M. CASEY RODGERS, District Judge.
This case was tried before the court without a jury. The dispute involves several claims arising out of the purchase of an aircraft in December 2005 by Plaintiff JDI Holdings, LLC ("JDI").
At trial, following the close of the plaintiff's evidence, Jet and Southern moved for judgment on partial findings pursuant to Federal Rule of Civil Procedure 52(c), arguing that JDI had failed to set forth sufficient evidence to support its claims. Rule 52(c) permits the court during a nonjury trial and after a party has been fully heard on an issue to enter judgment on a claim or defense that "can be maintained or defeated only with a favorable finding on that issue," and requires that any "judgment on partial findings must be supported by findings of fact and conclusions of law as required by Rule 52(a)." Fed. R.Civ.P. 52(c). When ruling on a Rule 52(c) motion, "the court must weigh the evidence and may consider the witnesses' credibility," treating the motion "as if it were a final adjudication at the end of trial," though it occurs in the middle. Caro-Galvan v. Curtis Richardson, Inc., 993 F.2d 1500, 1504 (11th Cir.1993) (internal marks omitted). Thus, the court resolves the disputed issues on the basis of the preponderance of the evidence, without drawing any special inferences in favor of the plaintiff. Emerson Elec. Co. v. Farmer, 427 F.2d 1082, 1086 (5th Cir.1970)
The court now considers the claims against the remaining parties, Jet and Kerr. In rendering judgment following a nonjury trial, Rule 52(a) requires the district court to make specific findings of fact and to state conclusions separately. The rule "does not require a finding on every contention raised by the parties," but requires the court to provide sufficient detail demonstrating that care was taken in ascertaining and analyzing the facts necessary to the decision and providing "sufficient particularity" to facilitate meaningful review. Feazell v. Tropicana Prods., Inc., 819 F.2d 1036, 1042 (11th Cir.1987). Thus, in accordance with the requirements of Rule 52(a), having heard and considered all of the testimony, evidence, and arguments presented at trial, the court now enters the following findings of fact and conclusions of law.
JDI, through its chief executive officer and sole member, Jared Isaacman,
Isaacman was initially interested in an aircraft offered for sale by Jon Kerr. Emails confirm that Isaacman and Kerr were engaged in discussions related to that aircraft in September 2005. Although Isaacman's interest turned to different airplanes, he continued to rely on Kerr's assistance to identify a suitable aircraft for him to purchase. In November 2005, Kerr identified the Cessna Citation 650 offered for sale by Jet, which suited Isaacman's needs. The aircraft had recently undergone a Phase 1-5 inspection process at Southern.
Email correspondence shows that within four days of identifying this aircraft, Kerr was discussing a fee arrangement with Watkins. Kerr and Watkins both testified that aircraft brokers often have trouble getting paid so they attempt to obtain payment for themselves from either side. Kerr had no written agency or broker agreement with Isaacman or JDI. He testified that he was instructed to communicate with Isaacman's attorney, Dulac, because Isaacman was very busy. According to Kerr's uncontradicted testimony, Dulac balked at Kerr's customary five percent commission, which would have yielded Kerr approximately $160,000 on a purchase price of $3,200,000, and Dulac instructed Kerr to see if he could get the seller to pay his commission.
As negotiations continued, Kerr informed Dulac that he believed the recently performed Phase 1-5 inspection was sufficient to qualify as a pre-purchase inspection for the aircraft but that the aircraft's flight and logbooks should be audited. (Plaintiff's Ex. 30.) By email on November 28, 2005, Isaacman advised Kerr that he had instructed Dulac to go forward with the deal and to make the required $50,000 deposit, but he preferred to get a "term sheet" first, meaning a preliminary agreement regarding the terms agreed upon.
The next day, November 29, 2005, negotiations continued. Kerr continued discussing a possible as-is purchase, the deposit, and his own potential fee with Watkins. In a series of email exchanges, Kerr stated he was ready to "pull the trigger on this deal" and asked Watkins if he would "mind signing a one page agreement" for Kerr's "protection." (Plaintiff's Ex. 37.) Watkins responded to Kerr's request by email stating:
(Plaintiff's Ex. 37.) However, on the same day, email discussions between Kerr, Dulac, and Isaacman reflect that Isaacman was not interested in accepting an as-is purchase with only a records check. Kerr reported that the Cessna Service Center in Newburgh, New York, had confirmed that the recently performed Phase 1-5 inspections would qualify as a pre-purchase inspection, and he attached a quote from the Newburgh service center, confirming a quick turnaround, apparently for a logbook and cursory aircraft review. (Plaintiff's Ex. 50.) Kerr advised Isaacman to rely on the recently completed Phase 1-5 inspections and forego the greater expense of an extensive pre-purchase inspection, but Isaacman responded that, being new to this process, he preferred to insist upon a pre-purchase inspection rather than risk encountering "surprises later on. Especially surprises in the air." (Plaintiff's Ex. 50.) Isaacman stated in an email to Kerr, copied to Dulac, that he did not mind "paying a bit more to know the jet is perfect." (Plaintiff's Ex. at 50.) This statement marks the beginning of a significant misunderstanding between Isaacman and his representatives—while Isaacman wanted a 1984 Cessna Citation 650 in "perfect" condition, Kerr and Dulac negotiated for the correction of "airworthy" discrepancies as per the common industry practice.
That evening (still November 29), email correspondence between Watkins and Kerr shows them continuing to discuss Kerr's commission fee. Their emails are titled, "FINDERS FEE AGREEMENT," with the first originating from Kerr and stating only, "See enclosed agreement," though no such agreement is attached to the trial exhibit. (Plaintiff's Ex. 40.) Watkins responded with some very specific language to be added into "paragraph 1" of whatever agreement they were discussing and requested, "Please use this one and send back." Watkins' language detailed that the seller would receive a guaranteed net amount of $3,050,000; the purchase price would be $3,200,000, with the seller responsible for correcting airworthiness discrepancies; and Kerr entitled to the remainder of the $150,000 difference after Jet paid the Cessna repair bill for airworthiness discrepancies. Watkins explained that this was a good deal for Kerr because the seller had spent $250,000 on the plane already, assuring Kerr, "This is a good plane." (Plaintiff's Ex. 41.) Kerr would be paid if the deal closed. Kerr expressed concern that, under this scenario, he could end up with nothing because a lot of discrepancies could mean "only the crumbs will be left." (Plaintiff's Ex. 48.) Kerr did not send back a final agreement with his next email but suggested they discuss the matter in the morning. No written fee agreement was introduced at trial.
On December 5, 2005, JDI and Jet entered into the aircraft purchase agreement, drafted by Isaacman's attorney, Dulac. (Plaintiff's Ex. 67.) Although Isaacman had previously indicated he wanted the aircraft delivered in "perfect" condition, Dulac prepared and Isaacman signed a purchase agreement requiring the seller to repair only "airworthy" items
The aircraft was flown to the Cessna Service Center in Orlando for a pre-purchase aircraft survey, which experts agreed is not a formal inspection. The December 5, 2005, aircraft survey customer agreement signed by Isaacman requested a standard aircraft survey with some additional tests requested, and it named Kerr and Mary Scales, Kerr's administrative assistant, as the customer contacts for the buyer. Chuck Farney
On December 8, 2005, the service center issued Cessna's initial survey inspection report on the plane, listing 37 "discrepancies" or repair orders, some of which were merely cosmetic or minor and 12 of which were marked as airworthy concerns (these were marked by the letter "A" in the margin of the inspection report). (Plaintiff's Ex. 73.) Kerr, Dulac and Isaacman all received and reviewed this report. In response, Dulac, by email to Isaacman, outlined the contract options available to Isaacman upon receipt of this report, which included either (1) "walking," i.e., terminating the purchase agreement due to the discrepancies found in the survey and obtain a refund of the deposit, or (2) accepting the aircraft on the condition that the "Seller corrects, at Seller's expense, the noted airworthiness discrepancies." (Plaintiff's Ex. 72.) Neither contract option required the seller to correct every discrepancy; the seller was required to correct only those considered airworthy. Dulac stated clearly in this email to Isaacman that the first issue to resolve is whether "the non-airworthiness discrepancies are of such a nature that [Isaacman] does not want this aircraft." (Plaintiff's Ex. 72.) Dulac suggested they speak with someone knowledgeable about the technical aspects of the aircraft to guide Isaacman on how to proceed. Isaacman, aware that Kerr was not a mechanic, contacted Paul Schulte and Russell Lash of New World Aviation in Pennsylvania, the company chosen to manage the aircraft after its purchase, and asked them to review the report.
On Monday, December 12, 2005, Isaacman elected to proceed with the purchase and authorized Jet to proceed with the repairs. Isaacman told Dulac and Kerr in an email, "I want to make sure everything on that report from Cessna is fixed," and asked whether he would receive some sort of "clean bill of health" or a revised report when the repair process was completed.
As part of the validation process, Cessna generated a second discrepancy report dated December 13, 2005 (sent on December 16), which listed 114 discrepancies on the aircraft. The report was sent to Kerr on December 16. Email exchanges between Watkins and Kerr show their frustration over the added discrepancies on this list. Kerr wrote to Watkins that he was not happy about the new list—he had heard the bill might be over $50,000—and stated this was "not working out" as he had hoped.
On December 19, 2005, Dulac sent Isaacman the "Acceptance Certificate" to sign acknowledging acceptance of the aircraft, which was required under the purchase agreement for the seller to move forward with repairs. (Plaintiff's Ex. 114.) This made the deposit nonrefundable, subject to the seller's timely completion of required corrective work.
On December 21, Kerr emailed Isaacman, approaching him apparently for the first time about the possibility of arranging a commission for his work, informing him that "someone in my capacity usually gets 2-4 points for identifying an aircraft for purchase. In this case, I have not only identified and negotiated (at a wholesale price) the aircraft, but also ... set up and monitored" the pre-purchase inspection, secured financing, and named a customer willing to purchase 30-40 charter hours for the month of January. (Plaintiff's Ex. at 126.) Kerr also suggested to Isaacman that Kerr's company could manage the aircraft for JDI. In a lengthy response, Isaacman regretted not discussing these issues sooner, as he preferred to work out details up front. Isaacman informed Kerr he had already promised the management of the plane to New World Aviation. Being new to this business, Isaacman said he had assumed the seller would pay Kerr's commission, and added, "I have since learned that this is not the case."
The final discrepancy list generated at Cessna Orlando on December 27, 2005, contained 124 discrepancies on the aircraft, with notations by each item indicating whether it had been corrected, "deferred," or listed for "information only." Of these 124 discrepancies, 21 items were listed as deferred and were not repaired. Watkins testified that the items deferred were deemed not airworthy or, in other words, optional to repair and that all airworthiness discrepancies were repaired. According to Watkins, the Cessna service center would not permit airworthy items to be deferred without a paper signature by the aircraft's owner (Jet, in this instance) which would be forwarded to the purchaser of the pre-purchase survey (JDI/Isaacman, in this instance). The Cessna bill for the corrective work totaled $78,686.61.
The records indicate that James Wallace of Southern faxed the Cessna bill and the final discrepancy report (25 pages total) to Kerr's assistant, Mary Scales, at Kerr's office on December 28, 2005, at 10:51 a.m. (Plaintiff's Ex. 171.) There is no document showing that the report was forwarded on to Dulac and Isaacman, but Kerr stated that Dulac received the final report from his assistant, Mary Scales. In Dulac's deposition testimony, he said he did not receive it until early January 2006, which was after the December 29 closing date (the copy in Dulac's file shows it was faxed from Cessna to MacConnell at New World Aviation on January 4 and then forwarded to Dulac by New World Aviation). Kerr testified that he instructed Mary Scales to forward everything to Dulac and that it was her practice to do so; Scales agreed that it was her practice to forward all information to Dulac, though she could not recall whether she had forwarded the report that day. Notably, the repair bill was page number 3 of the 26-page final report packet faxed to Kerr's office, and clearly both Dulac and Isaacman knew the exact amount of the repair bill prior to closing. Isaacman recited the total in an email to Dulac at 5:05 p.m. on December 28 as part of a funding summary, instructing Dulac to provide wiring instructions to National City Corporate Air Capital. (Plaintiff's Ex. 138.) (By agreement of the parties, Isaacman paid the Cessna bill and was reimbursed at closing.) While it is possible that Mary Scales faxed only the bill to Isaacman and Dulac, extracted from the 26-page fax, it is more likely, in the court's view, that Kerr's office forwarded the entire final discrepancy report, which included the bill, to Dulac prior to closing in the ordinary course of business, regardless of whether Dulac actually saw it prior to closing.
On December 29, 2005, following completion of the pre-purchase survey and repairs process, the plane was flown from Orlando, Florida, to Wilmington, Delaware, for closing with an FAA certificate of airworthiness and without incident. Watkins was at his office that day, and he had advised Dulac that he was available for consultation if needed. Isaacman, Dulac, and Watkins all participated in the closing by telephone, and Kerr attended in person in Delaware. According to Kerr, no one inquired about the final report, though they had to have known of its existence by this time, and he assumed they had received it. Isaacman admitted in his deposition testimony that he had seen the items that were listed on the final report and knew these problems existed prior to closing; he just had not seen the final report with comments showing that some of the items had been deferred and not repaired. (Isaacman's Depo. at 72.) At closing, Kerr conducted a walk-around inspection of the aircraft and noticed and reported a problem with the front nose tire tread. Watkins testified he had noted this as well and had been concerned about it but ultimately did not fix it because it was not considered an airworthy problem. Kerr testified that he called Dulac and Isaacman about the problem because he considered it significant, and was told to proceed with closing in spite of it. Kerr also testified that Watkins agreed to fix it at Jet's expense. Isaacman admitted that Kerr reported this problem to him and Dulac before the deal closed but he was not concerned about it; the closing proceeded as scheduled. JDI paid Jet $3,200,000. Jet retained $3,050,000 of the purchase price, paid Cessna $78,686.61 for the repairs, and paid Kerr the remaining $71,313.39—representing the $150,000 difference between the purchase price and Jet's net price, less the cost of repairs. Kerr also received $70,000 from Isaacman following the closing.
Immediately after the closing, Isaacman had the aircraft flown to New World Aviation in Allentown, Pennsylvania, in preparation for his first trip in the plane. After some initial minor repairs,
After the initial flights, Isaacman had New World Aviation inspect the aircraft. On January 12, 2006, New World mechanics compiled a list of 46 items needing repair and its chief inspector grounded the plane on the basis of these discrepancies. After obtaining a special ferry permit, New World transported the plane to the Cessna service center in Newburgh, New York. At JDI's expense, the Cessna Newburgh service center performed a complete Phase 1-5 inspection process and repaired all outstanding deficiencies by February 15, 2006.
JDI submitted the expert opinion of James MacConnell.
Although MacConnell conceded Cessna Orlando's pre-purchase inspection survey was quite extensive for a survey, he nonetheless felt that a Phase 1-5 inspection would have been a more appropriate pre-purchase inspection. MacConnell explained that there is no certified inspection known as a pre-buy and said that a survey inspection, such as Isaacman purchased from Cessna Orlando, is based on conjecture and opinion. At trial, MacConnell agreed with the testimony of other mechanics that there was nothing improper about the seller overseeing the inspection and participating in the validation process to ensure the inspection facility did not replace items that did not need replacing or to answer questions about the aircraft's logbooks and maintenance records. MacConnell also freely acknowledged that there is commonly a give-and-take negotiation process between a buyer and seller
According to MacConnell, the items deferred and not repaired at the Orlando Cessna Service Center rendered the plane unairworthy. One of his major concerns involved the main cabin door. Cessna Orlando had replaced a secondary seal on the door, but MacConnell, relying on a report generated subsequent to the closing, deemed the door an airworthy issue because it was stiff to operate.
MacConnell noted additional concerns, including items such as the worn nose tire, landing gear indicator lights that would not dim, a fuel gage that had reported an incorrect reading, loose flap handle covers, and a broken connector on the copilot's side window, among others. Although the nose tire was worn beyond limits at delivery and had to be replaced, Isaacman accepted the plane with full knowledge of the problem. MacConnell acknowledged that the inability to dim the landing gear indicator lights would only annoy a pilot. The faulty fuel gauge indicator light was on an auxiliary tank, not the main tank, and MacConnell acknowledged that it was an intermittent problem.
JDI also presented the expert report and deposition testimony of Wayne Garner, president of Big Sky Aviation and an A & P mechanic. Garner stated that Cessna Orlando missed one airworthy discrepancy, that is, wear and deterioration in the main cabin door.
Jet's expert, Dan Scanlon,
According to Scanlon, the other items of concern to JDI and discussed by MacConnell, and noted by Garner, were minor, such as intermittent problems with a reserve fuel tank indicator light; dimmer switches that would be only an annoyance to a pilot but not a hazard; various caps and covers that did not involve safety issues; and light bulbs needing replacement. Scanlon testified that none of the items deferred and not repaired on the final report affected the plane's airworthiness status. He further concluded that the seller went beyond its obligation by authorizing and paying for several items that he did not consider airworthiness concerns. While Scanlon initially noted a problem tracing the engine mounts in the aircraft's maintenance records, he testified that he had since learned from Herb Michael, Southern's chief inspector that the engine mounts were in fact new within the last year, which was within the 10,000 hour limit for the parts, eliminating any airworthiness problem in the documentation.
Anthony Vecchio, director of maintenance at Southern, and his chief inspector, Herb Michael, testified at trial and by deposition. They participated in the verification process during the pre-purchase survey and the records review at Cessna Orlando. Vecchio and Michael each testified that from their experience and observations of the aircraft and its records, the plane was airworthy when it left Orlando, and the cabin door was working satisfactorily when the plane left Southern. Michael had been in and out of the plane a number of times for various inspections at Southern and had not noticed a problem with the door's operation. He testified that Cessna Orlando repaired a seal on the door frame, which he explained was a secondary seal to keep rain water from entering the plane; it was not the main pressurization seal. Vecchio stated if there was any question that the door was an airworthy item when it left Orlando, he would have expected it to be written up by Cessna. Consistent with the opinion of all the mechanics who testified, Vecchio said that Cessna is known for doing more work than is necessary and charging more for that work.
Neither Vecchio nor Michael advised or heard anyone attempt to influence a Cessna mechanic to hide any discrepancies on this aircraft. Both testified that when a mechanic identifies an airworthy problem, it is always noted and there is no negotiation over whether to report it. They each testified that discussions may occur regarding the best option for resolving a discrepancy, such as whether a part should be repaired or replaced, because there are ways to keep costs down, but, as Michael testified, a discrepancy is either fixed or the owner is required to sign off that it has not been repaired. Vecchio testified similarly that in his opinion, an A & P mechanic would not bypass an airworthy item on a plane to save someone money because the mechanic must sign for the work he does, and his work also must be approved by a chief inspector. Vecchio stated, "We cannot
When asked about Cessna's recommendation for a complete Phase 1-5, as opposed to the survey done, Vecchio testified that it would have been redundant to perform another Phase 1-5 inspection so shortly after Southern had performed it because this type of inspection is ordinarily performed every 36 months or 1200 hours, whichever comes first. The record establishes that there had been less than 6 months and only 25-30 flight hours since Southern had performed a Phase 1-5 on this aircraft.
Chuck Farney from Cessna Orlando testified by deposition that it is standard practice at Cessna Orlando to recommend a full Phase 1-5 inspection; he said "You can't inspect the whole airplane on a survey." He said that Kerr signed off on that suggestion because this aircraft had recently undergone a Phase 1-5 at another maintenance facility. In response, Farney told Kerr that was not the same as having the inspection done by Cessna (reputed to be the gold standard), but he testified that he did not mean to imply that the recently performed inspection was unreliable. According to Farney, he and Kerr spoke frequently about the scope of the work and what was happening during the survey inspection process, and he verified that the cabin door was operational. Farney stated that the work Cessna performed on the aircraft during the pre-purchase survey inspection was airworthy, and as far as he was aware, Cessna Orlando repaired all the airworthiness issues it discovered.
There is no dispute that Florida law governs this diversity suit.
Breach of contract requires proof of three elements: (1) a valid contract; (2) a material breach; and (3) damages. Rollins Inc. v. Butland, 951 So.2d 860, 876 (Fla. 2d DCA 2006). JDI argues that Jet breached the aircraft purchase agreement by interfering with the pre-purchase inspection process, contrary to its duty of good faith and fair dealing, resulting in its delivery of an aircraft with significant defects. "The implied covenant of good faith and fair dealing applies to every contract." Meruelo v. Mark Andrew of Palm Beaches, Ltd., 12 So.3d 247, 250 (Fla. 4th DCA 2009). The purpose of the implied duty of good faith is to protect the reasonable commercial expectations of the parties, and it usually becomes an issue when there is an express contractual obligation over which one party has sole discretion. Id. at 251. A party's breach of the covenant of good faith is not an abstract concept independent of the contract terms but "must relate to the performance of an express term of the contract." Id. at 250 (internal marks omitted). "Under Florida law, a party breaches this implied covenant by a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence; but, rather by a conscious and deliberate act, which unfairly frustrates the agreed common purpose and disappoints the reasonable expectations of the other party." Tiara Condominium Ass'n, Inc. v. Marsh & McLennan Companies, 607 F.3d 742, 747 (11th Cir.2010) (internal marks omitted).
The evidence does not support JDI's claim that Jet interfered with the pre-purchase inspection process. The purchase agreement placed JDI in control of the pre-purchase inspection, and JDI alone arranged for the inspection/survey to be conducted by Cessna mechanics at the Cessna Orlando service center. Isaacman, Kerr, and Dulac agreed that Jim Wallace, a mechanic at Southern, was qualified to oversee the pre-purchase survey. More
The aircraft purchase agreement required Jet to deliver the aircraft in an airworthy—not perfect—condition on the day of closing. The aircraft purchase agreement did not define the term "airworthy" nor did it specify who would decide whether or not a discrepancy was airworthy if a dispute arose. The agreement simply warranted that the aircraft would be delivered in an airworthy condition with an FAA certificate of airworthiness. See Fla. Stat. § 672.313(1)(a) (stating a promise made by the seller "which relates to the goods and becomes a part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise"). The court is convinced from the evidence of record that Jet delivered the aircraft in conformance with the contract. In fact, the only evidence of a possible airworthy defect in the aircraft at the time of delivery was a bald nose tire, which JDI had full knowledge of and agreed to accept and according to Kerr, Watkins agreed to fix. The court accepts the testimony of Jet's well-qualified expert, Scanlon, that there were no other airworthy defects at the time of delivery. During trial, Scanlon addressed each deferred defect that JDI's expert, MacConnell, had indicated was a concern and credibly explained why none of the items presented an airworthiness problem. Notably, Scanlon rejected the primary concern about the main cabin door being difficult to close on grounds that no one had reported difficulty opening the door, which would have been an airworthy problem. Additionally, Scanlon relied on the fact that no pilots had noted airworthy defects or grounded the plane on Isaacman's trips immediately after closing. According to Scanlon, if the pilots thought the door was not closing or sealing properly, as noted in the later reports from Cessna Newburgh, they would have noted the problem and immediately grounded the plane instead of flying it to Delaware for the closing or on Isaacman's first trips after closing. Also, the door was working satisfactorily according to Michael of Southern and Farney of Cessna Orlando. The plane was not grounded until mid-January
To the extent JDI claims breach of implied warranties of merchantability, the claim is without merit because all implied warranties were effectively waived. A seller may exclude implied warranties by an express and conspicuous provision referring to either the implied warranty of merchantability or implied warranty of fitness. Fla. Stat. § 672.316(2). The disclaimers of implied warranties in the aircraft purchase agreement are plain and conspicuous, set forth in a separate paragraph with bold font and capital lettering.
Additionally and notably, JDI accepted the aircraft at closing after a reasonable opportunity to inspect it. Acceptance of goods occurs when the buyer, after a reasonable opportunity to inspect them, signifies that the goods are conforming or will be accepted despite a nonconformity; or if the buyer fails to make an effective rejection after having a reasonable opportunity to inspect the goods. Fla. Stat. § 672.606. An acceptance with knowledge of a nonconformity cannot be revoked because of that nonconformity. Fla. Stat. § 672.607. Furthermore, when a buyer has examined goods before entering into the contract or has refused to examine the goods, there is no implied warranty with respect to defects that the examination should have revealed. Fla. Stat. § 672.316(3)(b). JDI was permitted ample time to inspect prior to the deposit becoming nonrefundable, at any time during Cessna's performance of the survey and repair work, and again upon delivery on the day of closing. JDI ordered and paid for the independent inspection undertaken at the Cessna Orlando service center, specified the nature of the inspection to be completed, and relied on that independent process. Instead of sending a mechanic from New World Aviation to personally inspect the aircraft or to monitor the inspection process, JDI relied on Kerr, knowing he was not a mechanic, as well as Wallace.
JDI also argues that Jet tortiously interfered with its relationship with Kerr. The elements of tortious interference with a contractual relationship are (1) the existence of a contract; (2) the defendants' knowledge of the contract; (3) the defendants' intentional procurement of the contract's breach or interference with the contractual relationship; (4) the absence of any justification or privilege; and (5) damages. See Fla. Tele. Corp. v. Essig, 468 So.2d 543, 544 (Fla. 5th DCA 1985). According to JDI, the evidence at trial established that Kerr was in fact an agent of Jet at the same time he served as JDI's agent, unbeknownst to JDI, and that Jet thereby interfered with the agency relationship between JDI and Kerr.
The court cannot conclude by a preponderance of the evidence at trial that Kerr was in fact acting as Jet's secret agent during the pre-purchase inspection process. Isaacman initially had assumed that the seller would pay Kerr's fee. According to Watkins, aircraft brokerage fees are structured in different ways, depending on the deal; sometimes the buyer pays and other times the commission fee is split between buyer and seller. Here, JDI's attorney, Dulac, instructed Kerr early in the process to first see what fee he could obtain from the seller before asking Isaacman for a commission, which is precisely what Kerr did. There is no evidence that Jet instructed Kerr to keep their fee arrangement a secret. Watkins explained at trial that the broker's fees are usually set forth in the aircraft purchase agreement but that Dulac rejected the idea of including Kerr's fee in the purchase agreement, indicating that Dulac was aware of the arrangement. Dulac's knowledge is appropriately imputed to Isaacman. See generally, Anderson v. Walthal, 468 So.2d 291, 294 (Fla. 1st DCA 1985) (noting it is settled law that knowledge of an agent "while acting within the course and scope of his employment, and when it is in reference to matters over which the
JDI argues that the emails from Watkins, asking Kerr to hold off on showing the buyer (Isaacman) the December 16 discrepancy list, coupled with the fact that Isaacman did not receive the final December 28 list prior to closing, indicate that Jet exercised some measure of control over Kerr. This is sheer speculation on JDI's part. Isaacman signed the acceptance form on December 19, making the deposit nonrefundable, at the urging of his attorney, Dulac, not Kerr. Isaacman additionally admitted that he saw the intermediate discrepancy list showing all of the problems with the airplane but said he did not see the final list noting that some items were deferred instead of repaired. Watkins explained that his concern with the buyer seeing the December 16 list right away was merely that he knew some of the discrepancies could be cleared up first. Watkins explained that some record-keeping and parts-tracking questions show up as discrepancies initially but can be eliminated after further clarification by the seller, who is more familiar with the aircraft's history and records. Watkins simply wanted time to engage in that validation process prior to the buyer seeing all of the items listed. Witnesses for both JDI and Jet with experience in the pre-purchase inspection process agreed that the validation of noted deficiencies is an ordinary and natural part of the process. By asking Kerr to hold off on showing the December 16 report to Isaacman, Watkins was not thereby exercising control or influence over Kerr but doing his own job to monitor and correct the discrepancies for the seller. The record thus fails to establish that Watkins intended to interfere with Kerr's agency with JDI by causing Kerr to fail to disclose the final report.
Kerr's commission from Jet was contingent only on the completion of the deal and the costs of airworthy repairs being less than $150,000 (what remained of that amount would go to Kerr). Additionally, contrary to JDI's contention, there is no evidence that Jet used Kerr to minimize the repair costs. Kerr had no contact with or influence over the Cessna service center mechanics' independent airworthiness determinations, and Kerr's recommendation that Isaacman forego an expensive Phase 1-5 inspection because the process had been performed a few months earlier was reasonable according to the trial experts. For instance, JDI's own expert, Garner, stated that he would have repeated the full inspection only if it had not been completed within the past 12 months, and JDI's expert MacConnell stated the Phase 1-4 is required every 24 months and the Phase 5 inspection every 36 months. Here, Southern had completed the Phase 1-5 less than six months prior to the purchase agreement. Chuck Farney from Cessna admitted that his suggestion of a new Phase 1-5 inspection was simply a routine recommendation. Undoubtedly, it is an expensive inspection that is good for Cessna's business. Based on the evidence, the court is not persuaded that Jet used Kerr to minimize Jet's repair cost or that Jet otherwise interfered with Kerr's fiduciary obligation to his principal. See Martin Co., 213 So.2d at 480.
A civil conspiracy requires a showing of (1) an agreement between two or more parties; (2) to do an unlawful act, or a lawful act by unlawful means; (3) an overt act in pursuance of the conspiracy; and (4) damages. See Charles v. Fla. Foreclosure Placement Ctr., LLC, 988 So.2d 1157, 1159-60 (Fla. 3d DCA 2008). In this case, for the reasons previously given, the evidence fails to establish an agreement between Jet and Kerr to complete the aircraft purchase by intentionally
Rescission is a harsh remedy, typically disfavored by the courts. See Rood Co. v. Bd. of Pub. Instruction of Dade County, 102 So.2d 139, 142 (Fla.1958). Rescission may be appropriate, however, where there is evidence of fraud, mutual mistake, a false representation, or other ground for rescission; the party seeking to rescind has notified the other party of the rescission; and there is no adequate remedy at law. See Staaldam Beheer B.V. v. ASAP Installations, LLC, No. 809cv2226, 2010 WL 1730780, at *4 (M.D.Fla. April 28, 2010) (slip op.) (citing Crown Ice Mach. Leasing Co. v. Sam Senter Farms, Inc., 174 So.2d 614, 617 (Fla. 2d DCA 1965)). The court finds no conduct on the part of Jet amounting to fraud or a false representation that would support rescission of the aircraft purchase agreement, and in any event, an adequate remedy at law exists through a breach of contract claim and damages.
JDI asserts a breach of fiduciary duty by Kerr. The elements of a claim for breach of fiduciary duty are: (1) the existence of a fiduciary duty; (2) breach of that duty; and (3) damages. See Gracey v. Eaker, 837 So.2d 348, 353 (Fla. 2002). "`A fiduciary relation exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of that relation.'" Id. at 354 (quoting Restatement (Second) of Torts, § 874 cmt. a). A broker or agent owes a fiduciary duty of loyalty. See Frey v. Fraser Yachts, 29 F.3d 1153, 1156 (7th Cir.1994) (citing Young v. Field, 548 So.2d 784, 786 (Fla. 4th DCA 1989)). A broker or agent also owes a fiduciary duty of full disclosure. See Young, 548 So.2d at 786. Self-dealing is inconsistent with a broker's duty to a client. Phillips Chem. Co. v. Morgan, 440 So.2d 1292, 1294 (Fla. 3d DCA 1983). Additionally, "[c]oncealment of material facts known to the broker will forfeit his right to compensation for his services." Kline v. Pyms Suchman Real Estate Co., 303 So.2d 401, 405 (Fla. 3d DCA 1974), cert. denied, 314 So.2d 588 (Fla.1975). The fiduciary duty of dealing honestly and with good faith is breached "where there is a showing of fraud, deceit or absence of good faith." Messer v. E.F. Hutton & Co., 833 F.2d 909, 920 (11th Cir.1987) (citing Florida common law), amended on reh'g on other grounds, 847 F.2d 673 (11th Cir.1988). Thus, mere negligence is not sufficient to demonstrate a breach of fiduciary duty. See generally Maliner v. Wachovia Bank, N.A., No. 04-60237, 2005 WL 670293, at *9 (S.D.Fla. 2005) (noting more than mere negligence was required to recover for breach of fiduciary duty) (unpublished); Berges v. Infinity Ins. Co., 896 So.2d 665, 687 (Fla.2004) (noting in an insurance context that breach of fiduciary requires demonstration of more than mere negligence).
JDI argues that Kerr breached his fiduciary duty as JDI's broker in this transaction by failing to disclose his fee agreement with Jet and failing to disclose material facts of deferred deficiencies in the aircraft in order to complete the transaction to his own financial gain. The facts show that JDI's attorney, Dulac, told Kerr to seek a fee first from the seller, and although Kerr did not directly disclose his agreement with Jet to Isaacman personally, he had been instructed to deal with Dulac and Watkins testified that it was Dulac who did not want the fee arrangement memorialized in the purchase agreement. Because Dulac's knowledge of the arrangement is imputed to JDI, see generally,
The allegation that Kerr failed to disclose the final discrepancy report from Cessna is more troubling. There is no documentary evidence proving that Kerr or his office forwarded the final report to Dulac, and Isaacman testified that he might not have proceeded with the transaction had he seen the final discrepancy report showing 21 items deferred instead of repaired. However, rejecting the plane at closing on the basis of unrepaired non-airworthy items was not a viable contract option for Isaacman.
Importantly, the court has found that the plane was delivered in an airworthy condition. Under the purchase agreement, Isaacman had no option to walk away from the deal at closing absent the existence of an outstanding airworthiness deficiency. Kerr called Isaacman at closing to inform him of the bald nose tire he discovered, which was the one outstanding item of any airworthy concern on the plane and thus something that could have derailed the entire deal. Thus, Kerr's act of reporting this defect demonstrates good faith on his part and is inconsistent with one trying to close the deal irrespective of Isaacman's best interests. Also, even assuming Kerr failed to disclose the nonairworthy items which Jet had deferred, this does not amount to a material nondisclosure that would breach his fiduciary duty because the contract only allowed Isaacman an "out" at closing for the existence of an airworthy discrepancy, and there is no evidence to demonstrate that Isaacman's misunderstanding or Kerr's alleged failure to fax the final report to him was born of anything more than negligence. Such negligence does not rise to a breach of fiduciary duty. See Messer, 833 F.2d at 920 (requiring a showing of fraud, deceit or absence of good faith).
The essential elements of fraud under Florida law are (1) a false statement concerning a specific material fact; (2) the maker's knowledge that the representation is false; (3) an intention that the representation induce another's reliance; and (4) consequent injury to the party who acts in justifiable reliance on the representation. See Wadlington v. Continental Med. Servs., Inc., 907 So.2d 631, 632 (Fla. 4th DCA 2005). Without justifiable reliance, there can be no actionable fraud. See Hillcrest Pac. Corp. v. Yamamura, 727 So.2d 1053, 1057 (Fla. 4th DCA 1999). Fraud may be based on either an intentional misrepresentation or an omission of material fact. See Ward v. Atl. Sec. Bank, 777 So.2d 1144, 1146 (Fla. 3d DCA 2001). A failure to disclose calculated to induce a false belief violates principles of fair dealing and good faith. See Johnson v. Davis, 480 So.2d 625, 628 (Fla. 1985). However, "a misrepresentation is not actionable where its truth might have been discovered by the exercise of ordinary diligence." David v. Davenport, 656 So.2d 952, 953 (Fla. 3d DCA 1995) (internal marks omitted). Fraud is to be proven by a preponderance of the evidence in a civil action. See Beal Bank, SSB v. Almond and Assoc., 780 So.2d 45, 58 n. 19 (Fla.2001).
The evidence outlined above demonstrates that any failure by Kerr to ensure that Isaacman saw the final discrepancy report as well as his assurances that the plane was "perfect" were not made with an intent to defraud or purpose to deceive. Kerr testified that his ordinary practice was to forward all documents to Isaacman and Dulac as a matter of course. He had instructed his assistant Mary Scales to follow this practice and he believed she had, though she could not specifically recall faxing the final report. Isaacman was aware that there would be a final report and, "in the exercise of ordinary diligence," could have insisted on seeing it prior to closing. See David, 656 So.2d at 953. Also, Kerr's assurance that all was going smoothly through the validation process
"A claim for unjust enrichment seeks restitution from a party allegedly unjustly enriched" at another's expense. Ala v. Chesser, 5 So.3d 715, 718 (Fla. 1st DCA 2009) (citing Restatement of Restitution § 1, at 12 (1937)). The elements are (1) that the plaintiff conferred a benefit on the defendant, who has knowledge of it; (2) that the defendant voluntarily accepted and retained the benefit; and (3) circumstances exist showing it would be inequitable for the defendant to retain the benefit without paying the plaintiff its value. See Extraordinary Title Servs., LLC v. Fla. Power & Light Co., 1 So.3d 400, 404 (Fla. 3d DCA 2009). Kerr knowingly accepted a broker's fee from JDI; however, because the circumstances demonstrate that he performed valuable services, Kerr was not unjustly enriched by the payment. JDI received an aircraft in airworthy condition upon delivery in conformance with the contract, and Kerr performed services in aid of JDI's purchase by helping to locate the aircraft, aiding in the negotiation of the transaction, and attending the closing. JDI did not enter into a written agreement with Kerr explicitly setting forth the duties or obligations of either party, and the court concludes that the misunderstanding that ensued was attributable not only to Kerr but also to Isaacman's own lack of diligence as well as to the conduct of Isaacman's agent, Dulac, whose knowledge must be imputed to Isaacman. The court concludes there was no unjust enrichment.
JDI asserts that Jet and Kerr engaged in deceptive and unfair trade practices in violation of Florida's Deceptive and Unfair Trade Practices Act ("FDUTPA"), which declares unlawful any "[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce." Fla. Stat. § 501.204. FDUTPA "applies to private causes of action arising from single unfair or deceptive acts in the conduct of any trade or commerce, even if it involves only a single party, a single transaction, or a single contract." See PNR, Inc. v. Beacon Property Mgm't, Inc., 842 So.2d 773, 777 (Fla.2003). Unfair and deceptive trade practices are not defined by the legislature, but Florida courts have held that a practice is unfair if it "offends established public policy, is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." Id. FDUTPA is a separate cause of action intended to be an additional remedy, see Fla. Stat. § 501.213(1), and it is aimed toward making consumers whole for losses caused by fraudulent consumer practices. Delgado v. J.W. Courtesy Pontiac GMC-Truck, Inc., 693 So.2d 602, 606 & 610 (Fla. 2d DCA 1997). Because the court has concluded that neither Jet nor Kerr engaged in a deceptive or fraudulent practice, this claim fails. See Witt v. La Gorce Country Club, Inc., 35 So.3d 1033, 1040 (Fla. 3d DCA 2010) (explaining that whether conduct constitutes an unfair or deceptive trade practice is a question of fact and affirming a finding of no deceptive trade practice where there was no misrepresentation or deceptive non-disclosure).
The evidence at trial demonstrates that a major misunderstanding developed early
Accordingly, based upon the law and the evidence presented at trial and duly considered by the court, and in the case of Southern for the reasons stated by the court at trial, it is hereby ordered that final judgment shall be entered in favor of all Defendants and against Plaintiff, with costs taxed against Plaintiff.
