Smyrna Developers, Inc. v. Bornstein

• Decision Date: 30 June 1965
• Docket Number: No. 4915,4915
• Citation: 177 So.2d 16
• Parties: SMYRNA DEVELOPERS, INC., a Florida corporation, Appellant, v. Jerome J. BORNSTEIN and Robert J. Bishop, Appellees.
• Court: Florida District Court of Appeals

Page 16

177 So.2d 16

SMYRNA DEVELOPERS, INC., a Florida corporation, Appellant, v. Jerome J. BORNSTEIN and Robert J. Bishop, Appellees.

No. 4915.

District Court of Appeal of Florida, Second District.

June 30, 1965.

William H. Maness, of Kurz, Toole, Maness & Martin, Jacksonville, for appellant.

M. W. Wells of Maguire, Voorhis & Wells, Orlando, for appellee Bishop.

Charles M. McCarty, Orlando, for appellee Bornstein.

SMITH, Chief Judge.

Plaintiff appeals a final judgment in favor of the defendants entered after the court dismissed plaintiff's third amended complaint. The defendants cross assign as error the denial of their motion for summary judgment.

The third amended complaint alleges that the plaintiff engaged the services of the defendants, who were partners engaged in the practice of law; that it disclosed to the defendants the exact nature and extent of its assets, obligations, plans for development of a shopping center, method of financing, prospective lessees and every facet of its proposed endeavors; that in disregard, neglect and violation of the duty owed as attorneys for the plaintiff, their client, the defendants conspired with each other and with others to deprive the plaintiff of its property and to obtain it for themselves and others. Plaintiff then alleges specific overt acts to the effect that the defendants became officers and directors of the plaintiff corporation and negotiated a loan to the corporation from one of them as trustee for undisclosed principals; that the undisclosed principlas were in fact persons related to or under the control and domination of the defendants; that the defendants accepted employment by these undisclosed principals without disclosing that employment to the plaintiff; that the loan was secured by a note and mortgage encumbering the property of the plaintiff made payable within one year when the defendants knew by virtue of their capacity as attorneys, officers and directors of the plaintiff that the financing and construction of the shopping center could not be accomplished in time to pay that mortgage; that the defendant assured the president and sole stockholder of the plaintiff corporation that they could and would procure an extension of time in order that the corporate purpose could be fulfilled when in fact the defendants did not intend to do so, but to the contrary, planned to deprive the plaintiff of its property and in fact later counseled and encouraged the undisclosed principals not to grant an extension; that when the mortgage became due the defendants, while continuing as attorneys, officers and directors of the plaintiff, instituted a suit against the plaintiff to foreclose the mortgage; that at the time of the institution of the mortgage foreclosure the defendants had in their possession all the corporate records, funds and other material pertaining to the affairs of the corporation and after demand refused to deliver them to the president and sole stockholder; that after the foreclosure the defendants for their own purposes and for the use and benefit of their undisclosed principals acquired the property of the plaintiff and appropriated the plaintiff's entire plan, including the architectural plans prepared for and owned by the plaintiff, the various contracts with lessees and the surveys and drawings which they used in the construction of a shopping center. For all of these alleged wrongs the plaintiff claimed damages in the amount of $1,500,000.

We find that the complaint states a cause of action. See Halstead v. Florence Citrus Growers Ass'n, 1932, 104 Fla. 21, 139 So. 132, and Dreka v. Whitehair, 1940, 145 Fla. 102, 199 So. 579. There is no relationship between individuals which involves a greater degree of trust and confidence than that of attorney and client. The attorney is under a duty at all times to represent his client and handle his client's affairs with the utmost degree of honesty, forthrightness, loyalty and fidelity. Business transactions between attorney and client are subject to the closest scrutiny. The burden is placed upon an attorney to establish by clear and convincing evidence the fairness of an agreement or transaction purporting to convey a property right from a client to his attorney. Gerlach v. Donnelly, Fla.1957, 98 So.2d 493. If an attorney fails in the performance of these duties he may become personally liable to the client for the loss ensuing from his action whether the failure consists of fraud or negligent performance or failure to perform these duties. 5 Am.Jur.2d Attorneys at Law, §§ 167-168. Although the complaint alleges in detail the extent of participation of each of the defendants in the various transactions alleged, we have not endeavored to state this detail in our summary of the complaint. The defendants are partners engaged in the practice of law. As such each is responsible for the fraud or negligence of the other when acting within the scope of the ordinary business of an attorney. 5 Am.Jur.2d Attorneys at Law, § 181.

We cannot accept the defendants' contention that the complaint constitutes nothing more than a belated endeavor to appeal the foreclosure decree entered in Volusia County and discloses that the plaintiff lost its property by reason of those foreclosure proceedings rather than the alleged acts of the defendants. The fact that the defendants' alleged breach of duty resulted in a judicial decree of foreclosure in no way relieves the defendants from liability for their alleged breach of duty which produced that result. In addition the plaintiff alleges that it became aware of the facts alleged after it observed the construction of a shopping center according to plaintiff's plans.

Having determined that the complaint states a cause of action we consider defendants' cross assignments of error contending that the court erred in denying their motion for summary judgment. With the motion for summary judgment the court had before it the complaint,...