Court Opinion

ID: 8951654
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:52:38.865282+00
Date Added: 2024-06-11T17:09:58.876832
License: Public Domain

JOHN R. BROWN, Senior Circuit Judge,
concurring and dissenting:
While I concur with the majority’s reversal and remand to the trial court on the issue of duress, I dissent from the majority’s decision to uphold the grant of summary judgment based on the validity of the release bottomed on this circuit’s opinion in Pettinelli v. Danzig, 722 F.2d 706 (11th Cir.1984). Viewing the record in a manner most favorable either to the Finns or to Bache, material issues of fact exist that should be decided by a jury (or judge fact-finder) as to whether Bache and the Finns were in an adversarial relationship when the Finns executed the release.
From a reading of the majority’s opinion, the opinion does not, as required, demonstrate beyond genuine factual controversy at what point the Finns should have known to stop treating Bache as their trusted financial advisor, after which the law would compel them to view Bache as only an adversary with competing, conflicting interests. As is so often the case, the facts make the most powerful legal argument. At the precise point in time at which Bache was extracting the release of its liability to the Finns, Bache had made the decision, implemented two days later, that it would fire, i) Easter, the branch manager, ii) Kenning, the account mastermind, iii) Richard Kiel, operations manager in Boca Raton, iv) John Carpenter, another broker there, v) Gary Kramer, an office employee, and vi) Easter’s secretary. Further, Bache was clearly making plans to bring the lawsuit against Kenning alleging fraudulent mishandling of the Finns’ and others’ accounts. Bache knew of all these pending or completed actions, yet withheld all knowledge from the Finns, until they signed the release.
Certainly, the majority does not deny that at some point a fiduciary relationship existed. As a matter of summary judgment law, this relationship was not necessarily extinguished because the Finns brought Arthur Sullivan, their attorney, with them to some of the meetings. As a fiduciary, Bache was required to disclose fully to the Finns, prior to executing the release, all of its conduct concerning the way their account was handled. “[A]n affirmative duty to disclose exists in Florida only if there is a fiduciary relationship between the parties or the facts are solely within the knowledge of the representor or some trick has been employed to prevent an independent investigation by the representee.” Hauben v. Harmon, 605 F.2d 920, 924 (5th Cir.1979). In the instant case, we have i) a relationship, ii) facts solely within the knowledge of Bache and iii) no practical way for the Finns to investigate Bache’s representations and omissions. The “negotiations” between the Finns and Bache occurred largely during a three-day period. Not beyond summary judgment dispute, the Finns attended the meetings in an informational capacity, attempting to find out how they could have trusted — and lost — their life savings to a major brokerage firm and end up owing that firm more than $400,000. While amazement, bewilderment and consternation abound in this case, there is no semblance either of hard bargaining or awareness that the parties had to consider that the discussion was between sophisticated adversaries, conscious that they were, not the beneficiaries of the laws’ demands on a fiduciary, but simply strangers now in an adversarial role.
The court holds that as soon as the Finns brought Mr. Sullivan into the picture, the relationship changed altogether from one of trusting beneficiaries and a trustworthy fiduciary into one of strangers locked in mortal (financial) combat. They were, as a matter of law, so the trial court’s summary judgment holds, sufficiently protected from Bache’s misrepresentations or overreaching. It is important, however, to look at the actions of that attorney once he entered the process. A jury (fact-finder or *589judge) could find that his role was not that of an informed, zealous, loyal advocate. Rather, his detailed post-conference file memorandum to himself was not made as an historical record of the events. It was made to save his hide in a malpractice claim which any Florida litigant (and counsel) could reasonably expect.
Further, although Bache was engaging in reprehensible practices that might well have put a person on notice not to trust its representations, the cumulative effect of Bache’s mistreatment of the Finns is clearly demonstrated in the hindsight that the motion for summary judgment imposed on the trial court.
During the short three-day “negotiations” period, the Finns were in no position — and their so-called counsel made no effort to assist them — to obtain the necessary information to know that the tables were now turned and they would have to start dealing with Bache in an arms-length, hostile manner. A factfinder (jury or judge) could find that the Finns had a right to rely on Bache’s continued obligations to act as a fiduciary and thereby to rely on its representations. There was a genuine controversy on the critical, decisive facts. The trial court could not properly conclude on summary judgment that the Finns had not stated a cause of action of fraud under Florida law. Pettinelli, 722 F.2d at 709.
While the Pettinelli case is indeed similar and authoritative, I cannot find it controlling here. As I read Pettinelli, it holds that “[w]hen negotiating or attempting to compromise an existing controversy over fraud and dishonesty it is unreasonable to rely on representations made by ... allegedly dishonest parties.” Pettinelli, 722 F.2d at 710. The factual controversy is wide open over whether the Finns either would know, or have access to information that would lead them to find out that they were now dealing with persons who just recently were their friendly, compensated advisors and champions whose role had suddenly changed into one of hostile combatants and who, by some quirk of the law were now free to lie, misrepresent or cheat their one-time valued client.
Up until the time of the margin call on their bonds, the Finns had seen Bache — as Bache wanted them to see Bache — as their friendly, honest local broker, dispensing expert financial advice with a broad smile, a firm handshake, and, of course, gratitude for all the commissions earned, or at least, received. Suddenly, the court holds, sometime in the span of 72 hours, this retired midwestern farming couple should have miraculously acquired the skeptical savvy of moral-less Wall Street to realize that those whom they had trusted not only could no longer be trusted, but that they could not accept as gospel what these merchants of deception were saying.
What is worse, all this is done in the name of no genuine controversy of fact. Summary judgment is indeed being used to deny a trial of the critical facts.
More important, in Pettinelli, “[t]he parties were both represented by counsel and specifically advised not to rely on any representations.... From the beginning of the negotiations it was clear that the parties were in an adversarial relationship.... Throughout this negotiation, appellants knew from their own dealings that they should not rely on any representations made by the defendants.” Id. (citations omitted) (emphasis supplied).
I cannot see how a rule of law, announced for seasoned, truly lawyer-advised, adversaries locked in a dispute of a litigable claim can be applied to two financially inexperienced and trusting Illinois farmers who had seen their life savings turn into $400,000 of debt. The court’s sole reliance for this critical conclusion that, as a matter of law the parties were in an adversarial relationship, is derived from the memorandum prepared by attorney Sullivan two days after the Finns signed the release.
In simple terms, a fact-finder (jury or Judge) could readily find that Bache defrauded the Finns. The execution of the release was just another episode in the same series. A genuine issue of fact existed as to whether the Finns had to be conscious that the fiduciary relationship was an end so that as very new adversaries, *590they had no reasonable expectation to rely on the representations of Bache at the time they signed the release. Therefore, the trial court was in error in granting summary judgment on that issue.
I, therefore, respectfully dissent.