without oral argument, thus limiting its ruling to the four corners of Invo's amended complaint. As stated before, the defendants did not challenge the facts below, but simply argued that the economic loss rule barred the counts in question. Thus, the issue presented in this case is an issue of law and review is de novo. See Menendez v. Palms West Condominium Ass'n, Inc., 736 So.2d 58 (Fla. 1st DCA 1999). Furthermore, we accept the facts alleged in Invo's Amended Complaint as true. See Tri-City Used Cars, Inc. v. Grim, 566 So.2d 922 (Fla. 1st DCA 1990) (citing Connell v. Sledge, 306 So.2d 194 (Fla. 1st DCA 1975)).

First, Invo claims that the fraudulent transfer is an independent tort because it involves different elements, different remedies, and a different set of acts from those which breached the contract. We agree with Invo that the defendants' fraudulent transfer is independent of Somerset's contractual breach for a number of reasons.

An independent tort requires proof of facts that are distinct from breach of contract. See HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238, 1239 (Fla.1996). Under the facts of this case, for Invo to prove breach of contract, it must prove that Somerset and its directors, Landa and Ambrosio, failed to honor Invo's contractual rights under the agreement. To prove the fraudulent transfers alleged in Counts II, III and IV under the UFTA, Invo would have to prove a different set of facts.

For example, as Invo illustrates in their Initial Brief, in Count II of the Amended Complaint, Invo must prove all the elements for defrauding a present creditor under section 726.106(1), Florida Statutes. Invo can do this by proving that Somerset transferred the property in question without Invo receiving a reasonably equivalent value in exchange for the transfer and that Somerset was insolvent or became so after the transfer. See § 726.106(1), Fla. Stat. (1991). These elements are different than the ones required for Invo to prove a breach of contract action and are plainly independent of the contract; thus, they are not barred by the economic loss rule.¹See Pershing Indus., Inc., v. Estate of Sanz, 740 So.2d 1246 (Fla. 3d DCA 1999)(holding that the economic loss rule does not preclude independent tort claims that fall outside the scope of a breach of...