Reimsnyder v. Southtrust Bank, NA, 4D01-4922.
Decision Date | 11 June 2003 |
Docket Number | No. 4D01-4922.,4D01-4922. |
Citation | 846 So.2d 1264 |
Parties | Eric REIMSNYDER, Appellant, v. SOUTHTRUST BANK, N.A. and Carroll Richardson, Appellees. |
Court | Florida District Court of Appeals |
David P. Ackerman and Scott J. Link of Ackerman, Link & Sartory, P.A., West Palm Beach, for appellant.
John R. Eubanks, Jr. of Moyle, Flanigan, Katz, Raymond & Sheehan, P.A., West Palm Beach, for appellee Southtrust Bank, N.A.
Steven A. Mayans of FitzGerald, Hawkins, Mayans & Cook, P.A., West Palm Beach, for appellee Carroll Richardson.
The issue in this case involves the liability of a bank to a third party for providing a reference as to one of its account customers. The bank officer told the third party that its customer was a reputable company, which the third party contends was a misrepresentation. The third party invested in the company, and six months later the company was ultimately investigated for fraud by the Securities and Exchange Commission. The trial court granted summary judgment in favor of the bank. We affirm, holding that the bank had no duty of care to the third party in accordance with the Restatement (Second) of Torts, section 552.
A representative of International Capital Management, Inc. ("ICM"), solicited appellant, Eric Reimsnyder ("Reimsnyder"), a sophisticated stock investor, to invest in the company which traded in foreign currency. ICM provided Reimsnyder with a list of references, one of whom was Carroll Richardson ("Richardson"), branch manager of Southtrust Bank in Palm Beach where ICM had its accounts. Reimsnyder was not a customer of Southtrust. When Reimsnyder called Richardson regarding ICM, he spoke to her for about five to seven minutes. She told him the company was an account holder with very large deposits. When Reimsnyder asked her about the company, which he knew had only been in existence for about six months, Richardson said it was a safe, secure, and reputable company. Reimsnyder told her he was considering investing about $250,000 in ICM. She asked about his other investments, and he told her he invested in stocks. Richardson said that investing in ICM would be good because he would not be putting all of his "eggs in one basket." Reimsnyder testified that this was "friendly" advice and that he was not relying upon Richardson to provide investment advice.
According to Reimsnyder, because Richardson "legitimatized" ICM for him after his own review of the documents given to him by ICM, he decided to invest in the company in April of 1998. In September of 1998, the Securities and Exchange Commission filed a complaint against ICM for securities fraud. It froze all of ICM's assets and ICM consented to the appointment of a receiver. Reimsnyder only received about 19% of his investment back. Any further distribution is unlikely.
Reimsnyder sued Southtrust and Richardson for fraud, negligent misrepresentation, and breach of fiduciary duty. Southtrust and Richardson each moved for summary judgement as to all counts. They both claimed that Richardson did not owe a duty of care to Reimsnyder and that Richardson's statements were either true or only opinions, not facts, and could not form the basis of a misrepresentation claim. In support of her summary judgment motion, Richardson filed an affidavit attesting that ICM was the largest depositor at her branch, with an average daily balance of $295,660.84 and total deposits of $19 million over the nine months it maintained an account with Southtrust and its predecessor. Reimsnyder's deposition also was submitted in which he testified that Richardson told him ICM was reputable and had very large deposits. He admitted that he did not inquire as to what Richardson meant by "very large." He also testified that he believed she was acting in good faith and did not know of any fraud on behalf of ICM when she spoke to him.
In opposition to the motions for summary judgment, Reimsnyder argued Richardson had a duty under the Restatement (Second) of Torts, section 552, to provide him with information non-negligently. Reimsnyder also submitted the affidavit of a banker, who also was a former deputy banking commissioner for the State of Florida. He attested that had Richardson reviewed ICM's account activity and seen that all the monies deposited were withdrawn immediately, it should have raised suspicions about the company. He opined that Richardson violated Southtrust's policy to "know its customers" by understanding their banking practices.
The trial court entered summary judgment in favor of Southtrust and Richardson. The court found no legal duty between Southtrust and Reimsnyder, because Southtrust and Richardson were not parties to the underlying business transaction between Reimsnyder and ICM. It also determined that none of the statements attributed to Richardson were demonstrably false at the time she made them or, alternatively, her statements were merely opinions. Further, the court determined fraud could not be proven because there was no intent to deceive. Reimsnyder appeals only the entry of summary judgment as to the fraud and negligent misrepresentation counts.
Reimsnyder claims that despite the lack of privity between Southtrust and himself, Southtrust and Richardson are still liable for Richardson's negligent misrepresentations because she undertook to provide information to him in connection with his investment in ICM. He relies on the Restatement (Second) of Torts, section 552(1), which section provides:
One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Our supreme court adopted this position on negligent misrepresentation in Gilchrist Timber Co. v. ITT Rayonier, Inc., 696 So.2d 334, 339 (Fla.1997). There, a purchaser of real estate sued a vendor for negligent misrepresentation regarding zoning restrictions on the property. The court held that the vendor could be liable for a misrepresentation or nondisclosure, even though it was unintentional. See id.
In Gilchrist, the parties were in privity based upon the contract of sale. The issue presented in this case is whether this rule applies where the defendant who supplied the erroneous information has no privity or pecuniary interest in the transaction. Comment c. to section 552 clarifies the pecuniary interest in the transaction and states in part:
The rule stated in Subsection (1) applies only when the defendant has a pecuniary interest in the transaction in which the information is given. If he has no pecuniary interest and the information is given purely gratuitously, he is under no duty to exercise reasonable care and competence in giving it.
(Emphasis added).
Comment d. further states:
Section 552 has been interpreted as limiting liability for the supply of false information to those entities that are in the business of supplying a particular type of information or those who have a pecuniary interest in the transaction to which the information pertains. See Geosearch, Inc. v. Howell Petroleum Corp., 819 F.2d 521, 524 (5th Cir.1987); Cont'l Leavitt Communications, Ltd. v. PaineWebber, Inc., 857 F.Supp. 1266, 1270-71 (N.D.Ill.1994) ( ). However, when the information supplied is "gratuitous," no liability attaches because "the user of the information is not justified in expecting the supplier to have used due care in given [sic] the information." Cont'l Leavitt, 857 F.Supp. at 1270 . The supplier is only charged with the obligation to "speak in good faith and without consciousness of a lack of any basis for belief in the truth or accuracy of what he says." § 552, cmt. a. In other words, the standard is one of honesty. § 552 comment d.
Southtrust and Richardson were not in...
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