County Civil Court: CONTRACTS – fraud in the inducement – to prevail on claim for fraud in the inducement, plaintiff must show his/her reliance on statement is justified – cause must be remanded to trial court to determine, based on record already developed, whether plaintiff justifiably relied on defendant’s promises to pay her back for each alleged loan  - Final Judgment reversed and remanded.  James v. Brinkerhoff, No. 03-0217AP-88B (Fla. 6th Cir. App. Ct. July 29, 2004). 

 

 

IN THE CIRCUIT COURT FOR THE SIXTH JUDICIAL CIRCUIT

IN AND FOR PINELLAS COUNTY, FLORIDA

APPELLATE DIVISION

 

OMAR B. JAMES,

                        Appellant,

 

vs.                                                                                        Appeal No. 03-0217CI-88B

                                                                                            UCN522003**000217XXCI*P

LORI J. BRINKERHOFF,

                        Appellee.

_________________________________________/

 

Opinion Filed___________________

 

Appeal from Final Judgment

Pinellas County Court

County Judge Walter Fullerton

 

Russell L. Cheatham, III, Esquire

Attorney for Appellant

 

Warren J. Knaust, Esquire

Attorney for Appellee

 

 

 

ORDER AND OPINION

 

            THIS CAUSE came before the Court on appeal, filed by Omar B. James (James), from the Final Judgment, entered December 3, 2002, in favor of Lori J. Brinkerhoff (Brinkerhoff).  Upon review of the briefs, the record and being otherwise fully advised, the Court reverses the trial court’s ruling.

            The underlying facts are that Brinkerhoff filed a Complaint for Money Lent and for Fraud, on April 18, 2002, against James seeking to recover the principle sum of $5,750.95, money allegedly loaned by Brinkerhoff to James between October 29, 2001, and February 8, 2002.  During this time period, the parties were involved in a personal relationship.  Brinkerhoff alleged that this money was loaned to James as a result of James’ fraudulent misrepresentation and deceit, including that James stated that he would repay Brinkerhoff and that James needed money because his “life was in danger.”  James denied these allegations.  After a non-jury trial, the trial court entered Final Judgment finding the James fraudulently induced Brinkerhoff to loan him money.  The trial court awarded Brinkerhoff the sum of $6,141.60, [1] reasonable attorney’s fees and costs.   

            James raises two issues on appeal: (1) whether the trial court erred in rendering a judgment for fraud where there was insufficient evidence as a matter of law; and (2) whether the trial court improperly allowed into evidence the hearsay testimony of Louis Michael Cassiano.  In reviewing the first issue, the Court initially finds that the Final Judgment was entered for Brinkerhoff for the tort of fraud in the inducement and not on a breach of contract claim.  Brinkerhoff did not allege breach of an oral contract, nor did the trial court find that a contract existed between the parties.  Therefore, the cases cited by James in support of his argument that the economic loss doctrine limits Brinkerhoff to her contractual remedies are inapplicable to the case at bar.  See e.g. HTP, LTD v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238, 1240 (Fla. 1996)(holding that fraudulent inducement is an independent tort from breach of contract and is not barred by the economic loss rule); Allen v. Stephan Co., 784 So.22d 456, 457 (Fla. 4th DCA 2000)(same).  Indeed, the trial court did not award punitive damages in this case, in essence limiting Brinkerhoff’s to her contractual remedies.

However, this finding does not resolve the main issue of whether the trial court’s ruling is insufficient as a matter of law.  The record shows that the trial court considered the testimony of parties and several documents admitted into evidence that purportedly showed what loans were made to James and when.  These included:  (1) 10/24/01, money market account withdrawal (withdrawal), $1,000.00; (2) 10/26/01, car payment to AmSouth, $ 380.66; (3) 10/29/01, Sears credit card payment, $20.00; (4) 11/01/01, payment for lenses to Optical Outlets, $ 118.95; (5) 11/7/01, withdrawal, $1,500.00; (6) 11/7/01, withdrawal, $1,500.00; (7) 2/4/02, withdrawal, $500.00; (8), 2/4/02, withdrawal, $560.00; and (8) 2/8/02, withdrawal, $562.00. [2]   The record shows that, with the exception of the Sears and Optical Outlets statements, these documents contained notations, made by Brinkerhoff after receiving her bank statements, indicating that the monies paid to James were loans.  

James testified that Brinkerhoff gave him $1,000.00 in October 2001, as a gift presented in a card that James found in his suitcase upon arriving in Jamaica.  James further testified that Brinkerhoff voluntarily made his October car payment and that he never offered to pay her back.  James admitted that Brinkerhoff paid his Sears credit card, but that he gave Brinkerhoff $20.00 for the payment.  No specific questions were asked of James regarding the other loans and James denied owing Brinkerhoff any money. 

Brinkerhoff countered that she gave money to James and paid certain bills because James repeatedly said that he would pay her back.  Brinkerhoff testified that she continued to loan James money into February 2002, even though James refused to sign a promissory note and never made any attempt to repay Brinkerhoff.  According to Brinkerhoff, James stated that “no one’s ever lent me this much money before” and that James suggested he could pay her back by borrowing the money from someone else.  Brinkerhoff testified that James gave her a myriad of reasons for needing money, including that “someone was going to cast a spell on him” and “his life was in danger” (for the first $1,000.00), that James faced eviction if he didn’t pay his rent, and that James needed money for child support.

As the transcript reveals, the testimony was conflicting and the parties’ credibility

was the deciding factor in trial court ruling in favor of Brinkerhoff.  Although the trial court’s decision comes to this Court clothed with a presumption of correctness, [3] the Court nonetheless finds that the trial court’s ruling is fundamentally flawed as there was no finding that Brinkerhoff justifiably relied on James’ promises to repay her.  As recently set forth in Joseph v. Liberty National Bank, 873 So.2d 384, 388 (Fla. 5th DCA 2004),

in order to state a cause of action for fraud in the inducement a plaintiff must

allege that (a) the representor made a misrepresentation of a material fact; (b) the representor knew or should have known of the falsity of the statement; (c) the representor intended that the representation would induce another to rely and act on it; and (d) the plaintiff suffered injury in justifiable reliance on the representation.  (emphasis added).

 

Other Courts have similarly held that a plaintiff must show that his/her reliance on a statement is justified to prevail on a claim for fraud in the inducement.  See e.g. Shepard v. Wyse, 374 So.2d 1173, 1174 (Fla. 1st DCA 1979)(finding that the plaintiffs will be required to show that their reliance upon defendant’s statement was justified); Gilchrist Timber Co. v. ITT Rayonier, Inc., 696 So.2d 334, 336 (Fla. 1997)(stating that a recipient may rely on the truth of a representation unless the recipient knows the representation to be false or its falsity is obvious). [4]  

            The trial court made a specific finding that Brinkerhoff relied on James’ representations that he would repay her, but made no finding as to whether her reliance was justified.  The Court notes that it should have been readily apparent to Brinkerhoff, at least on November 7, 2002, when James refused to sign a promissory note in exchange for $3,000, that he had no intention of repaying her.  However, the Court finds that “justifiable reliance” is necessarily a discretionary finding that must be determined by the trial court who was in a superior position to weigh the evidence and credibility of the witnesses.  See  Smiley, 704 So.2d at 205.  Accordingly, the Court finds that this cause must be remanded to the trial court to determine, based on the record already developed below, whether Brinkerhoff justifiably relied on James’ promises to pay her back for each alleged loan.  (emphasis added).

In addressing the second issue, the Court finds that the trial court erred in considering the testimony of Louis Michael Cassiano regarding where Brinkerhoff said she “was going when she was so banged up” as this was inadmissible hearsay.  See Fla. Stat. 90.802.  There was no foundation laid for an exception to the hearsay rule and the record shows that Brinkerhoff was simply responding to Cassiano’s question.  The Court finds that there is no support for Brinkerhoff’s argument that this was a spontaneous or excited utterance.  Hence, on remand, the trial court will disregard this testimony.

 

 

 

 

            Therefore, it is,

            ORDERED AND ADJUDGED that the Final Judgment is reversed and this cause is remanded for action consistent with this Order and Opinion.

            DONE AND ORDERED in chambers, at St. Petersburg, Pinellas County, Florida this ______ of July 2004.

           

           

                                                                                    ________________________

                                                                                    DAVID A. DEMERS

                                                                                    Circuit Judge, Appellate Division

 

 

 

 

 

 

 

Copies furnished to:

 

Judge Walter Fullerton

 

Russell L. Cheatham, III, Esquire

5536 Central Avenue

St. Petersburg, FL 33707

 

Warren J. Knaust, Esquire

2167 5th Avenue North

St. Petersburg, FL  33713

 

[1] Counsel for Brinkerhoff orally moved to amend the pleadings to conform to the evidence presented, or $6,141.60, which the trial court granted without objection.

[2] The Court need not address whether these documents were properly admitted into evidence.  Other than requesting that the originals be admitted, no objection was made by James before the trial court and James has not raised admissibility of these documents as an issue on appeal.

[3] See Smiley v. Greyhound Lines, Inc., 704 So.2d 204, 205 (Fla. 5th DCA 1998)(stating that the trial court has the first-hand opportunity to hear and observe the witnesses as they testify and appellate court should not substitute its judgment for that of the trial court unless there is a lack of competent substantial evidence).

[4] Gilchrist is fraudulent misrepresentation case.  However, such cases are persuasive as the essential elements to state a cause of action for fraudulent misrepresentation are the same as fraud in the inducement.  See Thor Bear, Inc. v. Crocker Mizner Park, Inc., 648 So.2d 168, 172 (Fla. 4th DCA 1994)(setting forth the elements of a fraudulent misrepresentation claim).