McKinney-Green, Inc. v. Davis

• Decision Date: 02 September 1992
• Docket Number: INC,KINNEY-GREE,No. 91-2008,91-2008
• Citation: 606 So.2d 393
• Parties: 17 Fla. L. Week. D2055 Mc, Appellant, v. Calvin C. DAVIS, Appellee.
• Court: Florida District Court of Appeals

Page 393

606 So.2d 393

17 Fla. L. Week. D2055

McKINNEY-GREEN, INC., Appellant, v. Calvin C. DAVIS, Appellee.

No. 91-2008.

District Court of Appeal of Florida,

First

District.

Sept. 2, 1992.

Robert M. Ervin and Robert M. Ervin, Jr., of Ervin, Varn, Jacobs, Odom & Ervin, Tallahassee, for appellant.

Kenneth S. Davis, Gainesville, for appellee.

SHIVERS, Judge.

McKinney-Green, Inc. ("M-G"), appealed from a final judgment in favor of Calvin C. Davis ("Davis"), the plaintiff below in an action for breach of contract and tortious interference with an advantageous business relationship. Following a non-jury trial, the trial court awarded Davis $10,000 in compensatory damages. At several stages of the proceedings below, M-G moved to terminate the litigation, alleging 1) Davis' lack of standing, 2) Davis' failure to join indispensable parties, 3) Davis' failure to allege all the elements of tortious interference, and 4) the statute of frauds. The sufficiency of the allegations in the fourth amended complaint was disputed at trial, and appellant alleges error in the trial court's denial of the motion to dismiss that complaint, as well as M-G's motions for dismissal, following the case-in-chief, and for rehearing. We reverse, holding that the trial court erred, as a matter of law, in denying M-G's motion to dismiss the fourth amended complaint as to both counts.

MOTION TO DISMISS

In reviewing the trial court's order denying appellant's motion to dismiss, we must determine whether the allegations, from the four corners of the complaint, sufficiently state one or more claims for relief. Green v. Florida East Coast Railway Co., 141 So.2d 326, 327 (Fla. 1st DCA 1962); Padovano, Fla.App.Prac. Sec. 5.4B (1992 pocket part). We are obliged to accept all well-pled allegations of the complaint as true. Rishel v. Eastern Airlines, Inc., 466 So.2d 1136, 1138 (Fla. 3d DCA 1985). With that in mind, we summarize the facts as alleged.

Davis and his brother, G.M. Davis, Jr. ("G.M."), who is now deceased, orally agreed to develop the Oaks of Kanapaha subdivision in Alachua County, Florida. Davis and his brother each owned 50 per cent of the stock of Oaks of Kanapaha, Inc., the corporation that in 1984 owned the land parcel from which lots were divided and sold and on which homes were to be built. Appellant M-G was engaged in the business of originating loans and acting as a mortgage broker. A. Frank Green, the president and chief executive officer of M-G, was a licensed mortgage broker at all times pertinent. In February 1984, M-G, acting through Green, orally agreed with Davis and his brother to make a construction loan in March 1984 to Oaks of Kanapaha, Inc., to build houses on six subdivision lots during 1984. Under the agreement, M-G authorized Davis and Oaks of Kanapaha, Inc., to commence construction prior to the date of closing on the construction loan. Davis alleged the terms of the loan were memorialized on various documents prepared by counsel for M-G, including an unsigned proposed mortgage dated March 21, 1984, and filed in evidence as Plaintiff's Exhibit # 5. Immediately prior to closing on the construction loan, Green demanded that Davis arrange to transfer to M-G a vacant building located in another subdivision, owned by Tower Village, Inc., to satisfy a debt owed to M-G by another principal in Tower Village, Inc. Davis was the secretary and a 50 per cent stockholder in Tower Village, Inc.

BREACH OF CONTRACT (COUNT ONE)

Count One of the fourth amended complaint is an action for breach of contract. The allegations pertinent thereto are as follows: 1) The breached oral agreement was the one including M-G, acting through Green as its corporate officer and mortgage broker; Davis, and his brother, whereunder M-G was to make the construction loan to Oaks of Kanapaha, Inc. 2) Davis and Oaks of Kanapaha, Inc., did all that was required of them under the agreement for M-G to make the construction loan. 3) M-G delivered to Davis a set of documents for the closing, showing Oaks of Kanapaha, Inc., as the mortgagor, to which Davis agreed in all material respects. 4) Just prior to closing the loan package, Green and M-G breached the agreement, and refused to make the construction loan to Oaks of Kanapaha, Inc., but offered instead to make the loan to G.M. Davis, Inc., in which Davis had no interest and his brother was sole stockholder. 5) Davis was a beneficiary of the agreement to make the loan and was damaged by M-G and Green's breach of that agreement. Count One was dismissed against Green but not against M-G.

M-G moved to dismiss Count One on two grounds: 1) that the fourth amended complaint was substantially identical to the third, which had been dismissed without further explanation; and 2) "the plaintiff [Davis] either has failed to incorporate in the fourth amended complaint and allege with precision the terms of the alleged contract or, if he has done so, he is not a party to the contract alleged."

Davis asserted the newer complaint was rearranged, with substantial changes in text. The renumbered tenth paragraph of the fourth amended complaint was revised so that it alleged the name of the officer, Green, through whom M-G acted in making the oral agreement with Davis and his brother; and it added the year 1984, in which the houses were to be built. It alleged the terms of the construction loan were memorialized on "various documents" not otherwise described, other than an attached unexecuted "proposed mortgage."

M-G correctly argued that naming Green as the person through whom M-G acted was mere surplusage because it is axiomatic that corporations can act only through natural persons. Alleging the year apparently was intended to avoid the statute of frauds. The allegation that the terms of the construction loan agreement were memorialized on "various documents," without more, did not aid in the precise allegation of the terms of the contract. See Roy L. Willard, Inc. v. Miller, 150 Fla. 458, 8 So.2d 489, 492 (1942) (on reh'g) (plaintiff must allege elements of contract with precision so that person against whom redress is sought may properly defend). If the attached unexecuted "proposed mortgage" and "mortgage note" memorialized the agreement, then Davis is not a party. Nowhere in the attached documents is Davis mentioned as a party, and in fact, the mortgage and mortgage note expressly state the agreement is between Oaks of Kanapaha, Inc., as mortgagor, and M-G, as mortgagee. Davis' name, misspelled "Kelvin C. Davis," appears below the signature line, but only as the corporate president, not as a party individually. Paragraph 14 of the fourth amended complaint acknowledges that the proposed mortgage shows Oaks of Kanapaha, Inc., as mortgagor. Although as a corporation, Oaks of Kanapaha, Inc., could act only through its officer in negotiating a proposed mortgage, Davis' status as the president of the corporation did not make him a party individually. Thus, the proposed mortgage is not a specific or precise allegation of the terms of the oral agreement among Davis, his brother, and M-G. Miller, 8 So.2d at 492.

Neither have the other "various documents" alleged in Paragraph 10 of the complaint been identified and alleged in precise terms. We find merit in appellant's argument before the trial court that the revisions in the fourth amended complaint are not material and do not state a cause of action. The allegations of Count One either failed to meet the Miller requirements for preciseness and sufficiency, or otherwise showed, through the attached "proposed mortgage" and mortgage note, an agreement in which M-G and Oaks of Kanapaha, Inc., but not Davis individually, were parties. See White v. Exchange Corp., 167 So.2d 324, 326 (Fla. 3d DCA 1964) (person not a party to, or in privity with, a contract lacks the right to sue for its breach).

Davis alleged alternatively that he was a beneficiary of the agreement. However, he did not allege facts showing him to be an intended beneficiary of the proposed loan from M-G to Oaks of Kanapaha, Inc. In defending the substantially identical Count One of the third amended complaint, Davis had asserted he was a shareholder of Oaks of Kanapaha, Inc., and a proposed guarantor of the construction loan. However, Davis failed to show how being a guarantor constitutes a benefit, under these facts. Although Davis' being a 50 per cent stockholder in Oaks of Kanapaha, Inc., may make him an incidental or consequential third-party beneficiary, we held in Legare v. Music & Worth Constr. Co., Inc., 486 So.2d 1359 (Fla. 1st DCA 1986), that the right of a third-party beneficiary of a contract to sue for its enforcement is limited to those situations "where the contract provisions clearly establish the parties' intent to create a right primarily and directly benefiting the third party." Id. at 1362. The complaint and the attached proposed mortgage do not evince such a clear intent to benefit Davis primarily and directly as a third party. A merely incidental or consequential third-party beneficiary of a contract may not sue for its enforcement. American Surety Co. of New York v. Smith, 100 Fla. 1012, 130 So. 440 (1930); Genet Co. v. Anheuser-Busch, Inc., 498 So.2d 683, 685 (Fla. 3d DCA 1986); Security Mut. Cas. Co. v. Pacura, 402 So.2d 1266, 1267 (Fla. 3d DCA 1981); Muravchick v. United Bonding Ins. Co., 242 So.2d 179, 180 (Fla. 3d DCA 1970).

If this were deemed an action to redress injuries to Oaks of Kanapaha, Inc., resulting from appellant's breach of the agreement to make a construction loan to the corporation, Davis would be subject to the general rule that such an action cannot be maintained by a stockholder in his own name or the corporation's name, but must be brought by the corporation. See James Talcott, Inc. v. McDowell, 148 So.2d 36 (Fla. 3d DCA 1962). Although "under certain circumstances a stockholder may bring a stockholder's derivative action which is an action in which a...