Case Title: Robert T. Butler v. Henry Yusem, Et Al.

Citation: 

Docket Number: SC09-1508

State: florida

Court: Florida Supreme Court

Date: 2010-09-08T00:00:00Z

Document:
Supreme Court of Florida 
 
 
____________ 
 
No. SC09-1508 
____________ 
 
ROBERT T. BUTLER,  
Petitioner, 
 
vs. 
 
HENRY YUSEM, et al.,  
Respondents. 
 
[September 8, 2010] 
 
PER CURIAM. 
 
Robert T. Butler seeks review of the decision of the Fourth District Court of 
Appeal in Yusem v. Butler (Butler III), 10 So. 3d 1159 (Fla. 4th DCA 2009), on 
the ground that it expressly and directly conflicts with our decision in Butler v. 
Yusem (Butler II), 3 So. 3d 1185 (Fla. 2009), and our decision in Robertson v. 
State, 829 So. 2d 901 (Fla. 2002), regarding the proper application of the tipsy 
coachman doctrine.  We also conclude that the decision of the Fourth District, 
which holds that failure to establish justifiable reliance is a bar to recovery based 
on fraudulent misrepresentation, conflicts with the opinions of this Court in 
 
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Johnson v. Davis, 480 So. 2d 625 (Fla. 1985), and Besett v. Basnett, 389 So. 2d 
995 (Fla. 1980).  We have jurisdiction.  See art. V, § 3(b)(3), Fla. Const. 
 
The issue we decide is whether the trial court reversibly erred when it denied 
relief to Butler on his claims for fraudulent misrepresentation and negligent 
misrepresentation based on Butler‟s lack of due diligence—a defense not pled or 
tried by consent.  The underlying action is part of a twenty-year saga of litigation 
and numerous lawsuits that arose from a business partnership between Robert 
Butler, the petitioner in this case, and Henry Yusem (Yusem), Brian Yusem, 
Andrew Carlton, and H.Y. Wyncreek, Inc., and involved an agreement to construct 
a commercial retail and office building (the Wyncreek project).  In the litigation 
before us, Butler filed a multicount complaint against the respondents, asserting 
that the Wyncreek project was not being completed or leased as required by the 
partnership agreement.  The case proceeded to a bench trial, and the trial court 
granted relief to Butler on some of his claims and denied relief on others.   
Directly relevant to the issue that is before us, the trial court denied relief on 
Butler‟s claims of fraudulent misrepresentation and negligent misrepresentation 
based on Butler‟s failure to exercise due diligence: 
That lack of due diligence included putting various protective 
provisions in the [Limited Partnership Agreement], but failing to 
follow up on them.  Butler‟s lack of experience in development is 
outweighed by the fact that he is a sophisticated businessman and an 
experienced lawyer, who was represented by New York counsel.  
Furthermore, Butler sought legal advice and financial advice at 
 
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various times including, but not limited to, when he was going to 
embark on this new investment venture.   
Before signing any Wyncreek documents, Butler had a 
conversation with an officer of the First American Bank.  The purpose 
of the conversation was to verify the “excellent” reputation of the 
defendants in construction and commercial development.  However, 
Butler did not ask the right questions and therefore did not obtain 
information that was available to him from the Bank. 
 
Neither side was satisfied with the trial court‟s final judgment; Yusem 
appealed to the Fourth District, and Butler cross-appealed.  Yusem v. Butler 
(Butler I), 966 So. 2d 405, 412 (Fla. 4th DCA 2007), quashed, 3 So. 3d 1185 (Fla. 
2009).  We discuss only one aspect of Butler I: the trial court‟s application of due 
diligence to defeat several of Butler‟s claims for relief.  
The Fourth District stated that the trial court erroneously applied the doctrine 
of due diligence to defeat Butler‟s claims of fraud and negligent misrepresentation, 
because due diligence was not pled as an affirmative defense and thus Yusem 
waived the argument.  Id.  However, the Fourth District affirmed the trial court‟s 
decision to enter judgment on those claims against Butler because “a close reading 
of the trial transcript reveal[ed] that the trial court misapplied the term „due 
diligence‟ to express its conclusion that Butler did not justifiably rely on 
representations made by the Appellants.”  Id. (emphasis added).  According to the 
Fourth District, the trial court properly denied Butler‟s claims because Butler did 
not establish justifiable reliance.  Id.   
 
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In Butler II, this Court quashed that portion of Butler I addressing 
justifiable reliance.1  We held: 
[T]he Fourth District erred by recharacterizing the trial court‟s ruling 
as a lack of justifiable reliance.  We remand for the Fourth District to 
address whether it may apply justifiable reliance under the tipsy 
coachman doctrine to affirm the trial court.  On remand, if the Fourth 
District concludes that it may rely on the tipsy coachman doctrine, the 
Fourth District must address Butler‟s claims individually to determine 
whether justifiable reliance applies to each claim.  In its decision 
under review, the Fourth District lumped Butler‟s claims for 
fraudulent inducement, negligent misrepresentation, breach of 
contract, and breach of fiduciary duty together and then applied the 
justifiable reliance requirement to all his claims. 
 
3 So. 3d at 1186 (emphasis added) (footnotes omitted).  
After remand, the Fourth District did not order additional briefing but issued 
an opinion, summarily stating that it had applied the tipsy coachman doctrine as 
directed.  Butler III, 10 So. 3d at 1160.  The Fourth District then affirmed the trial 
court as to the counts of fraudulent misrepresentation and negligent 
misrepresentation, concluding that after “[r]eviewing the trial court‟s factual 
findings, it becomes clear that the trial court‟s reference to due diligence actually 
translated to Butler‟s failure to establish the element of justifiable reliance.”  Id. 
(emphasis added).2 
                                          
 
1.   This Court also reversed the Fourth District‟s failure to award 
prejudgment interest on certain attorney‟s fees claimed as part of the damages.   
 
 
2.  The Fourth District stated that although originally the court had addressed 
the due diligence argument as to four of Butler‟s claims (fraud in the inducement, 
 
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Upon review of the Fourth District‟s opinion on remand, we conclude that 
Butler III suffers from the same problem as Butler I and does not comply with our 
mandate in Butler II, which instructed the Fourth District to address each claim 
individually to determine if justifiable reliance applies.  It also fails to properly 
apply the tipsy coachman principle of Robertson.  In addition, in holding that the 
trial court‟s specific findings regarding lack of due diligence “translated” into lack 
of justifiable reliance as a basis for denying relief, the Fourth District departed 
from this Court‟s precedent as to the necessary elements and proper defenses to 
claims for fraudulent misrepresentation. 
Under the tipsy coachman doctrine, where the trial court “reaches the right 
result, but for the wrong reasons,” an appellate court can affirm the decision only if 
“there is any theory or principle of law in the record which would support the 
ruling.”  Robertson, 829 So. 2d at 906 (emphasis added) (quoting Dade Cnty. Sch. 
Bd. v. Radio Station WQBA, 731 So. 2d 638, 644 (Fla. 1999)).  As we stressed, 
the key to this doctrine is whether the record before the trial court can support the 
alternative principle of law.  Here, the Fourth District did not address the claims 
                                                                                                                                        
negligent misrepresentation, breach of fiduciary duty, and breach of contract), 
upon closer review of the final judgment, the trial court applied the due diligence 
defense to defeat only fraud in the inducement and negligent misrepresentation.  
Butler III, 10 So. 3d at 1160 n.2.  Thus, the district court did not apply the tipsy 
coachman doctrine to the remaining two claims (breach of fiduciary duty and 
breach of contract), and those claims are not before us.  
 
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individually, as directed, and summarily concluded that the same findings for a 
lack of due diligence would equally support the findings of justifiable reliance, 
without ever reviewing whether justifiable reliance was a necessary element of 
fraudulent misrepresentation or negligent misrepresentation.  See Butler III, 10 So. 
3d at 1160.   
 
These conclusions were in error.  Justifiable reliance is not a necessary 
element of fraudulent misrepresentation.  As we have stated, there are four 
elements of fraudulent misrepresentation: “(1) a false statement concerning a 
material fact; (2) the representor‟s knowledge that the representation is false; (3) an 
intention that the representation induce another to act on it; and (4) consequent 
injury by the party acting in reliance on the representation.”  Johnson, 480 So. 2d 
at 627 (emphasis added).  This is consistent with our prior opinion in Besett, 389 
So. 2d at 998, holding that in an action involving fraudulent misrepresentation, the 
buyers did not need to allege that they had investigated the truth of the 
misrepresentations because for this claim, “a recipient may rely on the truth of a 
representation, even though its falsity could have been ascertained had he made an 
investigation, unless he knows the representation to be false or its falsity is obvious 
to him.”  As we have explained, “the policy behind our holding in Besett is to 
prohibit one who purposely uses false information to induce another into a 
 
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transaction from profiting from such wrongdoing.”  Gilchrist Timber Co. v. ITT 
Rayonier, Inc., 696 So. 2d 334, 336-37 (Fla. 1997). 
The same reasoning does not apply, however, when a party transmits false 
information but is not aware of the falsehood, giving rise to a negligent 
misrepresentation claim.  See Gilchrist, 696 So. 2d at 337.  As to negligent 
misrepresentation claims, although justifiable reliance on the misrepresentation is 
required as an element of the claim, justifiable reliance on a representation is not 
the same thing as failure to exercise due diligence.  One does not necessarily 
translate into the other.  In fact, in Gilchrist, the Court held that principles of 
comparative negligence would apply to negligent misrepresentation claims.  Id. at 
339.  The Court recognized that while a recipient of information will not have to 
investigate every piece of information furnished, he or she is responsible for 
“investigating information that a reasonable person in the position of the recipient 
would be expected to investigate.”  Id.  Thus, a recipient of an erroneous 
representation cannot “hide behind the unintentional negligence of the 
misrepresenter when the recipient is likewise negligent in failing to discover the 
error.”  Id.   
In turning to this case, the trial court did not make its findings based on the 
reasonable person standard, but instead found that Butler did not exercise due 
diligence because he was a sophisticated businessman and an experienced lawyer 
 
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and although he undertook an investigation to verify the facts and the reputation of 
the defendants, he did not ask the “right questions” and thus did not obtain 
information that was available if he had questioned the bank officer more 
thoroughly.  Based on this record, the findings made by the trial court do not show 
that Butler failed to establish all of the elements of his claims.  Further, since 
failure to exercise due diligence was not raised as an affirmative defense, the trial 
court erred in denying relief on this basis.  
As to the proper relief, Butler urges that we should remand with directions 
for the trial court to enter judgment on the claims for fraudulent misrepresentation 
and negligent misrepresentation.  However, because the trial court denied relief 
based on lack of due diligence, it is not at all clear whether the trial court found 
that Butler had established the elements of those claims.  Accordingly, we quash 
the Fourth District‟s decision and remand this case to the district court with 
instructions that it be returned to the trial court for further proceedings consistent 
with this opinion, including that the trial court reconsider whether Butler is entitled 
to relief based on his claims for fraudulent misrepresentation and negligent 
misrepresentation. 
It is so ordered. 
CANADY, C.J., and PARIENTE, LEWIS, QUINCE, LABARGA, and PERRY, 
JJ., concur. 
POLSTON, J., concurs in result. 
 
 
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NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
 
Application for Review of the Decision of the District Court of Appeal - Direct 
Conflict of Decisions 
 
 
Fourth District - Case No. 4D05-1250 
 
 
(Palm Beach County) 
 
John Beranek, H. Michael Easley and Richard H. Willits of Ausley and McMullen, 
Tallahassee, Florida, 
 
 
for Petitioner 
 
Henry Yusem, Brian, Yusem, and H.Y. (Wyncreek), Inc., Boca Raton, Florida, and 
Andrew Carlton, Sapphire, North Carolina, 
 
 
Pro se Respondents