Vance v. Indian Hammock Hunt & Riding Club, Ltd.

• Citation: 403 So.2d 1367
• Decision Date: 23 September 1981
• Docket Number: No. 80-1682,80-1682
• Parties: Jesse B. VANCE, Jr., Brenda Vance and Robert Hartleb, Appellants, v. INDIAN HAMMOCK HUNT & RIDING CLUB, LTD., Appellee.
• Court: Court of Appeal of Florida (US)

Page 1367

403 So.2d 1367

Jesse B. VANCE, Jr., Brenda Vance and Robert Hartleb, Appellants, v. INDIAN HAMMOCK HUNT & RIDING CLUB, LTD., Appellee.

No. 80-1682.

District Court of Appeal of Florida, Fourth District.

Sept. 23, 1981.

Charles R. Gardner of Gardner, Shelfer, Mendelson, Duggar & Thompson, Tallahassee, for appellants.

Ted R. Brown and Scott J. Johnson of Maguire, Voorhis & Wells, P. A., Orlando, for appellee.

OWEN, WILLIAM C., Jr., (Retired) Associate Judge.

Plaintiffs, land purchasers claiming to have been defrauded by the developer, appeal from an adverse final judgment entered after the court had granted the defendant's motion for involuntary dismissal made at the close of the plaintiffs' case in chief during a non-jury trial. We reverse and remand for a new trial.

Defendant's development, registered with the Division of Florida Land Sales pursuant to Chapter 498, Florida Statutes, is a private, family oriented planned recreation development consisting of 299 platted lots of two and one half acres each for private homesites, with the remaining 2,600 acres being common area for use by all residents. The plaintiffs each purchased and own one or more lots in the development.

Subsequent to the purchase of their respective lots, plaintiffs filed this lawsuit. Initially filed as a multi-count class action, it ultimately went to trial as a suit on behalf of the named plaintiffs on Counts III and VII only. Count III alleged, in essence, that defendant had advertised and represented that improvements to be completed within the subdivision would include a "spacious hunting lodge in excess of 12,000 square feet", ¹ a "duck pond" and other improvements and that the entire subdivision would be surrounded with "a very strong perimeter fence" for security purposes; that none of these improvements had been completed; that the representations or advertisements were made by the defendant with the intention that plaintiffs rely on them, the defendant knowing that such representations or advertisements were false and were violations of the Florida Uniform Land Sales Practices Law; that plaintiffs, believing the representations and advertisements to be true, relied on them in entering into the contracts for purchase of lots; and that plaintiffs had suffered damages as a result. The relief sought was a judgment for specific performance of all obligations to construct the promised improvements and to maintain the common area, together with attorneys fees. Count VII realleged the same matters as common law fraud in inducement and sought relief in the form of compensatory and punitive damages, together with attorneys fees.

The court's order on pretrial conference required plaintiff to furnish to the court, prior to trial, citations to the appropriate sections of the statutes pursuant to which the suit was brought. In responding, plaintiff cited not only to Chapter 498, Florida Statutes, which had been specifically pleaded, but also to Sections 817.40 and 817.41, ² Florida Statutes, which had not been pleaded.

At the commencement of the trial, the court ruled that plaintiffs could not maintain a cause of action under Section 817.41(1), Florida Statutes, ³ because (1) plaintiffs had not specifically pleaded the statute in the complaint, (2) had it been pleaded, plaintiffs would still have had to prove all of the elements of common law fraud in inducement, including reliance, and (3) in any event, Section 817.41(1), Florida Statutes, (as applied to sales advertisement of land registered pursuant to Chapter 498, Florida Statutes) had been preempted by the provisions of Chapter 498, Florida Statutes.

This ruling, as well as two of the three reasons for it, was in error. First, while it would be better pleading practice, plaintiffs were not required to specifically designate or refer to Section 817.41(1), Florida Statutes in order to maintain an action under it, so long as they pleaded sufficient facts to bring the allegations of the complaint within the statute. See, City of Lakeland v. Select Tenures, Inc., 129 Fla. 338, 176 So. 274 (1937). Second, plaintiffs were not precluded from maintaining this action under Section 817.41(1), Florida Statutes due to any preemption by Chapter 498, Florida Statutes. The statutes are not inconsistent or repugnant to one another. We find no express legislative intent that Chapter 498, Florida Statutes, repeals Section 817.41(1), Florida Statutes, and repeal by implication is not favored. Mann v Goodyear Tire and Rubber Company, 300 So.2d 666 (Fla.1974). However, the trial court quite properly determined that one seeking to maintain a civil action for violation of Section 817.41(1), Florida Statutes, must, in order to recover damages, prove each of the elements of the common law tort of fraud in inducement (discussed infra), which would include not only reliance, but also detriment. This is so despite the fact that the state, in charging a crime under Section 817.41(1), Florida Statutes, need not prove either reliance or detriment in order to obtain a conviction. Major v. State, 180 So.2d 335 (Fla.1965). The reason is that in the criminal case the wrong for which public vindication is sought is the knowing making or dissemination of the false or misleading advertising with the intent or purpose of inducing a member of the public to enter into some obligation relating to the property or the services being advertised. The offense occurs irrespective of reliance by or detriment to a member of the public. On the other hand, one who seeks by civil suit to vindicate a violation of the statute as a private wrong must show that the wrong was the proximate cause of his injury or damage, and proof of reliance is necessary in order to prove the causal connection.

At the close of the plaintiff's case in chief, the court granted defendant's motion for involuntary dismissal on the grounds that: (1) as to the action for common law fraud, there was no proof of the essential element of reliance, and the only evidence of false statement or misrepresentation of fact pertained to a promise to do something in the future, (2) the absence of proof of reliance was also fatal to plaintiffs' cause of action under Section 498.061(1), Florida Statutes, ⁴ (3) the evidence did not show any violation of Section 498.023(2), Florida Statutes, ⁵ and (4) the more credible evidence established that the common area had been properly maintained. Plaintiffs attack this ruling on several grounds.

First, plaintiffs assert that reliance is not an essential element of a cause of action under Section 498.061(1), Florida Statutes, for a subdivider's untrue statement of a material fact made in disposing of any interest in subdivided lands or in a registration statement or public offering statement. We disagree. While at first blush the wording of the statute might make it appear that proof of lack of reliance is an affirmative defense, the burden of proof of which would be on the subdivider, we think, upon reflection, that logic and reason place on the plaintiff the burden to show reliance, failure of which would be fatal, as the court held in this case.

Our attention has not been called to any reported cases construing this particular statutory provision. Plaintiffs and defendant agree that this statute was modeled after Section 410(a) of the Uniform Securities Act, the interpretation of which is helpful. The trial court, in making its ruling, relied upon the case of S & F Supply Company v. Hunter, 527 P.2d 217 (Utah 1974), which was concerned with Section 410(a)(2) of the Uniform Securities Act. In the cited case, the Utah court, after noting that the statute only provided a remedy for the falsity of a "material" fact, stated, at page 221:

In that regard, some notice should also be taken of the fact that the statute gives a remedy only for falsity of a "material" fact or omission. That also seems to import some objective standard of reliance, because the determination of whether a fact is "material" can only be made in the frame of reference of the definition of what a material fact is: that is, it must be something which a buyer or seller of ordinary intelligence and prudence would think to be of some importance in determining whether to buy or sell.

We are persuaded that the reasoning of the Utah court is logical, and we therefore conclude that in order for a fact to be a "material" fact (in a statement alleged to be untrue) the party claiming to have sustained loss, injury, or damage has the burden to show reliance upon the untrue statement.

Plaintiffs next claim that the court erred in ruling that there was no proof of reliance. We agree. Coming, as it did, at the close of the plaintiffs' case in chief in a non-jury trial, defendant's motion for involuntary dismissal precluded any weighing of the credibility or probative value of the evidence, restricting the trial court solely to a determination of whether the evidence, viewed in a light most favorable to the plaintiffs, presented a prima facie case. Tillman v. Baskin, 260 So.2d 509 (Fla.1972); Curls v. Tew, 346 So.2d 1242 (Fla.1st DCA 1977).

Mr. Vance and Mr. Hartleb each testified that he had purchased one or more lots in the development in reliance upon the statements contained in the sales brochure, as supplemented by oral statements made by defendant's salesman, Mr. Reiss. Both of these plaintiffs had...