Court Opinion

ID: 9952613
Source: CourtListenerOpinion
Date Created: 2024-03-20 14:04:54.366465+00
Date Added: 2024-06-11T14:41:44.840856
License: Public Domain

Third District Court of Appeal
                               State of Florida

                        Opinion filed March 20, 2024.
       Not final until disposition of timely filed motion for rehearing.

                            ________________

                             No. 3D23-0559
                        Lower Tribunal No. 22-3185
                           ________________

                  LoanFlight Lending, LLC, et al.,
                                 Appellants,

                                     vs.

                        Gerald A. Wood, et al.,
                                 Appellees.

     An Appeal from a non-final order from the Circuit Court for Miami-
Dade County, Charles K. Johnson, Judge.

    Anthony & Partners, LLC, John A. Anthony, and Andrew J.
Ghekas (Tampa), for appellants.

      BergaLaw, PA, Christopher G. Berga, and Joshua Belcher, for
appellees.

Before FERNANDEZ, SCALES and MILLER, JJ.

     FERNANDEZ, J.
     Loanflight Lending, LLC (“Loanflight”), Kayla Rydell, and Amanda

Shapiro appeal the trial court’s non-final order granting leave to amend the

complaint to seek punitive damages. Based on the standard for punitive

damages, we affirm in part the order as to Kayla Rydell and reverse in part

the order as to Amanda Shapiro and Loanflight.

     The underlying case is a foreclosure action brought by Loanflight

against Gerald A. Wood and Seida M. Wood (“the Woods”), involving a

technical default where Loanflight alleges that the Woods committed fraud

by claiming that they would be receiving pension income from Citibank prior

to disbursement of the loan issued by Loanflight.1 Loanflight claims it

discovered the alleged fraud when Loanflight attempted to sell the Woods’

loan to Chase Bank. Chase, after conducting its own underwriting,

discovered that the pension money was not present income. Without the

pension income, the debt-to-income ratio (“the DTI”) was considered too

high. As a result, Chase declined purchase of the loan. Thereafter, Loanflight

filed a foreclosure action against the Woods based on the alleged fraud.

      The Woods filed an answer and affirmative defenses and filed a

countersuit against Loanflight and Loanflight loan processor, Kayla Rydell.

1
 Loanflight alleges a technical default as the Woods never missed a loan
payment.

                                      2
In their countersuit, the Woods claimed that Loanflight and Rydell negligently

and fraudulently misrepresented key information to convince the Woods to

obtain the subject loan. The Woods later filed a motion to amend their

complaint to add the underwriter of the loan, Amanda Wert (now, Amanda

Shapiro), as a counter-defendant and to add a request for punitive damages

against all parties for negligent and fraudulent misrepresentation.

      After an extensive hearing on the motion, the trial court granted the

Woods’ request to amend their counter-complaint, adding Shapiro as a

counter-defendant and finding a reasonable basis for punitive damages as

to all defendants. Loanflight, Rydell, and Shapiro appeal the non-final order

challenging the claim of punitive damages.2

     I.    Analysis

     We have jurisdiction pursuant to Florida Rule of Appellate Procedure

9.130, which allows parties to seek immediate appellate review of non-final

orders granting or denying motions for leave to assert claims for punitive

damages. The standard of review for “a trial court’s order granting or denying

a motion to amend to state a claim for punitive damages [is] de novo.” Estate

of Despain v. Avante Group, Inc., 900 So. 2d 637, 644 (Fla. 5th DCA 2005).

2
 The addition of Shapiro as a counter-defendant was not challenged on
appeal and will not be addressed by this Court.

                                      3
     Section 768.72, Florida Statutes (2023), provides the basis on which a

trial court can permit a claim for punitive damages as follows:

     1) In any civil action, no claim for punitive damages shall be
     permitted unless there is a reasonable showing by evidence in
     the record or proffered by the claimant which would provide a
     reasonable basis for recovery of such damages. The claimant
     may move to amend her or his complaint to assert a claim for
     punitive damages as allowed by the rules of civil procedure. The
     rules of civil procedure shall be liberally construed so as to allow
     the claimant discovery of evidence which appears reasonably
     calculated to lead to admissible evidence on the issue of punitive
     damages. No discovery of financial worth shall proceed until after
     the pleading concerning punitive damages is permitted.
     2) A defendant may be held liable for punitive damages only if
     the trier of fact, based on clear and convincing evidence, finds
     that the defendant was personally guilty of intentional
     misconduct or gross negligence. As used in this section, the
     term:
     (a) “Intentional misconduct” means that the defendant had
     actual knowledge of the wrongfulness of the conduct and the
     high probability that injury or damage to the claimant would result
     and, despite that knowledge, intentionally pursued that course of
     conduct, resulting in injury or damage.
     (b) “Gross negligence” means that the defendant’s conduct
     was so reckless or wanting in care that it constituted a conscious
     disregard or indifference to the life, safety, or rights of persons
     exposed to such conduct.

Of importance is the distinction between the standard for permitting a claim

for punitive damages and the standard for a defendant to be held liable for

punitive damages. The statute provides that in order for the trial court to

permit a claim, the claimant must demonstrate “a reasonable showing by

evidence in the record or proffered by the claimant which would provide a

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reasonable basis for recovery of such damages,” while in order to award

punitive damages, the trier of fact must find “based on clear and convincing

evidence[ ] that the defendant was personally guilty of intentional misconduct

or gross negligence.” Id.

      In the amended complaint, the Woods included a general request for

punitive damages and individual requests for punitive damages within the

negligent misrepresentation and fraudulent misrepresentation counts for

each party. Because punitive damages never stand alone, we review the

request for punitive damages in the context of the underlying claims. Keen

v. Jennings, 327 So. 3d 435, 438-39 (Fla. 5th DCA 2021) (quoting Soffer v.

R.J. Reynolds Tobacco Co., 187 So. 3d 1219, 1221 (Fla. 2016)) (“There is,

however, no separate and distinct cause of action for punitive damages.

‘[R]ather it is auxiliary to, and dependent upon, the existence of an underlying

claim.’” (internal citations omitted)).

      To state a cause of action for negligent misrepresentation, a plaintiff

must allege:

      (1) the defendant made a misrepresentation of material fact that
      he believed to be true but which was in fact false; (2) the
      defendant was negligent in making the statement because he
      should have known the representation was false; (3) the
      defendant intended to induce the plaintiff to rely . . . on the
      misrepresentation; and (4) injury resulted in the plaintiff acting in
      justifiable reliance upon the misrepresentation.

                                          5
Romo v. Amedex Ins. Co., 930 So. 2d 643, 653 (Fla. 3d DCA 2006) (quoting

Simon v. Celebration Co., 883 So. 2d 826, 832 (Fla. 5th DCA 2004)). To

state a cause of action for fraudulent misrepresentation, a plaintiff must

allege:

      (1) a misrepresentation of a material fact; (2) which the person
      making the misrepresentation knew to be false; (3) that the
      misrepresentation was made with the purpose of inducing
      another person to rely upon it; (4) that the person relied on the
      misrepresentation to his detriment; and (5) that this reliance
      caused damages.

Romo, 930 So. 2d at 650-51.

      Turning now to Rydell, Rydell as Loanflight’s loan processor was in

direct communication with Mr. Wood prior to the disbursement of the loan.

The Woods claim that on September 12, 2021, Rydell informed them that

there was an issue with the DTI, and to remedy the issue, the Woods needed

to verify cash reserves. Attached to the amended complaint as Exhibit B and

C are the email exchanges between Mr. Wood and Rydell. The

communications reveal that Rydell maintained that the Citibank pension

documentation was to be used for the purpose of cash reserves and not as

an indication of present income. When Rydell first requested the reserves,

she informed Mr. Wood, “[A]gency guidelines require you to have 6 months

reserves which equals out to about $17k. This does not have to be liquid

assets.” Mr. Wood stated that he and his wife did not have cash in a bank

                                     6
account that would qualify but stated, “I do have the ability to draw on a

pension, which I am deferring at present. The pension would not be

current income, but potential future income. Would documentation of the

pension be sufficient?” (Emphasis added). Rydell responded, “That should

be sufficient. Anything [sic] kind of assets with an ending balance of $17K or

more should be sufficient.” Thereafter, Wood verified with Rydell on multiple

occasions that the future pension money was to be used for cash reserves

and was not present income. He also restated that he would not be collecting

the pension for another 18 months. Rydell continued to affirm this to be the

case. At one time, Rydell asked Wood if he had started receiving the pension

amount, and if he had, the pension amount would qualify as income, but if

he had not received the pension amount, she would need further

documentation of the pension for purposes of cash reserves. In reply, Wood

once again stated he was not collecting on the pension: “So, the income has

not started yet. I intend to start it in about 18 months. I can't start it, then

pause it for a while.” That same day on September 22, 2021, Mr. Wood

emailed Rydell informing her that Citibank would send a confirmation that

“will show my name, address, estimated income and estimated lump sum if

I take the pension next month.” (Emphasis added). The Citibank document

showed the monthly pension amount and provided that the pension would

                                       7
commence in October 2021, the next month. However, the document also

stated that certain steps would need to be taken before the commencement

date in order for funds to be released by that date. Though there is a

commencement date in the Citibank loan document, Mr. Wood clarified in

the previous email that the Woods would not be taking the pension for

another 18 months, and “if” they took the pension next month, the stated

amount is an estimated lump sum.

      Additionally, attached to the amended complaint as Exhibit F is a two-

page Slack chat between Rydell and Shapiro. In the exchange, Rydell stated,

“[S]tupid [G]erry [W]ood apparently can’t find different reserves but he did

provide me with this[.]” She then sent a screenshot of the Citibank document.

Directly afterward, she asked, “[N]o[,] right[?] [S]ince 10/1 is before his first

mortgage payment?” Shapiro responded, “[Y]es that will work[.] . . . you can

give him the 4779.22/month[.]”

      Contrary to Rydell’s communications, the final loan application listed

the pension amount as present income. Based on the elements of negligent

and fraudulent misrepresentation, “there is a reasonable showing by

evidence in the record or proffered by the claimant which would provide a

reasonable basis for recovery of such damages.” The email exchanges

attached to the amended complaint show that Rydell either “made a

                                       8
misrepresentation of material fact that [she] believed to be true but which

was in fact false” or she misrepresented the material fact that she “knew to

be false.” If the former, there is evidence that Rydell “was either negligent in

making the statement because [she] should have known the representation

was false.” If the latter, she “made [the misrepresentation] with the purpose

of inducing another person to rely upon it.” Though Mr. Wood sent Rydell a

Citibank document providing the amount of the pension and disbursement of

the loan starting the next month, Wood emphasized that the pension was

future income, he was providing the pension for the purpose of cash

reserves, and he would not be collecting the pension for another 18 months.

Despite these clear statements by Mr. Wood, Rydell submitted the Citibank

document to Shapiro under the assumption that the Woods would start

collecting the pension the next month, though she knew from Mr. Wood’s

repeated statements that this was not the case. The timing of receiving the

disbursement was critical to the Woods receiving the loan as evidenced in

the Slack exchange. Rydell first states, “[S]tupid [G]erry [W]ood apparently

can’t find different reserves but he did provide me with this[.]” She then sent

a screenshot of the Citibank document. Afterward, she asks: “[N]o[,] right[?]

[S]ince 10/1 is before his first mortgage payment?” Rydell submitted the

Citibank document to Shapiro along with the date disbursement would

                                       9
commence on October 1st, which would have been the next month “before

his first mortgage payment.” Without the context that Mr. Wood submitted

the document to show what the estimated lump sum would be if he started

collecting the pension the next month and his stated intention that he would

not be collected the pension for another 18 months, Shapiro approved of the

loan.

        Considering the evidence of the email and Slack exchanges attached

to the amended complaint, we find that there is a reasonable showing of

evidence that provides a reasonable basis for recovery of punitive damages

as to Rydell. Therefore, the trial court did not err in permitting a claim for

punitive damages as to Rydell.

        As to Shapiro, we do not find a reasonable showing of evidence of

intentional    misconduct    regarding     the   negligent   and    fraudulent

misrepresentation counts. Shapiro, as underwriter of the loan, did not directly

communicate with the Woods. The Woods argue that Shapiro made

misrepresentations through Rydell but fail to explain a basis for vicarious

liability. Therefore, the Woods did not make a reasonable showing of

evidence that provides a reasonable basis for recovery of punitive damages

as to Shapiro. Accordingly, the trial court erred in permitting a claim for

punitive damages as to Shapiro.

                                      10
      With respect to Loanflight, the Woods allege vicarious liability for

negligent and fraudulent misrepresentations “through its employees, loan

processors and/or representatives.” 3 According to the statute, punitive

damages may be imposed on an employer for the conduct of an employee

in the case of the following:

      (3) In the case of an employer, principal, corporation, or other
      legal entity, punitive damages may be imposed for the conduct
      of an employee or agent only if the conduct of the employee or
      agent meets the criteria specified in subsection (2) and:
      (a) The employer, principal, corporation, or other legal entity
      actively and knowingly participated in such conduct;
      (b) The officers, directors, or managers of the employer,
      principal, corporation, or other legal entity knowingly condoned,
      ratified, or consented to such conduct; or
      (c) The employer, principal, corporation, or other legal entity
      engaged in conduct that constituted gross negligence and that
      contributed to the loss, damages, or injury suffered by the
      claimant.

§ 768.72, Fla. Stat. (2023).

      The Woods claim that Loanflight showed that it “knowingly condoned,

ratified, or consented to [Rydell’s] conduct” through its corporate policies and

by bringing this foreclosure action against the Woods. However, there is no

nexus between initiation of the foreclosure action by Loanflight and a

conclusion that Loanflight actively participated in Rydell’s conduct, nor is

3
 The Woods likewise allege Loanflight’s direct liability, though the alleged
actions do not qualify as miscommunications.

                                      11
there a showing that Loanflight knowingly condoned, ratified, or consented

to Rydell’s conduct. We therefore conclude that there is no reasonable

showing of evidence in the record that provides a reasonable basis for

recovery of punitive damages as to Loanflight. 4

     For the reasons stated, we affirm in part the non-final order granting

leave to amend the complaint to add punitive damages as to Rydell and

reverse in part the order as to Loanflight and Shapiro as to the issue of

punitive damages only.

     Affirmed in part; reversed in part and remanded.

4
  If anything, Loanflight relied on Rydell’s representation of Wood’s income
to fund the loan.

                                     12