John D. Levitan, Sr. v. Lucian G. Dancaescu

Citation: Not availableDocket: 21-0806

Court: District Court of Appeal of Florida; September 14, 2022; Florida; State Appellate Court

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Appellant John D. Levitan, Sr. appeals a summary final judgment in favor of Appellee Lucian G. Dancaescu, arguing that the trial court erred by granting summary judgment while his motion to amend his answer was pending. The court declines to address this argument, noting that Appellant did not request a ruling on his motion prior to the summary judgment decision. Appellant's second argument claims the trial court incorrectly determined that Appellee was entitled to summary judgment based on the parties' agreement, which the appellate court finds to have merit, resulting in a reversal and remand for further proceedings.

The case involves an agreement for Appellant to purchase LDRK Capital, LLC from Appellee for $2,000,000, with the understanding that LDRK owned two Brazilian treasury bonds. The agreement specified that Appellant had independently reviewed the bonds' information and acknowledged that Appellee made no representations regarding their market value, deeming Appellant’s interest speculative. Appellee filed a breach of contract complaint against Appellant, who counterclaimed that the bonds were fraudulently represented as genuine but were instead counterfeit, causing him harm.

In support of his motion for summary judgment, Appellee argued there were no genuine issues of material fact, relying on his sworn affidavit asserting he made no representations about the bonds' market value and that Appellant understood the speculative nature of the purchase. Appellant opposed this with three affidavits, including one from attorney James Tanenbaum, who indicated that a Brazilian firm suggested the bonds were likely counterfeit and potentially non-redeemable due to expired enforcement rights. Two additional affidavits from Brazilian attorneys echoed this conclusion. Appellant also attested that Appellee had represented the bonds as genuine and provided evidence of his inquiries confirming the bonds' questionable authenticity.

Appellee filed a Motion to Strike or Disregard Parol Evidence, asserting that Appellant could not utilize parol evidence from affidavits to alter the clear terms of their agreement, specifically regarding disclaimed representations about the 'speculative' bonds. During the summary judgment hearing, Appellee's counsel contended that the agreement explicitly defined the transaction as the sale of a membership interest in LDRK, without any representations about the bonds' value. In contrast, Appellant's counsel claimed the legitimacy of the bonds was crucial, and the affidavits raised a genuine issue of material fact to challenge Appellee’s motion. Appellee's counsel countered that the agreement itself contradicted Appellant’s claims about the bonds' legitimacy.

The trial court ultimately issued a Summary Final Judgment for Appellee, finding no genuine issue of material fact and ruling in favor of Appellee as a matter of law. Appellant's subsequent motion for rehearing argued the judgment was incomplete due to unresolved counterclaims. In response, Appellee submitted a proposed amended judgment addressing these issues. The trial court denied the rehearing motion, issued an Amended Summary Final Judgment, and included findings that (1) no contractual term linked Appellant’s payment obligation to the bonds' value, and (2) the contract explicitly disclaimed any representations regarding the bonds' market value, labeling the investment as 'strictly speculative.' Thus, the court reaffirmed summary judgment in favor of Appellee and dismissed Appellant's counterclaim, which led to Appellant's appeal.

The standards for reviewing a motion for summary judgment are outlined, emphasizing that such motions are assessed de novo. Summary judgment is appropriate when no material facts are disputed and the case hinges on the interpretation of a written agreement. However, if contract terms are contested and open to multiple interpretations, this presents a factual issue that cannot be resolved through summary judgment.

The court determines whether a contract term is ambiguous as a question of law, distinguishing between patent and latent ambiguities. A patent ambiguity is obvious from the document's language, while a latent ambiguity arises from clear language that suggests a single meaning but requires interpretation due to external facts. Parol evidence may only be considered when a latent ambiguity exists. In the case at hand, the Appellant argues that the trial court incorrectly granted summary judgment, asserting a genuine issue regarding whether the Appellee falsely represented the validity of certain bonds. The Appellee contends that the agreement's clear language disclaimed any representations about the bonds' value. The Appellant claims that the absence of definitions for "Market Value" and "speculative" introduces a latent ambiguity that necessitates parol evidence to address potential fraudulent inducement. The Florida Supreme Court precedent establishes that contractual clauses cannot prevent a party from seeking rescission due to fraud. Fraudulent procurement of a contract can be grounds for rescission unless parties expressly agree otherwise, and the relevant clause does not prohibit rescission for fraud, despite affirming that no external representations influenced the agreement.

The contract provision does not render the contract incontestable due to fraud; instead, it indicates an agreement that no fraud occurred. There is a notable difference between a stipulation acknowledging the potential for fraud, which can be limited contractually, and one asserting that no fraud has taken place. Courts have established that to successfully negate a fraudulent inducement claim, contract language must explicitly deny the right to such a claim. Although the appellant's counterclaim did not explicitly state "fraud in the inducement," it is understood that fraudulent inducement makes a contract voidable rather than void, allowing for remedies like rescission or damages. The appellant sought damages, not rescission. Florida case law distinguishes between fraudulent inducement claims for rescission and damages, emphasizing that a party cannot claim fraud based on oral misrepresentations that contradict written terms. However, the Second District has applied precedents to allow claims for damages or rescission. In this case, the disclaimer clause in the agreement does not preclude the appellant’s claim because it does not explicitly negate the right to bring such a claim nor adequately contradicts the claim regarding the validity of the bonds. The trial court's decision to grant summary judgment for the appellee was incorrect, as the disclaimer did not negate the counterclaim for fraudulent inducement relating to the bonds' alleged invalidity. The ruling is reversed, and the case is remanded for further proceedings.

The court has reversed and remanded the case, with Chief Justice Rowe and Justice Long concurring, while Justice Jay concurs with additional commentary. The concurring opinion emphasizes that the disclaimer in the parties' agreement does not invalidate the Appellant's counterclaim for fraudulent inducement related to the allegedly invalid LTN bonds. Furthermore, Appellant appears to assert a claim for fraud in performance, which could indicate a breach of contract. If the Appellee falsely represented the LTN bonds as genuine, without knowing they were counterfeit, this could establish a breach of contract claim. The core issue is whether the disclaimer negates such a breach claim concerning the bonds' validity. The Appellee did not contest the Appellant's affidavits regarding the bonds' legitimacy, arguing the agreement pertained solely to the sale of LDRK, which owned the bonds, and that no representations were made about the bonds' value. However, the Appellant argues that the agreement was effectively for the sale of the bonds, as they were the only asset of LDRK. This position aligns with the agreement’s language, which indicates LDRK's ownership of the bonds without mentioning other assets. In securities sales, there is an implied warranty that the securities are genuine, and while the agreement disclaimed representations regarding 'Market Value,' it did not deny the bonds' genuineness. Thus, the disclaimer does not negate a breach of contract claim based on the bonds' invalidity, reinforcing the conclusion that summary judgment was inappropriate.