Parker v. STATE OF FLORIDA BD. OF REGENTSParker v. STATE OF FLORIDA BD. OF REGENTS
Edward S. Schwartz, Law Offices of Philip M. Gerson, P.A., Miami, for Amicus Curiae Academy of Florida Trial Lawyers.
Wendy S. Morris, Associate Counsel, Florida Board of Regents, Tallahassee, for Appellee.
VAN NORTWICK, J.
Dr. Glenn Parker, a professor employed by Florida State University, sued the State of Florida Board of Regents for fraudulent misrepresentation and breach of contract after his salary was not raised аs allegedly promised. Following a jury verdict awarding Dr. Parker damages under both counts of his complaint, the trial court granted a judgment in favor of appellee, determining that Dr. Parker‘s claims were barred by the doctrine of sovereign immunity. For the reasons that follow, we agree with the trial court that the doctrine of sovereign immunity bars Dr. Parker‘s action for fraud; however, sovereign immunity does not bar his action and recovery of damages for breaсh of contract. Accordingly, the final judgment for the state is affirmed in part and reversed in part and the cause is remanded to the trial court with directions that final judgment be entered in favor of Dr. Parker in accordance with the jury verdict on the breach of contract count.
Dr. Parker and his wife were employed by Florida State University (FSU) when, in early 1990, they received offers of employment from the University of Texas at Dallas (UTD). UTD offered Dr. Parker an aрpointment as a professor of government and a $75,000 salary based on a nine-month year, among other things. At the time he received the offer, Dr. Parker was earning $59,425 per year at FSU. Following the UTD offer, Charles Cnudde, the FSU Dean of the College of Social Sciences, communicated to his supervisor, the FSU Vice President of Academic Affairs and Provost Augustus Turnbull, concerning the possibility that the Parkers might leave and take positions at UTD. Provost Turnbull informed Dеan Cnudde that there was no salary pool from which to make a counteroffer to Dr. Parker, but that he would “support whatever commitment you [Cnudde] make from College resources.”
In early April 1990, Dr. Parker, Dean Cnudde, and Dr. James Gwartney, Dr. Parker‘s direct supervisor, met in the dean‘s office and reviewed UTD‘s offer to Dr. Parker. Dean Cnudde informed Dr. Parker that the university could match the offer with the exception of the $75,000 salary; but that insufficient funds were availablе in the College of Social Sciences or through the provost to match the UTD offer. Nonetheless, according to Dr. Parker, Dean Cnudde promised that within three years he could come up with the necessary resources to match the $75,000 salary offered by UTD. This agreement was reduced to a written memorandum from Dean Cnudde to Dr. Parker dated April 24, 1990, which provided in pertinent part:
As you know, the Provost is not able to provide us with sufficient resources to match your salary offer. Our plan is to move you up to that level, and beyond, as soon as the University budget situation permits. Given the expectation of a very low salary increase budget for this year, I do not expect to be able to reach the salary in the mid-seventies prior to the end of the next three-year budget period.
Dr. Parker and his wife declined the offers from UTD and remained at FSU.
Over the next three years, Dr. Parker‘s salary was incrеased to the sum of $68,926 for the 1993-94 academic year. When a $75,000 salary was not forthcoming, Dr. Parker filed the instant action alleging fraudulent misrepresentation and breach of contract. With respect to the fraudulent misrepresentation claim, his complaint alleged that at all relevant times Dean Cnudde was acting within the course and scope of his employment with the university and was an authorized agent of the university. He alleged that at the time of the meeting in April 1990, and subsequent memorandum of April 24, 1990, that funds were available to match the UTD offer extended to Dr. Parker. Regarding the alleged fraudulent misrepresentation, the complaint states in pertinent part as follows:
22. Defendant‘s authorized agent, Dean Cnudde, made verbal and written misrepresentations to Plaintiff of material fact in April, 1990, ... that funds were not immediately available to match the salary amount contained in the [UTD] offer.
23. At the time that Dean Cnudde made the misrepresentations to Plaintiff ... Dean Cnudde had superior knowledge of the subject of availability of funds than Plaintiff, and was in a better position to ascertain the truth of his statements than Plaintiff.
24. At the time that Dean Cnudde made the misrepresentations to Plaintiff ... Dean Cnudde knew that the statements were false or, in the alternative, made the statements with reckless disregard as to their truth or falsity.
25. Dean Cnudde made the statements to Plaintiff ... with the specifiс intent of discouraging Plaintiff from accepting the [UTD] offer as well as ensuring that Plaintiff would remain as a professor within the College of Social Sciences at Florida State University.
26. Plaintiff accepted the statements of Dean Cnudde ... and thereby justifiably, reasonably and detrimentally relied upon Dean Cnudde‘s misrepresentations.
With respect to the breach of contract action, Dr. Parker alleged that the university did not meet its obligation to incrеase his
In its answer, among other things, the state admitted the complaint‘s allegations that at all times Dean Cnudde was acting within the course and scope of his employment and was аn authorized agent of FSU. Although the state raised several affirmative defenses, it neither contended that the alleged contract of April 24, 1990 was illegal, because Dean Cnudde lacked the authority to enter into that contract, nor contended that Dr. Parker‘s claims were barred by sovereign immunity.
The case proceeded to trial at which evidence was introduced that, as early as March 1990, FSU possessed available funds for vacant fаculty positions which could have been used to pay additional salary to Dr. Parker.1
At the close of Dr. Parker‘s case-in-chief, the state moved for a directed verdict on the fraudulent misrepresentation and breach of contract claims. The state argued then for the first time that Dean Cnudde was unauthorized to contract and bind the state to the April 24, 1990 contract with Dr. Parker, relying upon sections
The state did not seek leave from the trial court to amend its answer or to add affirmative defenses raising sovereign immunity or illegality of the contract alleged. Further, the state did not request the trial court to instruct the jury or to include in the verdict form any issue relating to whether Dean Cnudde was authorized by FSU to enter into the contract with Dr. Parker or whether the dean acted in bad faith or with malicious purpose in committing the fraud.
With regard to the cause of action for fraudulent misrepresentation, the trial court gave the standard jury instruction on fraudulent misrepresentation, with some minor editorial changes, as follows:
[O]n the Plaintiff‘s second claim for fraudulent misrepresentation, the issuеs for your determination are, first, whether Dean Cnudde made a false statement concerning a material fact of Dr. Parker. Second, whether Dean Cnudde knew the statement was false when he made it or made the statement knowing he was without knowledge of its truth or falsity. Third, whether in making the false statement Dean Cnudde intended that Dr. Parker would rely on the false statement. Fourth, whether Dr. Parker actually did rely on the false statement. Fifth, whether Dr. Parker suffered a loss as a result.
* * *
The next issue for your determination on the second claim is whether the defendant had actual or implied knowledge that the representation was false.
You may find that Dean Cnudde had such knowledge if he made the misrepresentation deliberately, knowing that the statement was false or made the representation
without knowledge as to its truth or falsity....
The jury returned a verdict with written interrogatories finding that there was a contract between Dr. Parker and the state which the stаte breached damaging Dr. Parker in the amount of $65,000. Next, the jury found that employees of the state had made fraudulent misrepresentations to Dr. Parker damaging him in the amount of $86,450.
Thereafter, the state filed a motion for entry of judgment in accordance with its motion for directed verdict and/or judgment notwithstanding the verdict. In addition to previous arguments, in connection with its motion the state asserted that Dean Cnudde was prohibited from entering into the April 24, 1990 contrаct with Dr. Parker by section
The trial court entered the order appealed, ruling that sovereign immunity barred both the fraud and contract claims. As to the fraudulent misrepresentation claim, the court ruled that while bad faith is not an express element of the cause of action for fraud, it is the gist of such cause of action and thus, section
Fraudulent Misrepresentation Claim
The issue presented here is whethеr as a matter of law the element of bad faith is inherent in any action for fraudulent misrepresentation6 and, as a result, fraudulent misrepresentation claims against the state are barred by the doctrine of sovereign immunity pursuant to section
Section
injury or loss of property, personal injury, or death caused by the negligent or wrongful act or omission of any employee of the agency or subdivision while acting within the scope of his office or employment under circumstances in which the state or such agency or subdivision, if a private person, would be liable to the claimant, in accordance with the general laws of this state....
Section
Dr. Parker argues that the trial court erred in ruling that bad faith is always inherent in a fraud claim. Dr. Parker reasons that bad faith would only be inherent in the fraud action if it had been alleged and proven that Dean Cnudde had actual knowledge of
The state‘s entire argument is that for fraud to exist, as a matter of law, bad faith must also exist. We agree. Although our review of the law of fraud in Florida reveаls that bad faith has not always been considered a necessary element of fraud, nor always the gist of that cause of action, First Interstate Dev. Corp. v. Ablanedo, 511 So. 2d 536, 539 (Fla. 1987), established that bad faith must always be considered a necessary element of fraud.
In Florida, legal scienter for purposes of fraud can be established in three ways. As stated in Joiner v. McCullers, 158 Fla. 562, 28 So. 2d 823, 824 (1947), quoting Wheeler v. Baars, 33 Fla. 696, 15 So. 584 (1894):
A false representation of a material fact, made with knowledge of its falsity, to a person ignorant thereof, with intention that is (sic) shall be acted upon, followed by reliance upon and by action thereon amounting to substantial change of position, is a fraud of which the law will take cognizance.
The knowledge, by the maker of the representation, of its falsity, or, in technical phrase, the scienter, can be established by either one of the three following phases of proof: (1) That the representation was made with actual knowledge of its falsity; (2) without knowledge either of its truth or falsity; (3) under circumstances in which the person making it ought to have known, if he did not know, of its falsity. Under the first phase the proof must show actual knowledge of the falsity of the representation. Under the second phase it should show that the representation was made in such absolute, unqualified, and positive terms as to imply that the party making it had knowledge of its truth, and that he made such absolute, unqualified, and positive assertion on a subject of which he was ignorant, and that he had no knowledge whether his assertion in reference thereto was true or false. Under the third phase, the proof should show that the party occupied such a special situation or possessed such means of knowledge as made it his duty to know as to the truth or falsity of the representation made. If the proof establishes either one of these three phases, the scienter is sufficiently made out.
See also Watson v. Jones, 41 Fla. 241, 25 So. 678 (1899); Hinson v. Drummond, 98 Fla. 502, 123 So. 913 (1929); Young v. Johnson, 538 So. 2d 1387 (Fla. 2d DCA 1989); see also Restatement (Second) of Torts § 526 (1977). Thus, while malice or actual corrupt intent to deceive may be a central factual element in many fraud cases, under the second and third phases in Joiner, such intent is not always necessary to establish fraudulent misrepresentation, see Logan v. Logan, 22 Fla. 561, 566 (1886), nor is intent to commit fraud necessarily the gravamen of every cause of action for fraudulent misrepresentation, see Upchurch v. Mizell, 50 Fla. 456, 40 So. 29, 32 (1905).
In Ablanedo, the Florida Supreme Court held that “proof of fraud sufficient to support сompensatory damages is sufficient to create
Scienter, or guilty knowledge, is an element of intentional misconduct, which can be established by showing actual knowledge, or that the defendant was reckless or careless as to the truth of the matter asserted.
Ocean Bank of Miami v. Inv-Uni Inv. Corp., 599 So. 2d 694, 697 (Fla. 3d DCA), rev. denied, 606 So. 2d 1165 (Fla. 1992).
Thus, under the broad rule announced in Ablanedo, bad faith must be dеemed to be a necessary element of any action for fraud whether the fraud action is based on intentional misconduct or on reckless disregard for the truth. To the extent that prior Florida case law suggested otherwise, we conclude that such cases were overruled sub silencio by Ablanedo.
Under section
Breach of Contract Claim
Turning to the contract claim, in Pan-Am Tobacco Corp. v. Department of Corrections, 471 So. 2d 4, 5 (Fla. 1984), the supreme court held that, where the state has entered into a contract fairly authorized by the powers granted by general law, the defense of sovereign immunity will not protect the state from an action arising from the state‘s breach of that contract. We agree with Dr. Parker that section
We also agree with Dr. Parker that section
Rule 6C-5.211(3)(c), Florida Administrative Code (repealed 1996) is equally inapplicable. Rule 6C-5.211(3)(c) provides that a faculty contract or letter of appointment shall not be for a term exceeding one year. Dr. Parker‘s breach of contract action, however, was based upon a conditional contract which
In summary, we hold that the state is not entitled to sovereign immunity on Dr. Parker‘s breach of contract claim. It is clear from this record that Dean Cnudde was acting within the scope of his employment when he entered into the contract with Dr. Parker. The state admitted in its answer and in the pretrial stipulation that, at all times, “Dean Cnudde acted within the course and scope of his employment with the defendant and was an authorized agent of the defendant.” Further, Dean Cnudde possessed the general authority under section
In addition, the April 24, 1990 letter was a conditional contract to raise Dr. Parker‘s salary “as soon as the budget situation permits.” There was an abundance of evidence before the jury to support a finding that funds available in the budget рermitted the dean to raise Dr. Parker‘s salary within the first academic year, or in the 1990-91 academic year. Thus, whether the dean could bind the state to a multi-year contract is not determinative, because evidence was introduced that the contract was capable of performance within one year. Had the state wanted a specific finding otherwise, it should have submitted this issue to the jury as well.
AFFIRMED in part, REVERSED in part, and REMANDED with directions that final judgment be entered in favor of Dr. Parker in accordance with the jury verdict on the breach of contract count.
BOOTH and WOLF, JJ., concur.