Merlite Land, Inc. v. Palm Beach Invest. Prop.

• Decision Date: 19 March 1970
• Docket Number: No. 28565 Summary Calendar.,28565 Summary Calendar.
• Citation: 426 F.2d 495
• Parties: MERLITE LAND, SEA & SKY, INC., Plaintiff-Appellant, v. PALM BEACH INVESTMENT PROPERTIES, INC., etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

426 F.2d 495 (1970)

MERLITE LAND, SEA & SKY, INC., Plaintiff-Appellant, v. PALM BEACH INVESTMENT PROPERTIES, INC., etc., et al., Defendants-Appellees.

No. 28565 Summary Calendar.

United States Court of Appeals, Fifth Circuit.

March 19, 1970.

Marvin I. Wiener, Miami, Fla., Judith A. Brechner, Miami Beach, Fla., for plaintiff-appellant.

Herbert C. Zemel, Michael S. Goldberg, of Zemel, Kaufman & Zemel, Miami Beach, Fla., for defendants-appellees.

Before JOHN R. BROWN, Chief Judge, and MORGAN and CLARK, Circuit Judges.

JOHN R. BROWN, Chief Judge.

In this Florida diversity case we must again send a case back for the normal process of development of the facts and the determination of the real merits of the case.¹ "This is but a different prelude to the common refrain and the high mortality rate to a dismissal under F.R.Civ.P. 12(b) for failure to state a claim". Pred v. Board of Public Instruction of Dade County, Florida, 5 Cir., 1969, 415 F.2d 851, 852, n. 1. See also Barber v. M/V "Blue Cat", 5 Cir., 1967, 372 F.2d 626, n. 1, 1967 A.M.C. 1926; Millet v. Godchaux Sugars, Inc., 5 Cir., 1957, 241 F.2d 264, n. 1.

Palm Beach Investment Properties, Inc., defendant-appellee, is a real estate promoter that markets its properties by bringing prospective customers to Florida through "free vacation certificates". When the customer arrives for his "free vacation" the defendant then engages him in a strong sales campaign involving tours of the real estate. Apparently, Palm Beach now operates only in Florida, but at the time this dispute arose it operated the same type of promotion in the Las Vagas, Nevada area.

Merlite, plaintiff-appellant, acting pursuant to a written agreement between it and Palm Beach, was in charge of the promotion of the "free vacation certificates". The certificates were distributed by Merlite through merchants who used them as promotional devices. Merlite was responsible for printing of certificates, advertising and promotion of the program, and initial contacts with the prospective customers. In return it was allowed to sell the certificates to the merchants and it received a $25 commission for each sale made to a certificate holder by Palm Beach.

The dispute arose when Palm Beach notified Merlite that it would no longer honor any of the certificates that had been distributed granting "free vacations" in the Las Vagas area. It is alleged by Merlite that this action was a violation of the written agreement between² these parties and that it sustained substantial damages including the loss of potential profits and the incursion of expenses for printing, distributing and advertising the certificates for the Las Vagas holiday. Merlite also presents its claim for relief on a tort theory claiming that the cancellation resulted in damage to its business reputation and relationships between it and the merchants it dealt with and ultimately potential certificate holders.

It is the position of Palm Beach, apparently adopted by the District Court, that the complaint failed to state grounds upon which relief could be granted because the alleged contract between Merlite and Palm Beach failed to specify the number of certificates Merlite was to print and distribute. The agreement only provided that Merlite should create, print and pay for the certificates "in such quantities as needed". It is Palm Beach's position that this lack of specificity in the agreement made it illusory and unenforceable. As to the tort claim it argues there was no allegation of an interference with a contractual relationship and only such an interference could be a basis for recovery. In addition, Palm Beach contends that a disclaimer of liability on the back of the certificates prevents any recovery by Merlite.³

Although it is basic contract law that there must be mutuality of obligations, it is just as basic that this mutuality may be supplied by reference to supplying the "needs" of the promisor. Edison Electric Illuminating Co. v. Thacher, 1921, 229 N.Y. 172, 128 N.E. 124; Jenkins v. City Ice and Fuel Co., 1935, 118 Fla. 795, 160 So. 215; A. Corbin, 1A Corbin On Contracts § 156 (1963). This is particularly true when the metes and bounds of an inherently indefinite word like "needs" can be supplied by the prior dealings between the parties to the contract. See Corbin, supra. And here this Rule 12(b) dismissal must be reversed since the complaint not only attached the agreement but also under a Conley v. Gibson⁴ reading of the pleadings⁵ it alleged a prior course of dealing.

Moreover, the complaint states a claim for which some relief can be granted even if it were determined that there was a lack of mutuality of obligation. It is well established that damages may be granted to a party who has performed his portion of such an agreement. See Florida-Georgia Chemical Co. v. National Laboratories, Inc., Fla.App., 1963, 153 So.2d 752. It is clear here that Merlite has alleged that it supplied all certificates required under the agreement until the defendant gave notice that it would no longer honor the certificates.

Finally, Merlite's allegation of a tort claim is also one as to which it cannot be said at this stage that relief could not be granted under a Conley v. Gibson, supra, reading of the pleadings. Palm Beach contends that no such claim is stated because the complaint speaks in terms of interference with the contract relationship between Merlite and the certificate holders. Palm Beach also argues that there is no such contract relationship. Such a restrictive reading of the factual...