Khawly v. Reboul, 85-1662

• Decision Date: 06 May 1986
• Docket Number: No. 85-1662,85-1662
• Citation: 488 So.2d 856,11 Fla. L. Weekly 1060
• Parties: 11 Fla. L. Weekly 1060 James F. KHAWLY, Appellant/Cross-Appellee, v. Evelyne REBOUL and Jean Claude Reboul, Appellees/Cross-Appellants. Evelyne REBOUL and Jean Claude Reboul, Cross-Appellants, v. Kareen RICHARD and Michael Bodne, Cross-Appellees.
• Court: Florida District Court of Appeals

Page 856

488 So.2d 856

11 Fla. L. Weekly 1060

James F. KHAWLY, Appellant/Cross-Appellee, v. Evelyne REBOUL and Jean Claude Reboul, Appellees/Cross-Appellants.

Evelyne REBOUL and Jean Claude Reboul, Cross-Appellants, v. Kareen RICHARD and Michael Bodne, Cross-Appellees.

No. 85-1662.

District Court of Appeal of Florida Third District.

May 6, 1986.

Rehearing Denied June 13, 1986.

Weintraub & Rosen and Lee I. Weintraub and Michael A. Rosen, Miami, for appellant and cross-appellees.

Wallace, Engels & Pertnoy and Gregory A. Martin and Douglas J. Snyder, Miami, for appellees/cross-appellants.

Before HENDRY, HUBBART and DANIEL S. PEARSON, JJ.

DANIEL S. PEARSON, Judge.

Khawly, one of three defendants below, appeals from a final judgment entered upon a jury verdict awarding the Rebouls monetary damages in this breach of contract action. The Rebouls cross-appeal from a judgment entered upon a directed verdict in favor of the remaining two defendants, Bodne and Richard. Our conclusion that the statute of frauds barred the Rebouls' breach of contract claim against all of the defendants is dispositive of the appeal and cross-appeal. ¹ On the main appeal, we reverse with directions to enter judgment for Khawly; on the cross-appeal, we affirm the judgment for Bodne and Richard.

The Rebouls alleged in their complaint that in April 1982, they and the defendants orally agreed to go into the retail sportswear business, and, for that purpose, to form a corporation in which the Rebouls would own the controlling interest, that is, fifty percent (50%) plus one (1) share of the stock. The Rebouls were to be in charge of opening and managing the store and to receive a monthly salary; the defendants were investors and lenders only. Shortly after the agreement was entered into, a corporation was formed, a three-year leasehold purchased, and, in July 1982, a store opened. The Rebouls actively managed the store until January 1983 when they were ousted from their position by some of the defendants.

There was little dispute that much of what the Rebouls say occurred, did. What was disputed is what interest in the corporation the Rebouls were to receive. The defendants contended that the agreement was that the Rebouls were to receive a forty percent interest in the corporation, precisely what they did receive. ²

Section 725.01, Florida Statutes (1981), Florida's statute of frauds, provides in pertinent part:

"No action shall be brought ... upon any agreement that is not to be performed within the space of 1 year from the making thereof ..., unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by him thereunto lawfully authorized."

The Florida Supreme Court first gave life to this statute in Yates v. Ball, 132 Fla. 132, 181 So. 341 (1937). It there held that

"when no time is agreed on for the complete performance of the contract, if from the object to be accomplished by it and the surrounding circumstances, it clearly appears that the party intended that it should extend for a longer period than a year, it is within the statute of frauds, though it cannot be said that there is any impossibility preventing its performance within a year."

Id. at 139, 181 So. at 344.

Thus, to determine whether the statute of frauds bars enforcement of an oral contract on the ground that it is not to be performed within one year, we look to the intent of the parties.

Our review of the entire record convinces us that the parties intended to establish an ongoing concern, to extend well beyond a year. First, the complaint alleges that the parties "agreed to form a corporation for the purpose of entering into the business of retail sales of sportswear." Second, the parties entered into a three-year lease at the Bal Harbour Shops to house their new business. Third, the Rebouls' own counsel argued that since the defendants wrongfully ousted his clients from the business, "they have not received one penny in salary from this business. This is the business where they were working, the business where they would have continued working." Additionally, it was the Rebouls' position at trial that they were entitled to be compensated for their loss of "$4,000 a month that they would have made" had they not been ousted. These factors point ineluctably to the conclusion that the parties intended the business to continue for more than a year and that, therefore, the oral agreement to form it is unenforceable.

The decided cases support our conclusion. In Weinsier v. Soffer, 358 So.2d 61 (Fla. 3d DCA), cert. denied, 365 So.2d 714 (1978), this court reversed a judgment for the plaintiffs and directed the entry of judgment for the defendants in a case involving the breach of an oral contract to enter into a new business. The court wrote that "[t]here is nothing inherent in this agreement to share losses in a going business which would limit its operation to a period of one year. An oral agreement to enter into a new business which will continue indefinitely has been held to be within the purview of the rules set forth by the Supreme Court in Yates v. Ball." Id. at 63. Likewise, in Tobin and Tobin Insurance Agency, Inc. v. Zeskind, 315 So.2d 518 (Fla. 3d DCA 1975), the court reviewed a case in which the plaintiff sued the defendant insurance agent for failure to pay orally agreed-upon referral fees. The plaintiff, in an apparent effort to avoid the statute of frauds, contended that each referral was a separate contract. In rejecting this contention, the court found the agreement to be indivisible and concluded that it was not capable of performance within one year. And in Food Fair Stores, Inc. v. Vanguard Investments Co., 298 So.2d 515 (Fla. 3d DCA), cert. denied, 305 So.2d 209 (Fla.1974), we reversed a finding that the oral agreement at issue was fully performed in one year and held that where "the essence of the oral agreement was that any future stores at any future time would be operated jointly and that all would have a right of 'first refusal' to an assigned interest in each store," the contract was not to be performed within one...