Regions Bank v. Maroone Chevrolet, L.L.C.

• Decision Date: 17 July 2013
• Docket Number: No. 3D10–1656.,3D10–1656.
• Parties: REGIONS BANK, etc., et al., Appellants, v. MAROONE CHEVROLET, L.L.C., Appellee.
• Court: Florida District Court of Appeals

118 So.3d 251

REGIONS BANK, etc., et al., Appellants,

v.MAROONE CHEVROLET, L.L.C., Appellee.

No. 3D10–1656.

District Court of Appeal of Florida, Third District.

July 17, 2013.

Garbett, Stiphany, Allen & Roza, Philip A. Allen, III, and David S. Garbett, Miami, for appellants.

Colson Hicks Eidson, Roberto Martinez, and Barbara A. Silverman, Coral Gables, for appellee.

Before SHEPHERD, C.J., and SUAREZ and ^*FERNANDEZ, JJ.

SUAREZ, J.

Regions Bank, formerly known as Union Planters Bank, N.A., First Source Bank, Peninsula Bank, and Ocean Banks (collectively “the banks”) appeal from a final judgment entered in favor of Maroone Chevrolet, L.L.C. We reverse in part and affirm in part.

This case arose from a business relationship between InterAmerican Car Rental, Inc. and Maroone Chevrolet for the purchase of InterAmerican's fleet of rental vehicles. The relationship existed from August 1999 until September 2002, when InterAmerican ceased operations. The parties' practice followed the norm in the industry. Maroone would receive an order for a group of vehicles from InterAmerican, and would place an order for the vehicles with the manufacturer. The manufacturer would ship the vehicles directly to InterAmerican but invoice Maroone. Maroone would in turn invoice InterAmerican for the amount due on the vehicles delivered. Additionally, Maroone would prepare applications for certificates of title on the vehicles, including any financing lien holders designated by InterAmerican. Upon InterAmerican's receipt of the vehicles, it would submit a draw request to a financing bank, which would issue a check for the purchase money loan on the subject vehicles payable solely to Maroone or payable jointly to Maroone and InterAmerican. The checks now at issue were then delivered to InterAmerican.

InterAmerican ultimately went out of business and was unable to repay money owed to Maroone. Consequently, Maroone sued InterAmerican's depository bank and financing banks for statutory and common law conversion and negligence, alleging mishandling of the financing checks.¹ Specifically, Maroone claimed Regions Bank accepted for deposit into InterAmerican's operating account, and the financing banks issued payment on, nine financing checks made payable: 1) to Maroone; or, 2) to both InterAmerican and Maroone, but were not properly endorsed by Maroone. Five checks, issued by Peninsula Bank to both payees, were included in the latter category: Check No. 7005252 for $655,130.85, Check No. 7006426 for $446,297.87, Check No. 7006452 for $439,346.21, Check No. 7006454 for $387.767.66, and Check No. 7003036078 for $406,070.85. Four checks, issued solely to Maroone, were included in the first category. The first, Check No. 620761, issued by Ocean Bank for $72,361.65, and three other checks issued by First Source Bank: Check No. 67154 for $120,802.43, Check No. 70340 for $516,064.00, and Check No. 71337 for $25,803.20.

On its negligence claim, Maroone sought $4.8 million in consequential damages for InterAmerican's outstanding receivables based on its claim that Maroone would have stopped doing business with InterAmerican sooner if the banks had timely alerted Maroone to InterAmerican's practice of forging Maroone's endorsement.

After a bench trial, the lower court entered the final judgment appealed from which denied the consequential damages claim as speculative, but found that the banks breached their duty of ordinary care in their handling of the checks which included Maroone as a payee. It also found that InterAmerican had directly paid Maroone for some of the financed vehicles, and accordingly deducted that amount from the damages awarded. The final judgment awarded Maroone: $406,070.85, representing the face amount of Peninsula Bank Check No. 3036078; $25,803.20 for the face amount of First Source Bank Check No. 71337; and $72,361.65 for the face amount of Ocean Bank Check No. 620761. Additionally, the trial court awarded Maroone prejudgment interest on each of these awards at the rate of nine percent beginning in 2002.

The banks now appeal that judgment. They contend the trial court erred in entering judgment in favor of Maroone on the single-payee checks because Maroone never proved InterAmerican was its agent for purposes of delivery. As to the remaining checks, appellants raise several errors, all of which we conclude are meritless. Lastly, appellants claim the trial court erred in the prejudgment interest award. We address the claims regarding the single-payee checks and prejudgment interest in this opinion.

The appellants do not challenge the lower court's findings of fact. Thus, because appellants' arguments rest on questions of law, our review is de novo. See Miami–Dade County v. Wilson, 44 So.3d 1266, 1270 (Fla. 3d DCA 2010).

We turn first to the argument that Maroone's statutory conversion claim fails for lack of delivery. This claim is based on section 673.4201(1)(b), Florida Statutes (1997), which provides in relevant part: “An action for conversion of an instrument may not be brought by ... [a] payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a copayee.” The banks contend Maroone did not meet the requirements for statutory conversion because it did not prove the subject checks were delivered to either Maroone or its agent. The parties' briefs concentrate on whether actual or merely constructive delivery is required to satisfy the statute.² We conclude instead that application of the statutory exclusion turns on the existence of an agency relationship between Maroone and InterAmerican. The question is whether, in receiving the single-payee checks, InterAmerican was acting as Maroone's representative.

It is well settled that an agency relationship may be express or implied from apparent authority, and the burden of proving the agency belongs to the party asserting it. See, e.g., City Nat'l Bank of Detroit v. Basic Food Indus., Inc., 520 F.2d 336, 337 (5th Cir.1975) (“[A]n agent's authority need not be conferred in express terms, but may be implied under justifying circumstances.”); Roessler v. Novak, 858 So.2d 1158, 1162 (Fla. 2d DCA 2003) (“Although some agencies are based upon an express agreement, a principal may be liable to a third party for acts of its agent which are within the agent's apparent authority.”); Robbins v. Hess, 659 So.2d 424, 427 (Fla. 1st DCA 1995) (“The party alleging the agency relationship bears the burden to prove it....”). Moreover, because “apparent authority is a form of estoppel [which arises] from ‘the authority a principal knowingly tolerates or allows an agent to assume, or which the principal by his actions or words holds the agent out as possessing,’ ” apparent agency exists only where the principal creates the appearance of authority. Jackson Hewitt, Inc. v. Kaman, 100 So.3d 19, 31 (Fla. 2d DCA 2011) (quoting Owen Indus., Inc. v. Taylor, 354 So.2d 1259, 1261 (Fla. 2d DCA 1978)). Therefore, the focus is on the conduct or words of the principal, not those of the purported agent or the understanding of the person dealing with the purported agent. However, “the third party's reliance on the purported agent's apparent authority must be reasonable.” Izquierdo v. Hialeah Hosp., Inc., 709 So.2d 187, 188 (Fla. 3d DCA 1998); see also Jackson Hewitt, 100 So.3d at 32;Roessler, 858 So.2d at 1161–62 n. 3.

Here, the allegations in Maroone's complaint and the testimony at trial incorrectly focused on the understanding of the purported agent, InterAmerican, and the entity dealing with the purported agent, the financing banks, rather than the conduct of the principal, Maroone. The complaint alleges the financing banks delivered checks payable to Maroone to InterAmerican for the benefit and use of Maroone. Representatives of the financing banks and InterAmerican generally confirmed this fact. However, Maroone asserted below that it was unaware InterAmerican was accepting financing checks on its behalf. Maroone could not have authorized InterAmerican to do something of which it was unaware. Thus, not surprisingly, the appellants presented no evidence that Maroone did anything to create an agency by placing apparent authoritywith InterAmerican. On the contrary, other than to avoid the statutory delivery exclusion, Maroone cannot claim InterAmerican as its agent because to do so would legitimize InterAmerican's actions, including the forging of Maroone's endorsements. This would be unreasonable.

Accordingly, we conclude Maroone's claims on the single-payee checks fail for lack of delivery. We, therefore, reverse that part of the final judgment awarding Maroone $25,803.20 for the face amount of First Source Bank Check No. 71337 and $72,361.65 for the face amount of Ocean Bank Check No. 620761.

Maroone presented the following evidence at trial regarding the two-payee checks:

A. Peninsula Bank.

Check No. 7005252 for $655,130.85—In August 1999, InterAmerican ordered sixty-two Hyundai cars, naming Peninsula Bank as the lien holder. In September 1999, Peninsula Bank delivered to InterAmerican a check payable to InterAmerican and Maroone for sixty-one of the sixty-two cars. InterAmerican typed Maroone's name on the back of the check and deposited it into InterAmerican's operating account with Regions Bank. In December 1999, Peninsula Bank delivered to InterAmerican another check payable to InterAmerican and Maroone in payment of the final car. This time, InterAmerican endorsed the check and delivered it to Maroone along with InterAmerican's check payable to Maroone for twenty-one of the sixty-two cars in the order. Between December 30, 1999, and April 1, 2000, InterAmerican sent three checks to Maroone in payment for the remaining cars. This order, therefore, was paid in full.

Check No. 7006426 for $446,297.87—In March 2002, InterAmerican ordered twenty-three Chevrolet cars, naming Peninsula Bank as the lien holder. Later that month,...