Noack v. Blue Cross and Blue ShieldNoack v. Blue Cross and Blue Shield
Nancy W. Gregoire, W. Edward McIntyre, and Daniel Alter of Bunnell, Woulfe, Krischbaum, Keller, Cohen & McIntyre, P.A., Ft. Lauderdale, for appellees Blue Cross and Blue Shield of Florida, Inc., Florida Combined Life Insurance Company, Inc., and Health Options, Inc.
T.A. Borowski, Jr., of Emmanuel, Sheppard & Condon, Pensacola, for appellees Affiliated Insurance of Pensacola, Inc. аnd Mark Tubbs.
Donald H. Partington of Clark, Partington, Hart, Larry, Bond, Stackhouse & Stone, Pensacola, for appellees.
LAWRENCE, J.
Harry Noack, Lynne Noack, and Noack and Associates Insurance and Financial Services, Incorporated (Noack), appeal an order dismissing with prejudice their second amended complaint against Blue Cross and Blue Shield of Florida, Incorporated; Flоrida Combined Life Insurance Company; Florida Combined Agency, Incorporated; and Health Options, Incorporated (Blue Cross). We affirm in part, and reverse in part.
Nоack‘s second amended complaint raises multiple claims surrounding the cancellation of its contract to sell insurance as an agent of Blue Cross. We affirm without discussion the dismissal of the counts which sought to allege a cause of action based upon a written contract, an oral contract, bad faith, and conspirаcy.
We write to address the facial sufficiency of Noack‘s counts based upon fraud in the inducement, reformation, and antitrust. Our court tells us:
When ruling on a motion to dismiss for failurе to state a cause of action, the trial court must accept the allegations of a complaint as true. Likewise, the appellate court must accept the facts alleged in a complaint as true when rеviewing an order that determines the sufficiency of the complaint. Whether a complaint is sufficient to state a cause of action is an issue of law. Consequently, а ruling on a motion to dismiss for failure to state a cause of action is reviewable on appeal by the de novo standard of review.
Sarkis v. Pafford Oil Co., 697 So.2d 524, 526 (Fla. 1st DCA 1997) (citations omitted) (emphasis added).
Fraud in the Inducement
The trial court‘s order holds that Noack‘s claim alleging fraud in the inducement is barred by the economic loss rule; this holding is error, for our court holds that “[f]raud in the inducement to make a contract is not barred by the economic loss rule.” Sarkis, 697 So.2d at 527. The order also recites that a claim for fraud cannot be predicated upon a mere promise that was not performed; this too is error, as our sister court observes:
As a general rule, fraud cannot be predicated upon a mere promise not performed. However, under certain circumstances, a promise may be actionable as fraud where it can be shown that the promissor had a specific intent not to perform the promise at the time the promisе was made, and the other elements of fraud are established.
. . . .
In order for a promise of future performance to serve as a predicate for a claim of fraud, it must be established that the promise was made with the present intention not to comply.
Alexander/Davis Properties, Inc. v. Graham, 397 So.2d 699, 706, 707-08 (Fla. 4th DCA 1981) (citations omitted) (emphasis added). Neither is the presence of a merger clause an impediment to a cause of action for fraud in the inducement. See Wilson v. Equitable Life Assurance Soc‘y, 622 So.2d 25, 27 (Fla. 2d DCA 1993) (it is a well-established rule that “alleged fraudulent misrepresentations may be introduced
Noack‘s complaint specifically alleges that Blue Cross, through its agent Suber, rеpresented that if Noack received a written release from Tubbs, Noack would immediately become general agents able to sell Blue Cross insurance; that Subеr‘s representation was made to induce Noack not to file suit against Tubbs and Blue Cross; that Suber‘s representation was false when made and Suber, when a general release was received, did not immediately make Noack a general agent. The complaint further alleges that Suber represented that if Noack moved out of their home into a commercial setting, and if Noack hired a secretary, then Noack would immediately become a general agent able to sell Blue Cross insurаnce and as long as Noack performed adequately Noack would remain a general agent; that Suber made these representations to induce Noack to forego filing suit to enforce earlier promises; that Noack complied with the conditions; and still Blue Cross withheld a contract. Noack‘s complaint thus statеs particular misrepresentations of fact. Noack further alleges that these representation were “false when made,” “known by [Tubbs and Blue Cross] to be untrue when they wеre made,” and “were made with intent to deceive, mislead, and defraud.” Noack further alleges reliance, and damage. The trial court thus erred in dismissing Noack‘s actiоn for fraud in the inducement.
Reformation
The trial court concluded that Noack‘s count seeking to reform its contract with Blue Cross is barred by the written contract‘s merger clause, and the parol evidence rule. This is error. Our court holds:
Parol evidence is admissible in a reformation action in equity for the purpose of demonstrating that the true intent of the parties was something othеr than that expressed in the written instrument. By the same token, ”the doctrine of merger in deed, under which preliminary understandings, negotiations, and agreements regarding a conveyance are held to mеrge in the deed leaving it as the sole expositor of the parties’ intent, is inapplicable in an action seeking the equitable remedy of reformation.”
Ayers v. Thompson, 536 So.2d 1151, 1154 (Fla. 1st DCA 1988) (emphasis added) (affirming the trial court‘s reformation of a deed, and reversing for clarificаtion of findings on damages).
Antitrust
The trial court dismissed Noack‘s count based on the Florida Antitrust Act1 because “the McCarran-Ferguson Act exempts insurance business from antitrust law.” The United States Supreme Court, interpreting the McCarran-Ferguson Act2 exemption, holds that the act exempts only the “business of insurance” not the “business of insurance compаnies” from antitrust claims. Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 217, 99 S.Ct. 1067, 59 L.Ed.2d 261 (1979) (holding that the McCarran-Ferguson Act exempts from antitrust laws the business of insurance and not the business of insurers, and where the challenged agreements were merely arrangements for the purchase of goods and services by the insurer, enabling the insurer to minimize costs and maximize profits, and where the agreements did not involve undеrwriting or spreading of risk, the agreements were not the “business of insurance” so as to be exempt from antitrust
We agree that Noack‘s complaint alleges injury to the market, rather than mere injury to Noack. See Greenberg v. Mount Sinai Med. Ctr., 629 So.2d 252, 257 (Fla. 3d DCA 1993) (“A complaint which does not allege a pеr se violation must in sum contain three elements: a) a specifically defined market; b) an allegation that defendants possessed the ability to affect price оr output; and c) an allegation that plaintiff‘s exclusion from the market did affect or was intended to affect the price or supply of goods in that market. It is not enough to allege that plaintiffs were injured; there must be an allegation of harm to competition in general.“) (citations and footnote omitted).
We thus hold that the court below correctly dismissed Noack‘s claims for breach of oral and written contract, bad faith, and conspiracy, but incorrectly dismissed with prejudice claims for fraud in thе inducement, reformation, and antitrust. We accordingly affirm in part and reverse in part the order below, and remand for consistent proceedings.
ERVIN and BROWNING, JJ., concur.