Sheen v. Jenkins, 92-1530

• Decision Date: 29 December 1993
• Docket Number: No. 92-1530,92-1530
• Citation: 629 So.2d 1033
• Parties: 19 Fla. L. Weekly D52 Brian J. SHEEN and Sheen Investment Management Group, Inc., Appellants/Cross-Appellees, v. Dorothy C. JENKINS, Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

Page 1033

629 So.2d 1033

19 Fla. L. Weekly D52

Brian J. SHEEN and Sheen Investment Management Group, Inc. Appellants/Cross-Appellees, v. Dorothy C. JENKINS, Appellee/Cross-Appellant.

No. 92-1530.

District Court of Appeal of Florida Fourth District.

Dec. 29, 1993.

Philip M. Burlington, Edna L. Caruso, P.A., and Alfred A. LaSorte, Jr., P.A., West Palm Beach, for appellants, cross-appellees.

Gary R. Jones and Thomas Boyd, Hickey & Jones, P.A., Miami, for appellee, cross-appellant.

HERSEY, Judge.

This appeal and cross-appeal arise from an action seeking recovery for fraud, negligence, and breach of a fiduciary relationship. There are several issues which warrant discussion.

Dorothy C. Jenkins employed Brian J. Sheen as her financial planner and investment advisor in November of 1982. As it turned out, Jenkins made only one investment through Sheen: the purchase of an interest in a tax shelter which turned sour, occasioning the proceedings in the trial court and here.

In Jenkins' suit against Sheen the jury returned a special interrogatory verdict in favor of Sheen on the fraud and fiduciary duty counts. The jury also responded that Jenkins' causes of action arose prior to May 22, 1986, which translates to a holding that the statute of limitations bars the entire action. On the negligence claim the jury found Sheen should be charged with 60% and Jenkins 40% of the total damages of approximately $62,000.00.

The trial court granted Jenkins' motion for judgment in accordance with a previous motion for directed verdict, thereby overruling the finding of the jury on the statute of limitations, and also awarded certain costs and prejudgment interest.

On appeal, appellant, Sheen, asserts that the trial court erred in setting aside the jury's determination that the statute of limitations had expired. Appellee, Jenkins, made her initial investment in Kimberly Associates Limited Partnership in 1982. The financing scheme required that she pay a total of $97,000.00; a small amount the first year and a larger amount in each of the succeeding six years. The tax benefit was a deduction for income tax purposes in each of those years. In addition to the tax benefit, appellee was led to believe that at the end of the investment term the computer parts, the lease of which constituted the business of the partnership, would have considerable residual value which would accrue to the account of the investors. Thus, there were two elements of damage when the partnership failed and the Internal Revenue Service disallowed most of the interim deductions: the tax benefits and return of the investment or part of it. While an allegation concerning cash flow was also made, it is clear that ultimately appellee's claim consisted of these two elements.

Because the investment was spread over six years there never was a possibility that appellee would receive anything from the ultimate disposal of the computer parts until 1988. Therefore, as to this element of loss, there was no evidence to support the jury's finding that appellee knew or should have known of her cause of action prior to May 22, 1986.

The second element of damage, loss of the benefit of the tax deductions, was not finalized until agreement was reached with the IRS and a tax deficiency paid in December 1989. Even if it were assumed that appellee's cause of action ripened earlier than that, the evidence shows that the first notice of disallowance was received in September 1987. Thus, there was again no evidence to support the jury's finding of the earlier date. We find no error as to this point on appeal.

Appellant next suggests that the trial court erred by excluding evidence that appellee had, at a later date, made investments similar to the one involved in this case. We find that the trial court properly excluded the evidence of appellee's subsequent investments on relevancy grounds, because, even with respect to the claims of justifiable reliance and comparative negligence, and the element of causation as to appellee's damages, the excluded evidence did not have a logical tendency to prove or disprove any fact which was of consequence to the outcome of this action. See Sec. 90.401 Fla.Stat. (1991). The degree of sophistication achieved by appellee subsequent to making the investment in question is simply not instructive or legally relevant to the degree of sophistication she brought to the market place when she dealt with appellant. We affirm on this point as well.

In her cross-appeal, appellee contends that the trial court erred by giving an instruction to the jury that was contrary to Florida law. The trial court gave an instruction on fraud, of which the following is the relevant part:

Four, plaintiff must prove that she justifiably relied and acted upon the misrepresentations. If, in the exercise of reasonable care, for the protection of her own interests, plaintiff could have ascertained the truth of the matter by making a reasonable inquiry or investigation under the circumstances presented, but failed to do so, it cannot be said that they justifiably relied upon such misrepresentations.

(Emphasis supplied.)

At least since Besett v. Basnett, 389 So.2d 995 (Fla.1980), an instruction such as the one given here is an incorrect statement of the law. The supreme court held, in Besett:

We hold that a recipient may...