Martha A. Gottfried, Inc. v. Amster

• Decision Date: 13 May 1987
• Docket Number: Nos. 85-1785,85-2469 and 85-2470,s. 85-1785
• Citation: 12 Fla. L. Weekly 1265,511 So.2d 595
• Parties: 12 Fla. L. Weekly 1265 MARTHA A. GOTTFRIED, INC., and Dorothy Grove, Appellants/Cross Appellees, v. Daniel AMSTER and Lucille Amster, his wife, Appellees/Cross Appellants, and Saul Goldstein and Dorothy Goldstein, his wife, De Fina Realty and Elsie Rose, Appellees. MARTHA A. GOTTFRIED, INC., and Dorothy Grove, Appellants, v. Daniel AMSTER and Lucille J. Amster, his wife, et al., Appellees. Daniel AMSTER and Lucille J. Amster, his wife, Appellants, v. MARTHA A. GOTTFRIED, INC., et al., Appellees.
• Court: Florida District Court of Appeals

Page 595

511 So.2d 595

12 Fla. L. Weekly 1265

MARTHA A. GOTTFRIED, INC., and Dorothy Grove, Appellants/Cross Appellees, v. Daniel AMSTER and Lucille Amster, his wife, Appellees/Cross Appellants and Saul Goldstein and Dorothy Goldstein, his wife, De Fina Realty and Elsie Rose, Appellees.

MARTHA A. GOTTFRIED, INC., and Dorothy Grove, Appellants, v. Daniel AMSTER and Lucille J. Amster, his wife, et al., Appellees.

Daniel AMSTER and Lucille J. Amster, his wife, Appellants, v. MARTHA A. GOTTFRIED, INC., et al., Appellees.

Nos. 85-1785, 85-2469 and 85-2470.

District Court of Appeal of Florida Fourth District.

May 13, 1987.

Rehearing Denied Sept. 17, 1987.

D. Culver Smith III of Steel Hector Davis Burns & Middleton, West Palm Beach, for Gottfried and Grove.

Freeman W. Barner, Jr. of Freeman W. Barner, Jr., P.A., and Cromwell & Remsen, Riviera Beach, for Amsters.

Louis L. Hamby III of Alley, Maass, Rogers, Lindsay & Chauncey, Palm Beach, for appellees-Goldsteins.

STONE, Judge.

This is an appeal from a final judgment awarding damages to the Amsters, the buyers of a condominium unit, against Grove, a licensed real estate salesperson, and Martha Gottfried, Inc., Grove's broker (hereafter "brokers"). The judgment denied both the buyers and the brokers any relief as to their claims against the Goldsteins, the sellers of the unit.

The Goldsteins had a contract to purchase an apartment from the developer, who is not involved in this action. They authorized Rose, a real estate agent, who is not a party to this appeal, to offer their unit for sale upon the condition that they would be able to acquire a desired substitute unit in the building. Rose understood that the sellers were willing to sell only on the condition that they were able to acquire the other unit.

Agent Grove worked with Agent Rose in the developer's condominium sales department, and both were authorized to handle resales. According to the Amsters, Grove met with them and led them to believe that the Goldsteins' apartment was available for a specified sum. The Amsters contend that Grove represented that she was the sellers' exclusive agent, holding exclusive authority to sell the unit, to enter into an agreement for the assignment of the sales contract, and to execute all necessary documents. Grove did not identify the owners nor were the buyers advised of the condition placed on the offer.

The buyers gave Grove a check, and received a handwritten receipt designating it as an earnest money deposit for that unit for the specified purchase price. The buyers were also furnished with the developer's standard form for a deposit receipt contract, but none of the blank spaces were completed. No additional contract was signed. The buyers made several trips to Florida in anticipation of the closing.

Complications developed when the sellers insisted that the sale had to be a three-way transaction involving the alternate unit. The buyers objected to this added factor. The transaction with respect to the additional unit fell through, and the sellers went on to close on their contract to purchase the unit in question, refusing to sell it.

Consequently, the buyers sued the sellers for specific performance and breach of contract. They also sued the brokers, Martha A. Gottfried, Inc., and Grove, based on the theories of implied warranty of authority and of tortious misrepresentation. The sellers brought a third party action against the brokers for indemnity, and the latter responded by impleading Rose and the real estate company she was associated with, DeFina Realty.

At the conclusion of the plaintiffs' case, the trial court granted the sellers' motion to dismiss the buyers' claims against them. The court also granted the motion of Rose and DeFina to dismiss the claims against them by the brokers. The court entered a judgment against the brokers which awarded damages to the buyers in the sum of $37,294.07, plus a return of their deposit. Although the trial court denied the buyers' motion for attorney's fees against the brokers, the brokers were ordered to compensate the sellers for their attorney's fees based on a theory of indemnity.

I.

The brokers assert that there is an inherent contradiction in the trial court finding them liable to the buyers, and yet dismissing the sellers. There is substantial competent evidence in support of the determination by the trier of fact that Grove had impliedly warrantied that she had the authority to sell the property on behalf of the sellers, when in fact she had no authority to make such representations. There was also evidence from which the trial court could conclude that Grove had made false representations to the buyers upon which they relied to their detriment. These theories are independent of any claims against the sellers.

A cause of action for breach of warranty may be alleged against an agent who purports to make a contract on behalf of a principal, and represents that he has the power to do so. In McKnight v. Hialeah Race Course, Inc., 242 So.2d 478 (Fla. 3d DCA 1970), the court quoted the provision set forth in Restatement (Second) of Agency § 329 that such a representation by an agent becomes a warranty:

"A person who purports to make a contract, conveyance or representation on behalf of another who has full capacity but whom he has no power to bind, thereby becomes subject to liability to the other party thereto upon an implied warranty of authority, unless he has manifested that he does not make such warranty or the other party knows that the agent is not so authorized."

McKnight at 480.

This action for breach of warranty of implied authority was first adopted by the Florida Supreme Court in Tedder v. Riggin, 65 Fla. 153, 61 So. 244 (1913). The supreme court said:

An agent, purporting to act for and bind a principal whom he has no authority to represent, is liable for breach of implied warranty or in tort to the extent of any damages resulting to the other party from such misrepresentation of authority. Groeltz v. Armstrong, 125 Iowa, 39, 99 N.W. 128.

Tedder 61 So. at 245.

Since the brokers' liability in this case is based on a breach of warranty of implied authority, the brokers' liability is unrelated to that of the sellers. Therefore, there is no inconsistency in the court dismissing the sellers, and entering a judgment against Grove and Gottfried in favor of the buyers.

II.

The brokers next object that their conduct should not render them liable for the sellers' costs and attorney's fees. In Baxter's Asphalt & Concrete, Inc. v. Liberty County, 406 So.2d 461 (Fla. 1st DCA 1981), quashed on other grounds, 421 So.2d 505 (Fla.1982), it was recognized that a party is entitled to recover attorney's fees where the wrongful act of the defendant has involved him in litigation with others. This is an exception to the rule that attorney's fees are not recoverable in the absence of a statute, contract, or rule authorizing such an award. The court declared:

Where the wrongful act of the defendant has involved the claimant in litigation with others, and has placed the claimant in such relation with others as makes it necessary to incur expenses to protect its interests, such costs and expenses, including reasonable attorney's fees upon appropriate proof, may be recovered as an element of damages. Port Everglades Authority v. R.S.C. Industries, Inc., 351 So.2d 1148 (Fla. 4th DCA 1976); Canadian Univ. Ins. Co. v. Employer's Surplus Lines Insurance Co., 325 So.2d 29 (Fla. 3d DCA 1976); Milohnich v. First National Bank of Miami Springs, 224 So.2d 759 (Fla. 3d DCA 1969).

Baxter's Asphalt at 467 (footnote omitted).

We therefore affirm the judgment of the trial court indemnifying the Goldsteins for their costs and reasonable attorney's fees against Gottfried and Grove.

III.

The brokers assert that the court erred in considering the buyers' claim of loss of bargain damages in the sum of $18,000, plus interest.

The buyers may not recover benefit of bargain damages on the breach of warranty claim. In Tedder v. Riggin, the supreme court held that the measure of damages in an action for breach of a warranty of authority is the actual loss incurred as a result of the breach. Loss of bargain is thus not recoverable under this theory, as the agent is not being sued on the contract itself, but rather for the losses actually sustained as a natural and proximate result of the breach of implied warranty.

In such cases the rule of compensation seeks to put the party misled back into the condition in which he was before he acted on the asserted authority of the defendant to make a contract for another. Where a misrepresentation has been relied on by the plaintiff to his detriment, the measure of recovery is not the difference between the plaintiff's pecuniary condition if the representation had been true and his condition under the actual facts, but rather the difference between what the plaintiff had before he acted on the representation and what he had afterward. This represents his actual loss.... In this action the plaintiff cannot recover for profits which he might have made if the one for whom the defendant assumed to act had performed the agreement which the defendant made without authority; the defendant not being liable on the unauthorized agreement.

Tedder v. Riggin 61 So. at 245.

The buyers also claim that they are entitled to recover the benefit of their bargain as damages on their allegation of fraud. The general rule is that ordinarily a party may not recover contractual damages, such as lost profits or benefit of bargain, in a tort action. See Sprayberry v. Sheffield Auto and Truck Service, Inc., 422 So.2d 1073 (Fla. 1st DCA 1982), rev. denied, 427 So.2d 738 (Fla.1983); Greater Coral Springs Realty, Inc. v. Century 21 Real Estate of Southern Florida, Inc., 412 So.2d 940 (Fla. 3d DCA 1982).

Nevertheless, benefit of bargain damages are recoverable in appropriate cases. See Schryburt v. Olesen, 475...