Susan Fixel, Inc. v. Rosenthal & Rosenthal, Inc.

• Decision Date: 02 April 2003
• Docket Number: No. 3D02-1139.,3D02-1139.
• Citation: 842 So.2d 204
• Parties: SUSAN FIXEL, INC., Appellant, v. ROSENTHAL & ROSENTHAL, INC., Appellee.
• Court: Florida District Court of Appeals

842 So.2d 204

SUSAN FIXEL, INC., Appellant, v. ROSENTHAL & ROSENTHAL, INC., Appellee.

No. 3D02-1139.

District Court of Appeal of Florida, Third District.

April 2, 2003.

Adorno & Yoss and Samantha N. Tesser, Fort Lauderdale, for appellant.

Ferrell, Schultz, Carter, Zumpano & Fertel and Alan Fertel, Miami, and H. Eugene Lindsey, for appellee.

Before COPE and WELLS, JJ., and NESBITT, Senior Judge.

NESBITT, Senior Judge.

Appellant Susan Fixel, Inc. ("Fixel"), a Florida corporation engaged in the business of wholesaling clothes, filed a Third Amended Complaint which included, in Counts II-V, claims against its factor¹ Appellee Rosenthal & Rosenthal, Inc. ("Rosenthal"), for breach of fiduciary duty, fraud in the inducement, fraudulent misrepresentation and negligent misrepresentation. Upon Rosenthal's motion to dismiss, the trial court dismissed all of the claims for failure to state a cause of action, found that there was no fiduciary duty between Rosenthal and Fixel, and, noting it was the Third Amended Complaint, ruled the dismissals were with prejudice. The trial court gave Fixel leave "to attempt to state a cause of action sounding in contract" against Rosenthal. We reverse.

A motion to dismiss tests whether the plaintiff has stated a cause of action. Because a ruling on a motion to dismiss for failure to state a cause of action is an issue of law, it is reviewable on appeal by the de novo standard of review. When determining the merits of a motion to dismiss, the trial court's consideration is limited to the four corners of the complaint, the allegations of which must be accepted as true and considered in the light most favorable to the nonmoving party.

Bell v. Indian River Mem. Hosp., 778 So.2d 1030, 1032 (citations omitted). See also Siegle v. Progressive Consumers Ins. Co., 819 So.2d 732, 734-35 (Fla.2002)

; Ralph v. City of Daytona Beach, 471 So.2d 1, 2 (Fla.1985); Orlando Sports Stadium, Inc. v. State, 262 So.2d 881, 883 (Fla.1972); Alvarez v. E & A Produce, 708 So.2d 997, 999 (Fla. 3d DCA 1998). Consideration of potential affirmative defenses or speculation about the sufficiency of evidence which plaintiff will likely produce on the merits is wholly irrelevant and immaterial to deciding such a motion. Barbado v. Green & Murphy, P.A., 758 So.2d 1173 (Fla. 4th DCA 2000); Abrams v. General Ins. Co., 460 So.2d 572 (Fla. 3d DCA 1984); Parkway Gen. Hosp., Inc. v. Allstate, Ins. Co., 393 So.2d 1171 (Fla. 3d DCA 1981).

Casting the allegations of the Third Amended Complaint in a light most favorable to Fixel, and accepting them as true, the claims against Rosenthal are based upon the following facts:

In 1997, Fixel and Rosenthal entered into a Factoring Agreement, under which Rosenthal purchased Fixel's receivables based upon a credit-risk evaluation and Fixel drew funds according to an agreed advance rate. Fixel and Rosenthal also entered into a letter agreement, pursuant to which Rosenthal agreed to make inventory advances to Fixel up to $150,000.00, secured by a security interest in Fixel's inventory. The parties established an ongoing relationship in which Rosenthal knew that Fixel placed trust and confidence in Rosenthal, and that, separate from the relationship established by the terms of the parties' contracts, Rosenthal assumed a role of superiority and exerted influence over Fixel, which relied upon Rosenthal for its counsel and guidance with regard to its business dealings.

During this time period, Rosenthal also was the factor of C & L Textile Corporation ("C & L"), a clothing manufacturer. By virtue of its relationship with C & L, Rosenthal knew that C & L was experiencing deep financial difficulties, rendering it difficult for C & L to support and maintain its existing business. Nevertheless, Rosenthal, for its own financial benefit, wanted to create a relationship between Fixel and C & L, even though Rosenthal knew that such an agreement was not in Fixel's best interest. Rosenthal, exerting extensive control, pressured Fixel to enter into a contract with C & L by threatening to call in Fixel's inventory loan and terminate its factoring relationship with Fixel, which on short notice would have immediately put Fixel out of business. This pressure was combined with repeated false representations from certain of Rosenthal's employees and representatives throughout September and October, 1998 concerning C & L's financial status and ability to handle Fixel's business, including representations that:

a. "They [C & L] have an open checkbook with us [Rosenthal];"

b. Fixel would be getting a financially secure partner with C & L;

c. "C & L had the financial wherewithal" to produce and ship Fixel's inventory; and

d. "C & L could do whatever Fixel needed them to do financially."

Rosenthal undertook activities beyond the performance of its contractual duties in advising and guiding Fixel. In October of 1998, relying upon Rosenthal's false representations (which Fixel alleges was reasonable in light of its relationship of trust and confidence with Rosenthal), and in response to the pressure Rosenthal exerted, Fixel entered into a written agreement with C & L (the "C & L Agreement"), pursuant to which C & L was to be responsible for Fixel's production and shipping. Meanwhile, Rosenthal and C & L structured a financial arrangement between themselves, without the prior knowledge or consent of Fixel, pursuant to which Rosenthal and C & L would benefit economically from C & L's new business relationship with Fixel. Without Fixel's consent, Rosenthal deducted 15% of the money it was advancing to C & L for shipments and applied this against money allegedly owed by Fixel to Rosenthal. Again, without Fixel's consent, C & L would then deduct the 15% from the money owed to Fixel from the shipped orders.

C & L did not, in fact, have the credit worthiness or cash resources, or the "open checkbook" with Rosenthal, needed to provide the goods and services which it agreed to provide for Fixel, which caused damages to Fixel.² Rosenthal induced and coerced Fixel to enter into the C & L Agreement for Rosenthal's own economic benefit to the detriment of Fixel. Rosenthal used its inside superior knowledge as C & L's factor, its relationship of trust, influence and superiority over Fixel, and Fixel's reliance upon Rosenthal's counsel and guidance, to orchestrate the C & L Agreement.

Rosenthal argues that Fixel's claims for breach of fiduciary duty, fraud in the inducement, fraudulent misrepresentation and negligent misrepresentation are insufficient as a matter of law because its relationship with Fixel is governed by the parties' contracts. Rosenthal further asserts Fixel's claims can only be asserted as breach of contract claims, that the economic loss rule precludes the various tort claims, and that there is, as a matter of law, no fiduciary duty between Rosenthal and Fixel.

In Doe v. Evans, 814 So.2d 370 (Fla.2002), a fiduciary relationship was characterized as follows:

If a relation of trust and confidence exists between the parties (that is to say, where confidence is reposed by one party and a trust accepted by the other, or where confidence has been acquired and abused), that is sufficient as a predicate for relief.

814 So.2d at 374, quoting Quinn v. Phipps, 93 Fla. 805, 113 So. 419, 421 (Fla.1927). See also Dale v. Jennings, 90 Fla. 234, 107 So. 175 (1925); First Nat. Bank and Trust Co. v. Pack, 789 So.2d 411 (Fla. 4th DCA 2001); Capital Bank v. MVB, Inc., 644 So.2d 515, 518 (Fla. 3d DCA 1994),rev. denied 654 So.2d 918 (Fla.1995). Fiduciary relationships may be implied in law and such relationships are "premised upon the specific factual situation surrounding the transaction and the relationship of the parties." Id. at 518; Doe v. Evans, supra, at 374. See also Hooper v. Barnett Bank of West Florida, 474 So.2d 1253 (Fla. 1st DCA 1985),

decision approved, 498 So.2d 923 (Fla.1986).

Depending upon the specific factual circumstances, courts have found the existence of fiduciary relationships between borrowers and lenders. Barnett Bank v. Hooper, 498 So.2d 923 (Fla.1986); First Nat. Bank and Trust Co. v. Pack, supra; Capital Bank v. MVB, Inc., supra

at 519 (and numerous authorities cited therein). Such relationships have been found "where the bank knows or has reason to know that the customer is placing trust and confidence in the bank and is relying on the bank so to counsel and inform him." Capital Bank v. MVB, Inc., supra at 519, quoting Klein v. First Edina Nat'l Bank, 293 Minn. 418, 196 N.W.2d 619 (1972) Additionally, "special circumstances" may impose a fiduciary duty where the lender takes on extra services for a customer, receives any greater economic benefit than from a typical transaction, or exercises extensive control. Capital Bank v. MVB, Inc., supra at 519, citing Tokarz v. Frontier Fed. Sav. & Loan Ass'n, 33 Wash.App. 456, 656 P.2d 1089 (1982).

Fixel asserts a similar claim for breach of fiduciary duty against Rosenthal, its factor, claiming Rosenthal knew Fixel placed trust and confidence in Rosenthal and relied upon Rosenthal for its advice and counsel, and that Rosenthal took on "extra services" in its orchestration of the C & L Agreement and exercising extensive control over Fixel. Fixel alleges Rosenthal breached the fiduciary duty which arose between them by: (a) coercing Fixel into entering a business relationship with C & L to benefit Rosenthal's own financial interests to the detriment of Fixel; (b) repeatedly misrepresenting C & L's financial ability to produce and ship Fixel's inventory; (c) not acting in Fixel's best interest and not disclosing accurate financial information regarding C & L; (d) benefitting from the C & L Agreement; and (e) taking unfair advantage of Fixel. Such a claim is not precluded as a matter of law. See, e.g., Dresses for Less, Inc. v. CIT Group/Commercial Serv., Inc., 2002 WL 31164482 (S.D.N.Y.)(fiduciary duty claim against...