Opinion
Nos. 81-36, 81-98.
January 4, 1983. Rehearing Denied January 24, 1983.
Appeal from the Circuit Court, Dade County, Wilkie D. Ferguson, Jr., J.
Karl Beckmeyer, Tavernier, and Jeffrey E. Lehrman, Coconut Grove, for appellants.
Silver, Levy Hershoff and Jay M. Levy, Nachwalter Falk, Miami, for appellees.
Before BASKIN, DANIEL S. PEARSON and JORGENSON, JJ.
Joseph T. Lance and Cross Key Waterways, Inc., appeal from an adverse judgment entered upon a jury verdict finding them liable for compensatory and punitive damages. The central issue in this appeal presents the question of the propriety of the trial court's submitting to the jury a class action sounding in fraud. For the reasons which follow, we affirm.
The plaintiffs alleged detrimental reliance upon fraudulent representations by the seller in its public offering statement and advertising fliers and upon oral fraudulent representations by the seller's employees. The representations were that certain paved roads would be provided for access to and travel within a mobile home development.
Relying on Osceola Groves v. Wiley, 78 So.2d 700 (Fla. 1955), appellants contend that an action of this nature may not be maintained. We disagree with that contention. The rule announced in Osceola Groves was characterized as "limited" by our Supreme Court in Frankel v. City of Miami Beach, 340 So.2d 463, 469 (Fla. 1976). The Frankel court established a three-prong test which, when satisfied, permits a class action sounding in fraud. That test has been met by the appellees. Where, as here, the plaintiff class is engaged in a cooperative enterprise (adjacent landowners attempting to use the same undeveloped road), have a joint pecuniary interest (their common ownership of the roadways in the subdivision), and do not have a choice of remedies which may be subject to separate and distinct defenses (the only defenses available to Lance and Cross Key Waterways were proof of contractual compliance, i.e., the building of the roads to county specifications, or the creation of a trial issue that the defendants' guaranty of the roads was merely "puffing" and thus plaintiff class should not prevail), the Frankel criteria are met.
This case would be unwieldy in the form of individual suits and conforms with the rationale of Justice Terrel in Tenney v. City of Miami Beach, 11 So.2d 188 (Fla. 1942), where, speaking for the court, he stated:
The very purpose of a class suit is to save a multiplicity of suits, to reduce the expense of litigation, to make legal processes more effective and expeditious, and to make available a remedy that would otherwise not exist. . . . To have required 232 separate suits here would have been prohibitive and ridiculous and would have deprived many of a remedy.
Appellants' reliance on Costin v. Hargraves, 283 So.2d 375 (Fla. 1st DCA 1973), Equitable Life Assurance Society of the United States v. Fuller, 275 So.2d 568 (Fla. 3d DCA 1973), and Hendler v. Rogers House Condominium, Inc., 234 So.2d 128 (Fla. 4th DCA 1970), is misplaced. Each of those cases fail to satisfy the three-prong test as announced in Frankel and are therefore inapplicable here.
We have examined each of the other issues raised in this appeal and find them to be without merit.
The judgments appealed from are accordingly affirmed.
Purchasers of mobile home lots in Cross Key Waterways, Monroe County, filed a class action in which they sought damages predicated upon fraud. They alleged that approximately 350 purchasers relied, to their detriment, upon statements contained in the Public Offering Statement, brochure, and contract for deed, which represented that the lots would be provided access to the highway by means of a paved road and that other roads would be paved according to the specifications of the Monroe County engineer. When their repeated attempts to enforce numerous promises to pave the roads proved fruitless, the lot owners brought a class action, charging the seller, Cross Key Waterways, Inc., and its president, Joseph T. Lance, with fraud. Following trial, the court entered judgments in accordance with the jury verdicts: $200,000 compensatory damages and $300,000 punitive damages against Cross Key Waterways; $50,000 compensatory damages and $60,000 punitive damages against Joseph T. Lance. This appeal ensued.
Although the two members of the class named as its representatives testified that they had relied upon the documents, other purchasers testified that they had not relied upon those documents.
Although Florida Rule of Civil Procedure 1.220 may now permit the filing of a class action alleging fraud, no similar rule authorized the institution of a class action for fraud at the time appellees filed suit. The Supreme Court of Florida has repeatedly ruled that class actions based upon claims of fraud are improper. Avila South Condominium Association v. Kappa Corp., 347 So.2d 599 (Fla. 1976); Osceola Groves v. Wiley, 78 So.2d 700 (Fla. 1955). In Frankel v. City of Miami Beach, 340 So.2d 463 (Fla. 1976), which questioned the continuing validity of Osceola Groves, the court noted that Costin v. Hargraves, 283 So.2d 375 (Fla. 1st DCA 1973); Equitable Life Assurance Society of United States v. Fuller, 275 So.2d 568 (Fla. 3d DCA 1973); and Hendler v. Rogers House Condominium, 234 So.2d 128 (Fla. 4th DCA 1970) had correctly disapproved class actions for fraud. Furthermore, in Cherin v. Southern Star Land Cattle Co., 400 So.2d 1 (Fla. 1981), the court declined to answer the certified question presented by the appellate court in Cherin v. Southern Star Land Cattle Co., 390 So.2d 104 (Fla. 3d DCA 1980) or to overrule Osceola Groves.
See Arnold, Class Actions in Florida — A New Look, 31 U.Fla.L.Rev. 551, 582-84 (1979); Fed. R.Civ.P. 23 advisory committee note.
The doubt expressed by the supreme court in Frankel regarding adherence to the rule enunciated in Osceola Groves, and Justice England's comments in his dissent in Avila South Condominium, suggest a need to remedy the class fraud problem:
The time has come, I believe, to acknowledge possibility that condominium developers in Florida may have spawned a new form of fraud — class fraud by general, public misrepresentations — and to admit that historic rules governing access to the courts are inappropriate to remedy this unique and persuasive problem.
347 So.2d at 610.
Although the supreme court may eventually reconsider the question of class action fraud lawsuits, this court is required to follow the law as it presently exists, Hoffman v. Jones, 280 So.2d 431 (Fla. 1973), and to reverse the judgments entered by the trial court.