ALEX HOFRICHTER, P.A., f/k/a Hofrichter & Quiat, P.A., Appellant,
v.
ZUCKERMAN & VENDITTI, P.A., Dоnald S. Zuckerman, P.A., and Donald S. Zuckerman, Appellees.
District Court of Appeal of Florida, Third District.
Ginsberg & Schwartz, and Alex Hofrichter, and Todd R. Schwartz, Miami, for appellant.
Lekach, Klitzner & Ansel, Cooper & Wolfe and Sharon Wolfe and Barbara A. Silverman, Miami, for appellees.
Before SCHWARTZ, C.J., and COPE and GREEN, JJ.
COPE, Judge.
The question presented is whether the economic loss rule bars a claim for conversion, civil theft, and constructive fraud where a defendant has converted partnеrship funds to personal use. We conclude that the economic loss rule does not bar such claims.
Plaintiff-appellant Alex Hofrichter, P.A., formerly known as Hofrichter & Quiat, P.A., and defendant-аppellee Donald S. Zuckerman, P.A., by oral agreement formed the law partnership of Hofrichter, Quiat & Zuckerman. The law partnership terminated on March 21, 1986.
Litigation between the former partners ensued.[1] Hofrichter alleged that Zuckerman: (1) obtained six client checks in the amount of $46,658.16 which were payable to the former partnership, endorsed same, and deposited the funds in his personal bank account; (2) billed clients for services rendered by the former partnership, but had *128 them pay Zuckerman's new professional association, Zuckerman & Venditti, P.A.; and (3) without authority, wrote a $15,000 check from the former partnership account to his own professional association.[2] Hofrichter asserted claims for conversion, civil theft, constructive fraud, and conspiracy. Both parties sought an accounting.
On motion by Zuckerman, the trial court bifurcated the proceedings so that the parties' accounting claims would be tried first. Those proceedings were conсluded and resulted in a judgment in favor of Hofrichter. See Donald S. Zuckerman, P.A. v. Hofrichter & Quiat, P.A.,
In the second phase of the case, Zuckerman argued that Hofrichter's substantive claims were barred by the economic loss rule. Zuckerman reasoned that the parties had practiced law pursuant to an oral partnership agreement and thus their relationship was contractual in nature. He pointed out that Hofrichter's claims were for economic loss without any claim for personal injury or property damage. Relying primarily on this court's decision in Ginsberg v. Lennar Florida Holdings, Inc.,
In this case, the claim is that by intentional misconduct, Zuckerman embezzled or converted partnership property to his personal use. This is more than a claim for a simple breach of contract.
A partner is a fiduciary with respect to other partners, see § 620.66, Fla. Stat. (1985), and partnership assets are in essence held in trust by each partner for partnershiр purposes. See id. § 620.68(2)(a) (unless otherwise agreed, "a partner has an equal right with his partners to possess specific partnership property for partnership purposes; but he has nо right to possess property for any other purpose without the consent of his partners"); Grossman v. Greenberg,
Although not an economic loss rule case, the decision in Masvidal v. Ochoa,
Moreover, we are not persuaded by the argument that no civil theft or conversion occurred in this case because there was a contractual relationship between the parties. The evidence shows a classic embezzlement by the defendant of an escrow fund set up under the subscription agrеement between the parties. That is, the defendant lawfully obtained possession of the plaintiff's funds to set up the escrow fund and thereafter converted the funds for his own use. This being so, the defendant, by his actions, committed an embezzlement, a civil theft and a conversion as well as a breach of contract. We do not read Rosen v. Marlin,486 So.2d 623 (Fla. 3d DCA), pet. for review denied,494 So.2d 1151 (Fla.1986) to preclude this result because therе, unlike this case, the parties had a legitimate contractual dispute over the amount of a debt owed, and no embezzlement whatever occurred in that case.
More reсently, again in a non-economicloss context, this court considered whether an action for civil theft would lie where the defendant misappropriated proceeds of a certificate of deposit which, pursuant to a marital settlement agreement, were to have been paid over to the plaintiff. This court said:
Escudero asserts that where there is a contractual relationship between the parties, *129 a claim for civil theft will not lie absent a showing that the loss from the theft is separate and distinct from the loss flowing from the breach of contract. Florida law, however, does not bar civil theft simply because a contractual relationship is involved.... In this case, Hasbun has identified a specified sum of money from an identifiable account, allegedly belonging solely to her, that Escudero has allegedly misappropriated for his own use. We think that such allegations are sufficient to state a cаuse of action under the civil theft statute.
Escudero v. Hasbun,
In HTP, Ltd. v. Lineas Aereas Costarricenses, S.A.,
The economic loss rule has not eliminated causes of action based upon torts independent of the contractual breach еven though there exists a breach of contract action. Where a contract exists, a tort action will lie for either intentional or negligent acts considered to be indepеndent from acts that breached the contract.
Id. at 1239 (citations omitted).
In our view, an action for conversion and civil theft[4] will lie where there is a claim that the defendant has misappropriated or embezzled trust funds, and such a claim amounts to an indepеndent tort within the meaning of HTP. That analysis applies here, where the claim is that partnership property was converted to personal use.
The result we reach is in accord with thе rule followed in the First and Fifth Districts. See Nerbonne, N.V. v. Lake Bryan Int'l Properties,
The trial court concluded that the causes of action for conversion and civil theft were precluded by this court's decision in Ginsberg v. Lennar Fla. Holdings, Inc.,
However, later in the Lennar opinion, the panel actually placеd its holding on the narrow ground that Lennar "only held a lien on the rents," id. at 498, and under the mortgage documents did not have an automatic and immediate right to possession of the rents when the mortgage went into default. See id. at 499. Since "Ginsberg and MLG were rightfully in possession of the rents," id. at 501, it followed that Ginsberg and MLG could not be guilty of either conversion or civil theft. See id. at 499-501. The suggestion is that the result would have beеn *130 different if Lennar had had a right to immediate possession of the rents. See id.
In our view, therefore, the Ginsberg panel's broad statement that there can be no claim for conversion or civil theft where there is an underlying contract, see id. at 494, must be viewed as dictum. The actual holding of the case ruled out conversion and civil theft because Lennar had no immediate right to possession of the rents.
Hofrichter made a claim for constructive fraud, which the trial court dismissed. However, by alleging that Zuckerman abused his fiduciary relationship with the partnership by converting partnership property to his personal use, Hofrichter has stated a valid claim for constructive fraud. See Douglas v. Ogle,
Affirmed in part, reversed in part, and remanded for further proceedings сonsistent herewith.
NOTES
Notes
[1] See Donald S. Zuckerman, P.A. v. Alex Hofrichter, P.A.,
[2] For present purposes these claims must be taken as true, as the present proceeding arises on review of a summary judgment.
[3] The decision in Rosen v. Marlin held in substance that a mere refusal tо pay money owed under a contract does not, without more, amount to conversion or civil theft. See
[4] For purposes of this discussion we assume (without deciding) that the economic loss rulе could be applied to a statutory cause of action, i.e., civil theft. Compare Rubio v. State Farm Fire & Cas. Co.,