Taylor Woodrow Homes Fla., Inc. v. 4/46-A CORP.

• Decision Date: 24 January 2003
• Docket Number: No. 5D01-1581.,5D01-1581.
• Citation: 850 So.2d 536,541 Fla. 5
• Parties: TAYLOR WOODROW HOMES FLORIDA, INC., et al., Appellants/Cross-Appellees, v. 4/46-A CORPORATION, etc., Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

850 So.2d 536

541 Fla. 5

TAYLOR WOODROW HOMES FLORIDA, INC., et al., Appellants/Cross-Appellees,

v.

4/46-A CORPORATION, etc., Appellee/Cross-Appellant.

No. 5D01-1581.

District Court of Appeal of Florida, Fifth District.

January 24, 2003.

Rehearing Denied June 26, 2003.

David B. King and Mayanne Downs of King, Blackwell & Downs, P.A., Orlando, for Appellants/Cross-Appellees. Michael R. Levin of Baker & Hostetler, LLP, Orlando, for Appellees/Cross-Appellants.

PER CURIAM.

The Appellants/Cross-Appellees, Taylor Woodrow Homes Florida, Inc. and Monarch Homes of Florida, Inc. (Taylor),¹ appeal a final judgment awarding Heathrow Land Company (Heathrow)² $12.1 million in damages. Taylor argues that Heathrow failed to prove a fiduciary duty, breach of that duty, fraudulent inducement, or that the breach of the confidentiality agreement executed by Taylor caused damages and lost profits to Heathrow.³ We reverse.

The Facts

The dispute between the parties centers around a subdivision located in Seminole County that was being developed by Arvida.⁴ In late 1995, Arvida found itself in financial difficulty, and because it was in default of its loans with Bank of America, development of the subdivision came to a standstill. Arvida decided to sell the subdivision, and among the many bidders competing to purchase the development were Heathrow and Taylor.

Heathrow, through its general partner, 4/46-A Corporation, which was owned by a man named George Apostolicas, was the successful bidder.⁵ Apostolicas had a Harvard MBA, a law degree, and had previously developed property in the high-end residential market. Pursuant to the purchase contract, Arvida agreed to sell the development to Heathrow for $20 million dollars and set the closing date for May 31, 1996. In order to secure the purchase price, Heathrow, through Apostolicas, proceeded to make arrangements to either sell portions of the development, obtain financing, or both. Apostolicas engaged in negotiations with numerous banks, lenders, and builders to arrange the necessary financing that would allow Heathrow to close. Taylor, having been an unsuccessful bidder for the Heathrow project, initiated discussions with Apostolicas about participating in the pending acquisition.

During the negotiations between Apostolicas and Taylor, Apostolicas informed Taylor that Taylor would have to execute the confidentiality agreement that Apostolicas had previously signed for Arvida.⁶ Taylor had previously signed a similiar agreement with Arvida as a bidder for the project, but the confidentiality agreement Taylor signed for Apostolicas also provided in part that certain information from Arvida would be kept confidential, used solely for the purpose of evaluating a possible transaction, and would not be used in any way that would be directly or indirectly detrimental to Arvida. The agreement also provided that Arvida promptly would be informed in the event the other party decided not to proceed with the transaction. After Taylor signed a copy of the agreement between Heathrow and Arvida, Taylor was provided a packet of documents that included documents relating to the business plan developed by Apostolicas and Heathrow.

Discussions between Taylor and Heathrow began in earnest. However, Heathrow, through Apostolicas, was also negotiating for financing with others because, according to the testimony of Apostolicas, he needed to put in place several different components that he called "frogs on a log" and "pieces of the puzzle" so that he could have back-up deals. Having these components in place would not leave him vulnerable if one component dropped out because he would have alternative financing arranged so that no single individual or entity would have leverage over him by leaving him stuck and unable to close. Apostolicas admitted that he had to have back-up deals because if one piece of the puzzle fell through it would give someone enormous leverage over him. Throughout April 1996, discussions between Heathrow and Taylor involved a joint venture and a limited partnership, all of which were ultimately rejected by Apostolicas.

On May 9th, Taylor wrote to the owner of Alaqua Lakes, which is a competitor of Heathrow in the high-end residential market, inquiring whether Alaqua Lakes was available for purchase by Taylor. The letter indicated that Taylor had recently completed a due diligence on the Heathrow project and that it appeared Taylor would not be involved with that project. The letter also identified Alaqua Lakes as a major competitor of Heathrow's. The record reflects that Taylor did not immediately inform Heathrow of this inquiry. There is nothing in the record to indicate that as of May 9th, any contract or agreement existed between Taylor and Heathrow; there were only continuing discussions about Taylor's potential involvement in the Heathrow project.

The discussions between Taylor and Heathrow, at some point in time, turned to a proposed purchase by Taylor of a portion of the development identified as Parcels 26 and 27.⁷ Heathrow was also negotiating with others, including Centex Homes, the Cabot Group, Morrison Homes, and Park Square, for the purchase of these two parcels. On May 13th, apparently after Centex Homes bowed out of the deal, Heathrow sent Taylor a proposed contract. On May 18th, Apostolicas wrote Taylor indicating that he could meet with Taylor on May 20th in the event Taylor still wanted to be involved with the development. Apostolicas indicated that he would fully understand if Taylor did not want to sign the contract and requested a response by May 20th so that he would have time to accept one of the other offers for the two parcels.

Taylor and Heathrow were unable to reach an agreement on Taylor's purchase of part of the development, and on May 22nd, Taylor proposed a loan with an option to purchase finished lots in Parcels 26 and 27. Apostolicas testified that either during this May 22nd discussion or the day before, he was informed by a representative of Taylor that Taylor was interested in pursuing the purchase of Alaqua Lakes. The record also reveals that a day or two earlier, a representative of Arvida informed Apostolicas that he heard Taylor was purchasing Alaqua Lakes.

Taylor and Heathrow eventually did reach an agreement embodied in a loan commitment letter dated May 31, 1996, which required Taylor to lend Heathrow $3 million dollars if numerous conditions were satisfied by Heathrow. In the commitment letter and previous drafts, Taylor revealed that it was under contract to purchase Alaqua Lakes. The loan commitment stated in part:

[Heathrow] acknowledges that due to the nature of [Taylor's] business, [Taylor] and its affiliates may from time to time be in direct competition with ... [Heathrow]. Without limiting the general nature of the foregoing, [Heathrow] acknowledges (i) [Taylor] is under contract to acquire the development known as "Alaqua Lakes" in Seminole County, Florida and (ii) in the event [Heathrow] does not purchase [the Heathrow development] or any portion of the Heathrow development, [Taylor] may buy or acquire any development not purchased by [Heathrow]; and (iii) [Taylor] has in no way agreed to limit its business activities as a result of [this loan].

In the event all conditions precedent were complied with, the loan was scheduled to close on June 7, 1996.⁸ On that date, Taylor's representatives traveled to Orlando for the loan closing. Apostolicas's attorney, who was required to give a satisfactory opinion letter under the loan agreement and who had been involved in the negotiations, reviewed the loan documents and advised Apostolicas that there was a potential usury problem with the loan. Despite discussions throughout the day concerning the usury issue, and other conditions that were not met, the loan did not close. Apostolicas obtained an extension of the closing date from Arvida, found a buyer for Parcels 26 and 27, and secured a loan. Heathrow then closed with Arvida and subsequently instituted suit against Taylor, alleging that Taylor realized an advantage through Heathrow's disclosure of confidential materials. Specifically, it was alleged that Taylor could differentiate Alaqua Lakes from the Heathrow subdivision to Taylor's advantage now that Taylor knew, based on the disclosed information, that Heathrow planned to compete against Alaqua Lakes. Heathrow further alleged that Taylor breached the confidentiality agreement by failing to disclose to Heathrow Taylor's negotiations with Alaqua Lakes and by failing to disclose to Heathrow Taylor's intentions not to continue negotiations with Heathrow. The jury returned a verdict in favor of Heathrow, and the court entered the judgment under review, awarding Heathrow 12.1 million dollars in damages after granting Taylor's motion for remittitur.

We will consider, in the following order, the issues of 1) whether a fiduciary duty was breached by Taylor; 2) whether Taylor fraudulently induced Heathrow into executing the loan agreement; and 3) whether Heathrow had a valid claim for breach of the confidentiality agreement. Because these issues are dispositive, the remaining issues raised by the parties are moot.

Breach of Fiduciary Duty

A cause of action for breach of a fiduciary duty is founded on a fiduciary relationship. A fiduciary relationship is based on trust and confidence between the parties where "confidence is reposed by one party and a trust accepted by the other, ...."Doe v. Evans, 814 So.2d 370, 374 (Fla.2002) (quoting Quinn v. Phipps, 93 Fla. 805, 113 So. 419, 421 (1927)); see also First Nat'l Bank & Trust Co. of Treasurer Coast v. Pack, 789 So.2d 411, 415 (Fla. 4th DCA 2001)

("A fiduciary relationship which is implied in law is based on the specific factual circumstances surrounding the transaction and the relationship of the parties, ...." (citations omitted)); Capital Bank v. MVB, Inc., 644 So.2d 515 (Fla. 3d DCA 1994).

Unless the relationship is...