Ungerleider v. Gordon, No. 99-10767

• Decision Date: 13 June 2000
• Docket Number: No. 99-10767
• Citation: 214 F.3d 1279
• Parties: (11th Cir. 2000) Bruce A. UNGERLEIDER, M.D., Plaintiff-Appellant, v. Robert P. GORDON, Harvest International of America, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1279

214 F.3d 1279 (11th Cir. 2000)

Bruce A. UNGERLEIDER, M.D., Plaintiff-Appellant, v. Robert P. GORDON, Harvest International of America, Inc., Defendants-Appellees.

No. 99-10767.

United States Court of Appeals Eleventh Circuit.

June 13, 2000.

Appeal from the United States District Court for the Middle District of Florida. (No. 95-00568-CV-T-23E), Steven D. Merryday, Judge.

Before COX, Circuit Judge, and GODBOLD and MESKILL^*, Senior Circuit Judges.

MESKILL, Senior Circuit Judge:

Plaintiff-appellant Bruce A. Ungerleider appeals from a judgment of the United States District Court for the Middle District of Florida, Merryday, J., summarily disposing of his claims sounding in securities fraud, common law fraud, contract, civil theft and conversion. The sole issue raised by Ungerleider on appeal is whether the district court erred in holding that an alleged oral agreement could not be enforced under the parol evidence rule. We find no error and affirm.

BACKGROUND

In 1991, Ungerleider began making a series of investments in defendant Phoenix Information Systems, Inc. (Phoenix), a startup company attempting to develop a travel reservations system for use in the United States and abroad. Defendant-appellee Robert P. Gordon was the chairman and CEO of Phoenix, as well as its largest shareholder. He was also the owner, chairman and CEO of defendant-appellee Harvest International of America, Inc. (Harvest). Between 1991 and 1993, Ungerleider invested over $800,000 in Phoenix, and his interests in the company were memorialized in over a dozen written agreements.

In 1992, Gordon and Harvest agreed to pay Ungerleider a finder's fee if he was able to secure additional financing for Phoenix from certain sources, including the prominent investor George Soros. Shortly thereafter, Gordon apparently also arranged for Robert Conrads to pursue additional financing for Phoenix. Conrads succeeded in attracting Soros' interest in the investment. The defendants informed Ungerleider that an outside investor had been found, but they refused to identify him. The defendants also advised Ungerleider that the investor was unwilling to proceed unless Ungerleider relinquished his contractual interests in Phoenix.

On April 15, 1993, Ungerleider, Gordon, Phoenix and Harvest entered into a written agreement whereby Harvest and Phoenix were entitled to retain all the money invested by Ungerleider; Ungerleider was to receive 1.2 million shares of Phoenix; and all the prior agreements, including the finder's fee agreement, were revoked. Two of the relevant provisions of the April 15 agreement are set forth below.

NOW THEREFORE, in consideration of the premises and of the undertakings and obligations herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

. . .

14. Entire contract. This Agreement contains the entire understanding of the parties and supersedes all previous verbal and written agreements. There are no other agreements, representations, or warranties not set forth herein.

Paragraph 5 of the agreement stated that Ungerleider was entitled to receive 1.2 million shares of Phoenix stock, and paragraph 3 stated that Ungerleider was "entitled to receive the [Phoenix] Common Stock referred to in paragraph 5 hereof and no other stock or other consideration."

At the time the agreement was signed, Gordon conveyed to Ungerleider a stock certificate for 1.2 million shares of Phoenix. Both parties agree that the shares were not the same 1.2 million shares that Ungerleider was entitled to under the agreement. Ungerleider alleged that he received these initial shares as part of a contemporaneous parol agreement with Gordon to induce Ungerleider to sign the written agreement. The defendants contended in the district court that these initial shares were merely collateral until Ungerleider received the shares called for in the written agreement.

Gordon shortly thereafter regained possession of the initial shares, apparently by asking Ungerleider to return the stock certificate in order to effect a corporate name change. When Ungerleider was unsuccessful in demanding the return of the certificate, and after discovering that Soros was a significant source of the additional financing, he filed this suit. The defendants moved to dismiss, and the district court granted the motion in part and denied it in part. See Ungerleider v. Gordon, 936 F.Supp. 915 (M.D.Fla.1996). Ungerleider filed an amended complaint, stating claims sounding in securities fraud, common law fraud, contract, civil theft and conversion. The district court granted an automatic stay with respect to defendant Phoenix, which was entering into bankruptcy, and ultimately granted summary judgment against Ungerleider on all claims in an unpublished decision. The district court certified that its decision constituted a final judgment in accordance with Fed.R.Civ.P. 54(b), and this appeal followed.

DISCUSSION

The sole issue on appeal is whether the district court correctly held that the purported oral agreement between Ungerleider and Gordon was unenforceable under the parol evidence rule. Ungerleider argues that the oral agreement was enforceable as a contemporaneous agreement that induced the signing of the written agreement. Ungerleider also argues that the parol evidence rule should not apply because the reference to "other good and valuable consideration" in the written agreement rendered the written agreement incomplete. For the reasons set forth below, we reject these arguments and affirm the judgment of the district court.

I

Florida law, of course, recognizes the parol evidence rule. "[E]vidence of a prior or contemporaneous oral agreement is inadmissible to vary or contradict the unambiguous language of a valid contract. This rule applies when the parties intend that a written contract incorporate their final and complete agreement." Johnson Enters. of Jacksonville v. FPL Group, 162 F.3d 1290, 1309 (11th Cir.1998) (citation and internal quotation marks omitted); see J.M. Montgomery Roofing Co. v. Fred Howland, Inc., 98 So.2d 484, 485-86 (Fla.1957). The rule is one of substantive law, not evidence, so it is applied by federal courts sitting in diversity. See Johnson Enters., 162 F.3d at 1309 n. 47.

Ungerleider argued before the district court that "parol evidence is admissible to establish a contemporaneous oral agreement which induced the execution of a written contract, though it may vary, change, or reform the instrument." See Mallard v. Ewing, 121 Fla. 654, 664, 164 So. 674, 678 (1935). Indeed, Florida courts recognize such an "inducement" exception to the parol evidence rule. Johnson Enters., 162 F.3d at 1309-10 (citing Mallard ). However, the party submitting parol evidence under this exception carries a heavy burden of proof. "The inducement exception 'requires the [oral] agreement to be shown by evidence that is clear, precise, and indubitable; that it shall be found that the witnesses are credible, that they distinctly remember the facts to which they testify, and that they narrate the details exactly and that their statements are true.' " Id. at 1310 (alteration in original) (quoting Mallard, 121 Fla. at 664, 164 So. at 678).

The district court did not address Ungerleider's argument. Instead, "[b]ecause of the specific and comprehensive nature of the written agreement," it gave no credence to the "oral representations which occurred after, and which contradict, the written agreement." We need not remand for the district court to consider the inducement exception in the first instance, i.e., whether there was "clear, precise, and indubitable" evidence of the oral agreement, because we hold as a matter of law that the inducement exception is inapplicable.

Under Florida law, the inducement exception does not apply where "the alleged oral agreement relate[s] to the identical subject matter embodied in the written agreement and ... directly contradict[s] an express provision of the written agreement." Linear Corp. v. Standard Hardware Co., 423 So.2d 966, 968 (Fla.App. 1 Dist.1982); see also Bond v. Hewitt, 111 Fla. 180, 185, 149 So. 606, 608 (1933) ("[W]here a written instrument does not purport to contain the entire agreement between the parties thereto, nor to have been intended as a complete statement or whole contract, and where such instrument was executed pursuant to a parol agreement and in part performance thereof, parol evidence is admissible when consistent with, and not contrary to, such written instrument." (emphasis added)). The Supreme Court of Florida made this clear in McComb v. Hygeia Coca-Cola Bottling Works, 137 Fla. 260, 188 So. 219 (1939), in which it rejected the plaintiff's claims that he was entitled to lifetime employment by virtue of an oral promise made to induce him to sign a release of liability. The court presented the issue as follows:

When a release of a claim for personal injuries is executed and delivered in the form, viz: "For the sole consideration of the sum of One Hundred Sixty and 00/100 Dollars ... received from Hygeia Coca Cola Bottling Works, Inc., I do hereby acknowledge full satisfaction and discharge of all claims ...", can it be shown by parol testimony that there was a prior or contemporaneous additional consideration for said release?

Id. at 265-66, 188 So. at 221. The court answered no. "If the plaintiff is allowed to show on the trial of the cause other considerations flowing from the alleged injury, then the rule against varying the terms of a written instrument will be violated." Id. at 266, 188 So. at 222. The court expressly considered, but declined to follow, Mallard. See id.

Here, the alleged oral agreement entitling Ungerleider to an additional 1.2 million shares of stock directly contradicts paragraph 3 of the written agreement, which states that Ungerleider was "entitled to receive the [Phoenix] Common Stock...