Vantage View, Inc. v. Bali East Development Corp.

• Citation: 421 So.2d 728
• Decision Date: 10 November 1982
• Docket Number: No. 81-289,81-289
• Parties: VANTAGE VIEW, INC., Appellant, v. BALI EAST DEVELOPMENT CORPORATION, etc., et al., Appellees.
• Court: Court of Appeal of Florida (US)

Page 728

421 So.2d 728

VANTAGE VIEW, INC., Appellant, v. BALI EAST DEVELOPMENT CORPORATION, etc., et al., Appellees.

No. 81-289.

District Court of Appeal of Florida,

Fourth District.

Nov. 10, 1982.

Kay Latona of Becker, Poliakoff & Streitfeld, P.A., Fort Lauderdale, for appellant.

Julio C. Alonso of Meyer, Weiss, Ross, Arkin, Shampanier, Ziegler & Barash, P.A., Miami Beach, for appellee, Bankers Trust Co.

GLICKSTEIN, Judge.

Appellant, a condominium association, brought an action against appellee, Bankers Trust Company, and others for breach of implied warranty, negligence, and strict liability arising out of a number of construction defects and deficiencies. The trial court dismissed with prejudice in the same order appellant's amended complaint and second amended complaint against Bankers, ostensibly basing its dismissal on appellant's failure to allege facts which would justify holding Bankers liable for the acts of its subsidiary, Real-Prop Investors Atlantic, Inc. Appellant does not appeal that part of the order which dismisses the count concerning strict liability, but argues the counts based on implied warranty and negligence state a cause of action. We agree; therefore we reverse and remand.

Appellant's complaint alleged alternative theories of recovery against Bankers: that Bankers and Real-Prop were jointly and severally liable as developers ¹; or, in the alternative, that Bankers was liable for the acts of its subsidiary as the developer of the condominium. The trial court, appellant correctly contends, considered only the latter theory of recovery. In Bond v. Koscot Interplanetary, Inc., 246 So.2d 631 (Fla. 4th DCA 1971), this court stated:

"If a complaint states a cause of action upon any ground, a motion to dismiss the complaint for failure to state a cause of action should be denied. * * "

Id. at 633 (emphasis original), citing Regan v. Davis, 97 So.2d 324 (Fla. 2d DCA 1957), as quoted in Lytell v. McGahey Chrysler-Plymouth, Inc., 180 So.2d 354, 355 (Fla. 3d DCA 1965).

As to the count alleging breach of implied warranty, appellant claimed:

5.2 The Developers (BALI EAST, BANKERS TRUST and REALPROP), impliedly warranted to the Condominium's unit owners that each Condominium parcel was reasonably fit for its intended purpose and merchantable, and that the Condominium building and improvements were constructed in accordance with the plans and specifications filed as a matter of public record.

5.3 The Developers breached the aforesaid implied warranty by failing, in constructing the Condominium building and improvements, to comply with the requirements of the South Florida Building Code, failing to construct in accordance with proper and approved construction plans and specifications, and failing to employ good design, engineering and construction practices, as a direct and proximate result of which the Developers constructed the Condominium building and improvements and sold parcels thereof to the unit owners with the defects and deficiencies set forth in Exhibit "A".

These allegations state a cause of action. See Gable v. Silver, 258 So.2d 11 (Fla. 4th DCA), aff'd, 264 So.2d 418 (Fla.1972); B & J Holding Corp. v. Weiss, 353 So.2d 141 (Fla. 3d DCA 1977); David v. B & J Holding Corp., 349 So.2d 676 (Fla. 3d DCA 1977).

Concerning its count for negligence, appellant's second amended complaint alleged the following:

6.2 At all times material hereto, the Developers (BALI EAST, BANKERS TRUST and REALPROP), by themselves and through their agents, servants and employees, designed, constructed, supervised, inspected and approved for occupancy the Condominium building and improvements, and were under a duty to the members of the Association to use reasonable care in so doing.

6.3 At all times material hereto, the Developers, by themselves and through their agents, servants and employees, undertook to construct the Condominium building and improvements, and were under a duty to members of the Association to do so in accordance with the South Florida Building Code, proper and approved plans and specifications, and proper design, engineering and construction practices.

6.4 The Developers were careless and negligent in designing, constructing, supervising, inspecting and approving for occupancy the Condominium building and improvements because of their failure to comply with the requirements of the South Florida Building Code, failure to construct in accordance with proper and approved construction plans and specifications, and failure to employ good design, engineering and construction practices, as a direct and proximate result of which the Developers constructed the Condominium building and improvements and sold parcels thereof to the unit owners with the defects and deficiencies set forth in Exhibit "A".

These, too, recite elements of a legally cognizable action against a developer. See Wittington Condominium Apartments, Inc. v. Braemar Corp., 313 So.2d 463 (Fla. 4th DCA 1975), cert. denied, 327 So.2d 31 (Fla.1976). Accordingly, the trial court, in failing to examine all theories advanced by appellant, committed error.

The final issue in this case is whether appellant alleged sufficient facts to avoid dismissal of an action seeking to pierce the corporate veil of Real-Prop, Banker's subsidiary. We hold that it did. In reaching our conclusion, we hearken back to the analysis and collection of authorities by the late Circuit Judge W. Troy Hall, Jr., in Waterman Memorial Hospital Association v. Rigdon, 32 Fla.Supp. 154 (Cir.Ct. Lake County 1969), which the writer of this opinion has long admired. He said in considering a motion to dismiss:

Much of the time of this and other courts is consumed in hearing such procedural matters. This in large part results from the fact that professional customs and practices have a tendency to linger long after they are supposed to have been changed by duly promulgated rules, statutes or decisions.... It may well be that early common law pleading rules had certain advantages over the rules of modern pleading. The fact remains, however, that the rules have changed, F.R.C.P. 1.110(b) requires "a short and plain statement of the ultimate facts showing that the pleader is entitled to relief." The Black's Law Dictionary definition of "ultimate facts" includes the following--

"The logical conclusions deduced from certain primary evidentiary facts ... Those facts found in that vaguely defined field lying between evidential facts on the one side and the primary issue or conclusion of law on the other ... The final resulting effect reached by processes of legal reasoning from the evidentiary facts."

Id. at 155. ²

The nature of this "vaguely defined field" is such that confusion may be, to a certain degree, inevitable. Perhaps the most helpful method of ascertaining the type of pleading required under present rules is to examine the forms which are appended to them. Sometimes a page of the concrete is worth more than a volume of abstract semantics. No set of forms could cover every situation but the forms were apparently intended to illustrate what is required. Each is obviously a "short and plain statement" and contains only a few sentences. Although there are no doubt a few exceptions, we assume that generally speaking the forms show the general type of pleading required and that other types would be the exceptional cases--not vice versa.

Id. at 156 (footnote omitted) (emphasis supplied).

The ultimate facts alleged in paragraph 3.2(a) are that Bankers established Real-Prop as a mere instrumentality and a sham to mislead creditors. ³ We start with the following text recited by Judge Hall for determining the sufficiency of a complaint:

In Conley v. Gibson, supra, the U.S. Supreme Court also laid down the test which has become the standard criterion in federal courts for determining the sufficiency of a complaint, and that is that a complaint "should not be dismissed for insufficiency unless it appears to a certainty that the plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim." This same quotation was set out with approval and italicized in the Florida case of Martin v. Highway Equipment Supply Co., Inc., supra [172 So.2d 246 (Fla. 2d DCA 1965) ].

The U.S. Court of Appeals for this, the fifth circuit, has, in numerous cases in recent years, been reversing trial judges for dismissing complaints. Most of such cases, incidentally, originated in Florida. (See Barber, infra.) In Arthur H. Richland Co. v. Harper, 5th Cir., 302 Fed.2d 324, the court declared, through Judge Brown--

"This is another case proving that final disposition of a civil action on the basis of bare bones pleading is a tortuous thing. How a standard so simply expressed, so often repeated, is apparently so often overlooked without even so much as a mention is hard to understand."

Id. at 159.

We said earlier that the ultimate facts alleged by appellant are: (1) the parent established the subsidiary as a mere instrumentality and a sham; and (2) the parent did so to mislead creditors and to avoid liability. As for the first allegation, we are not enamoured with the word "instrumentality" but there is authority for its use. We interpret such word to be the equivalent of "alter ego" or "agent"; and we hold that in order to state a cause of action against a parent corporation for the acts of its subsidiary, it is sufficient to allege the latter to be the alter ego or agent of the parent.

An early decision which serves as a primary basis for our holding is Berkey v. Third Ave. Ry., 244 N.Y. 84, 94, 155 N.E. 58, 61 (1926), wherein the late Justice Cardozo said:

The whole problem of the relation between parent and subsidiary corporations is one that is still enveloped in the mists of metaphor.... We say at times that the corporate entity will be ignored when the parent corporation operates a business through a subsidiary which is characterized...