Rhodes v. Blp Associates, Inc.
| Decision Date | 20 December 2006 |
| Docket Number | No. 4D05-3833.,4D05-3833. |
| Citation | 944 So.2d 527 |
| Parties | Paul RHODES, Appellant, v. BLP ASSOCIATES, INC., a Florida corporation, Gilbert Goldstein, Howard Gittis and Judgment Acquisition Corporation, Appellees. |
| Court | Florida District Court of Appeals |
In 1988, the appellant Rhodes, along with BLP Associates, Inc., whose principals were appellees Goldstein and Gittis, formed a general partnership called Broward Land Partners, for the purpose of buying and selling certain real estate. The partnership was memorialized in a written agreement and appellant Rhodes was named the managing partner.
In 1994, Rhodes filed a complaint against the other partners for breach of contract, breach of fiduciary duty, accounting, and declaratory relief. BLP filed a counterclaim against Rhodes for accounting, breach of fiduciary duty, and for dissolution of the partnership with appointment of a receiver. The court issued its final judgment on May 13, 1996, dissolving the partnership and appointing a receiver. That final judgment was appealed and affirmed.
Several years later, on February 14, 2005, the trial court conducted a hearing to consider the receiver's final accounting. The final order, dated August 23, 2005, resolved all remaining issues between the parties and determined the proper distribution of partnership funds. The appellant contends the trial court erred in this final order in three respects: (1) determining that certain monies given to the partnership by the partners were capital contributions rather than loans; (2) enjoining distribution of partnership funds to appellant in order to enforce a promissory note from appellant to appellees; and (3) miscalculating the accrued interest on the amount of expenses appellant owed the partnership. We agree with appellant as to the second and third issues, but not as to the first.
CLASSIFICATION OF ADDITIONAL CONTRIBUTIONS TO PARTNERSHIP
Article II of the partnership agreement sets forth the requirements for capitalization of the partnership and the allocation of profit and loss. The agreement contemplated two classes of capital contributions. Class A contributions were nominal amounts paid upon the execution of the agreement showing the percentage share of the partners. Class B contributions were to be made in two installments and totaled $600,000. The other partners agreed to loan Appellant Rhodes his share of the Class B contributions and that loan was evidenced by a separate promissory note. The note provided that it would mature on the date that the Class B capital contributions were "paid in full." Accrued interest on the note was to be paid at any time Rhodes received any distributions of interest on his Class B contribution.
In addition to the capital contributions as noted above, the agreement provided, in Section 2.14(d) as follows:
(d) Additional Capital Contributions and Partner Loans. In the event additional funds in excess of the contributions required to be made in Sections 2.1(a) and (b) hereof and in excess of the Bank Loan described in Section 2.1(c) hereof, are needed to carry out the purposes of the Partnership, then such additional sums necessary therefore may be (but shall not be required to be) advanced as loans from the Partners ("Partner Loan").
This subsection further provided that to the extent a partner made a loan to the partnership, that partner was also to make a Class A capital contribution of $1 for each $600 of funds loaned to the partnership. Section 2.4 of the agreement also established a hierarchy for distribution that placed the payment of interest and principal for partner loans ahead of any payment of the interest and principal for Class B capital contributions.
After the partnership commenced and the initial capital contributions were made, Rhodes sent approximately fifteen requests for additional cash from the partners. Despite the language in Section 2.1(d) which contemplated that such additional monies would be in the form of partner loans, the letters which Rhodes sent out called the requests "capital calls" or otherwise referred to the requested cash infusions as "capital contributions." Likewise, numerous letters from the principals of BLP, responding to these requests for cash, referred to the money they were sending in as "capital contributions." The partnership tax returns in each of those years also classified the contributions as "capital." None of the partners, at the time, characterized any of these contributions as "partner loans", nor did anyone object to Rhodes's use of the terms "capital call" or "capital contributions." In fact, at the final hearing on February 14, 2005, one of BLP's principals, Gilbert Goldstein, testified that he and Rhodes had agreed to treat all additional cash contributions into the partnership as capital rather than partner loans. Rhodes attempted to adjust the Class A contributions based on the response to the capital calls, but Goldstein wrote a letter objecting to it very strenuously.
A written agreement may be modified by the subsequent conduct or course of dealing of the parties. See St. Joe Corp. v. McIver, 875 So.2d 375, 382 (Fla.2004); Gallagher v. Dupont, 918 So.2d 342, 347 (Fla. 5th DCA 2005); White v. Ocean Bay Marina, Inc., 778 So.2d 412 (Fla. 3rd DCA 2001); Franklin Life Ins. Co. v. Davy, 753 So.2d 581, 586 (Fla. 1st DCA 1999); Beach Higher Power Corp. v. Granados, 717 So.2d 563, 565 (Fla. 3rd DCA 1998). Of course, no such modification can occur unless it is by mutual consent, and supported by consideration. St. Joe, 875 So.2d at 382. Here, the record supports such a finding of mutual consent and consideration. The parties referred to the cash infusions as capital contributions, never as loans. The partnership tax returns designated them as capital and there was testimony that this was the intent. The consideration can be found in the fact of the cash infusions themselves, which the partners were not required to make under the agreement.
The appellant maintains that because the language of the agreement in Section 2.14(d) is clear and unambiguous, and contemplates that additional contributions will be in the form of loans, the agreement can not be altered or modified by way of subsequent conduct of the parties. The appellant relies on the case of Cox v. CSX Intermodal, Inc., 732 So.2d 1092 (Fla. 1st DCA 1999) for this proposition. Cox dealt with contracts to haul freight, and specifically, with a clause in the contracts that disclaimed any obligation on the part of the company to provide any specific quantity of freight or number of loads to the truckers. The issue was whether the subsequent course of conduct between the parties established a policy of "first come, first served" to determine orders, and thus modified the contracts.
The First District Court of Appeal acknowledged the general principle that written contracts can be modified by the subsequent conduct of the parties, but it also stated as follows:
When a course of dealing and the terms of the contract appear to conflict, the parties' practice and the written agreement must be construed as consistent with each other, if it is reasonable to do so. If no reasonable consistent construction can be drawn, however, the express terms of the agreement control.
Cox, 732 So.2d at 1096 [citations omitted]. We find this authority unpersuasive for two reasons.
First, the Cox opinion cites two cases to support this statement of the law: Flagship National Bank v. Gray Distribution Systems, Inc., 485 So.2d 1336 (Fla. 3rd DCA 1986); and Indian Harbor Citrus, Inc. v. Poppell, 658 So.2d 605 (Fla. 4th DCA 1995). The Flagship case did, in...
To continue reading
Request your trial
-
Siever v. Bwgaskets, Inc.
...(Fla. 3d DCA 1991). No modification can occur unless it is by mutual consent and supported by consideration. Rhodes v. BLP Assocs., Inc., 944 So.2d 527, 530 (Fla. 4th DCA 2006) (citing St. Joe Corp. v. McIver, 875 So.2d 375, 382 (Fla.2004)). "Whether the parties have validly modified a cont......
-
Okeechobee Resorts, L.L.C. v. E Z Cash Pawn, Inc.
...writing “when one party provides additional consideration for the modification accepted by the other party”); Rhodes v. BLP Assocs., Inc., 944 So.2d 527, 530 (Fla. 4th DCA 2006) (“A written agreement may be modified by the subsequent conduct or course of dealing of the parties,” provided th......
-
MWK Recruiting Inc. v. Jowers
... ... Coral Reef Drive Land Dev., LLC v. Duke Realty Ltd ... P'ship, 45 So.3d 897, 902 (Fla. 3d DCA 2010); ... see also Rhodes v. BLP Assocs., Inc., 944 So.2d 527, ... 530 (Fla. 4th DCA 2006) (“A written agreement may be ... modified by the subsequent conduct ... ...
-
In re S & I Investments
...in contract, subsequent acts may modify the terms of the contract, even in the absence of writing. See, e.g., Rhodes v. BLP Associates, Inc., 944 So.2d 527, 530 (Fla. 4th DCA 2006); Gallagher v. Dupont, 918 So.2d 342, 347 (Fla 5th DCA 2005); White v. Ocean Bay Marina, Inc., 778 So.2d 412 (F......