Gatti v. Goodman et alREPLY to Response to Motion re First MOTION for summary judgmentM.D. Fla.February 15, 2018UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA FT. MYERS DIVISION LOU GATTI, as Trustee and President of TWIN PALMS INC., a dissolved Virginia Corporation, and TWIN PALMS INC., a dissolved Virginia Corporation, Plaintiff, v. Case No: 2:16-cv-728-PAM-CM HELEN F. GOODMAN, CLIFF GOODMAN, and TWIN PALMS RESORT, LLC, Defendants. / DEFENDANTS’ REPLY TO PLAINTIFFS’ RESPONSE IN OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT Defendants HELEN F. GOODMAN, CLIFF GOODMAN, and TWIN PALMS RESORT, LLC, (collectively “Defendants”), by and through undersigned counsel, hereby files this, their Reply to Plaintiffs’ LOU GATTI, as Trustee and President of TWIN PALMS INC., a dissolved Virginia Corporation, and TWIN PALMS INC., a dissolved Virginia Corporation (collectively “Plaintiff”) Response in Opposition to Defendants’ Motion for Summary Judgment [DE 100], and in support thereof, state as follows: I. VIRGINIA LAW AND TPI’S RIGHTS. The Parties agree that the applicable statute permits the successor of a corporation to enforce rights that existed pre-dissolution. The key to the statute is that the rights and liabilities must have existed prior to dissolution. Va. Code Ann. § 13.1–755. However, the Sales Contract is not a right, and Plaintiff provides no authority supporting that notion. [DE 100 ¶ 16]. Plaintiff Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 1 of 11 PageID 3404 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 2 of 11 2 points out that Defendants rely on cases concerning a dissolved corporation’s liabilities in lawsuits filed after dissolution. That statement is accurate, but a red-herring; the same principles apply whether it is the corporation defending a liability or prosecuting a right. Va. Code Ann. § 13.1– 755. Neither Party has cited a case where a corporation, or its successor in interest, sued to enforce a right twenty (20) years after the corporation ceased to exist. Clearly, Plaintiff Twin Palms, Inc. (“TPI”) did not have a right to occupy the property, to require Mrs. Goodman to execute a General Warranty Deed, and to divide the property in September of 1996. [DE 100 ¶ 16]. TPI did not have those rights in September 1996 because TPI had not paid the amounts due under the Sales Contract and had already breached the written terms of the Sales Contract. [DE 89 Statement of Facts ¶¶ 17, 18, 19] II. ESTOPPEL DOES NOT CREATE AN EXCEPTION TO THE APPLICATION OF THE STATUTE OF FRAUDS. The doctrine of promissory estoppel applies when there is (1) a promise which the promisor should reasonably expect to induce action or forbearance; (2) action or forbearance in reliance on the promise; and (3) injustice resulting if the promise is not enforced. DK Arena, Inc. v. EB Acquisitions I, LLC, 112 So. 3d 85, 96 (Fla. 2013). The Florida Supreme Court has definitively and repeatedly rejected the application of that doctrine to avoid the statute of frauds. Id. at 94; see also Consortium Info. Servs., Inc. v. Credit Data Servs., Inc., 149 Fed. App’x. 575 (9th Cir. 2005) (holding that whether an oral agreement is unenforceable under the Statute of Frauds is a pure question of law). In Tanenbaum v. Biscayne Osteopathic Hosp., Inc., 190 So.2d 777, 778 (Fla. 1966), the plaintiff sought enforcement of an oral agreement that the statute of frauds required to be in writing. The plaintiff argued that the oral agreement, combined with his own detrimental reliance on the defendant’s representations, rendered the contract enforceable under the doctrine of promissory estoppel. Id. The Florida Supreme Court rejected plaintiff’s argument, holding: Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 2 of 11 PageID 3405 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 3 of 11 3 “The question that emerges for resolution by us is whether or not we will adopt by judicial action the doctrine of promissory estoppel as a sort of counteraction to the legislatively created Statute of Frauds. This we decline to do.” Id. at 779. Most recently, in DK Arena, Inc., the Florida Supreme Court affirmed Tanenbaum’s unequivocal rejection of a promissory estoppel exception to the statute of frauds. Nevertheless, and despite this clear statement of the law, Plaintiff persists that Defendants are estopped from raising the statute of frauds defense since Plaintiff allegedly relied on the oral modification to the Sales Contract. [DE 100 ¶¶ 18–28]. A. Blue Paper, Inc. v. Provost was a Waiver Case Plaintiff argues that this case is analogous to Blue Paper, Inc. v. Provost, 914 So. 2d 1048 (Fla. 4th DCA 2005). [DE 100 ¶¶ 25-26] That statement is inaccurate. Blue Paper, Inc., concerned a lawsuit filed well within the statute of limitations period and a written sales contract that was amended, in writing. The original sales agreement required the buyer of property to make a $100,000.00 down payment. The parties orally agreed that the buyer was only required to deposit $75,000.00. The amended sales contract stated that that $100,000.00 deposit was held in escrow, even though that was not true. Id. at 1050. Sometime later, the seller, Blue Paper, received a better offer on the property, so Blue Paper attempted to avoid the amended sales contract on the basis that Provost had defaulted on his deposit obligations, even though the seller never requested Provost pay the balance of the deposit. Id. Ultimately, the trial court held, and the district court affirmed, that the seller waived the requirement of a timely payment of the deposit, as clearly time was not of the essence, and applied the terms of the original contract to the dispute. Id. at 1051. Blue Paper did not concern estoppel, but waiver. Id. at 1052. Waiver is the intentional relinquishment of a right by only one party. DK Arena, Inc., 112 So. 3d at 98. “If a plaintiff has been caused to delay his performance beyond the specified time by request or agreement or other Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 3 of 11 PageID 3406 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 4 of 11 4 conduct of the defendant, the plaintiff can enforce the agreement in spite of his delay.” Id. at 98 (citing 4 Corbin § 13.9). However, waiver cases, like Blue Paper, concern slight delays in performance, or changes to minor, non-material terms where one party relied upon those oral modifications and acted accordingly. Id. at 98 (citations omitted). Consequently, in DK Arena, Inc., the Florida Supreme Court held that an unwritten, extended, due diligence period, under which the defendant EB Acquisitions I held an unqualified right to terminate the contract, was not appropriately analyzed under the waiver cases the Fourth District Court of Appeal had relied upon below, including Blue Paper, Inc.; therefore the district court’s opinion was quashed and the oral terms held unenforceable due to the operation of the statute of frauds. Id. B. Waiver Doctrine Inapplicable The alleged oral modifications to the Sales Contract at issue here were significant and material: (1) they changed the timing of the payments so that none of the annual payments of $50,000.00 due beginning October 1, 1990 were to be made pursuant to the written contractual schedule; (2) they changed the source of the payments from TPI to the profits earned by the Camp’s operations under Mrs. Goodman’s management; and (3) they changed the duration of the payments, which, pursuant to the written schedule, were required to be completed by October 1, 1996, to some indefinite period in the future. [DE 89 Statement of Facts ¶¶ 17, 18, 19, 21] Accordingly, the alleged oral modifications are subject to the statute of frauds, and Plaintiff’s claim that Defendants are estopped from using the statue of frauds as a shield, fails. The statute of frauds prohibits the enforcement of oral agreements to transfer interest in real property, and Defendants’ Motion for Summary Judgment should be granted accordingly. Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 4 of 11 PageID 3407 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 5 of 11 5 III. STATUTES OF LIMITATIONS AND REPOSE BAR ACTION Putting aside the dispositive statute of frauds, Plaintiff attempts to avoid the application of the statutes of limitations and repose by asserting that the last element constituting the cause of action did not occur until Plaintiff asked Helen to divide and transfer the Property, which was in 2016. See, e.g., [DE 100 ¶¶ 36–38, 40-41, 44]. But see [DE 77 (3rd Amended Complaint) ¶¶ 86, 90, 97] (continuously breaching their duties from 1993 to present). This case therefore boils down to whether Plaintiff gets to evade both the statute of limitations and the statute of repose simply because he/they chose to ignore their rights, if any, for twenty (20) plus years. Plaintiff’s argument completely ignores the weight of authority holding that damages, even nominally, occur at the time of breach, even if the plaintiff is unaware of the breach. See, e.g., Abbott Lab’s, Inc. v. General Elec. Capital, 765 So.2d 737, 740 (Fla. 5th DCA 2000). This argument also disregards the authority stating that plaintiffs cannot be in control of the timing of the running of the statute of limitations by resting on their rights indefinitely. United States v. Cocoa Berkau, Inc., 990 F.2d 610, 614 (Fed. Cir. 1993) (internal citations omitted) (“[W]e cannot ‘permit a single party to postpone unilaterally and indefinitely the running of the statute of limitations.’ The accrual of a right of action should occur upon default by a liable party, not when a creditor takes steps to procure performance.” (Quoting United States v. Commodities Export Co., 972 F.2d 1266, 1271 n.3 (Fed. Cir. 1993))). Statutes of limitation afford parties needed protection against the necessity of defending claims which, because of their antiquity, would place the defendant at a grave disadvantage. In such cases how resolutely unfair it would be to award one who has willfully or carelessly slept on his legal rights an opportunity to enforce an unfresh claim against a party who is left to shield himself from liability with nothing more than tattered or faded memories, misplaced or discarded records, and missing or deceased witnesses. Allie v. Ionata, 503 So. 2d 1237, 1240 (Fla. 1987). Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 5 of 11 PageID 3408 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 6 of 11 6 If, as Plaintiff asserts, that last act constituting the element of damages occurred when Helen refused to transfer the Property to Plaintiff in 2016, Plaintiff’s purported causes of action could have gone on indefinitely; he could have waited another twenty (20) years before demanding Helen transfer the Property to him and his causes would still not be barred by the statutes of limitations. Clearly, that would be an illogical and absurd result, completely contrary to the legislative objectives of certainty and finality codified in Florida Statutes’ limitations of actions sections 95.11 and 95.12. Summary judgment should be granted to Defendants based upon the application of law to the well-developed record. A. Fraudulent Concealment Doctrine Does Not Defeat the Application of the Statutes of Limitations and Repose Plaintiff asserts that Defendants failed to address the doctrines of tolling, delayed discovery, and fraudulent concealment. [DE 100 ¶¶ 30–34]. This is also inaccurate. Defendants addressed the allegations in their Motion for Summary Judgment at pages 17, and 21 through 23. Despite Plaintiff’s representation that the doctrine of fraudulent concealment “tolls the limitations with respect to all eight counts,” it bears repeating that the doctrine of delayed discovery or fraudulent concealment is only applicable in certain limited circumstances: it does not apply to breach of contract, breach of fiduciary duty, or unjust enrichment actions as those causes of actions are not encompassed within Florida Statute Section 95.031 (“Computation of time”). In addition, and despite Plaintiff’s representations at DE 100 ¶¶ 7 and 29, this Court has never ruled in any manner on the merits of Plaintiff’s claim that the fraudulent concealment doctrine applied, or that the statute of limitations do not bar Plaintiff’s claims.1 1 The Court sua sponte dismissed Plaintiff Gatti’s initial complaint for lack of jurisdiction and denied Defendants’ motion to dismiss as moot [DE 22]; the Court dismissed Plaintiffs’ first amended complaint on the basis of standing, without ruling on Defendants’ statute of limitations Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 6 of 11 PageID 3409 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 7 of 11 7 B. Tolling Statute Inapplicable Events that toll the statute of limitations are defined in Florida Statute Section 95.051 (“When limitations tolled”). They include, for instance, where the party to be sued is absent from the state, section 95.051(1), incapacity of the person entitled to sue, section 95.051(1) (d), and intervening bankruptcy, section 95.051(h). Furthermore, section 95.051(2) expressly precludes the use of any tolling provision not listed: “No disability or other reason shall toll the running of any statute of limitations except those specified in this section, s. 95.091, the Florida Probate Code, or the Florida Guardianship Law.” Thus, the legislature has made clear its intent to exclude all tolling exceptions not listed in the statute. HCA Health Servs. of Fla., Inc. v. Hillman, 906 So. 2d 1094, 1098 (Fla. 2d DCA 2004). Plaintiff’s assertion that his causes of action have been tolled is inaccurate. C. Fraudulent Concealment Doctrine has Limited Application Fraudulent concealment is recognized in limited circumstances to extend the period for filing an action “from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence . . . but in any event an action for fraud under s. 95.11(3) [the four (4) year statute of limitations] must be begun within twelve (12) years after the date of the commission of the alleged fraud, regardless of the date the fraud was or should have been discovered.” Fla. Stat. § 95.031(2) (a). In this case, there are two (2) counts – not eight (8) as Plaintiff incorrectly asserts [DE 100 ¶ 29] – to which the delayed discovery doctrine might apply: Count V, Fraudulent Misrepresentation and Count VI, Fraud by Omission. See Fla. Stat. § 95.031(2) (a). The doctrine or statute of frauds analyses [DE 36]; the Court did not rule on Defendants’ motion to dismiss the second amended complaint before the Magistrate Judge granted Plaintiffs’ motion to file a third amended complaint [DE 75] . Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 7 of 11 PageID 3410 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 8 of 11 8 does not operate to delay the accrual of a cause of action for breach of fiduciary duty or unjust enrichment, Davis v. Monahan, 832 So.2d 708, 710-12 (Fla. 2002), contract, Fed. Ins. Co. v. SW Fla. Ret. Ctr., Inc., 707 So. 2d 1119, 1122 (Fla. 1998), or negligence, D.H. by and through R.H. v. Adept Comm. Serv., Inc., 217 So. 3d 1072 (Fla. 2d DCA 2017), because the doctrine is a creature of statute. Davis, 832 So.2d 708, 710-12. Assuming arguendo, the two (2) fraud counts are not otherwise barred by the statute of frauds, and the statute of limitations, they are still barred by the statute of repose. Fla. Stat. § 95.031(2)(a). The doctrine of fraudulent concealment recognized in § 95.031(2) (a) does not preserve a fraud claim forever. The statute of repose, codified in the same subsection providing the delayed discovery exception to the four-year statute of limitations, still requires an action for fraud to be filed within twelve (12) years after the commission of the alleged fraud, regardless of the date the fraud was or should have been discovered. Id. (emphasis added). Plaintiff cannot avoid the absolute preclusive effect of the statute of repose; he chose to wait until 2016 to demand the property be divided and transferred to him. To hold otherwise would completely eviscerate the purpose of the statutes of limitations and repose. IV. COUNTS RELATED TO ORAL AGREEMENT THAT COULD NOT BE PERFORMED WITHIN ONE YEAR ARE ALSO SUBJECT TO THE STATUTE OF FRAUDS Plaintiff’s Counts II, V, VI, VII, and VIII allege and seek damages for Defendants’ alleged failure to transfer the Property to Plaintiff on request; Defendants’ beach of their fiduciary duty to maintain the Property since 1993 in Plaintiff’s interests; and Defendants’ failure to account to Plaintiff for the profits derived from the Property. Plaintiff asserts that these counts are “not merely repackaged claims for breach of an oral contract to convey real property. Instead they are separate claims which stand on their own based on Defendants’ deceitful scheme never to transfer the Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 8 of 11 PageID 3411 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 9 of 11 9 Property; keep the proceeds…; and to sell the Property out from under Plaintiffs . . . .” [DE 100 ¶ 59]. Putting aside this admission that the fraud counts are merely repackaged claims for breach of an oral contract to convey real property, the alleged agreement to manage the Property and keep the Camp’s proceeds in lieu of payment under the Sales Contract could not have been accomplished within one (1) year. [DE 89 Statement of Facts ¶ 21] In addition to the requirement that an interest in land must be reduced to writing, Florida’s statute of frauds provides in pertinent part: “No action shall be brought . . . upon any agreement that is not to be performed within the space of one year from the making thereof . . . unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by him or her thereunto lawfully authorized.” Fla. Stat. § 725.01. Florida law explicitly prohibits a plaintiff from reformulating an oral contract as a tort for the purpose of avoiding the statute of frauds. See Ostman v. Lawn, 305 So. 2d 871, 873 (Fla. 3d DCA 1974) (actions in quantum meruit and fraud based on breach of unwritten employment contract not avoided by a suit for fraud based on oral representations). The way a plaintiff fashions a claim does not determine the applicability of the statute. Because the statute “bars any claim which requires as its gravamen, proof of a promise or agreement” not reduced to writing, “[t]here is no distinction between an action ex contractu and an action ex delicto in this regard. . . . The Florida rule is that the statute of frauds may not be avoided by a suit for fraud based on oral representations.” Eclipse Med., Inc. v. Am. Hydro-Surgical Instruments, Inc., 262 F. Supp. 2d 1334, 1345 (S.D. Fla. 1999), aff’d, 235 F.3d 1344 (11th Cir. 2000). Plaintiff alleges that the Parties entered into an oral agreement whereby Helen Goodman would manage the Property in Plaintiff’s interest in lieu of payment under the Sales Contract Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 9 of 11 PageID 3412 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 10 of 11 10 (Defendant Helen Goodman denies the allegations, but for purposes of summary judgment only does not dispute them). In order to be enforceable, the statute of frauds requires that the alleged agreement, which could not have been accomplished within one (1) year, to have been memorialized in a writing. Fla. Stat. § 725.01. No amount of reframing and reformulating of the allegations into fraud and breaches of fiduciary duty counts will permit Plaintiff to circumvent the statute of frauds where the claims are predicated upon an oral agreement that is unenforceable under the statute of frauds. See, e.g., Eclipse Med., Inc., 262 F. Supp. 2d 1334. V. CONCLUSION Defendant respectfully requests that this Court grant its Motion for Summary Judgment [DE 88] as to all eight (8) counts. Plaintiff’s Third Amended Complaint is based upon an unenforceable oral agreement barred by the statute of frauds, statutes of limitations and repose. Plaintiff’s efforts to avoid the effect of the statutes twenty (20) years after the fact must be rejected. Dated this 15th day of February, 2018. Respectfully submitted, By: /s/ Sally Still Denise J. Bleau, Esq. Florida Bar No. 599514 Sally Still, Esq., B.C.S. Florida Bar No. 904414 WARD DAMON POSNER PHETERSON & BLEAU Counsel for Defendants/Counter-Plaintiffs 4420 Beacon Circle West Palm Beach, Florida 33407 Tel: (561) 842-3000/Fax: (561) 842.3626 E-mail: litservice@warddamon.com dbleau@warddamon.com msaunders@warddamon.com sstill@warddamon.com kmcnulty@warddamon.com Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 10 of 11 PageID 3413 Gatti et al v. Goodman et al/Defendants’ Reply Case No.: 2:16-cv-00728-PAM-CM Page 11 of 11 11 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on February 15, 2018, a true copy of the foregoing was filed with the Clerk of Court using the CM/ECF system which will send a notice of electronic filing to all counsel or parties of record on the Service List below. By: /s/ Sally Still Sally Still, Esq., B.C.S. Florida Bar No. 904414 sstill@warddamon.com SERVICE LIST C. Wade Bowden, Esq., B.C.S. Florida Bar No. 090735 E-mail: bowdenw@gtlaw.com leonb@gtlaw.com chalkleyt@gtlaw.com Brandon S. Leon, Esq. Florida Bar No. 0091525 E-mail: krugerl@gtlaw.com flservice@gtlaw.com GREENBERG TRAURIG, P.A. Counsel for Plaintiff/Counter-Defendants 777 S. Flagler Drive, Suite 300E West Palm Beach, Florida 33401 Case 2:16-cv-00728-PAM-CM Document 105 Filed 02/15/18 Page 11 of 11 PageID 3414
