Resorts Intern., Inc. v. Charter Air Center, Inc.

• Decision Date: 10 February 1987
• Docket Number: No. 86-141,86-141
• Parties: 12 Fla. L. Weekly 481, 12 Fla. L. Weekly 946 RESORTS INTERNATIONAL, INC. and GB Management LTD., Appellants, v. CHARTER AIR CENTER, INC., Appellee.
• Court: Florida District Court of Appeals

Page 1293

503 So.2d 1293

12 Fla. L. Weekly 481, 12 Fla. L. Weekly 946

RESORTS INTERNATIONAL, INC. and GB Management LTD., Appellants, v. CHARTER AIR CENTER, INC., Appellee.

No. 86-141.

District Court of Appeal of Florida,

Third District.

Feb. 10, 1987.

On Motion for Rehearing and

Clarification April 7, 1987.

Horton, Perse & Ginsberg and Mallory Horton, Prunty & Olsen, Miami, for appellants.

Magill & Lewis and R. Fred Lewis, Miami, for appellee.

Before BARKDULL, NESBITT and BASKIN, JJ.

NESBITT, Judge.

Resorts International, Inc. (Resorts) and GB Management Ltd. (GB) appeal from the entry of an adverse final judgment. We affirm the entry of judgment as to Resorts' and GB's liability for breach of contract but reverse the award for damages.

In 1978, Resorts purchased a Bahamian Casino in Freeport. At that time, Charter Air Center, Inc. (Charter) was providing flight service to the casino for gambling junkets. Resorts negotiated with Charter through Charter's president, William Cousins, for a junket flight program. Since Mackey Airlines (Mackey) enjoyed certain required Civil Aeronautical Board certifications which allowed it to operate flights to Freeport more freely, Resorts encouraged Charter to acquire operational and managerial control over Mackey. At the time, Mackey had filed for chapter 11 bankruptcy protection. Resorts also encouraged Charter to acquire additional aircraft in order to accommodate an anticipated increase in flight service requirements.

As part of the agreement, Resorts planned to provide Charter with a financial guarantee of up to $8.5 million for the purchase and lease of an aircraft. The aircraft was to be used at night for Resorts' junket flights, but Charter would have been free to use it at all other times for its regularly scheduled commercial flights. Resorts sent Charter a letter of its intent to provide a financial guarantee, dated June 21, 1979, to be used in arranging credit for the purchase of an aircraft. Subsequently, Resorts informed Charter that the financial guarantee would have to be reduced to $6 million. Upon the representations made to Charter by Resorts, Mr. Cousins proceeded with the expansion of Charter and attempted to obtain additional aircraft.

Charter entered into a written contract with Resorts' subsidiary, GB, on August 1, 1979, whereby Charter agreed to fly, and Resorts agreed to use, a minimum number of flight hours per month with certain specified aircraft until December 31, 1987 or until GB ceased to operate a casino in Freeport. In consideration, Resorts was to pay Charter the cost of this operation plus fifteen per cent.

On September 12, 1979, Resorts advised Charter that problems had arisen with respect to the guarantee and proposed a new rate schedule to be used until the financial guarantee was forthcoming. Charter agreed to operate under the new schedule until the guarantee could be obtained.

Eventually, Resorts' use of Charter's services tapered off and the guarantee was never obtained. Charter brought suit for breach of contract alleging that Resorts failed to use Charter's services as required by the contract. The trial court entered a partial summary judgment. Since GB ceased operating the casino on September 25, 1983, the court limited proof of damages for prospective loss of profit to the losses sustained up until that date. The judge returned a verdict for Charter finding specifically that it had sustained: $450,000 lost profits; $1,200,000 of damage as a result of expenses related to acquiring CAB certifications; losses of $450,000 associated with salvaging Mackey; and, a $258,000 loss which resulted from the purchase and sale of an airplane that was to be used to service Resorts.

Contrary to Resorts' contention, there is competent evidence to support the jury's finding with respect to Resorts' liability. A parent corporation may be held liable for the acts of its subsidiary when the subsidiary is a mere instrumentality of the parent and is used to mislead the parent's creditors or to fraudulently avoid liability. Dania Jai-Alai Palace, Inc. v. Sykes, 450 So.2d 1114 (Fla.1984). The record in the present case reveals that Charter dealt with only Resorts and its representatives in negotiating the contract and the guarantee. It was only after Mr. Cousins, representing Charter, sat down at the table to sign the contract that Resorts informed him that, as a mere formality, GB would replace Resorts as the named party in the contract. There was ample evidence from which the jury could have concluded that it was Resorts' intent to fraudulently avoid liability and mislead Mr. Cousins.

Similarly without merit is Resorts' contention that the trial court erred by admitting evidence which established the existence of an oral contract for a financial guarantee. It is true that a promise made directly to a creditor to pay the debts of some third party falls within the statute of frauds. § 725.01, Fla.Stat. (1983); see also 2 A. Corbin, Corbin On Contracts § 347 (1950). In contrast, however, "[a] promise to a debtor to pay or otherwise answer for his debt or default to a third person is not within the statute." 2 A. Corbin, supra § 357 at 241; accord Weingart v. Allen & O'Hara, Inc., 654 F.2d 1096 (5th Cir.1981); 3 S. Williston, A Treatise on the Law of Contracts § 460 (3d ed. 1960). Therefore, the trial court properly admitted evidence of the oral agreement as presented by the debtor, Charter.

With respect to damages, we agree with Resorts' final contention that the trial court erred in allowing Charter to recover for losses sustained by its sister company, Sunny Air, and for both its reliance and expectation damages.

"It is well settled that, regardless of what the evidence may otherwise show, plaintiff must recover, if at all, on the case made by her declaration." Atlantic Co. v. Orendorff, 156 Fla. 1, 22 So.2d 260, 263 (1945) (en banc); see also Mansell v. Foss, 343 So.2d 910 (Fla. 3d DCA 1977). In the present case, Charter did not seek relief for damages suffered by its sister company in its pleadings, nor did it plead that these two companies were actually one and the same. Furthermore, there was no consent, stipulation, nor acquiescence by Resorts, nor were the pleadings amended to reflect the issue which was brought before the court. ¹ In fact, Resorts objected to the introduction of evidence pertaining to Sunny Air's damages as being irrelevant to the issue of Charter's damages. The mere facts that Charter used the two corporate names interchangeably at trial and that evidence was introduced which demonstrated that both companies were owned by the same person cannot establish Charter's allegation by implication. Cf. Walter E. Heller & Co., S.E. v. Pointe Sanibel Dev. Corp., 392 So.2d 306 (Fla. 3d DCA 1980) (interchangeably using two corporate names during trial did not prove nonparty's right to recover by implication). Charter should have been precluded from raising this issue at trial. Cf. Griffin v. Griffin, 463 So.2d 569 (Fla. 1st DCA 1985) (absent parties' stipulation, consent, acquiescence, motion and order, or amendment, the issues at trial are fixed by the pleadings); Provident Nat'l Bank v. Thunderbird Assocs., 364 So.2d 790 (Fla. 1st DCA 1978) (same). Consequently, the trial court erred in including the damages suffered by Sunny Air in its judgment for Charter. Cf. Pointe Sanibel Dev. Corp., 392 So.2d at 308; Mansell v. Foss, 343 So.2d 910 (Fla. 3d DCA 1977) (where pleadings did not allege that assignment of debt had been made by a nonparty to the plaintiff, plaintiff was not entitled to recover on this theory which was different from the complaint); American Ladder & Scaffold Co. v. Miami Ventilated Awning Co., 150...