Court: District Court of Appeal of Florida; March 27, 2001; Florida; State Appellate Court
The District Court of Appeal of Florida addressed the appeal by Keith S. Samuels and Constance R. Jones-Samuels against King Motor Company of Fort Lauderdale regarding the dismissal of multiple counts from their second amended complaint. The trial court dismissed counts II (misleading and false advertising), III (fraud in the inducement and performance), and IV (deceptive and unfair trade practice) with prejudice and count I (breach of contract) for lack of subject matter jurisdiction, allowing for re-filing in county court due to the amount in controversy being below $15,000.
The Plaintiffs claimed that during their attempt to purchase a new vehicle in mid-1998, they were misled into believing that the buyers order would only become a binding contract if certain contingencies were met, including being signed by a King manager and acceptable to a finance company. They contended that King Motor could not sell their trade-in vehicle until the buyers order was finalized as a contract. Acting on these representations, the Plaintiffs traded in their used vehicle, took delivery of the new vehicle, and entered into a retail installment contract that included a $2,250 down payment for the trade-in. Subsequently, King Motor informed them that financing was disapproved unless they paid an additional $3,000 down payment. The Plaintiffs returned the new vehicle and requested their trade-in back, but were informed that it could not be located. The court affirmed some of the trial court's decisions while reversing others and remanding the case for further proceedings.
King Motor has refused to return the Plaintiffs' trade-in vehicle or provide compensation for it. The Plaintiffs argue that the buyers order was not valid as the necessary contingencies were not met; specifically, King Motor failed to sign the buyers or sales contract and did not secure financing within the required five days. They claim this means the buyers order is not a contract. The Plaintiffs allege King Motor made two false statements: one regarding the contingency of financing for the transaction and the other about the inability to locate the trade-in vehicle, which the Plaintiffs assert was still on the lot or sold. The Plaintiffs alternatively argue that if the buyers order is deemed a contract, King Motor breached it by not returning the trade-in vehicle. Count I is based on this breach of contract claim. King Motor moved to dismiss counts II through IV, arguing that the buyers order was binding and allowed for the disposal of the trade-in vehicle. King Motor also cited various reasons for dismissal, including failure to state claims for fraud and related offenses, the economic loss rule, and procedural issues under Florida law. The trial court dismissed counts II through IV with prejudice and determined that Count I, due to the amount in controversy being under $15,000, also lacked subject matter jurisdiction, allowing the Plaintiffs to re-file in county court.
King Motor contends that the buyers order constituted a binding contract, permitting the immediate disposal of the trade-in vehicle upon the Plaintiffs' tendering. The court must accept the allegations in the complaint and any attached exhibits as true, adhering strictly to the contents of the complaint without considering external facts. While the buyers order contains language referring to it as an 'agreement,' it explicitly states that it only becomes a binding contract upon the fulfillment of specific contingencies, including the signing by a King Motor manager within five days, acceptance for financing, and the execution of an installment sales contract by both parties. The Plaintiffs assert that these conditions were not satisfied, as King Motor neither signed the buyers order nor the installment sales contract, nor accepted the order for financing within the stipulated timeframe. The attached buyers order supports this claim, showing it was unsigned by King Motor representatives.
King Motor's argument hinges on disregarding the Plaintiffs' allegations and the explicit terms of the buyers order to assert it was a binding contract. Given that courts must accept the Plaintiffs' allegations as true and not look beyond the complaint's four corners in a motion to dismiss, King Motor's position is deemed improper.
The document also addresses the sufficiency of the Plaintiffs' claims in counts II through IV, affirming that a complaint must allege sufficient facts to establish entitlement to relief. Whether a complaint adequately states a cause of action is a legal question reviewed de novo. If a complaint is found insufficient, courts are generally inclined to allow amendments unless it’s clear that no amendment can rectify the deficiencies.
Count II specifically pertains to claims of misleading and false advertising, defined under section 817.41 of the Florida Statutes, which prohibits the dissemination of misleading advertisements. Violation of this statute is considered fraudulent and unlawful, aimed at acquiring money or property under false pretenses. The statute provides for recovery of costs, reasonable attorney's fees, and potential punitive damages for prevailing parties in civil actions.
Misleading advertising is defined under Florida Statutes as any public statement, known or reasonably ascertainable to be untrue or misleading, made with the intent to sell or dispose of property or services. The Plaintiffs allege they were misled by King Motor into believing that their obligations under a buyers order, including the disposal of a trade-in vehicle, were contingent upon obtaining financing. However, the court found that the Plaintiffs failed to allege that the misleading statement was made with the intent to sell or dispose of property, as required by statute. Instead, the statement appeared intended to induce the Plaintiffs to relinquish their trade-in vehicle. The court ruled that the Plaintiffs could not establish a claim for misleading advertising, leading to the dismissal of their claim with prejudice.
Additionally, regarding false advertising under Section 817.44, it is unlawful to advertise property or services with no intention of selling them as represented. The statute provides a presumption of intent to violate if advertised items are not sold. The Plaintiffs did not adequately argue on appeal that their complaint constituted a cause of action under this section, thus waiving their right to challenge the dismissal of their false advertising claim.
Plaintiffs allege that King Motor made two false statements: (1) that their obligations in the buyers order, including the disposal of their trade-in vehicle, were contingent on financing, despite King Motor's intention to enforce those obligations regardless of financing; and (2) that the trade-in vehicle could not be located, despite King Motor's knowledge of its whereabouts. Plaintiffs claim these statements constitute "false advertising," but the court finds they do not meet the definition under section 817.44, which requires that the seller has no intention to sell the advertised property. Additionally, Plaintiffs concede that the buyers order is not typically considered advertising and fail to provide sufficient statutory support for their claim. Consequently, their allegations of false advertising were dismissed with prejudice.
Regarding the claim for common law fraud in the inducement, Plaintiffs must demonstrate a misrepresentation of a material fact, knowledge of its falsity by the representor, intent to induce reliance, and resulting injury from that reliance. While Plaintiffs reasserted previous allegations, they did not sufficiently reassert those concerning the false statements. They admit that count III reflects breach of contract allegations but request leave to amend their complaint. The court agrees, noting that the overall allegations could satisfy the fraud elements if properly articulated. Specifically, they allege that King Motor falsely claimed they would not be bound by the buyers order to induce them to sign. The court also clarifies that the economic loss rule does not preclude the fraud claim, as fraudulent inducement is a separate tort from contract breach.
The trial court's dismissal of count III was technically proper, but it abused its discretion by doing so with prejudice and not allowing the Plaintiffs to amend their complaint. The Plaintiffs did not adequately demonstrate on appeal how their allegations constituted a claim for fraud in performance, failing to meet the burden of showing reversible error. Additionally, the economic loss rule bars their fraud in the performance claim, as such cases are closely related to breach of contract. The court rejected the Plaintiffs' argument that the economic loss rule applies only in product liability cases. Consequently, the trial court's dismissal of the fraud in performance claim was upheld.
Regarding count IV under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), the statute prohibits unfair or deceptive acts in trade or commerce. Although the statute does not define "unfair or deceptive act," it mandates a liberal interpretation and emphasizes the need to consider federal case law. An unfair practice under federal law is one that violates public policy or is deemed immoral, unethical, or substantially harmful to consumers. Florida courts have recognized that a plaintiff alleging intentional concealment of a lease agreement instead of a sales agreement, resulting in the loss of a trade-in vehicle, can establish a cause of action under FDUTPA.
The economic loss rule does not prevent a claim under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), as established in cases such as Delgado and Comptech. Statutory causes of action remain viable even if they involve economic losses, particularly when the statutory language indicates that remedies are cumulative. Although the Plaintiffs’ FDUTPA claim initially lacked specific allegations regarding false statements made by King Motor, the overall allegations in their second amended complaint suggest a viable claim. The Plaintiffs assert that King Motor misled them regarding the nature of their agreement, leading to the unauthorized disposal of their trade-in vehicle without compensation, which is deemed immoral and harmful to consumers. Therefore, the court's dismissal of the FDUTPA claim without granting leave to amend was an error.
Regarding King Motor's motion to dismiss the second amended complaint based on Florida Rule of Civil Procedure 1.130, which requires the attachment of relevant contracts, the court disagreed with King Motor's assertion that the bailment agreement was necessary. The bailment agreement, which was provided by King Motor, only indicated that the Plaintiffs had the new vehicle on a loan basis and did not relate to the core issues of whether the buyers order constituted a contract or King Motor's authority over the trade-in vehicle. King Motor's attempt to introduce the bailment agreement improperly diverted the focus from the allegations in the complaint.
The Plaintiffs' complaint against King Motor centers on the appropriateness of the vehicle trade-in disposal, not on the obligation to return the new vehicle or pay for its use, thus not necessitating the attachment of the bailment agreement per Rule 1.130(a). King Motor argues for dismissal under Florida Rule of Civil Procedure 1.420(b) due to the Plaintiffs' failure to amend their complaint after previous dismissals for lack of a cause of action. However, the court finds that dismissing as a sanction under Rule 1.420(b) requires a clear finding of willful noncompliance, which was absent in this case. Therefore, the trial court's dismissal of the second amended complaint as a sanction was improper, especially since the Plaintiffs could still state valid claims.
King Motor's assertion that a complaint can be dismissed with prejudice after three failed attempts to state a cause of action is also rejected. The rules favor granting leave to amend unless it is evident that no amendment could remedy the defects. The Plaintiffs had only amended their complaint twice, and there was potential for them to successfully state a cause of action. The trial court's dismissal of the breach of contract claim was based on a misinterpretation of the amount in controversy needed for jurisdiction, which the court identified as erroneous. The court affirms the dismissal of claims regarding misleading and false advertising but reverses the dismissal of other claims and remands for further proceedings, allowing the Plaintiffs the option to include the breach of contract claim in a potential third amended complaint.
