Opinion
No. 3D09-2342.
Opinion filed October 27, 2010.
An Appeal from the Circuit Court for Miami-Dade County, Lower Tribunal No. 08-01308, Mark King Leban, Judge.
Arthur J. Morburger; Robert I. Spiegelman, for appellants.
John H. Schulte, for appellee.
Before RAMIREZ, C.J., and COPE and ROTHENBERG, JJ.
This is an appeal of a final order granting a motion for judgment on the pleadings. We conclude that the second amended complaint states a cause of action and remand for further proceedings.
The second amended complaint alleges that the plaintiffs William P. Walker, III and Gemma M. Walker loaned $25,000 to the defendant, Jaime A. Figarola, pursuant to an oral agreement. The plaintiffs made a wire transfer of the $25,000 to an account designated by the defendant.
The plaintiffs allege that, at the time the defendant requested the loan, he had no intention to repay it. The plaintiffs contend that the defendant has committed civil theft in violation of section 772.11 and subsection 812.014(4), Florida Statutes (2003).
The second amended complaint alleges:
10. At the time when Defendant, JAIME A. FIGAROLA, requested the loan and advance of Plaintiffs' funds, the Defendant, JAIME A. FIGAROLA, falsely and fraudulently represented to Plaintiffs that the loan and advance of Plaintiffs' funds would be repaid by him to Plaintiffs, within about three weeks.
A. At the time when said Defendant made the aforesaid representation to Plaintiffs, Defendant had no intention to repay said funds and/or intended not to repay said funds.
B. That the representations made by Defendant to Plaintiffs were material and false.
C. That the representations by Defendant to Plaintiffs induced Plaintiffs to effectuate the wire transfer as the Defendant had requested.
D. Plaintiffs made the said loan and advance in reliance on the truth of the Defendant's representations to their detriment.
. . . .
11. At all times material, Defendant knowingly [] solicited, obtained and received the benefit of Plaintiffs['] moneys, with the felonious intent to permanently deprive the Plaintiffs of the right to their funds and to appropriate the Plaintiffs' money to the Defendant's own use, in violation of § 812.014(1), Florida Statutes.
. . . .
13. In furtherance of the fraud and intent to steal and appropriate Plaintiffs' moneys, Defendant failed and refused to repay the sums advanced by Plaintiffs at the Defendant's special request and behest. . . .
. . . .
15. The Defendant knowingly obtained and appropriated to his own use and benefit Plaintiffs' $25,000.00, with the felonious intent to permanently deprive the Plaintiffs of their right to receive reimbursement of their moneys, in violation of § 772.11, Florida Statutes.
16. As a result, Plaintiffs have been injured and damaged because of Defendant's violation of § 772.11, Florida Statutes, and have lost the above sum plus interest from the date of Defendant's theft of the same.
The defendant moved for judgment on the pleadings. He argued that, at bottom, the complaint simply alleged a failure to repay a loan, and that a failure to repay a loan does not amount to civil theft. He argued that the funds in this case were not an escrow fund or other special deposit, and therefore could not be a proper subject for conversion (and therefore not a proper basis for civil theft). He also argued that the cause of action was barred by the economic loss doctrine. The trial court granted judgment on the pleadings and the plaintiffs have appealed.
The defendant argues that the plaintiffs have alleged no more than that they made the defendant a loan and the defendant failed to repay it. The defendant argues, in essence, that a loan is a loan, is a loan, is a loan. The defendant contends that there is no allegation here which would rise to the level of constituting civil theft.
If the plaintiffs had only alleged a loan and failure to repay, the defendant would have a point. However, the plaintiffs have alleged more. For simplicity, we first consider the distinction between breach of contract and fraud.
"A mere failure to perform a promise will not constitute fraud. . . ." 27 Fla. Jur. 2d Fraud and Deceit § 27 (2010). It is fraud, however, "if such promise is made without any intention of performing or with the positive intention not to perform." Id. In such circumstances the maker of the false promise has obtained money or property under false pretenses.See id. The Florida Supreme Court has said:
[A] promise or promissory representation as to a material matter, made without any intention of performing it, or made with the positive intention not to perform it, and made by the promisor for the purpose of deceiving the promisee and inducing him to act where he otherwise would not have done so, and the promisee does act in reliance thereon to his injury, constitutes a legal fraud.
Home Seekers' Realty Co. v. Menear, 135 So. 402, 402-03 (Fla. 1931); see Weldon v. Wyche, 863 So. 2d 395, 396 n.* (Fla. 3d DCA 2003) (same); Mejia v. Jurich, 781 So. 2d 1175, 1177 (Fla. 3d DCA 2001) (same); Thor Bear, Inc. v. Crocker Mizner Park, Inc., 648 So. 2d 168, 172 (Fla. 4th DCA 1995) (same); Capital Bank v. MVB, Inc., 644 So. 2d 515, 521 (Fla. 3d DCA 1994) (same); Vance v. Indian Hammock Hunt Riding Club, Ltd., 403 So. 2d 1367, 1372 (Fla. 4th DCA 1981) (same).
In the present case the plaintiffs allege that the defendant promised to repay the loan in about three weeks. The crucial allegation is that when he made that promise, "Defendant had no intention to repay said funds and/or intended not to repay said funds." The allegations just quoted — that "Defendant had no intention to repay said funds and/or intended not to repay said funds" — states a claim for common law fraud, not just a claim for breach of contract.
It is appropriate to have begun the analysis with common law fraud, because the legislature incorporated fraud into the theft statute. The plaintiffs allege that the defendant committed civil theft in violation of subsection 812.014(1), Florida Statutes. That statute provides, in part, that a "person commits theft if he . . . knowingly obtains or uses . . . the property of another with intent to, either temporarily or permanently . . . (b) Appropriate the property to his . . . own use or to the use of any person not entitled to the use of the property." (Emphasis added).
In the statute, the phrase "obtains or uses" is a defined term. Id. § 812.012(3). "Obtains or uses" includes "[o]btaining property by fraud, willful misrepresentation of a future act, or false promise." Id. § 812.012(3)(c) (Emphasis added). Also included in the definition of "obtains or uses" is "[c]onduct previously known as . . . obtaining money or property by false pretenses, fraud, or deception; or . . . [o]ther conduct similar in nature." Id. § 812.012(3)(d)1., 2. (Emphasis added).
The full definition of "obtains or uses" is:
(3) "Obtains or uses" means any manner of:
(a) Taking or exercising control over property.
(b) Making any unauthorized use, disposition, or transfer of property.
(c) Obtaining property by fraud, willful misrepresentation of a future act, or false promise.
(d)1. Conduct previously known as stealing; larceny; purloining; abstracting; embezzlement; misapplication; misappropriation; conversion; or obtaining money or property by false pretenses, fraud, or deception; or
2. Other conduct similar in nature.
Id. § 812.012(3).
From the foregoing, it is plain that the second amended complaint states a cause of action. As already demonstrated, the allegation that the defendant had no intention to repay the funds and/or intended not to repay the funds is sufficient to state a claim for common law fraud, and common law fraud is explicitly included in the theft statute. Id. § 812.012(3)(c), (d)1. Furthermore, the statute also says that "obtains or uses" includes "willful misrepresentation of a future act. . . ." Id. § 812.012(3)(c). The plaintiffs have alleged a false promise to repay the money in the future, when, according to the allegation, the defendant had no intention to repay.
The defendant contends, however, that it is impossible to have an action for civil theft where there has been a failure to repay money, unless there has been a conversion of a specific fund. The defendant relies on Gasparini v. Pordomingo, 972 So. 2d 1053 (Fla. 3d DCA 2008). The defendant is incorrect. First, we have already quoted the statutory elements of a civil theft claim. The statute explicitly allows a civil theft claim where the allegation is "fraud, willful misrepresentation of a future act, or false promise," § 812.012(3)(c), Fla. Stat. (2003), as well as "[c]onduct previously known as . . . obtaining money or property by false pretenses, fraud, or deception; or . . . [o]ther conduct similar in nature." Id. § 812.012(3)(d). The allegations in this case fall within the statutory elements.
Second, the defendant relies on Gasparini, but that case is not to the contrary. The decision says, "It is well-established law in Florida that a simple debt which can be discharged by the payment of money cannot generally form the basis of a claim for conversion or civil theft." Id. at 1055 (emphasis added). The case now before us falls within an exception to the general rule, because it is properly pled under the civil theft statute.
It is true that the Gasparini case also says, "To establish a claim for civil theft, a party must prove that a conversion has taken place and that the accused party acted with criminal intent." Id. at 1056. We clarify that the just-quoted language is addressing the law which was applicable to the specific facts of the Gasparini case. It is not a statement which establishes a rule for all civil theft cases.
In Gasparini, one of the plaintiffs, Vitala, S.A., paid a $300,000 fee to one of the defendants, International Trading, to procure a letter of credit. Id. at 1054. International concluded that Vitala was not creditworthy and decided not to issue the letter of credit. Id. at 1055. However, International refused to refund the $300,000 fee. Vitala and another plaintiff sued International and another defendant. The plaintiffs claimed unjust enrichment, civil theft, and conversion. The plaintiffs recovered a judgment on all three theories in a bench trial, and the defendants appealed. Id.
This court concluded that the evidence was legally insufficient to support the judgment for conversion and civil theft. This court held that the conversion count failed because the plaintiffs' claim was one which sought to recover a simple debt. Id. The parties' agreement did not require that the $300,000 amount be kept in an escrow fund or other separate account. Id. at 1056. That being so, there was no conversion.
With regard to the civil theft count, the civil theft statute specifies that conversion can be a basis for a civil theft claim. Under the statute, theft includes "[c]onduct previously known as . . . conversion. . . ." § 812.012(3)(d)1, Fla. Stat. (2003); see supra note 1.
In Gasparini the basis for the civil theft claim was conversion. That being so, once the conversion claim failed, then the civil theft claim also failed. It is in that specific factual context — a civil theft claim based on a conversion — that the Gasparini court said:
To establish a claim for civil theft, a party must prove that a conversion has taken place and that the accused party acted with criminal intent. Since we have found that there was no factual basis to support a claim for conversion, it stands to reason therefore, that there can be no cause of action for civil theft.
Gasparini, 972 So. 2d at 1056 (citation omitted). That is an accurate statement of the law where the civil theft claim is based on conversion.
The present case differs from Gasparini. In the present case, the plaintiffs have pled that the defendant obtained money by conduct amounting to a commonlaw fraud. As demonstrated earlier in this opinion, the plaintiffs have alleged the statutory elements of a civil theft claim.
The defendant correctly points out that in paragraph 10E of the second amended complaint, the plaintiffs alleged that "At all times material, Defendant knowingly solicited, obtained, and received the benefit of Plaintiffs' moneys, with the felonious intent to permanently deprive the Plaintiffs of the right to their funds and to convert and appropriate the Plaintiffs' money to Defendant's own use in violation of § 812.014(1), Florida Statutes." (Emphasis added). To the extent the phrase "to convert and" can be read to allege that a conversion took place, that allegation is legally insufficient for the reasons just discussed. However, the remainder of the paragraph just quoted, plus the allegations of the second amended complaint quoted earlier in this opinion, adequately allege the elements of a civil theft through obtaining money by fraud.
The defendant argues that the plaintiffs' claim is barred by the economic loss doctrine. The defendant is incorrect. The Florida Supreme Court has squarely held that "The economic loss rule does not bar statutory causes of action. . . ." Comptech Int'l, Inc. v. Milam Commerce Park, Ltd., 753 So. 2d 1219, 1224 (Fla. 1999). In Indemnity Insurance Co. of North America v. American Aviation, Inc., 891 So. 2d 532 (Fla. 2004), the Court reiterated that freestanding statutory causes of action are an exception to the economic loss rule. Id. at 543 (citing Comptech). Furthermore, the Court cited with approval this court's decision inPershing Industries, Inc. v. Estate of Sanz, 740 So. 2d 1246, 1248 (Fla. 3d DCA 1999), for the proposition that "claims for economic damage based on fraud in the inducement, conversion, and civil theft were independent torts and thus actionable despite existence of contract between the parties." Indem. Ins. Co., 891 So. 2d at 537 (emphasis added).
For the stated reasons, we reverse the order now before us and remand for further proceedings.
Not final until disposition of timely filed motion for rehearing.