Lake Placid Holding Co. v. Paparone

• Decision Date: 27 February 1987
• Docket Number: No. 86-301,86-301
• Citation: 12 Fla. L. Weekly 651,508 So.2d 372
• Parties: 12 Fla. L. Weekly 651 LAKE PLACID HOLDING CO., a Florida corporation, and August Tobler, Appellants, v. Elissa Landi PAPARONE, Appellee.
• Court: Florida District Court of Appeals

Page 372

508 So.2d 372

12 Fla. L. Weekly 651

LAKE PLACID HOLDING CO., a Florida corporation, and August Tobler, Appellants, v. Elissa Landi PAPARONE, Appellee.

No. 86-301.

District Court of Appeal of Florida,

Second District.

Feb. 27, 1987.

Rehearings and Rehearings En Banc Denied May 7 and 19, 1987.

A.H. Lane of Lane, Trohn, Clarke, Bertrand & Williams, P.A., Lakeland, for appellants.

Gerald F. Richman and Bertha Claire Lee of Floyd Pearson Richman Greer Weil Zack & Brumbaugh, P.A., Miami, and William C. Hearon of Law Offices of William C. Hearon, Miami, for appellee.

FRANK, Judge.

The instant proceeding represents the fourth occasion offering us an opportunity to examine and resolve disputes involving Elissa Landi Paparone arising from transactions associated with land owned by the Lake Placid Holding Company (LPHC). Lake Placid Holding Co. v. Paparone, 414 So.2d 564 (Fla. 2d DCA 1982) [Paparone I] (directing the discharge of a lis pendens filed by Paparone), Paparone v. Lake Placid Holding Co., 438 So.2d 155 (Fla. 2d DCA 1983) [Paparone II] (reversing summary judgments entered in favor of Bankers Life & Casualty Company and Lake Placid Holding Company), and Paparone v. Bankers Life & Casualty Company, et al., 496 So.2d 865 (Fla. 2d DCA 1986) [Paparone III] (ordering summary judgment in favor of Bankers upon remand). The issues now confronting us stem from the pleaded backdrop contained in our prior opinions and the facts most recently developed in a trial. The entire factual setting may be summarized as follows:

LPHC entered into an agreement to sell certain land to Gulfstream Citrus, Inc. ¹ The agreement was subsequently assigned to Placid Lakes Corporation which intended to develop the property under the management of Magna Properties, Inc. Bankers, acting through Placid Lakes, in addition to making a cash payment of $1,157,868.00 at closing, assumed and satisfied several mortgages totalling $1,927,159.00, which had been created by LPHC, and agreed in a profits participation agreement (PPA) to develop and sell the property. Placid Lakes further agreed in the PPA to pay LPHC twenty-five percent of the pretax profits originating in the development and sale of the property encompassing some 3,300 acres.

Paparone, the former spouse of August Tobler who controlled LPHC, was the real estate broker involved with the sale of the land to Placid Lakes. Her status as the broker was formed by letters dated August 25, 1975, and September 10, 1975, executed on behalf of LPHC by Tobler. LPHC agreed to and did pay her an initial real estate commission in the amount of $20,000; it also promised to pay a sum equal to fifty percent of any monies received by LPHC under the terms of the PPA.

When it became evident after a substantial period following entry into the PPA that Placid Lakes was not going to fulfill its obligation to develop and sell the property, LPHC filed an action in April of 1979 seeking damages, specific performance, and the foreclosure of a vendor's lien. After lengthy negotiations between LPHC and the Bankers-Placid Lakes-Magna group, a settlement was reached; LPHC reacquired the property free and clear by a deed from Placid Lakes in lieu of foreclosure, and the parties bilaterally indemnified each other against future claims. Paparone intervened in the litigation on May 11, 1981, one day before the litigation was compromised, claiming entitlement from Bankers to a portion of the alleged damages. In one count of her complaint in intervention Paparone alleged that LPHC and Bankers, with full knowledge of her rights and her pending motion to intervene, wilfully and maliciously conspired to defraud and defeat her interest in the PPA by settling the litigation and in transferring the subject property through a deed granted in exchange for not foreclosing the vendor's lien.

The deed in lieu of foreclosure was executed and recorded in accordance with the agreement, and LPHC dismissed its action against Bankers. ² LPHC then filed a cross-claim against Paparone for declaratory relief. Paparone filed an answer, affirmative defenses, and a cross-claim, subsequently amended, against Bankers, Placid Lakes and Magna. All parties also filed motions for summary judgment. The trial court granted the motions filed by LPHC, Bankers, Lake Placid, and Magna finding no genuine issue of material fact. It found that Paparone's claim for a brokerage commission was limited to a particular fund, i.e., the profits to be received by LPHC under the PPA, but because the fund never materialized, she was not entitled to a commission. The trial court further held that Paparone had no right to a commission, hence there was no basis for her contention that she was defrauded by the parties. Accordingly, Paparone's motion for summary judgment was denied, and her complaint in intervention and her cross-claim were dismissed with prejudice.

Paparone appealed from the denial of her motion for summary judgment, the dismissal of her intervenor's complaint and the dismissal of her cross-claim. We affirmed the denial of her motion for summary judgment but we reversed the granting of summary judgment rendered in favor of LPHC, Bankers, Placid Lakes and Magna, the dismissal of her complaint in intervention and her cross-claim. Paparone II. We concluded in that proceeding that:

[A] material issue of fact exists as to whether or not the fund was created by the substitution of the land for the money. If that issue of fact is resolved against Paparone, and the trier of fact determines that the fund was never created, it will still be necessary to determine whether the creation of the fund was prevented by the unreasonable refusal to act, or some other wrongful action attributable to the appellees.

438 So.2d 157.

A trial was conducted following remand and the jury returned a special verdict finding that:

1. A fund was created by the substitution of the land for the money which could have been recovered by LPHC from Bankers in the lawsuit which was settled;

2. LPHC defrauded Paparone;

3. LPHC breached its fiduciary duty to Paparone;

4. Tobler breached his fiduciary duty to Paparone;

5. Paparone was entitled to compensatory damages in the amount of $300,000.00;

6. Paparone was entitled to punitive damages from LPHC in the amount of $1,312,000.00;

7. Paparone was entitled to punitive damages from August Tobler in the amount of $500,000.00.

An amended final judgment was entered, incorporating the special verdict, in which the trial court in the exercise of its declaratory judgment powers, inter alia, conferred ownership in Paparone to an undivided one-half interest as a tenant in common with LPHC in the property situated in Highlands County, such property having been found by the trial court to be free from any encumbrance except for certain leases. LPHC was also permanently enjoined from any action impairing a free, clear and unencumbered title in Paparone of her undivided one-half interest in the property. The trial court also imposed a constructive trust upon one-half of all funds or other property received by LPHC arising from its ownership or operation of the property.

LPHC and Tobler have appealed from the amended final judgment urging reversal based upon four major and thirteen subsumed issues. We have reviewed the transcript of testimony, the exhibits in their entirety which have been brought to us, and we have analyzed each of the issues framed by LPHC and Tobler; we have concluded that the only meritorious contentions focus on the fraud and breach of fiduciary duty verdicts and the resultant award of punitive damages. We reverse and vacate those aspects of the amended final judgment.

Paparone's present claims, no differently from the three prior instances when this litigation was before us, derive from "nothing other than a contract for a real estate broker's fee." Paparone I and III.

We begin our consideration of this matter again stating that we will not sustain an award of punitive damages for the breach of a contract save in the circumstance where the conduct producing the breach is itself endowed with the characteristics of an independent, actionable tort. Porter v. Wilson, Walch, Fortner, Robinson & Besse, 384 So.2d 190 (Fla. 2d DCA 1980). Indeed, even "a 'flagrant breach of contract' will not support punitive damages." G.M. Brod & Co. Inc. v. U.S. Home Corporation, 759 F.2d 1526, 1536 (11th Cir.1985). The proof which must be developed in order to warrant the award of punitive damages in the context of a breach of contract must rise to a level revealing malice, moral turpitude, wantonness "conceived in the spirit of mischief or criminal indifference to civil obligations." Genesis Publications, Inc. v. Goss, 437 So.2d 169 (Fla. 3d DCA 1983). We have examined the record in a light most favorable to Paparone to determine if competent substantial evidence supports the findings that LPHC and Tobler defrauded and breached a fiduciary duty owed to her. See Clover Interior Systems, Inc. v. General Development Corp., 357 So.2d 459, 460 (Fla. 2d DCA 1978). We are unable to distill that quality of evidence permitting a finding that the behavior of LPHC and Tobler justified the recovery of punitive damages. See Potashnick-Badgett Dredging, Inc. v. Whitfield, 269 So.2d 36, 43 (Fla. 4th DCA 1972).

In reversing the punitive damage awards, we are not unmindful of the role of the jury in determining whether fraudulent conduct and breach of a fiduciary duty warrant the imposition of such damages. See, e.g., Walsh v. Alfidi, 448 So.2d 1084 (Fla. 1st DCA 1984). The error we have found, however, does no violence to the jury's function. The question of whether the evidence described a legal basis for the recovery of punitive damages was for the trial court to determine upon the motions of Tobler and LPHC for directed verdicts prior to submission to the jury. Wackenhut Corp. v. Canty, 359 So.2d 430 (Fla.1978). In our view, more fully...