Kovach v. McLellan
| Decision Date | 26 July 1990 |
| Docket Number | No. 89-131,89-131 |
| Parties | 15 Fla. L. Weekly D1929 Yvonne R. KOVACH, Appellant, v. William C. McLELLAN, et al., Appellees. |
| Court | Florida District Court of Appeals |
Richard A. Manzo and Roy A. Praver of Manzo & Praver, P.A., Titusville, for appellant.
Stanley R. Andrews, Titusville, for appellees.
Yvonne R. Kovach appeals the summary final judgment of foreclosure in favor of appellees, William and Nancy McLellan, and the dismissal with prejudice of her amended counterclaim. We vacate the summary final judgment and reverse the dismissal with prejudice of the counterclaim.
The McLellans alleged non-payment of installments and failure to insure the security as grounds for their action to foreclose a mortgage granted by Kovach. Kovach generally denied the allegations and affirmatively alleged waiver, estoppel, fraud, and failure of consideration. In her counterclaim, Kovach sought damages for fraud and to set aside the mortgage on the grounds of fraud, misrepresentation, and want or failure of consideration. Kovach alleged that she purchased a single-family residence from the McLellans' daughter and son-in-law, the Aldermans; that at the time of purchase she delivered a note and mortgage on the property in favor of the McLellans; that the McLellans had participated in improper construction of improvements on the property; that two years and three months prior to this purchase the McLellans sold the residence to the Aldermans and accepted a purchase money mortgage that was replaced by Kovach's mortgage; and that, sometime after the purchase, Kovach discovered latent defects that rendered the property uninhabitable.
The McLellans' motion to dismiss Kovach's first counterclaim was heard on November 3, 1988. The trial court dismissed the counterclaim, allowing Kovach until November 14, 1988, to file an amendment. The order was filed on November 22, 1988, and dated by handwritten entry that is difficult to decipher but appears to be "the 18th day of March, 1988," although, logically, it was probably dated November 18, 1988. Kovach then served an amended counterclaim and third party claim on November 30, 1988. The McLellans countered with a motion to dismiss, alleging that the amended counterclaim was tardy, failed to state a cause of action, and merely repeated the allegations contained in the first counterclaim. A hearing on this motion on December 14, 1988, resulted in an order dismissing the amended counterclaim with prejudice. This time, the order was signed and filed on December 14. The order does not state any grounds for the dismissal with prejudice. 1 The absence of stated grounds for the dismissal with prejudice is especially critical in this case because of the confusion of dates. It appears that the first order allowing amendment was not signed or filed until after the time it allowed for filing the amended counterclaim. 2 Additionally, dismissal with prejudice is contrary to the rule of liberality in the amending of pleadings so as to reach the merits of the case. Fla.R.Civ.P. 1.190; and see, e.g., Downtown Investments, Ltd. v. Segall, 551 So.2d 561 (Fla. 3d DCA 1989); Dingess v. Fla. Aircraft Sales & Leasing, Inc., 442 So.2d 431 (Fla. 5th DCA 1983). Unless it appears that the privilege to amend has been abused or that the complaint is clearly untenable, it is an abuse of discretion to dismiss a complaint with prejudice. See generally Hamide v. State Dep't of Corrections, 548 So.2d 877 (Fla. 1st DCA 1989); Countryside Christian Center, Inc. v. City of Clearwater, 542 So.2d 1037 (Fla. 2d DCA 1989); Crews v. Ellis, 531 So.2d 1372 (Fla. 1st DCA 1988); Delia & Wilson, Inc. v. Wilson, 448 So.2d 621 (Fla. 4th DCA 1984). This rule continues even where an opportunity to amend was previously granted. See, e.g., Crews, supra; Gerentine v. Coastal Security Systems, 529 So.2d 1191 (Fla. 5th DCA 1988). Therefore, where a party may be able to allege additional facts, as in Crews, or where the ultimate facts alleged may support relief based upon another theory, such as in Roger Rankin Enterprises v. Green, 433 So.2d 1248 (Fla. 3d DCA 1983), dismissal with prejudice is an abuse of discretion. Since we are unable to determine the grounds for the dismissal with prejudice and since we cannot determine with certainty that Kovach is unable to allege further facts or an alternative theory, we must set aside the order dismissing with prejudice Kovach's amended counterclaim.
While the motion for summary judgment of foreclosure is not affected by the confusion of dates and while all procedural rules were followed, the counterclaim included a count to set aside the mortgage, and that counterclaim was improperly dismissed with prejudice. Therefore, the judgment must be vacated until resolution of the counterclaim. Because of the unique nature of the position of the McLellans as lender and former owner, we feel obliged to guide the trial court in its subsequent proceedings.
Kovach opposed the motion for summary judgment through her affirmative defenses, alleging without detail waiver, estoppel, fraud, and failure of consideration. She attempted to support those defenses through factual contentions set forth in an affidavit in opposition to the McLellans' motion for summary judgment. The affidavit indicated that the McLellans took an active role in the sale of the property; that they agreed to allow Kovach to assume a mortgage held by them on the property; 3 that the Aldermans were their daughter and son-in-law; that they knew Kovach would use the property as her residence; that when they previously owned the property they performed numerous repairs and construction on the property in a negligent and unworkmanlike manner without compliance with applicable building codes; that the repairs and defects were of a nature which could not have been reasonably discovered by Kovach; and that the McLellans failed to disclose numerous defects. Attached to the affidavit were copies of a September 8, 1988, notice from Brevard County to vacate the premises until the septic system was connected, and a typed letter from an individual. This individual, alleged in Kovach's affidavit to be a licensed contractor, indicated that, in his casual inspection of the premises, he had found many structural irregularities and code violations and that he was certain normal inspections such as plumbing, electrical, roofing, termite, and heating had not been done. The identity of the person who would have made these inspections and when they should have been performed are not disclosed. Also conspicuously absent from the affidavit is a detailed description of any particular latent defect, except for the septic system which, upon correction, would have eliminated the Brevard County vacate order, or any statement that the McLellans repaired or participated in the construction of the septic system requiring correction or were aware of a problem connected with it. Both of the attachments to Kovach's affidavit indicate they were obtained after the foreclosure was initiated and one year and eight months after Kovach granted the mortgage.
The McLellans' liability for nondisclosure of defects as individual lender and former owner of the property presents an issue that we have been unable to locate in previous appellate decisions. Kovach and the McLellans are in privity as lender and borrower, but they are not in privity in their respective capacities as buyer and remote seller. Because of the absence of privity between them as buyer and seller, the rule of law pronounced in Johnson v. Davis, 480 So.2d 625 (Fla.1985), does not apply. In Johnson, our supreme court held that, when the seller of a used home knows of defects materially affecting the value of property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. Johnson may have application to Kovach and the Aldermans as current buyer and seller who are in privity with each other, but not to Kovach and the McLellans as current purchaser/former seller. Johnson did not involve lender liability for failure to disclose, and we are unwilling to expand the rule established in that case in the absence of any affirmative representations of any fiduciary, special, or longstanding relationship between Kovach and the McLellans as lenders.
Also absent from Kovach's answer and affidavit is any allegation that she relied upon an affirmative representation or expertise of the McLellans to her detriment. S.H. Investment & Development v. Kincaid, 495 So.2d 768 (Fla. 5th DCA 1986), rev. denied, 504 So.2d 767 (Fla.1987), is cited by Kovach to establish the essential elements for an action based upon fraud. The first element, which requires a false statement concerning a material fact, is absent in the instant case. Ramel v. Chasebrook Construction, 135 So.2d 876 (Fla. 2d DCA 1961), is cited for the rule that nondisclosure of a material fact may be deemed fraudulent where the other party does not have equal opportunity to become apprised of the fact. However, that case involved a construction company's failure to advise its buyer that the home built by the company for its customer was erected without pilings on muck when affirmative representations were made that the house was well constructed.
Kovach's affidavit opposing the motion for summary judgment shows at most that the McLellans' participation in the Aldermans' sale to Kovach was that the McLellans "agreed to allow [Kovach] to assume [the] mortgage." This allegation and the other sketchy recitations in the affidavit are not enough to support her affirmative defenses. To hold a lender responsible for damages such as these, there must be allegations of ultimate facts that would indicate active participation in the sale of the residence or the existence of a special relationship between the lender and the borrower. We are cognizant of the special...
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...vendor's duty to disclose on the prior vendor's involvement, in some other capacity, with a subsequent sale. See, e.g., Kovach v. McLellan (Fla.App.1990), 564 So.2d 274 (prior vendor served as mortgagee in subsequent resale); Schnell v. Gustafson (Colo.App.1981), 638 P.2d 850 (prior vendor ......