Johnson v. Davis

• Decision Date: 31 October 1985
• Docket Number: No. 65330,65330
• Citation: 480 So.2d 625,10 Fla. L. Weekly 583
• Parties: , 10 Fla. L. Weekly 583 Clarence H. JOHNSON and Dana Johnson, his wife, Petitioners, v. Morton DAVIS and Edna Davis, his wife, Respondents.
• Court: Florida Supreme Court

Page 625

480 So.2d 625

54 USLW 2303, 10 Fla. L. Weekly 583

Clarence H. JOHNSON and Dana Johnson, his wife, Petitioners, v. Morton DAVIS and Edna Davis, his wife, Respondents.

No. 65330.

Supreme Court of Florida.

Oct. 31, 1985.

Rehearing Denied Jan. 20, 1986.

Mitchell W. Mandler and Patricia M. Silver of Smith & Mandler, Miami Beach, for petitioners.

Stanley M. Newmark, Joe N. Unger of the Law Offices of Joe N. Unger, Miami, and Joseph G. Abromovitz, Boston, Mass., for respondents.

ADKINS, Justice.

We have before us a petition to review the decision in Johnson v. Davis, 449 So.2d 344 (Fla. 3d DCA 1984), which expressly and directly conflicts with Banks v. Salina, 413 So.2d 851 (Fla. 4th DCA 1982), and Ramel v. Chasebrook Construction Co., 135 So.2d 876 (Fla. 2d DCA 1961). We have jurisdiction, article V, section 3(b)(3), Florida Constitution, and approve the decision of the district court.

In May of 1982, the Davises entered into a contract to buy for $310,000 the Johnsons' home, which at the time was three years old. The contract required a $5,000 deposit payment, an additional $26,000 deposit payment within five days and a closing by June 21, 1982. The crucial provision of the contract, for the purposes of the case at bar, is Paragraph F which provided:

F. Roof Inspection: Prior to closing at Buyer's expense, Buyer shall have the right to obtain a written report from a licensed roofer stating that the roof is in a watertight condition. In the event repairs are required either to correct leaks or to replace damage to facia or soffit, seller shall pay for said repairs which shall be performed by a licensed roofing contractor.

The contract further provided for payment to the "prevailing party" of all costs and reasonable fees in any contract litigation.

Before the Davises made the additional $26,000 deposit payment, Mrs. Davis noticed some buckling and peeling plaster around the corner of a window frame in the family room and stains on the ceilings in the family room and kitchen of the home. Upon inquiring, Mrs. Davis was told by Mr. Johnson that the window had had a minor problem that had long since been corrected and that the stains were wallpaper glue and the result of ceiling beams being moved. There is disagreement among the parties as to whether Mr. Johnson also told Mrs. Davis at this time that there had never been any problems with the roof or ceilings. The Davises thereafter paid the remainder of their deposit and the Johnsons vacated the home. Several days later, following a heavy rain, Mrs. Davis entered the home and discovered water "gushing" in from around the window frame, the ceiling of the family room, the light fixtures, the glass doors, and the stove in the kitchen.

Two roofers hired by the Johnsons' broker concluded that for under $1,000 they could "fix" certain leaks in the roof and by doing so make the roof "watertight." Three roofers hired by the Davises found that the roof was inherently defective, that any repairs would be temporary because the roof was "slipping," and that only a new $15,000 roof could be "watertight."

The Davises filed a complaint alleging breach of contract, fraud and misrepresentation, and sought recission of the contract and return of their deposit. The Johnsons counterclaimed seeking the deposit as liquidated damages.

The trial court entered its final judgment on May 27, 1983. The court made no findings of fact, but awarded the Davises $26,000 plus interest and awarded the Johnsons $5,000 plus interest. Each party was to bear their own attorneys' fees.

The Johnsons appealed and the Davises cross-appealed from the final judgment. The Third District found for the Davises affirming the trial court's return of the majority of the deposit to the Davises ($26,000), and reversing the award of $5,000 to the Johnsons as well as the court's failure to award the Davises costs and fees. Accordingly, the court remanded with directions to return to the Davises the balance of their deposit and to award them costs and fees.

The trial court included no findings of fact in its order. However, the district court inferred from the record that the trial court refused to accept the Davises' characterization of the roof inspection provision of the contract. The district court noted that if there was a breach, the trial court would have ordered the return of the Davises' entire deposit because there is no way to distinguish the two deposit payments under a breach of contract theory. We agree with this interpretation and further find no error by the trial court in this respect.

The contract contemplated the possibility that the roof may not be watertight at the time of inspection and provided a remedy if it was not in such a condition. The roof inspection provision of the contract did not impose any obligation beyond the seller correcting the leaks and replacing damage to the facia or soffit. The record is devoid of any evidence that the seller refused to make needed repairs to the roof. In fact, the record reflects that the Davises' never even demanded that the areas of leakage be repaired either by way of repair or replacement. Yet the Davises insist that the Johnsons breached the contract justifying recission. We find this contention to be without merit.

We also agree with the district court's conclusions under a theory of fraud and find that the Johnsons' statements to the Davises regarding the condition of the roof constituted a fraudulent misrepresentation entitling respondents to the return of their $26,000 deposit payment. In the state of Florida, relief for a fraudulent misrepresentation may be granted only when the following elements are present: (1) a false statement concerning a material fact; (2) the representor's knowledge that the representation is false; (3) an intention that the representation induce another to act on it; and, (4) consequent injury by the party acting in reliance on the representation. See Huffstetler v. Our Home Life Ins. Co., 67 Fla. 324, 65 So. 1 (1914).

The evidence adduced at trial shows that after the buyer and the seller signed the purchase and sales agreement and after receiving the $5,000 initial deposit payment the Johnsons affirmatively repeated to the Davises that there were no problems with the roof. The Johnsons subsequently received the additional $26,000 deposit payment from the Davises. The record reflects that the statement made by the Johnsons was a false representation of material fact, made with knowledge of its falsity, upon which the Davises relied to their detriment as evidenced by the $26,000 paid to the Johnsons.

The doctrine of caveat emptor does not exempt a seller from responsibility for the statements and representations which he makes to induce the buyer to act, when under the circumstances these amount to fraud in the legal sense. To be grounds for relief, the false representations need not have been made at the time of the signing of the purchase and sales agreement in order for the element of reliance to be present. The fact that the false statements as to the quality of the roof were made after the signing of the purchase and sales agreement does not excuse the seller from liability when the misrepresentations were made prior to the execution of the contract by conveyance of the property. It would be contrary to all notions of fairness and justice for this Court to place its stamp of approval on an affirmative misrepresentation by a wrongdoer just because it was made after the signing of the executory contract when all of the necessary elements for actionable fraud are present. Furthermore, the Davises' reliance on the truth of the Johnsons' representation was justified and is supported by this Court's decision in Besett v. Basnett, 389 So.2d 995 (1980), where we held "that a recipient may rely on the truth of a representation, even though its falsity could have been ascertained had he made an investigation, unless he knows the representation to be false or its falsity is obvious to him." Id. at 998.

In determining whether a seller of a home has a duty to disclose latent material defects to a buyer, the established tort law distinction between misfeasance and nonfeasance, action and inaction must carefully be analyzed. The highly individualistic philosophy of the earlier common law consistently imposed liability upon the commission of affirmative acts of harm, but shrank from converting the courts into an institution for forcing men to help one another. This distinction is deeply rooted in our case law. Liability for nonfeasance has therefore been slow to receive recognition in the evolution of tort law.

In theory, the difference between misfeasance and nonfeasance, action and inaction is quite simple and obvious; however, in practice it is not always easy to draw the line and determine whether conduct is active or passive. That is, where failure to disclose a material fact is calculated to induce a false belief, the distinction between concealment and affirmative representations is tenuous. Both proceed from the same motives and are attended with the same consequences; both are violative of the principles of fair dealing and good faith; both are calculated to produce the same result; and, in fact, both essentially have the same effect.

Still there exists in much of our case law the old tort notion that there can be no liability for nonfeasance. The courts in some jurisdictions, including Florida, hold that where the parties are dealing at arms's length and the facts lie equally open to both parties, with equal opportunity of examination, mere nondisclosure does not constitute a fraudulent concealment. See Ramel v. Chasebrook Construction Co., 135 So.2d 876 (Fla. 2d DCA 1961). The Fourth District affirmed that rule of law in Banks v. Salina, 413 So.2d 851 (Fla. 4th DCA 1982), and found that although the sellers had sold a home without disclosing the presence of a defective roof and swimming...