Filed: Feb. 04, 1999
Latest Update: Feb. 21, 2020
Summary: [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 97-5931 02/04/99 THOMAS K. KAHN CLERK D. C. Docket No. 97-62-CV-JAL MAZZONI FARMS, INC., a Florida corporation, Plaintiff-Appellant, versus E.I. DUPONT DE NEMOURS AND COMPANY, a Delaware corporation, d.b.a. Dupont, CRAWFORD & COMPANY, a Georgia Corporation, Defendants-Appellees. _ No. 97-5932 _ D.C. Docket No. 97-63-CIV-LENARD JACK MARTIN GREENHOUSES, INC., f.k.a. M & M ORN
Summary: [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 97-5931 02/04/99 THOMAS K. KAHN CLERK D. C. Docket No. 97-62-CV-JAL MAZZONI FARMS, INC., a Florida corporation, Plaintiff-Appellant, versus E.I. DUPONT DE NEMOURS AND COMPANY, a Delaware corporation, d.b.a. Dupont, CRAWFORD & COMPANY, a Georgia Corporation, Defendants-Appellees. _ No. 97-5932 _ D.C. Docket No. 97-63-CIV-LENARD JACK MARTIN GREENHOUSES, INC., f.k.a. M & M ORNA..
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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 97-5931 02/04/99
THOMAS K. KAHN
CLERK
D. C. Docket No. 97-62-CV-JAL
MAZZONI FARMS, INC., a Florida corporation,
Plaintiff-Appellant,
versus
E.I. DUPONT DE NEMOURS AND COMPANY,
a Delaware corporation, d.b.a. Dupont,
CRAWFORD & COMPANY, a Georgia Corporation,
Defendants-Appellees.
_________________
No. 97-5932
_________________
D.C. Docket No. 97-63-CIV-LENARD
JACK MARTIN GREENHOUSES, INC.,
f.k.a. M & M ORNAMENTALS, INC.,
and JACK MARTIN,
Plaintiffs-Appellants,
versus
E.I. DUPONT DE NEMOURS AND COMPANY,
d.b.a. Dupont,
Defendant-Appellee.
Appeals from the United States District Court
for the Southern District of Florida
(February 4, 1999)
Before ANDERSON and DUBINA, Circuit Judges, and FAY, Senior Circuit
Judge.
DUBINA, Circuit Judge:
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These consolidated cases present the question whether a release in a
settlement agreement bars a claim that defendant fraudulently induced plaintiffs to
settle. Initially, however, we must decide whether a choice-of-law provision in the
same agreement applies to the fraudulent inducement claim. Because we find no
definitive Florida precedent for the choice-of-law issue, we certify that question to
the Supreme Court of Florida and postpone disposition of these cases until we
receive an answer from that court. In the event the Supreme Court of Florida
decides Florida law applies, we also certify the merits question.
I. BACKGROUND
Plaintiffs Mazzoni Farms and Jack Martin are commercial nurseries whose
plants were allegedly damaged by a Dupont product called Benlate. In the early
1990's, plaintiffs sued Dupont and a local distributor of Dupont products for property
damage and fraudulent concealment of Benlate's alleged defects. The parties
subsequently settled those suits, and the settlement agreements contained this release:
In consideration of Defendant's payment of the amount set
forth in the authorization previously signed by Plaintiff,
Plaintiff hereby releases Defendant from any and all causes
of action, claims, demands, actions, obligations, damages,
or liability, whether known or unknown, that Plaintiff ever
had, now has, or may hereafter have against Defendant, by
reason of any fact or matter whatsoever, existing or
occurring at any time up to and including the date this
Release is signed (including, but not limited to, the claims
asserted and sought to be asserted in the Action).
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(Mazzoni R1-8, Ex. A ¶ 1; Jack Martin R2-33, Ex. A ¶ 1.) The settlement agreements
also contained a choice-of-law provision:
This Release shall be governed and construed in accordance
with the laws of the State of Delaware without giving effect
to the conflict of laws or choice of law provisions thereof.
(Mazzoni R1-8, Ex. A ¶ 15; Jack Martin R2-33, Ex. A ¶ 1.)
After settling with Dupont, plaintiffs discovered information that led them to
believe that Dupont had destroyed evidence and presented perjured testimony in the
original litigation. They filed these suits in Florida state court, alleging that Dupont
fraudulently induced them to settle. Dupont removed these cases to the district court
on the basis of diversity of citizenship and then moved for dismissal. Once in federal
court, plaintiff Mazzoni Farms amended its complaint and added Crawford &
Company, a Dupont agent, as a co-defendant.
The district court, relying on Florida law, dismissed plaintiffs' claims under
Fed.R.Civ.P. 12(b)(6), stating that the releases barred plaintiffs' claims. The court
found that Florida law requires a party bringing a fraudulent inducement claim to
choose between equitable and legal remedies. It found further that by asking for
damages instead of recission, which might have required them to tender back the
settlement proceeds, plaintiffs elected to pursue a legal remedy. As a consequence,
the court determined that they ratified the settlement agreements which released
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Dupont from "all . . . claims, . . . whether known or unknown . . . ." (Mazzoni R1-8,
Ex. A ¶ 1; Jack Martin R2-33, Ex. A ¶ 1.)
II. DISCUSSION
We review de novo the district court's decision to apply Florida law to plaintiffs'
claims. See Strochak v. Fed. Ins. Co., 109 F.3d 717, 719 (11th Cir. 1997). Since the
district court sits in Florida, Florida's choice-of-law rules apply. See Klaxon Co. v.
Stentor Elec. Mfg. Co.,
313 U.S. 487, 496 (1941).
Dupont argues that Delaware law controls because plaintiffs have not
specifically alleged that Dupont fraudulently procured the choice-of-law provisions
themselves. Plaintiffs' response is that their general allegation of fraudulent
inducement renders void the choice-of-law provisions. To support the proposition that
a choice-of-law provision controls in a fraudulent inducement case, in the absence of
a specific allegation that the defendant fraudulently procured the choice-of-law
provision itself, Dupont points us to two authorities: (1) Section 201 of the
Restatement (Second) of Conflict of Laws, and (2) a line of Florida cases that applies
a similar rule to arbitration clauses.
Section 201 provides that "[t]he effect of misrepresentation, duress, undue
influence and mistake upon a contract is determined by the law selected by application
of the rules of §§ 187-188." Restatement (Second) of Conflict of Laws § 201 (1971).
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Section 187, in turn (with two exceptions not applicable here), permits parties to
choose the law that will govern their contractual rights and duties. See id. § 187. So,
if Florida were to follow the Restatement, Delaware law would apply to these
fraudulent inducement suits, even if plaintiffs specifically challenged the choice-of-
law provision, since Section 201 is unqualified.
But no Florida court has yet followed Section 201. The line of cases to which
Dupont points by way of a "cf." signal stands for the proposition that an arbitration
clause in a contract will compel arbitration of even a fraudulent inducement claim,
unless the fraudulent inducement claim is directed at the arbitration provision itself.
See, e.g., Medident Constr., Inc. v. Chappell, 632 So. 2d 194, 195 (Fla. 3d Dist. Ct.
App. 1994); Manning v. Interfuture Trading, Inc.,
578 So. 2d 842, 843 (Fla. 4th Dist.
Ct. App. 1991); Physicians Weight Loss Centers of America, Inc. v. Payne,
461 So. 2d
977, 978 (Fla. 1st Dist. Ct. App. 1984).
We find these cases unpersuasive because they do not present cleanly a question
of state law. Rather, they rely on the federal policy favoring liberal interpretation of
agreements to arbitrate and specifically on the United States Supreme Court's
interpretation of Section 3 of the Federal Arbitration Act (F.A.A.), 9 U.S.C. § 3, in
Prima Paint Corp. v. Flood & Conklin Manufacturing Co. , 388 U.S. 395, 404 (1967).
Prima Paint involved an application for a stay pending arbitration made to a federal
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court, but the Supreme Court has since stated (in dicta) that Section 3 also applies to
state courts. See Moses H. Cone Mem'l Hosp. v. Mercury Construction Corp., 460
U.S. 1, 26 & n.34 (1983). In addition, the Florida cases themselves repeatedly cite
Prima Paint. See, e.g.,
Manning, 578 So. 2d at 843; cf. Trojan Horse, Inc. v. Lakeside
Games,
526 So. 2d 194, 195-96 (Fla. 3d Dist. Ct. App. 1988) (F.A.A. § 2 applies in
Florida courts); Old Dominion Ins. Co. v. Dependable Reinsurance Co.,
472 So. 2d
1365, 1367 (Fla. 1st Dist. Ct. App. 1985) (F.A.A. applies in Florida courts).
Plaintiffs' argument on the choice-of-law question is the same as its argument
on the merits: first, that since the district court dismissed these cases under Rule
12(b)(6) for failure to state a claim, we must assume that all their factual allegations
are true, including the fraud; and second, that if Dupont fraudulently induced plaintiffs
to settle, then the settlement agreements, which include the choice-of-law provision
(and the release), are voidable at plaintiffs' option. The first proposition is true
enough, but we question whether the authority on which plaintiffs rely for the second
proposition speaks to this issue. They cite Florida East Coast Railway Co. v.
Thompson, 111 So. 525, 528 (Fla. 1927), which says that "[a] contract procured
through fraud . . . is voidable [at the option of the innocent party]." This statement is
uncontroversial enough in general terms, but we are not persuaded that it means we
cannot enforce the choice-of-law provision because plaintiffs have not specifically
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alleged that Dupont fraudulently procured the choice-of-law provision itself, and the
Restatement rule would give effect to the choice-of-law provision.
In the absence of controlling authority, we certify this question to the Supreme
Court of Florida. Also, because the plaintiffs' argument on the choice-of-law question
is the same as its argument on the merits, a decision in favor of plaintiffs on the
choice-of-law question might affect the merits question. For that reason, in the event
the Supreme Court of Florida decides that Florida law applies, we also certify the
merits question to that court. We note further that no Delaware case precisely
addresses the question whether the release bars plaintiffs' fraudulent inducement
claims, so if the Supreme Court of Florida directs us to apply Delaware law, we may
need to certify that question to the Supreme Court of Delaware.
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA,
PURSUANT TO SECTION 25.031, FLORIDA STATUTES, AND RULE 9.150,
FLORIDA RULES OF APPELLATE PROCEDURE.
TO THE SUPREME COURT OF FLORIDA AND THE HONORABLE
JUSTICES THEREOF:
The United States Court of Appeals for the Eleventh Circuit concludes that
these cases involve determinative questions of state law for which there appear to be
no clear, controlling precedents in the decisions of the Supreme Court of Florida. This
court therefore certifies these questions to the Supreme Court of Florida for
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instructions based on the facts of these cases.
Styles of the cases: (1) Mazzoni Farms, Inc., a Florida corporation, Plaintiff-
Appellant, v. E.I. Dupont Nemours & Co., a Delaware corporation, d.b.a. Dupont
Crawford & Co., a Georgia corporation, Defendants-Appellees, Case No. 97-5931;
and (2) Jack Martin Greenhouses, Inc., f.k.a. M & M Ornamentals, Inc., and Jack
Martin, Plaintiffs-Appellants, v. E.I. Dupont Nemours and Co., d.b.a. Dupont,
Defendant-Appellee, Case No. 97-5932.
Movant: Dupont is the movant for purposes of the choice-of-law question;
plaintiffs are the movants for purposes of the substantive question. See Fla. R. App.
P. 9.150(d).
Statement of Facts: We incorporate our statement of facts from above.
Questions to be Certified to the Supreme Court of Florida:
(1) DOES A CHOICE-OF-LAW PROVISION IN A
SETTLEMENT AGREEMENT CONTROL THE
DISPOSITION OF A CLAIM THAT THE AGREEMENT
WAS FRAUDULENTLY PROCURED, EVEN IF THERE
IS NO ALLEGATION THAT THE CHOICE-OF-LAW
PROVISION ITSELF WAS FRAUDULENTLY
PROCURED?
(2) IF FLORIDA LAW APPLIES, DOES THE RELEASE IN
THESE SETTLEMENT AGREEMENTS BAR
PLAINTIFFS' FRAUDULENT INDUCEMENT CLAIMS?
As usual, our sterile phrasing of the issues need not preclude the Florida
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Supreme Court from inquiring into the specifics of these cases. See Dorse v.
Armstrong World Ind., Inc., 798 F.2d 1372, 1377-78 (11th Cir. 1986).
The clerk is directed to send the entire records of these cases with this
certificate.
QUESTIONS CERTIFIED.
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