Schrank v. Pearlman

• Decision Date: 23 October 1996
• Docket Number: No. 95-2642,95-2642
• Citation: 683 So.2d 559
• Parties: 21 Fla. L. Weekly D2278 Edward SCHRANK, Appellant, v. Philip PEARLMAN and Anita Pearlman, Appellees.
• Court: Florida District Court of Appeals

Page 559

683 So.2d 559

21 Fla. L. Weekly D2278

Edward SCHRANK, Appellant, v. Philip PEARLMAN and Anita Pearlman, Appellees.

No. 95-2642.

District Court of Appeal of Florida,

Third District.

Oct. 23, 1996.

Wallace Bauman Fodiman & Shannon and Michael G. Shannon and Todd A. Fodiman, Coral Gables, for appellant.

Sanford Z. Chevlin, for appellees.

Before SCHWARTZ, C.J., and COPE and GODERICH, JJ.

COPE, Judge.

Edward Schrank appeals a partial summary judgment determining that he is liable to Philip Pearlman and Anita Pearlman. The principal question presented is the length of the statute of limitations in a suit for equitable contribution, which we decide is four years. Because the statute of limitations issue and other issues raised by defendant-appellant Schrank precluded the entry of summary judgment, we reverse.

In 1986 plaintiff-appellee Philip Pearlman executed a promissory note in favor of Barnett Bank of South Florida, N.A. He signed the note as trustee of an unrecorded land trust.

Contemporaneously Philip Pearlman, Anita Pearlman, and Edward Schrank each executed a personal guaranty of the 1986 loan. According to the complaint, in September 1989, Barnett Bank called on the Pearlmans and Schrank to honor their personal guaranties. Philip Pearlman and Anita Pearlman allege that they paid $259,805.70 to Barnett Bank, which discharged the indebtedness under the 1986 note. The Bank canceled all three personal guaranties.

In 1994, Philip Pearlman and Anita Pearlman sued Schrank for equitable contribution. The complaint alleged that since the Pearlmans and Schrank each were co-guarantors of the 1986 note, each guarantor was equitably liable for one-third of the $259,805.70 amount paid to satisfy the indebtedness. The Pearlmans sought judgment against Schrank for his one-third share.

Defendant Schrank filed a motion to dismiss, asserting that the complaint facially showed that it was barred by the statute of limitations. The motion was not called up for a hearing.

The Pearlmans filed a motion for partial summary judgment on liability. They asserted that since all three parties had indisputably executed personal guaranties covering the 1986 note, it was clear as a matter of law that the Pearlmans were entitled to equitable contribution.

Defendant Schrank submitted an affidavit in opposition to the motion for summary judgment. Schrank conceded that he executed the guaranty in favor of Barnett Bank. However, he asserted the defense of the statute of limitations. He also appended a general partnership agreement executed by Schrank and Philip Pearlman as general partners, in 1984. Schrank stated that the general partnership agreement governed the relationship between Schrank and Philip Pearlman, including the 1986 loan by Barnett Bank. Schrank asserted that under an indemnification provision in the 1984 partnership agreement, he was entitled to be indemnified by Philip Pearlman. Accordingly, Schrank stated that under either the statute of limitations or the general partnership agreement, he was not liable. At the summary judgment hearing, defendant Schrank also objected that plaintiffs' motion for summary judgment was not supported by any affidavit or other competent evidence in the record, and should be denied for that additional reason.

The trial court entered partial summary judgment on liability in favor of the Pearlmans, and Schrank has appealed.

The principal issue is whether the plaintiffs' claim for equitable contribution is governed by a four-year or five-year limitation period. Plaintiffs take the position that a suit for equitable contribution is properly viewed as a "legal or equitable action on a contract, obligation, or liability founded on a written instrument." § 95.11(2)(b), Fla. Stat. (1989). They reason that the cause of action arises out of the guaranties, which are written instruments, and that the five-year statute of limitations is controlling.

Defendant asserts that the case is governed by the four-year limitation period for a "legal or equitable action on a contract, obligation, or liability not founded on a written instrument...." Id.; § 95.11(3)(k), Fla. Stat. (1989). Defendant argues that the cause of action for equitable contribution is one which is implied in law, and is not contained within the guaranties themselves. Defendant says that the cause of action is, therefore, not founded on a written instrument within the meaning of the statute of limitations, and is governed by the four-year limitation period. Since the complaint in this case was filed four-and-one-half years after the date plaintiffs paid Barnett Bank, defendant contends that the action is time-barred.

In the present case each party executed a guaranty in favor of Barnett Bank for the 1986 note. Each party's guaranty recited that the other two parties were simultaneously executing guaranties in favor of Barnett Bank, and acknowledged that each guarantor was jointly and severally liable for the obligations thereunder.

The guaranties are completely silent on the issue of contribution. The guaranties do not address the financial relationships among the guarantors, nor do they address any of the rights one guarantor may have against the others in the event that Barnett Bank must be paid under the guaranty.

Where, as here, there is no express agreement covering rights of contribution, Florida law recognizes a right of equitable contribution. "The [equitable contribution] principle attempts to distribute equally among those who have a common obligation, the burden of performing that obligation." Fletcher v. Anderson, 616 So.2d 1201, 1202 (Fla. 2d DCA 1993) (citation omitted). "Thus, an obligor who has paid in excess of his prorata share of the obligation, is entitled at law to contribution from the other obligors for their aliquot share." Id. (citations omitted).

As summarized by the Florida Supreme Court at an early date:

The principal [sic] of contribution does not seem to have sprung from contract, but is based on a principle of justice and equity, that one person should not be singled out by the creator to pay the whole demand; and where this occurs, the law intervenes and places sureties relatively to each other in a state of equality as to the amount paid, and gives the party paying a remedy by action for contribution. This right of action grows out of an implied agreement, that if one surety shall be compelled to pay the whole, or a disproportionate part of the debt, the other shall pay such a sum as shall render their common burden equal.

Love v. Gibson, 2 Fla. 598, 618-19 (1849); see also Meckler v. Weiss, 80 So.2d 608, 609 (Fla.1955); Berkan v. Brown, 242 So.2d 207, 209 (Fla. 3d DCA 1970), cert. denied, 246 So.2d 111 (Fla.1971).

Since in the circumstances of the present case, the right of contribution is created by law, and does not arise from any promise contained in the written guaranties themselves, the question is whether the cause of action is "founded on a written instrument," § 95.11(2)(b), Fla. Stat. (1989), for purposes of the statute of limitations. The ...