Opinion ID: 6986358
Heading Depth: 1
Heading Rank: 1

Heading: Certified Question I

Text: At the outset, we acknowledge the Eleventh Circuit’s statement that its “sterile phrasing of the issues need not preclude [us] from inquiring into the specifics of these cases.” See Mazzoni, 166 F.3d at 1165. That being said, we recognize that the nurseries elected to affirm rather than rescind the settlement agreements. Consequently, we restrict the inquiry of the first certified question to situations where the parties have elected to affirm the contract and sue for damages. Thus, we have rephrased the first certified question to read: (1) DOES A CHOICE-OF-LAW PROVISION IN A SETTLEMENT AGREEMENT CONTROL THE DISPOSITION OF A CLAIM THAT THE AGREEMENT WAS FRAUDULENTLY PROCURED IF THE DEFRAUDED PARTY HAS ELECTED TO AFFIRM THE CONTRACT AND SUE FOR DAMAGES? As a threshold matter, the nurseries contend that the Court need not answer the first certified question. They offer the following syllogism: because DuPont did not specify the basis in Delaware law or the differences between Delaware law and Florida law, 5 there is a legal presumption that Delaware law is the same as Florida law, and therefore Florida law applies. The nurseries further assert that both Matsuura v. Alston & Bird, 166 F.3d 1006 (9th Cir.1999), and Fuku-Bonsai, Inc. v. E.I. DuPont de Nemours & Co., 187 F.3d 1031 (9th Cir.1999), interpreted Delaware law to provide for an election of remedies between rescission and suing for damages. Because Florida law similarly provides for an election of remedies, they argue that Florida law, not Delaware law, should apply. Apparently, the nurseries have misinterpreted the law by incorrectly relying on cases where choice-of-law provisions did not govern the dispute. See Gustafson v. Jensen, 515 So.2d 1298 (Fla. 3d DCA 1987) (applying Florida law to determine the enforceability of a premarital agreement executed in Denmark); Coyne v. Coyne, 325 So.2d 407 (Fla. 3d DCA 1976) (determining whether an appearance was made in a California divorce proceeding). Contrary to the nurseries’ assertions, courts have uniformly enforced choice-of-law provisions without requiring the parties to brief the law of the chosen forum. See, e.g., Continental Mortgage Investors v. Sailboat Key, Inc., 395 So.2d 507, 513-14 (Fla.1981). Moreover, it is incumbent upon the party seeking to avoid enforcement of the provision to show that the foreign law contravenes public policy of the forum jurisdiction. See Delhomme Indus., Inc. v. Houston Beechcraft, Inc., 669 F.2d 1049, 1058 (5th Cir.1982) (“A choice of law provision in a contract is presumed valid until it is proved invalid. The party who seeks to prove such a provision invalid because it violates public policy bears the burden of proof.”) In short, DuPont is neither required to brief the substantive law of Delaware nor obliged to demonstrate conflict between Delaware and Florida law; on the contrary, the choice-of-law provision is presumptively valid and it is the nurseries’ burden to demonstrate why it should not be enforced. Therefore, the nurseries’ contentions are without merit, and the first certified question is properly raised before this Court. Generally, Florida enforces choice-of-law provisions unless the law of the chosen forum contravenes strong public policy. 6 See Punzi v. Shaker Adver. Agency, Inc., 601 So.2d 599 (Fla. 2d DCA 1992). The nurseries contend that enforcing the choice-of-law provision would enable DuPont to contract against liability for fraud, thereby violating Florida public policy. DuPont, however, insists that the countervailing public policy must be fundamental, and that the countervailing policies in the instant case do not outweigh the policy of protecting the expectations of contracting parties. DuPont bolsters its position by alluding to usury cases in which this Court held that the policy disfavoring usurious interest rates could not override explicit contractual terms. See Burroughs Corp. v. Suntogs of Miami, Inc., 472 So.2d 1166 (Fla.1985); Morgan Walton Properties, Inc. v. International City Bank & Trust Co., 404 So.2d 1059 (Fla.1981) (upholding a choice-of-law provision even though the parties’ purpose in making it was to avoid the restrictive effects of Florida law); Continental, 395 So.2d at 507. This Court in Continental elucidated the public policy exception by identifying four factors that indicate whether the countervailing policy overrides the expectations of contracting parties: whether the statute evincing the policy is fraught with exceptions; whether the statute is frequently amended, thereby reflecting a flexible public policy; whether the policy is fundamental to the legal system; and whether the outcome has a limited effect upon the contract. See also Burroughs, 472 So.2d at 1168 (discussing Continental). The court in Burroughs applied these factors in the statute of limitations context and similarly concluded that the contractual provision shortening the statutory filing period was not contrary to strong public policy. In determining whether contractual provisions violate public policy, courts have also considered this directive: Courts ... should [proceed with] extreme caution when called upon to declare transactions as contrary to public policy and should refuse to strike down contracts involving private relationships on this ground, unless it is made clearly to appear that there has been some great prejudice to the dominant public interest sufficient to overthrow the fundamental policy of the right to freedom of contract between parties sui juris. Pizza U.S.A. of Pompano Inc. v. R/S Assocs. of Fla., 665 So.2d 237, 239 (Fla. 4th DCA 1995) (quoting Bituminous Casualty Corp. v. Williams, 154 Fla. 191, 197, 17 So.2d 98, 101-02 (1944)). The court in Punzi applied a less stringent standard when it said: The fact that the law of the forum state is different than the law of the foreign state does not mean that the foreign state’s law necessarily is against the public policy of the forum state. Instead, it is proper for the court to ascertain whether the foreign state’s law is harmonious in spirit with the forum state’s public policy. Punzi, 601 So.2d at 600 (citation omitted). Although courts have adopted varied formulations, the underlying principle remains the same: the countervailing public policy must be sufficiently important that it outweighs the policy protecting freedom of contract. Thus, to the extent that DuPont’s “fundamental public policy” argument is consistent with this principle, it is correct in its assertion that routine policy considerations are insufficient to invalidate the choice-of-law provision. As DuPont suggests, the nurseries’ reliance on covenant-not-to-compete cases to demonstrate overriding public policy is misplaced. Indeed, the distinctive character of covenant not to compete claims, which are vigorously disfavored by Florida courts, diminishes its applicability in other contexts. As the court in Continental noted, covenants not to compete “do not help us understand the strength of the very different policies underlying the usury laws.” Continental, 395 So.2d at 510. The Court further noted in footnote 5 of the Continental decision that even in a covenant-not-to-compete case, Davis v. Eb sco Industries, Inc., 150 So.2d 460 (Fla. 3d DCA 1963), the court applied the law chosen by the parties. The nurseries correctly recognize that this Court’s decision in HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238 (Fla.1996), articulated Florida’s public policy against fraudulent conduct: [T]he interest protected by fraud is society’s need for true factual statements in important human relationships, primarily commercial or business relationships. More specifically, the interest protected by fraud is a plaintiffs right to justifiably rely on the truth of a defendant’s factual representation in a situation where an intentional lie would result in loss to the plaintiff. Id. at 1240 (quoting Woodson v. Martin, 663 So.2d 1327, 1330 (Fla. 2d DCA 1995) (Altenbernd, J., dissenting)). The nurseries further contend that Florida public policy disallows the enforcement of contracts where parties have contracted against liability for their own fraud or other intentional torts. See Oceanic Villas v. Godson, 148 Fla. 454, 4 So.2d 689 (1941); Mankap Enter., Inc. v. Wells Fargo Alarm Servs., 427 So.2d 332, 333-34 (Fla. 3d DCA 1983) (“The law is settled that a party cannot contract against liability for his own fraud in order to exempt him from liability for an intentional tort, and any such exculpatory clauses are void as against public policy.”); Goyings v. Jack & Ruth Eckerd Found., 403 So.2d 1144 (Fla. 2d DCA 1981). Yet, DuPont maintains that parties are encouraged to settle claims involving wrongdoing, and that parties are only prohibited from contracting against liability for future, not past, intentional wrongdoings. Indeed, the Court in Cerniglia v. Cerniglia, 679 So.2d 1160, 1164-65 (Fla.1996), enforced a general release in a marital settlement agreement despite the party’s common law fraud claim based on nondisclosure of financial assets. Moreover, the policy interests underlying settlement agreements are not commensurate with those underlying exculpatory clauses. As one court explained: Plaintiffs also claim the releases should be void as against public policy, because they seek to absolve a party from liability for an intentional tort (i.e., wrongful discharge). Ail authorities cited by plaintiffs address the enforceability of exculpatory clauses which operate prospectively. The court is aware of no authority in Kansas or elsewhere which would void the release of past intentional torts on public policy grounds. In fact, the law of Kansas highly favors the settlement of past claims, whether they are based on intentional or negligence actions. White v. General Motors Corp., 699 F.Supp. 1485, 1488 (D.Kan.1988). Thus, the nurseries’ reliance on a rationale applicable to exculpatory clauses is not entirely dispositive of the issue before the Court. While we both recognize and reaffirm Florida’s policy disfavoring fraudulent conduct, we are mindful of the rigorous standard employed in determining whether to invalidate choice-of-law provisions. Accordingly, we hold that enforcement of the choice-of-law provision is not so obnoxious to Florida public policy as to render it unenforceable. Because the nurseries do not fall within the narrow public policy exception, they are bound by the choice-of-law provision since they have elected to affirm the contract instead of seeking rescission. It is axiomatic that fraudulent inducement renders a contract voidable, not void. See Columbus Hotel Corp. v. Hotel Management Co., 116 Fla. 464, 477, 156 So. 893, 898 (1934). Consistent with the majority view, Florida law provides for an election of remedies in fraudulent inducement cases: rescission, whereby the party repudiates the transaction, or damages, whereby the party ratifies the contract. See Deemer v. Hallett Pontiac, Inc., 288 So.2d 526, 528 (Fla. 3d DCA 1974). A prerequisite to rescission is placing the other party in status quo. See Lang v. Horne, 156 Fla. 605, 615, 23 So.2d 848, 853 (1945). As the court in Bass v. Farish, 616 So.2d 1146, 1147 (Fla. 4th DCA 1993), noted, “Generally, a contract will not be rescinded even for fraud when it is not possible for the opposing party to be put back into his pre-agreement status.” Moreover, a party’s right to rescind is subject to waiver if he retains the benefits of a contract after discovering the grounds for rescission. See Rood Co. v. Board of Pub. Instruction, 102 So.2d 139, 141-42 (Fla.1958). A damages claim, by contrast, affirms the contract, and thus ratifies the terms of the agreement. See Hauser v. Van Zile, 269 So.2d 396, 398-99 (Fla. 4th DCA 1972). This principle ensures that a party who “accepts the proceeds and benefits of a contract” remains subject to “the burdens the contract places upon him.” Fineberg v. Kline, 542 So.2d 1002, 1004 (Fla. 3d DCA 1988); see also Head v. Lane, 495 So.2d 821, 824 (Fla. 4th DCA 1986) (noting that a party who “accepts the benefits” of a transaction is “estopped” from “repudiating the accompanying or resulting obligation”). As previously stated, the necessary precondition for rescission is tender of the benefits received under the contract. In effect, the nurseries elected to affirm the contract by not returning the settlement proceeds. As a result, they are bound by the terms of the contract, including the choice-of-law provision. 7 Thus, we hold that the choice-of-law provision is operative and, therefore, Delaware law governs the Mazzoni, JMG, Foliage, and Castleton disputes. Accordingly, we answer the first certified question, with our attendant modifications, in the affirmative.