Case Name: P. Bryce WILLIAMS and Michael J. Dwyer, Appellants, v. PEAK RESORTS INTERNATIONAL INC., et al., Appellees
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1996-07-12
Citations: 676 So. 2d 513
Docket Number: No. 95-1325
Parties: P. Bryce WILLIAMS and Michael J. Dwyer, Appellants, v. PEAK RESORTS INTERNATIONAL INC., et al., Appellees.
Judges: ANTOON, J., concurs.
Reporter: Southern Reporter, Second Series
Volume: 676
Pages: 513–522

Head Matter:
P. Bryce WILLIAMS and Michael J. Dwyer, Appellants, v. PEAK RESORTS INTERNATIONAL INC., et al., Appellees.
No. 95-1325.
District Court of Appeal of Florida, Fifth District.
July 12, 1996.
Patrick C. Crowell of Patrick C. Crowell, P.A., Orlando, for Appellants.
Walter S. McLin, III and Phillip S. Smith of McLin, Burnsed, Morrison, Johnson & Robuck, P.A., Leesburg, for Appellees.

Opinion:
THOMPSON, Judge.
P. Bryce Williams and Michael J. Dwyer, appellants, appeal the partial summary judgment entered against them as to Count I (Florida's Communication Fraud Act), Count II (Common Law Fraud), and Count IV (Quantum Meruit) of their counterclaims against Peak Resorts International, Inc., Peak Financial Corporation of Florida, James W. Peak, Samuel H. Simkin, and Max P. Cawal. We reverse the partial summary judgment, and remand for further proceedings.
Peak Resorts International, Inc. ("Peak Resorts"), a Florida corporation having a principal place of business in Florida, was formed for the purpose of developing resort properties. Peak Financial Corporation of Florida ("Peak Financial") is a shareholder of Peak Resorts. James W. Peak ("Peak") is the President and one of three shareholders of Peak Financial, and is the President of Peak Resorts. Samuel H. Simkin ("Simkin") is one of three shareholders of Peak Financial, and an officer of Peak Resorts. Max P. Cawal ("Cawal") is also one of three shareholders of Peak Financial, and an officer of Peak Resorts.
In 1992, Peak Resorts began contracting for and obtaining options to purchase certain real properties in Osceola and Lake Counties for the purpose of constructing a time-share resort. In April or May 1992, Peak Resorts began negotiations with appellant P. Bryce Williams ('Williams") for the purpose of obtaining his services as Vice President and Chief Financial Officer of Peak Resorts. Over the course of the next few months, Simkin, Cawal, and Peak allegedly made several false representations to Williams regarding the financial status of Peak Enterprises (including Peak, Peak Financial, and Peak Resorts). Those alleged false representations included statements that Peak Enterprises was financially strong and was capable of providing compensation to Williams for his services. Williams allegedly relied on these representations and in August 1992, accepted Peak Resorts' offer of employment. Peak Resorts and Williams executed an employment agreement which provided that Williams would serve as the Executive Vice-President (EVP) and Chief Financial Officer (CFO) of Peak Resorts. The terms of the contract provided that Williams would be employed as an independent contractor fi'om 1 September 1992 through 21 December 1992, and on 1 January 1993, he would serve as the EVP and CFO of Peak Resorts at an annual salary of $190,000. A second employment agreement was executed between Williams and Peak Resorts with an effective date of 1 April 1993. Pursuant to the second agreement, Williams was to receive an annual base salary of $140,000.
In June 1992, Peak Resorts began negotiations with Michael J. Dwyer ("Dwyer"), in an effort to obtain his services as the Vice President of Sales and Marketing and Project Director for the development of the property in Osceola and Lake Counties. Dwyer also relied on the alleged representations by Sim-kin, Cawal, and Peak, and in June 1992, began providing services pursuant to certain letter agreements indicating that Dwyer was to receive an annual base salary of $200,000, in addition to sales bonuses. In March 1993, Peak Resorts failed to pay amounts that were owed to Williams and Dwyer pursuant to their employment contracts.
This cause was commenced when Peak Resorts filed a complaint against Williams and Dwyer alleging extortion, conversion and conspiracy causes of action. Williams and Dwyer timely filed their answers, affirmative defenses and counterclaims. This appeal concerns the counterclaims brought by Williams and Dwyer against Peak Resort, Peak Financial, Peak, Simkin, and Cawal, which are as follows: (1) Count I — violation of Florida's Communications Fraud Act, section 817.034, Florida Statutes (1991); (2) Count II — common law fraud; (3) Count III — breach of agreement; (4) Count IV— quantum meruit; and (5) Count V — breach of de facto employment agreement as to Williams only. The allegations as to all counts arose from the formation and performance of the employment contracts between Peak Resorts, Dwyer and Williams. The fraud claims are based on alleged misrepresentations by Peak Resorts, Peak Financial, Peak, Simkin and Cawal regarding Peak Resorts' ability to meet its obligations under the employment contracts. The record also contains affidavits of Dwyer and Williams detailing the damages they suffered as to the fraud claims, which damages are separate from the damages incurred as a result of Peak Resorts' breach of the employment contracts. According to their affidavits, Dwyer and Williams suffered the following damages in addition to the salaries agreed to: moving expenses; damage to credit; medical expenses; lost employment and opportunity for employment; and the sale of their homes.
Peak Resorts filed a motion for Partial Summary Final Judgment as to Counts I, II, and TV of the appellant's counterclaims. After a hearing on the motion, the trial court entered an order granting partial summary judgment for Peak Resorts as to Counts I, II, and IV of the appellants' counterclaims. In so doing, the trial court specifically found that the allegations in Count I were not separate from the allegations in the breach of contract claim; and that there being no genuine issue as to any material fact as to the interdependence of the facts supporting Count I and their claim for breach of contract, Dwyer and Williams were limited to obtaining and proving the right to recovery under their claim for breach of contract. As to Count II, the trial court found that Williams and Dwyer could not recover for purely economic losses absent evidence of physical injury or property damage; that their tort cause of action was identical to and inextricable from the evidence and facts arising from an alleged employment contract; and that there being no genuine issue as to any material fact regarding liability of Peak Resorts, Peak Financial, Peak, Simkin, and Cawal for common law fraud, Dwyer and Williams were limited to obtaining and proving the right to recovery under their claim for breach of contract.
Peak Resorts admitted breaching the employment contracts with Dwyer and Williams during a jury trial on Peak Resorts' Complaint against Williams and Dwyer, and on Counts III & V of their counterclaims. Accordingly, the trial court entered a judgment in favor of Dwyer and Williams and against Peak Resorts for breach of contract damages.
On appeal, Williams and Dwyer contend that the trial court erroneously granted summary judgment as to their fraud counterclaims against Peak Resorts, based upon its finding that the facts and evidence support ing their fraud claims arose out of and were not separate from the allegations supporting their breach of contract claims. We agree. In their counterclaims against Peak Resorts, Williams and Dwyer specifically alleged that during the negotiations regarding employment opportunities within Peak Resorts, Simkin, Cawal and Peak made false representations in an effort to induce them to enter into employment contracts. The alleged false representations included remarks that the Peak Enterprises (Peak Resorts, Peak Financial, and Peak) had a strong financial status and was able to pay the negotiated salaries to Williams and Dwyer. In addition, Williams and Dwyer alleged that Peak fraudulently represented that he had a net worth of $21 million in an effort to induce their employment and assure them that they would be compensated for their services. Further, as to Count I only, Williams and Dwyer alleged that Peak Resorts violated Florida's Communications Fraud Act by making false representations through "the transmission or transfer of signs, signals, writing, images, sounds, data, or intelligences of any nature in whole or in part by the mail, or by wire, radio, electromagnetic, photo-electronic, or photo-optical systems." These allegations, which have not been disputed by Peak Resorts, when viewed along with the record evidence indicate that there are genuine issues of material fact. Therefore, the trial court erroneously granted summary judgment as to Counts I and II of the counterclaims.
This court recently decided a similar issue in Acadia Partners v. Tompkins, 673 So.2d 487, (Fla. 5th DCA 1996). There, Acadia filed two actions against Tompkins Investment Group Incorporated: (1) a breach of credit agreement claim (the 319 action); and (2) a fraud in the inducement to enter the agreement claim, among other claims (the 320 action). The trial court entered summary judgment as to Acadia's breach of contract action based on the recommendation of a special master that the facts necessary to establish the claims in the fraud action were identical to the underlying facts and circumstances which were presented to the jury in the breach of contract case. On appeal, this court reversed the summary judgment, specifically rejecting the argument that the fraud action was barred by the election of remedies principle. In so doing, this court agreed with Ashland Oil, Inc. v. Pickard, 269 So.2d 714, 723 (Fla. 3d DCA 1972), cert. denied, 285 So.2d 18 (Fla.1973), that
'... (O)ne who has been fraudulently induced into a contract may elect to stand by that contract and sue for damages for the fraud. When this happens and the defrauding party also refuses to perform the contract as it stands, he commits a second wrong, and a separate and distinct cause of action arises for the breach of contract. The same basic transaction gives rise to distinct and independent causes of action which may be consecutively pursued to satisfaction. 'Thus, an action on a contract induced by fraud is not inconsistent with an action for damages for the deceit;.' 18 Am.Jur. 139, El. Of Rem. s.14 (1st ed.1938). 'A right of action on a contract and for fraud in inducing plaintiff to enter into such contract may exist at the same time, and a recovery on one of the causes will not bar a subsequent action on the other.' 50 C.J.S. Judgments s.676, p. 121 (1st ed.1947). The courts of many states have recognized the rule that a suit on a contract and a suit for fraud in inducing the contract are two different causes of action with separate and consistent remedies.'
Id. at 723 (quoting Bankers Trust Co. v. Pacific Employers Ins. Co., 282 F.2d 106, 110 (9th Cir.1960), cert. denied, 368 U.S. 822, 82 S.Ct. 41, 7 L.Ed.2d 27 (1961)); see also HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 661 So.2d 1221 (Fla. 3d DCA 1995), rev. granted, 670 So.2d 938 (Fla.1996) (affirming trial court's ruling that plaintiffs action for fraud in the inducement was an independent tort that was not barred by the economic loss rule); Burton v. Linotype Co., 556 So.2d 1126, 1128 (Fla. 3d DCA 1989), rev. denied, 564 So.2d 1086 (Fla.1990) ("Fraud in the inducement and deceit are independent torts for which compensatory and punitive damages may be recovered."). Put another way, the actions of fraudulent inducement into a contract and breach of that contract are not mutually exclusive and, therefore, may be brought in the same suit. Sprayberry v. Sheffield Auto and Truck Service, Inc., 422 So.2d 1073, 1075 (Fla. 1st DCA 1982), rev. dismissed, 427 So.2d 738 (Fla.1983). In the instant case, the trial court erred in finding that the facts and evidence supporting the fraud claims raised by Dwyer and Williams arose out of and were not separate from the allegations supporting their breach of contract claims, and in concluding that Williams and Dwyer were limited to the recovery available under their contractual causes of action.
It is well settled that a party may not recover damages for both breach of contract and fraud unless the party first establishes that the damages arising from the fraud are separate or distinguishable from the damages arising from the breach of contract. See Florida Temps, Inc. v. Shannon Properties, Inc., 645 So.2d 102 (Fla. 2d DCA 1994) (holding that "[plaintiff was] not entitled to damages for fraud that duplicate damages awarded for breach of the contract"); Huie v. Dent & Cook, P.A., 635 So.2d 111 (Fla. 2d DCA 1994) ("[A] fraud claim may not be pursued if its damages merely duplicate the damages recoverable for breach of a related contract."); R.D.M.H., Inc. v. Dempsey, 618 So.2d 794 (Fla. 5th DCA 1993) (affirming award of compensatory damages for breach of contract claim, and reversing compensatory damages award for fraud claim because record evidence did not support an independent award of compensatory damages for fraud); Rolls v. Bliss & Nyitray, Inc., 408 So.2d 229 (Fla. 3d DCA 1981), dismissed, 415 So.2d 1359 (Fla.1982) (reversing award of compensatory and punitive damages based on fraud, since plaintiffs failed to prove that they sustained compensatory damages based on fraud which were separate or distinguishable from their compensatory damages based on the contract).
Under Florida's economic loss rule, absent a tort independent of breach of contract, recovery for economic loss must be pursued under contract law. See Casa Clara Condominium Ass'n v. Charley Toppino and Sons, Inc., 620 So.2d 1244, 1246-47 (Fla.1993); Monco Enterprises v. Ziebart Corporation, 673 So.2d 491, (Fla. 1st DCA 1996). Florida courts have held that fraud in the inducement is an independent tort, and that recovery under this tort is not barred by the economic loss rule, and this is true irrespective of whether only economic losses are sought. See Jarmco, Inc. v. Polygard, Inc., 668 So.2d 300 (Fla. 4th DCA 1996); TGI Development, Inc. v. CV Reit, Inc., 665 So.2d 366 (Fla. 4th DCA 1996); HTP, Ltd., 661 So.2d at 1222.
To the contrary, in Woodson v. Martin, 663 So.2d 1327, 1329 (Fla. 2d DCA 1995), the second district held that under the economic loss rule, the nature of the damages suffered determines whether recovery is barred for tort actions, explaining that if the damages sought are economic losses only, the party seeking recovery for those damages must proceed on contract theories of liability. In his dissent, Judge Altenbernd explained that in Florida there are three distinct, but often overlapping, economic loss rules: (1) the products liability economic loss rule; (2) the contract economic loss rule; and (3) the negligence economic loss rule. Id. at 1331. Under the contract economic loss rule, if the parties have entered into a contract, the obligations of the contract may not support a cause of action in tort for the recovery of purely economic damages. .Id. Judge Alten-bernd further noted that in fraud in the inducement claims, often the obligations under the contract are unrelated to the events that actually induced one to enter into the contract. The fraud usually occurs prior to the contract and whether the defendant was truthful during the formation of the contract is unrelated to the events giving rise to breach of the contract. Id.
In the instant ease, Williams and Dwyer demonstrated that the economic losses they are seeking under the independent tort of fraud in the inducement are different from their breach of contract damages. Williams and Dwyer have filed affidavits indicating that they are seeking damages that would not be recoverable, and are separate and distinct from those damages that would be recoverable for Peak Resorts' breach of their employment contracts. Under their breach of contract claims, Williams and Dwyer sought contract damages in the form of compensation due. Under the fraud claims, Williams and Dwyer are seeking compensation for moving expenses, medical expenses, the loss of credit, loss of employment, and the sale of their homes, which damages are separate and distinct from the breach of contract damages. Arguably, the appellants could have amended their complaint to recover these damages in their breach of contract action instead of in an action for fraud in the inducement. The fact that the appellants sought to recover damages under one theory as opposed to another is a decision for the appellants and their attorney, not the appellate court. In this regard, the record contains sufficient evidence to support a cause of action for fraud. Therefore, the trial court erroneously entered the summary judgment as to Counts I and II of the counterclaims raised by Williams and Dwyer. Moore v. Morris, 475 So.2d 666 (Fla.1985); Destiny Constr. Co. v. Martin K. Eby Constr., 662 So.2d 388 (Fla. 5th DCA 1995).
Accordingly, we reverse the partial summary judgment, and remand this case to the trial court for further proceedings.
REVERSE and REMAND.
ANTOON, J., concurs.
HARRIS, J., dissents, with opinion.
. The summary judgment as to Count IV is no longer an issue in this appeal. Williams and Dwyer concede that the quantum meruit issue became moot once the trial court entered a judgement against Peak Resorts for breach of the employment agreements.