IN ADMIRALTY CHISHOLM, in personam ANDREA ARAS, her...
Transcript of IN ADMIRALTY CHISHOLM, in personam ANDREA ARAS, her...
The other counterclaims Defendants sought to add in their Motion for Leave to1
File First Amended Affirmative Defenses and Counterclaims, usury and breach of thecovenant of good faith and fair dealing, were found by this Court to be futile and leavewas denied to amend their Answer to include these claims. (Order on Various Motions,p. 11-12 [DE 276].)
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA
IN ADMIRALTY
CASE NO. 05-61238-CIV-COHN/SNOW
RICHARD ROSS,
Plaintiff,
vs.
COLIN CHISHOLM and ANDREA CHISHOLM, in personam, and M/Y ANDREA ARAS, her engines, boiler, machinery, tackle, equipment, freights, furnisings, and appurtenances, etc., in rem._________________________________/
FINDINGS OF FACT AND CONCLUSIONS OF LAW
THIS CAUSE came before the Court for non-jury trial on November 7, 8, 9, 13,
15, and 16, 2006. Plaintiff Richard Ross filed this action for foreclosure of a maritime
lien against the M/Y Andrea Aras, in rem, and for breach of contract against Colin and
Andrea Chisholm, in personam. [Complaint, [DE 1].) Defendants were granted leave to
amend their Answer to add counterclaims against Ross for intentional breach of
fiduciary duty, negligent breach of fiduciary duty, fraud, negligent misrepresentation,
violations of the Florida Deceptive and Unfair Trade Practices Act, violations of the
Florida Consumer Collection Practices Act, and violations of the Federal Truth in
Lending Act. Defendants have also attempted to assert a number of affirmative1
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Defendants were denied leave to amend their Answer to add a number of2
affirmative defenses on the grounds of futility in this Court’s Order on Various Motionsof August 14, 2006 [DE 276]. Defendants also subsequently filed a Motion for Leave toFile Second Affirmative Defenses, attempting to add the affirmative defenses ofestoppel/waiver, lack of consideration, and usury, which this Court denied in its Order ofOctober 13, 2006 [DE 327].
Any factual findings that may represent conclusions of law are adopted as3
conclusions of law.
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defenses and were granted leave to amend their Answer to add three: unclean hands,
set-off and recoupment, and the defense that Plaintiff is barred from recovery of a
deficiency judgment beyond the difference between the fair market value of the vessel
and the debt owed. The Court subsequently granted summary judgment in favor of the2
Plaintiff on Defendants’ limited deficiency judgment affirmative defense, finding that the
fair value of the vessel for purposes of calculating the deficiency judgment is $509,000
[DE 369].
The Court granted Summary Judgment for the Plaintiffs and against the
Defendants with respect to Plaintiff’s claims of foreclosure and breach of contract in an
Order dated April 27, 2006 [DE 165]. However, the Court deferred entering judgment
against the Defendants to allow for additional discovery on their various affirmative
defenses and counterclaims. Thus, the only issues remaining for trial were the
Defendants’ counterclaims and affirmative defenses, as summarized above.
FINDINGS OF FACT3
Credibility Determinations:
1. The Court found Defendant Colin Chisholm’s testimony to be almost entirely
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lacking in credibility. Cross examination of Mr. Chishom revealed that he cannot
remember and cannot explain many of the inconsistencies between his prior
statements and representations, and his current testimony. He also purports to
not remember or not be able to explain many of the key details from the
negotiations and transaction at issue. The Court believes that Mr. Chisholm’s
testimony was at best evasive, and at worst perjurious, and it has been given
minimal weight in the Court’s consideration of this case.
2. In contrast, the Court found Plaintiff Richard Ross’s testimony to be extremely
credible. Mr. Ross testified in a consistent, genuine, and straightforward
manner, responding to questions as he was able, and referring questions he
could not answer to the appropriate people, such as Ron Morgenstein and
Warren Hayes, who also testified at trial. The Court notes with appreciation that
Mr. Ross was honest and open about the transaction at issue in this case, and
about other unrelated transactions when asked, and accordingly gives his
testimony substantial weight in the Court’s consideration of this case.
3. Similarly, the Court found the testimony of Ron Morgenstein and Warren Hayes
to be credible.
4. Although the Court did not find the testimony of Defendant Andrea Chisholm to
be inherently lacking in credibility, it is noted that some inconsistencies between
her testimony and her husband’s testimony do call into question either her own
truthfulness, or the accuracy of the information she was given by her husband.
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Because this vessel underwent several name changes over the course of its4
lifetime, this Court will refer to it generically as “the Trumpy” for ease of reference.
The Court did not receive a transcript of the trial held on November 7, 8, 9, 13,5
15, and 16, 2006. Therefore, the testimony of all witnesses will be referred to solely bytheir name without reference to a transcript page number.
Because Colin Chisholm played a larger role in negotiating this transaction6
than his wife, Andrea, the Court refers to Colin Chisholm unless otherwise specified.
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The Deal
5. In 2002, Plaintiff Richard Ross acquired the “Wishing Star,” a Trumpy4
motoryacht, which had just undergone a $2 million re-fit. (Richard Ross Trial
Testimony.) At the time Mr. Ross purchased the Trumpy, it was surveyed as5
having a $1.4 million fair market value and a $5 million replacement value. (Ron
Morgenstein Trial Testimony.)
6. Mr. Ross later decided to sell the Trumpy. Defendant Colin Chisholm learned
that the vessel was available for sale in September 2004, and he identified it as
being the former “Aras,” a boat that had previously belonged to members of his
family. (Colin Chisholm Trial Testimony.)
7. Mr. Chisholm contacted the broker who had listed the vessel, Luke Brown &
Associates, to inquire about the Trumpy. On October 15, 2004, Mr. Chisholm
sent an email to Ron Morgenstein, of Luke Brown & Associates, advising that his
company, TCN Networks, had taken “most all of [his] available cash up to this
date, around $6.2 Million” but that he controlled “about $30 Million in Network
Television Advertising on CNBC.” (Defendants’ Exhibit 73bb; Plaintiff’s Exhibit
63.) In actuality, however, Chisholm never put any of his own money into TCN6
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Networks, and he did not actually control any advertising on CNBC, but rather
controlled advertising in CNBC programming on TCN Networks, a network that
had never broadcast. (Colin Chisholm Trial Testimony.) Chisholm also advised
Morgenstein in the October 15, 2006 email that he was interested in purchasing
the Trumpy using owner financing or some other form of “creative financing.”
(Defendants’ Exhibit 73bb; Plaintiff’s Exhibit 63.) Morgenstein responded that
with Chisholm’s permission, he would forward this email to the owner of the
vessel for his consideration. (Id.) The email was forwarded to Ross, the owner
of the vessel, for his consideration. (Plaintiff’s Exhibit 5.) The Court finds that
Chisholm intended that this email, including the false statements about his
wealth, be sent to Ross for his consideration in negotiating a deal.
8. Chisholm directed Ross to the Web site of TCN Networks, which indicated that
TCN Networks reaches millions of viewers in the Carribean, provided information
about the Carribean Music Channel, and listed a number of officers with
biographies. (Colin Chisholm Trial Testimony.) Ross viewed the Web site and
found it to be “impressive.” (Richard Ross Trial Testimony.) In reality, however,
TCN Networks has never broadcast anything, the Caribbean Music Channel is
merely a “development project,” and TCN Networks has no paid employees or
officers. (Colin Chisholm Trial Testimony.) The Court finds that Chisholm falsely
represented to Ross that TCN Networks was a viable company.
9. Prior to reaching an agreement regarding the Chisholms’ purchase of the
Trumpy, Chisholm met with Ross on October 23, 2004 to see the vessel and
have lunch. They spent no more than a few hours together. Prior to this
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As with many of the statements in Chisholm’s trial testimony, no explanation7
was provided as to who or what in “Chicago” was to transfer the funds. The Courtinfers that Chisholm intended this reference to pertain to his business in some way.
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meeting, the Chisholms and Ross had never met. (Richard Ross Trial
Testimony; Colin Chisholm Trial Testimony.)
10. Chisholm represented to Ross in October 2004 that millions of dollars in
investments would be coming into TCN Networks in the near future, but that he
only had available cash to pay 20-30% of the purchase price at that time.
(Richard Ross Trial Testimony.)
11. Other than viewing the TCN Networks Web site and obtaining a “D&B” [Dun &
Bradstreet] report on TCN Networks, Ross conducted no other background
checks on the Chisholms or the company and relied on their representations to
him about their financial condition. (Richard Ross Trial Testimony.)
12. Ross was mislead by Colin Chisholm to believe that Chisholm was a millionaire
with a successful business and the financial capability to afford the vessel.
13. In an arm’s length transaction, Chisholm and Ross negotiated a deal whereby
Chisholm would make an initial deposit, then pay monthly payments for a year,
with a balloon payment of the remaining principal due at the end of the year. In
a subsequent meeting on January 3, 2005, Ross and Chisholm agreed to modify
the deal to increase the down-payment to $220,000, increase the monthly
payment to $7,500, and require an additional lump sum payment of $150,000 to
be due on March 15, 2005. (Defendants’ Exhibit 116.)
14. On January 6, 2005, Chisholm advised Ross that he had directed “Chicago” to7
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do a wire transfer to his personal account in New York, and had contacted
“Ramon” at Webster Bank to arrange for the transfer of the funds to the Warren
Hayes trust account at SunTrust as soon as those funds arrived. (Plaintiff’s
Exhibit 8.) In November 2004, the last month for which Chisholm disclosed bank
records from Webster Bank, Chisholm had no more than approximately $2,000
in his Webster Bank checking account and no funds in his Webster Bank
savings account. (Plaintiff’s Exhibit 22.) Chisholm testified at trial that he had no
account at Webster Bank at the time the down-payment was made, and that he
does not know anyone named “Ramon.” (Colin Chisholm Trial Testimony.)
15. On January 8, 2005, Chisholm notified Ross that the wire transfer for the down-
payment would be coming within a few days, explaining again that he was having
his company transfer the funds to his personal account, and that he would then
wire the down-payment from the personal account to Alley Maas, because he
“did not feel comfortable doing the wire straight from the Company to Warren.”
(Plaintiff’s Exhibit 9.) However, in actuality, the two wire transfers comprising the
down-payment came from Mellon Bank accounts in the names of Michael Lang
and TCN Networks. (Plaintiff’s Exhibits 20 and 21.) Although Chisholm testified
at trial that he did not know whether the down-payment had been made through
his personal accounts at Webster Bank, (Colin Chisholm Trial Testimony), bank
records confirm that the down-payment came from accounts not in Chisholm’s
name and not at Webster Bank (Plaintiff’s Exhibits 20 and 21.)
16. At the time that the Chisholms were negotiating with Ross for the purchase of the
Trumpy, they were in great debt, including bad debts on credit cards, judgments
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against them, and back alimony owed to Mr. Chisholm’s former wife. (Andrea
Chisholm Trial Testimony; Colin Chisholm Trial Testimony.) The Court finds that
Chisholms did not disclose the extent of their financial obligations to Mr. Ross
and intentionally deceived him as to the extent of their wealth in an effort to
influence him to provide owner financing, without which they could not have
obtained the Trumpy.
17. The evidence indicates that the due date of the final payment changed during
the process of revising the documents, from December 31, 2005 to December
15, 2005. (Colin Chisholm Trial Testimony.) The Court finds, however, that
Chisholm had several opportunities thereafter to note the changed date in his
review of the documents, and that he signed the documents with the December
15, 2005 final balloon payment due date.
18. The Chisholms closed on the purchase of the Trumpy on January 20, 2006.
Structuring of the Deal as a Trade-In
19. Ross made arrangements to purchase a new vessel around the same time he
was selling the Trumpy to the Chisholms. He requested that the sale of the
Trumpy be structured as a trade-in, whereby he would transfer the Trumpy to
Luke Brown & Associates, receive a trade-in credit towards the purchase of his
new vessel, and Luke Brown & Associates would subsequently transfer the
Trumpy to the Chisholms. The purpose of this structure was to take advantage
of a Florida sales tax provision that would limit the sales tax Ross had to pay on
his purchase of the new vessel. (Warren Hayes Trial Testimony.)
20. Chisholm was not involved in the discussions regarding structuring the deal as a
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trade-in. (Colin Chisholm Trial Testimony.)
21. The purchase price for the Trumpy did not change following the decision to
structure the deal as a trade-in. At all relevant times during the transaction, the
agreed upon purchase price was $1.2 million. (Colin Chisholm Trial Testimony.)
22. The Court finds that the decision to structure the sale of the Trumpy as a trade-
in, rather than a direct sale from Ross to the Chisholms, had no effect
whatsoever on the Chisholms.
Involvement of Ron Morgenstein
23. Ron Morgenstein, of Luke Brown & Associates, acted as the broker for the sale
of the Trumpy. (Richard Ross Trial Testimony.)
24. Morgenstein had a long-standing relationship with Ross prior to this transaction.
(Richard Ross Trial Testimony.)
25. Morgenstein’s commission on the sale of the vessel was to be paid by the seller,
Ross. (Richard Ross Trial Testimony.)
26. Morgenstein disagreed with Ross’s decision to make a deal with the Chisholms
whereby the seller, Ross himself, would hold paper on the vessel. He had not
seen a deal structured like this before and believed it was unusual. (Richard
Ross Trial Testimony; Ron Morgenstein Trial Testimony.) Morgenstein was
unsure as to whether the Chisholms had the money to pay for the vessel at the
time of purchase, because Chisholm had represented to him that his money was
tied up in his business. (Ron Morgenstein Trial Testimony.)
27. The transaction provided that Luke Brown & Associates would be paid a
commission of 10% on the payments Ross received for the vessel. In the event
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that Ross did not receive the full payment from the Chisholms and was forced to
foreclose on the mortgage, Ross agreed to re-list the vessel with Luke Brown &
Associates in exchange for their agreement to forgive the remaining commission
due on the full purchase price of the vessel. (Richard Ross Trial Testimony.)
28. Luke Brown & Associates received from Ross 10% of the total down-payment
made by the Chisholms on the vessel, totaling $22,000. Had the Chisholms paid
for the vessel as agreed, Luke Brown & Associates would have received an
additional $98,000 commission. As a result of the Chisholms’ failure to pay,
Luke Brown & Associates has received significantly less in commission on the
vessel.
Representation by Warren Hayes
29. Prior to the transaction with the Chisholms, Ross had used the legal services of
Warren Hayes and the law firm of Alley Maas for other vessel purchases and
sales. (Richard Ross Trial Testimony.)
30. Warren Hayes testified that he represented only Ross in this transaction, but that
Chisholm paid the bills for the representation pursuant to an agreement between
Chisholm and Ross. (Warren Hayes Trial Testimony.)
31. In contrast, both Chisholm and Ross testified that they believed at the time that
Chisholm had retained Warren Hayes to draw up the paperwork for the
transaction. (Richard Ross Trial Testimony; Colin Chisholm Trial Testimony.)
32. Ross testified that he thought it was obvious to the Chisholms that he was
continuing to use Warren Hayes. (Richard Ross Trial Testimony.) Based on
prior deposition testimony that Chisholm acknowledged on cross examination, it
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Chisholm explained, when confronted with this prior deposition testimony, that8
he was being “sarcastic” at the time he made these statements. However, the Courtfound this explanation to be entirely lacking in credibility.
An email from Chisholm to Hayes specifically requests the documents in Word9
format because “I can’t edit or make any changes to a PDF File.” (Plaintiff’s Exhibit 42.) Chisholm testified in court, however, that he requested the Word format because hecould not read the documents in PDF format. (Colin Chisholm Trial Testimony.) TheCourt finds this to be yet another example of Chisholm modifying his testimony to fit thelegal theories in this case, rather than testifying truthfully to the details surrounding thetransaction.
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appears that Chisholm also considered Hayes to be Ross’s lawyer at the time of
the transaction. (Colin Chisholm Trial Testimony).8
33. Warren Hayes initially prepared the documents for the transaction without
speaking with Chisholm. (Warren Hayes Trial Testimony.)
34. Chisholm personally made a number of significant decisions regarding the
details of the transaction, and even edited some of the documents on his own.
For example, Chisholm originated the idea to close the deal more than three
miles out to sea to avoid paying sales tax, and directed Hayes to edit the
documents to reflect this decision (Warren Hayes Trial Testimony.) Chisholm
also at one point requested a Word version of the documents, rather than the
PDF Hayes had sent, because he was not able to edit the PDF. Although9
Chisholm testified that he made changes and sent them back to Hayes for his
review, Hayes denied this, testifying that Chisholm made changes directly to the
Word-format documents and signed them without further input from Hayes.
(Warren Hayes Trial Testimony.) Chisholm was also unable to produce any
documentation to support his claim that he sent his changes back to Hayes for
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review, despite extensive discovery that allowed him to obtain all of Hayes’
emails and files pertaining to this transaction.
35. Although both Andrea and Colin Chisholm testified that they would not have
gone through with the purchase of the Trumpy had they known that Warren
Hayes represented Ross’s interests, the Court found these claims to be self-
serving, lacking in credibility, and contrary to other evidence presented.
36. The Court finds that the Chisholms knew of Hayes’s former and ongoing
business relationship with Ross and consented to any dual representation that
existed in this transaction.
37. Based on all the evidence and testimony presented, the Court believes that the
parties to the transaction made the decision to hire Warren Hayes, with the
Chisholms paying the bill, to prepare the documents pursuant to their
agreements and facilitate the closing of the transaction. Hayes’s role was to
facilitate closing the transaction in accordance with the agreement negotiated by
Chisholm and Ross. He simply prepared the documents to their specifications
and made them available to the parties to edit and execute as they chose. The
Court also finds that both the Chisholms and Ross understood that only one
lawyer was needed and that Hayes’s work was to benefit both of them, and they
consented to any dual agency or dual representation that took place.
38. Further, Chisholm held himself out to be an experienced businessman, and in
that role, he took an active and affirmative role in the decisions surrounding this
transaction and the actual editing of the documents involved. In light of the fact
that Chisholm directly negotiated the terms of the agreement himself, including
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Chisholm testified that he and Andrea thought that having Hayes on their side10
would “level the playing field” against the more experienced and knowledgeable Rossand Morgenstein. (Colin Chisholm Trial Testimony.) However, the Court can find in theevidence no instance in which the Chisholms called on Hayes to represent theirinterests in the negotiations with Ross, to negotiate on their behalf, or to counsel themon the transaction. Thus, the Court finds the Chisholms’ testimony that they relied onHayes to represent their interests lacking in credibility.
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reviewing and editing the various documents associated with the transaction
before signing them, the Court finds that he understood and knowingly agreed to
the terms of the transaction as well as the nature of Hayes’s representation of
the parties. Thus, any claims by Andrea and Colin Chisholm that they did not
know about the relevant terms of the agreement and were counting on Warren
Hayes to explain them are lacking in credibility.
39. The Court also finds that Warren Hayes did not take any actions that caused
harm to the Chisholms, regardless of whom he represented. The negotiation of
the price of the vessel and the terms of the agreement took place between Ross
and Chisholm directly, and Hayes played no role in those negotiations. He was10
tasked simply with drafting the papers to memorialize those agreements.
Further, Chisholm appears not to have actively sought out Hayes’s advice on the
substance of the transaction, and indeed made changes to the documents
without consulting with Hayes. Finally, the key portion of the transaction that has
caused the Chisholms problems–namely, the requirement that they make timely
payments on the mortgage–was clearly understood by the Chisholms and
required no explanation from Hayes. Mr. Chisholm never testified that he would
not have gone through with the transaction had he known he would have to pay
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The Chisholms claim, for example, that they were unaware that Ross was11
structuring the sale as a trade-in to limit his sales tax liability, and that the agreementprovided for Luke Brown and Associates to re-list the vessel in the event of default onthe mortgage. (Colin Chisholm Trial Testimony.) However, they were unable to explainhow the presence of these provisions caused any harm to them, other than makingconclusory statements that they would not have gone through with the transaction hadthey known about these provisions. The Court finds these conclusory statements to belacking in credibility.
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for the vessel. As to the various other terms of the agreement, of which the
Chisholms claim they were unaware and which they claim caused them harm,11
the Court finds that the Chisholms were aware of the material terms of the
agreement when they closed on the vessel and that none of these terms has
caused any harm to them, whether explained by Warren Hayes or not.
Previous Lending Activities
40. Mr. Ross loaned $2.5 million as part of the financing in the transaction in which
he sold the “Sir Jolly Roger” and purchased the “Wishing Star.” (Richard Ross
Trial Testimony.)
41. This loan, called “floorplan financing” was made to the broker to finance the
acquisition of the trade-in vessel so the broker would not have to outlay the
money to purchase the vessel outright. (Warren Hayes Trial Testimony.)
42. Hayes testified that he knew of no other occasion, aside from his loan to the
Chisholms, when Ross had loaned money to a natural person. (Warren Hayes
Trial Testimony.)
Insurance Policy
43. The Chisholms purchased insurance coverage for the Trumpy through Brown &
Brown. They took out hull coverage, P&I coverage, and breach of warranty
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The portions of Lori Dial’s deposition that were read into evidence at trial will12
be cited as “Lori Dial Testimony.”
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coverage on the vessel. (Lori Dial Testimony.)12
44. The breach of warranty policy was issued on behalf of Richard Ross. This policy
provided coverage for Mr. Ross in the event that the vessel suffered some
casualty and no insurance was in place due to a breach in the terms of the policy
by the Chisholms. (Lori Dial Testimony.)
45. Ross called Brown & Brown on September 8, 2005 requesting the name of the
captain on the vessel because he was attempting to repossess it and could not
locate it. This information was passed along to the underwriters, who advised
Brown & Brown that non-payment on the mortgage was not grounds for
cancellation of the insurance policy. Brown & Brown provided Ross with the
name of the Chisholms’ captain at the time–Sandy Sandrol. (Lori Dial Trial
Testimony.)
46. Ross’s attorney, Tomaselli, informed Brown & Brown via email on September 14,
2005 that Ross was attempting to repossess the vessel and foreclose on the
mortgage. He also advised that they had learned from Captain Sandrol that the
Chisholms may not be using a captain, as required by the insurance policy, on a
regular basis, and that Ross as loss payee was concerned that coverage may be
compromised. This information was passed along to the underwriters via email
on September 14, 2005. (Lori Dial Testimony; Defendants’ Exhibit 43.)
47. The “Yacht Log,” authenticated by both Colin and Andrea Chisholm and entered
into evidence, reflects many occasions prior to December 2005 when the
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Trumpy was piloted by Colin Chisholm himself, rather than a licensed captain, as
required by the insurance policy. It appears from this Log that the Chisholms
used a captain for trips taken between the time of closing and March 2005.
Starting on March 26, 2005, there are twenty-three entries in the Log reflecting
that Colin Chisholm was at the helm of the vessel, including a trip to the
Bahamas in May 2005. (Plaintiff’s Exhibit 29.)
48. The Court finds, based on the records kept by the Defendants themselves, that
Ross and his attorney reported accurate information to Brown & Brown regarding
the failure of the Chisholms to use an approved captain, as required by the
policy.
49. The underwriters of the insurance policy take the fact that a captain may not be
on board very seriously. Failure to use a captain as required may result in
cancellation of the insurance policy. (Lori Dial Testimony.)
50. Upon receiving the information from Tomaselli about the Chisholms’ failure to
use a captain, the underwriters contacted Colin Chisholm via email on
September 14, 2005 to advise him they had received information that Sandrol
was no longer acting as captain. On September 16, 2005, Chisholm responded
via email, advising that the information they received was “wrong,” saying “Sandy
Sandrol is our Captain and will remain so.” (Lori Dial Testimony; Defendants’
Exhibit 47.)
51. On September 14, 2005, two days prior to giving this response, Colin Chisholm
operated the vessel himself without a captain on a trip with a number of guests
on board. (Plaintiff’s Exhibit 29.)
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52. The Court finds that Chisholm was untruthful in his response to the underwriters
that Sandrol was acting as captain on board the vessel.
53. Brown & Brown also contacted Sandrol via email on September 16, 2005 to
confirm that he was still acting as the captain of the vessel. (Defendants’ Exhibit
48.) Sandrol responded on September 18, 2005, confirming that he continued to
serve as captain on the vessel. (Defendants’ Exhibit 49.)
54. The Yacht Log contains no entries in which Sandrol is recorded as serving as
captain on board the Trumpy. (Plaintiff’s Exhibit 29.)
In follow-up to Sandrol’s response, Brown & Brown emailed Sandrol again,
inquiring whether he had operated the vessel since being hired, where the vessel
was located, whether he had been hired to do a charter, and whether the vessel
had taken trips without him on board. (Defendants’ Exhibit 51.) Sandrol
responded by stating that these questions were inappropriate as directed to him,
and requesting that Brown & Brown contact the Chisholms’ attorney.
(Defendants’ Exhibit 52.)
56. The underwriters expressed surprise and concern that the captain was unwilling
to answer the fairly simple questions posed. Because company policy does not
allow them to correspond with attorneys, Brown & Brown did not follow up by
contacting Warren Hayes. The underwriters were informed of this policy and
that they would not follow up with Hayes. The underwriters subsequently made
the decision to not renew the policy as of January 2006, and a letter to that effect
was sent to the Chisholms on November 10, 2005. (Lori Dial Testimony.)
57. The reason for the underwriters’ decision not to renew the policy was the lack of
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communication from the Chisholms regarding their captain. (Lori Dial
Testimony.)
58. The Court finds that the non-renewal of the insurance policy had no effect on the
Chisholms. Their coverage remained in place until January 18, 2006, (Lori Dial
Testimony), and they were no longer in possession of the vessel as of that date.
Attempts to Collect the Debt
59. On March 15, 2005, the due date for the lump sum payment of $150,000 and
monthly payment of $7,500, Chisholm wrote a check to Ross for $157,500 and
asked him to hold it for a little while. Ross deposited the check on March 28,
2005 and it was returned for insufficient funds. Defendants’ Exhibit 187; Warren
Hayes Trial Testimony.)
60. At the time Chisholm wrote this check, and for several months prior, he did not
have more than a few thousand dollars in the account from which the check was
written. (Colin Chisholm Trial Testimony.)
61. In April 2005, Chisholm made several payments to Ross totaling approximately
$172,000. This money came from loans from friends, family, and their vessel
captain at the time, Roy Green. However, none of the bank records disclosed in
this case reflect Chisholm’s receipt of these loans or the various payments made
to Ross. (Colin Chisholm Trial Testimony.) Chisholm was unable to explain
where the funds were deposited, or how they were paid to Ross. Chisholm did
claim, however, that he does not have any bank accounts that were not
disclosed during this litigation, (Colin Chisholm Trial Testimony), although the
Court finds this claim to be lacking in credibility.
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Chisholm claimed that the wording of the letter and the legal information in it13
came from a friend who is an attorney. He also claimed he did not send the letter. However, Ruth Larsen and Linda Alton filed a Notice of Claim of Maritime Lien with theUnited States Coast Guard in August 2005. (Plaintiff’s Exhibit 19.) Therefore, theCourt finds Chisholm’s claim that he did not mail the letter or advise his mother-in-lawregarding a maritime lien to be lacking in credibility.
19
62. On April 10, 2005, the Chisholms executed a promissary note in the amount of
$527,582.00 in favor of Andrea’s mother and a friend of the mother. (Plaintiff’s
Exhibit 18.) These funds, like the other loans used to make the April payment to
Ross, do not appear in the Chisholms’ bank records, and it is unclear what they
were used for.
63. Chisholm drafted a letter to his mother-in-law advising her about the legal
implications of a maritime lien, and suggesting that she record a maritime lien on
the Trumpy to secure her debt and ensure she could take back the vessel if it
was repossessed by Ross. (Plaintiff’s Exhibit 17.) 13
64. Chisholm did not inform Ross of the promissary note executed in favor of
Andrea’s mother and friend, in violation of the terms of the promissory note
between Chisholm and Ross. (Colin Chisholm Trial Testimony.)
65. In the summer of 2005, the Chisholms traveled out of Florida with the vessel
without informing Ross, prompting him to file the Verified Complaint in the instant
case on July 27, 2005. (Richard Ross Trial Testimony.) An Order directing the
issuance of a Warrant of Arrest of the vessel was issued by this Court on July
27, 2006. (DE 9,10.) However, the vessel was not arrested at that time because
Ross was unable to locate the vessel. (Richard Ross Trial Testimony.)
66. Although Ross’s attorney took a number of actions in an attempt to locate the
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20
vessel, including involving an organization called National Liquidators, they were
unable to locate the vessel. Ross later learned that the Chisholms had traveled
to Georgia and South Carolina with the vessel. Chisholm claims that they moved
the vessel from Florida to avoid the hurricane season. (Richard Ross Trial
Testimony; Colin Chisholm Trial Testimony.)
67. Ross expended approximately $20,000 in attorneys fees and costs attempting to
locate and arrest the vessel during this time period. (Richard Ross Trial
Testimony.)
68. In September 2005, Chisholm made contact with Ross again. Towards the end
of September, Chisholm conveyed, via Warren Hayes, the message that he
wished to make a payment and work out an agreement with Ross. Hayes
conveyed that to Ross’s lawyer, Tomaselli, who responded that Ross was happy
to receive any funds that Chisholm wished to provide and to consider any
proposals for looking forward. (Defendants’ Exhibit 150.)
69. On September 30, 2005, Chisholm contacted Ross via email and advised him
that he could pay all payments due through November 30, 2005, late charges,
$25,000 for Ross’s legal bill, and an additional principal payment of $30,000.
The total amount to be paid was $94,000, leaving only the December balloon
payment to be made. (Defendants’ Exhibit 152.)
70. Chisholm had concerns about making payment without written reinstatement of
the original loan terms. Ross advised Hayes that Chisholm would just have to
trust Ross, as Ross had trusted Chisholm on the loan of $980,000. Hayes
conveyed this to Chisholm, and advised that Ross would not pursue the
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21
foreclosure action if payment was made, and the balance was paid on December
14, 2005, per the original agreement. (Defendants’ Exhibit 153.)
71. Chisholm and Ross had a phone conversation in which Ross asked Chisholm to
keep him advised of the location of the vessel his plans to keep it in shape.
Chisholm then sent a follow-up email to Ross, advising him on the maintenance
of the vessel and thanking him for “accepting our offer to work things out.”
(Defendants’ Exhibit 154.)
72. Ross responded to Chisholm’s email indicating that he had not accepted an offer
to work things out. Chisholm then contacted Hayes on October 8, 2005 to ask
what had happened. (Defendants’ Exhibit 147.) On October 10, 2005, Chisholm
advised Hayes that he had spoken to Ross, and that Ross’s lawyer “did jump on
him to send me that e-mail. It seems everything is fine.” (Defendants’ Exhibit
149.)
73. In October 2005, the Chisholms were served with the Complaint in this action.
They forwarded the materials to Hayes, who advised them that Ross had
declared them in default on the promissory note and was pursuing the action to
obtain a judgment against them. Hayes advised that this judgment was to be
used only if he failed to make the balloon payment on or before December 15,
and that Ross’s attorney was positioning them to be able to move quickly if the
full payment was not made on the due date. (Defendants’ Exhibit 155.)
74. Hayes provided the final payment amount of $763,118.01 and the payment due
date of December 14, 2005 to both Ross and Chisholm via email on November
29, 2005. (Defendants’ Exhibit 161.) Ross sent Hayes an email on that date
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The September 2005 payment of $94,000 included $25,000 for Mr. Ross’s14
legal bills incurred as of that date, per an agreement between Chisholm and Ross, soonly $69,000 of that payment is included in this calculation of total payments made onthe loan. Additionally, the Chisholms made payments of $7,500 on February 14, 2005;$69,500 on April 2, 1005; $100,000 on April 14, 2005; $3,000 on April 25, 2005; and$15,375 on June 6, 2005, all of which are included in this calculation of total paymentsmade.
22
stating “let’s hope he can find the bucks.” (Defendants’ Exhibit 169.)
75. On December 13, 2005, Chisholm contacted Ross and advised he would wire
the final payment on December 14, 2005. When Ross called Chisholm on
December 14, 2005 to confirm that the transfer was coming, Chisholm did not
answer the phone. Ross learned that Chisholm had moved the vessel from the
marina the previous day without telling him. At that time Ross made the decision
to have the vessel arrested, and the arrest was effected on December 17, 2005.
(Defendants’ Exhibit 162.)
76. As of December 14, 2005, Colin Chisholm did not have the funds to make the
final payment due on the vessel. (Colin Chisholm Trial Testimony.) The Court
finds that Chisholm was being untruthful when he contacted Ross on December
13, 2005 to advise he would be wiring the final payment the next day.
Total Debt Owed and Payments Made:
77. The total principal due at the commencement of the loan was $980,000.
78. The Chisholms had made $264,375 in payments as of the date of trial,
November 6, 2006.14
79. The Chisholms had incurred $8,812.50 in late fees as of the date of trial,
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Per the Note, the Chisholms are obligated to pay a late fee of 5% of the late15
payment amount for all payments made more than ten days after their due date. TheChisholms owe late fees on the payments due in March, April, May, June, and July2005.
Interest originally accrued at an annual rate of 5%. As of the first instance of16
default on March 24, 2005, interest began accruing at an annual rate of 25%, per theterms of the Note.
23
November 6, 2006.15
80. Interest had accrued on the loan totaling $355,161.41 as of the date of trial,
November 6, 2006.16
81. The total amount due on the Note as of the date of trial, November 6, 2006, was
$1,079,598.91.
82. Interest has continued accruing on the loan since November 6, 2006 at a rate of
$739.45 per day.
83. The vessel was re-sold following the judicial sale for $509,000. The Court finds
that this is the fair value of the vessel, minus the $50,900 commission paid to re-
sell the vessel, for purposes of calculating the deficiency judgment.
CONCLUSIONS OF LAW
As a preliminary matter, the Court seeks to clarify those issues that were
properly presented for trial and those issues that had already been decided prior to trial.
In this Court’s Order of April 27, 2006 [DE 165], summary judgment was granted in
favor of Plaintiff Ross and against Defendants with respect to Plaintiff’s claims of
foreclosure and breach of contract, as well as several of Defendants’ affirmative
defenses. The Court, in essence, found that Plaintiff was entitled to recover a
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24
deficiency judgment on the promissory note unless Defendants were able to prove one
of the specific affirmative defenses left pending for trial. Also pending for trial were a
number of counterclaims asserted by Defendants that, if proven, could offset some or
all of the judgement owed to Plaintiff Ross on the promissory note.
Defendants have argued, both at trial and in their Proposed Findings of Fact and
Conclusions of Law, that the transaction should be set aside and the promissory note
and mortgage voided on the basis of two theories not previously plead in the case.
First, Defendants assert that Plaintiff’s failure to introduce the original note and
mortgage at trial is fatal to his claim of recovery on that note because copies of a
promissory note and mortgage are not admissible to the same extent as originals under
Florida law. As this Court explained in its Order of December 7, 2006 [DE 392],
however, the question of Plaintiff’s entitlement to recover under the promissory note
and mortgage was answered when the Court granted summary judgment on this issue
in April 2006. Plaintiff had no burden to prove his right to recover under the note at trial;
any burden of proof at trial was on the Defendants, as they sought to prove their
affirmative defenses and counterclaims. As such, introduction of the original
promissory note and mortgage was not required at trial, and this argument by
Defendants fails.
Second, Defendants argue that the transaction at issue is voidable at Chisholm’s
option because Warren Hayes acted as a dual agent for both Chisholm and Ross
during the transaction. Defendants cite to case law in support of their argument that
where an agent undertakes to represent both buyer and seller in a transaction without
full and complete disclosure of the nature of his representation, the transaction is
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25
voidable regardless of whether any improper advantage was gained or any harm was
caused. See Quest v. Barge, 41 So.2d 158 (Fla.1941).
The Court notes at the outset that such a defense to enforcement of this contract
was not properly plead in this case. Defendants filed an Answer [DE 26] and two
subsequent Motions to Amend their Answer to add affirmative defenses and
counterclaims [DE 193 and 297], giving them ample opportunity to assert the defense
that Warren Hayes’ dual representation in this transaction justifies rescission of the
contract at the Chisholms’ option and serves as a defense to enforcement of the
contract. Indeed, the Chisholms knew, and asserted in their original Answer [DE 26],
that Warren Hayes acted on behalf of both parties to the transaction. However, at no
point prior to the eve of trial did Defendants assert that they had not consented to the
nature of Hayes’s involvement in this transaction, nor did they argue that their lack of
consent justified rescission of the contract in defense to Ross’s claims. The Court can
only conclude that this is yet another instance of the Defendants molding their
allegations and testimony to fit the legal theories proposed by counsel.
Defendants attempted to cure their failure to plead this affirmative defense by
making an ore tenus Motion at the conclusion of trial to conform the pleadings to the
evidence. When asked precisely what amendments were sought, Defendants made
the allegation that Warren Hayes acted as a dual agent and that this dual agency was
not consented to by the Defendants, but they still failed to articulate the affirmative
defense of rescission of the contract as a desired amendment. Had they done so, the
Court would have denied such a request. It is well settled in the federal courts that “in
suits seeking to avoid the effect of fraudulent contracts, pleading is of the utmost
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26
importance” and that when rescission is relied upon as a defense to a contract, “it must
be specifically pleaded.” Jack Mann Chevrolet v. Associates Inv., 125 F.2d 778, 784
(6th Cir. 1942) (cited in Wright & Miller, Federal Practice and Procedure: Civil 3d §
1271). The policy reasons for requiring prompt and specific pleading of such a defense
are clear, especially as illustrated by the case at bar: rescission of the contract, even if
justified, could not be fully effected now, after a year of litigation, because the vessel
has been sold to new owners and title has transferred. Further, Defendants do not
provide, nor can the Court conceive of, any possible justification for waiting so long to
plead the core allegation of this defense–that the Chisholms did not consent to the role
Hayes played in the transaction. Surely the Chisholms themselves were in the best
possible position to know what the Chisholms did or did not consent to at the time of the
transaction. Such undue delay in making these allegations cannot be justified on the
record before this Court.
However, the point is a moot one, because even if Defendants had properly pled
this defense, it would fail on the evidence presented at trial. The law does not prohibit
an agent, such as Warren Hayes, from acting on behalf of both principals to a
transaction unless the parties have not consented to such representation. In Quest, the
court addressed a situation where a real estate broker acted on behalf of both the buyer
and the seller in negotiating the sale of property. 41 So.2d at 160. The inherent
conflicts of interest in that case were obvious–the buyer desired to get the lowest
possible price, while the seller desired to get the highest possible price. The broker
failed to disclose to the seller the extent of his relationship with the buyers, and the
court found his actions to be “insufficient to charge [the seller] with a full knowledge and
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27
consent to the double agency.” Id.
In the case at bar, however, the alleged “dual agent” played a much more limited
role in the transaction, and that role was quite clear to both parties. Hayes was not
responsible for negotiating the terms of the deal, but rather was called in to memorialize
those terms on paper and create the legal structuring of the transaction to provide tax
benefits to both the Chisholms and to Ross. In that respect, the interests of the buyers
and seller were perfectly aligned with respect to Hayes’s representation. There is no
evidence that Hayes provided advice or counsel to either Chisholm or Ross as to the
substantive terms of the deal. Further, Chisholm knew that Ross had used the legal
services of Warren Hayes, and the law firm of Alley Maas, for years; indeed, this high
recommendation was the primary reason that Chisholm agreed to use Hayes for the
work on the Trumpy transaction. The Court made a finding of fact that Chisholm
understood fully the nature of Hayes’s representation in this matter, as well as any
potential conflicts of interest, and consented to that representation when he and Ross
agreed to use Hayes’s services.
It also bears noting that Hayes had no real conflict of interest in his work on this
transaction that would have required disclosure to the parties. Although he had a
longer working relationship with Ross than he did with Chisholm, his primary role in the
Trumpy transaction was to memorialize an agreement already reached by the parties
and to assist them both in realizing tax benefits–tasks in which Chisholm and Ross’s
interests were aligned. Accordingly, the Court can see no conflict of interest
disclosures that should have been made but were not, and the Court concludes that
Hayes had the intelligent consent of all parties to this transaction to any “dual
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representation” that he may have carried out.
Finally, the Court notes that, per its previous Order on the Plaintiff’s Motions for
Summary Judgment [DE 369], the deficiency judgment to be awarded will be based on
the vessel’s fair value of $509,000, the resale price of the Trumpy following the judicial
sale, minus the commission paid to re-sell the vessel of $50,900.
The Court now turns its attention to the properly plead affirmative defenses and
counterclaims.
A. Unclean Hands
Defendants have asserted and attempted to prove that Plaintiff Ross should not
be permitted to recover under this contract because of his unclean hands. The
equitable principle of unclean hands provides that “whenever a party who seeks to set
the judicial machinery in motion and obtain some equitable remedy has violated
conscience or good faith, or another equitable principle in prior conduct with reference
to the subject at issue, the doors of equity will be shut . . .” 27A Am. Jur. 2d Equity §
126. The Court concludes that Defendants are entitled to no such defense. The Court
sees nothing in Plaintiff Ross’s actions to support a finding of unclean hands, and
everything in the Defendants actions to negate their entitlement to this defense. The
evidence before the Court supports only the conclusion that Defendants were the ones
to present false information, deceive, and defraud the Plaintiff, and that it is the
Defendants who come to court with unclean hands. As such, Defendants’ defense of
unclean hands is entirely without merit.
B. Set-Off and Recoupment
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In this affirmative defense, Defendants argue that any damages to which they
are entitled must off-set Plaintiff’s entitlement to damages pursuant to the mortgage
foreclosure and the breach of contract. Although this allegation is a statement of the
obvious, the Court allowed Defendants to amend their Answer to add this defense
insofar as it defeats or diminishes Plaintiff’s entitlement to damages. However, as laid
out below, the Court finds that Defendants are entitled to no damages on any of their
counterclaims, and so this affirmative defense is moot.
C. Intentional/Negligent Breach of Fiduciary Duty
Breach of fiduciary duty is a recognized cause of action in Florida. See Doe v.
Evans, 814 So.2d 370, 374 (Fla. 2002). Under Florida law, fiduciary relationships may
be either express or implied. Capital Bank v. MVB, 644 So. 2d 515, 518 (Fla. Dist. Ct.
App. 1994). A fiduciary relationship is implied in law when “confidence is reposed by
one party and a trust accepted by the other.” Id. (quoting Dale v. Jennings, 107 So.
175, 179 (Fla. 1925)). A fiduciary relationship may be found “where there has been a
special confidence reposed in one, who in equity and good conscience, is bound to act
in good faith and with due regard to the interests of the one reposing the confidence.”
Atlantic National Bank v. Vest, 480 So. 2d 1328 (Fla. Dist. Ct. App. 1985). However,
such a fiduciary relationship typically arises only where one party knows or has reason
to know that the other party is placing trust and confidence in him, or is relying on him
for counsel and advice. Capital Bank, 644 So. 2d at 519. Such fiduciary relationships
may arise between lender and borrower, for example, where the lender bank and
borrower have an existing relationship, and the borrower seeks advice and counsel
from the bank as financial adviser. See id.
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The Court concludes that no such fiduciary relationship was present in the
instant case. Plaintiff and Defendants did not know one another prior to the negotiation
of this transaction. They met on only a few occasions to negotiate the details of the
transaction, and there is no evidence to indicate that the Chisholms sought out Ross’s
advice regarding the purchase of the vessel. Even if they had requested Ross’s advice
and counsel, such a request could not have been considered genuine, given the
extensive misrepresentations made to Ross regarding their financial situation. The
Court notes that the Chisholms did not place their trust and confidence in Ross even so
far as to be truthful with him about the status of their business and their financial
resources. Thus, for the Chisholms to now claim that they placed their trust and
confidence in Ross, and depended on his advice and counsel, flies in the face of the
clearly established evidence to the contrary and is totally lacking in credibility. The
Court finds that no fiduciary relationship existed between Ross and the Chisholms, and
as such, the Chisholms may not recover for either intentional or negligent breach of
fiduciary duty.
D. Fraud/Negligent Misrepresentation
Pursuant to this Court’s Order [DE 276], Defendants were permitted to amend
their Answer to add claims for fraud and negligent misrepresentation based on the
following alleged omissions: (1) that Plaintiff received a $100,000 credit toward his
purchase of a different vessel from the broker; (2) that Plaintiff never actually paid the
$980,000 loan to the broker; (3) that Plaintiff was to pay the broker an additional seller’s
commission through installments as Defendants repaid the loan; (4) that Plaintiff was to
repay a loan from the broker in installments based on Defendants’ repayment, and (5)
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When sitting in admiralty, courts generally apply common law fraud. Diesel17
“Repower” v. Islander Invs., 271 F.3d 1318 (11th Cir. 2001). Nevertheless, pursuant tothe promissory note’s chice of law clause, which indicates that Florida law governs, andfinding no conflict with substantive admiralty law, the Court shall apply Florida law withregard to these claims. Stoot v. Fluor Drilling Servs., 851 F.2d 1514, 1517 (5th Cir.1988).
31
that Plaintiff was required to repossess the vessel and return it to the broker in the
event of a default. These alleged omissions are essentially the “behind the scenes
deals” to which Defendants frequently refer in their arguments.
A tortfeasor may commit fraud through nondisclosure, but “only when a duty to
make such disclosure exists.” Friedman v. Am. Guardian Warranty Servs., 837 So. 2d
1165, 1166 (Fla. Dist. Ct. App. 2003). “This duty arises when one party has17
information which the other party has a right to know because there is a fiduciary or
other relation of trust or confidence between the two parties.” Id. As discussed above,
the Court concludes that there was no fiduciary relationship or other relationship of trust
between Ross and the Chisholms, and no duty on the part of Ross to provide this
information to the Chisholms ever arose. Further, to prove a claim for fraud, the
Chisholms must show that Ross intended to induce their reliance on representations he
knew to be false or omissions of information he had an affirmative duty to disclose.
See Susan Fixel, Inc. v. Rosenthal & Rosenthal, 842 So. 2d 204, 209 (Fla. Dist. Ct.
App. 2003). The Court concludes that Ross had no such intent to defraud the
Defendants. Finally, to prove a claim for fraud, the Chisholms must show that they
were injured by the misrepresentations or omissions. Id. No such injury can be shown
in this case. Although Defendants make much of these supposed “behind the scenes
deals” of which they were not made aware, they have been unable to show how these
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deals affected them in any way. Other than making conclusory and self-serving
statements that they would not have gone through with the transaction had they known
about these deals, which the Court finds to be lacking in credibility, Defendants have
offered no proof of any injury caused by the alleged omissions. As such, the Court
concludes that Defendants have failed to prove a claim for fraud.
A claim for negligent misrepresentation may arise where a tortfeasor “supplies
false information for the guidance of others in their business transactions . . . if [the
tortfeasor] fails to exercise reasonable care or competence in obtaining or
communicating the information.” First Fla. Bank, N.A. v. Max Mitchell & Co., 558 So. 2d
9, 12 (Fla. 1990). Although a claim for negligent misrepresentation does not include the
intent requirements of a claim for fraud, recovery under a theory of negligent
misrepresentation is still based on liability for pecuniary losses caused by the alleged
misrepresentation. Defendants have proven no pecuniary loss caused to them by the
alleged omissions, and so their claim for negligent misrepresentation must also fail.
E. Florida Deceptive and Unfair Trade Practices Act
Defendants were permitted to amend their Answer to include claims under the
Florida Deceptive and Unfair Trade Practices Act as to the same specific omissions
listed above in the discussion of Defendants’ claims for fraud and negligent
misrepresentation. The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”)
broadly proscribes “unfair methods of competition, unconscionable acts or practices,
and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Fla.
Stat. § 501.204(1). To recover under the FDUTPA, a consumer must “plead and prove
that he or she was aggrieved by the unfair and deceptive act.” Veal v. Crown Auto
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Dealerships, No. 04-CV-323-T-27; 2006 WL 435693, *4; 2006 U.S. Dist. LEXIS 8243,
*13 (M.D. Fla. Feb. 21, 2006) (quoting Macias v. HBC of Fla., 694 So. 2d 88, 90 (Fla.
Dist. Ct. App. 1997)). Defendants allege that the omissions listed above were
deceptive, unfair, misleading, and unconscionable. However, as with the claims for
fraud and negligent misrepresentation, Defendants have failed to prove what harm or
injury was caused to them as a result of the alleged omissions. Absent any evidence
whatsoever of injury, as discussed above, this Court cannot conclude that Defendants
have proven a claim under the FDUTPA.
F. Florida Consumer Collection Practices Act
The Florida Consumer Collection Practices Act (“FCCPA”) proscribes a broad
range of activities on the part of persons collecting debts. See Fla. Stat. § 559.72.
Defendants allege that Plaintiff violated the FCCPA by disclosing information affecting
their financial reputation and regarding their payment status to other persons who did
not have a legitimate business need for the information. See Fla. Stat. § 559.72 (5). At
trial, Defendants provided evidence to show that Ross communicated with Brown &
Brown regarding his difficulties in locating the vessel for purposes of foreclosure and
advised them when he learned that a captain may not be on board, as required by the
insurance policy. However, as the evidence at trial clearly showed, the location of the
vessel and the presence of a captain to operate the vessel are both matters relevant to
the renewal or non-renewal of the insurance policy. Thus, the insurance underwriters
had an obvious business need for the information that was provided to them, and Ross,
as loss payee under the breach of warranty policy, had an obvious and legitimate
reason for communicating with Brown & Brown about these matters. As such, the
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34
Court cannot find that Brown & Brown lacked a legitimate business interest in the
information conveyed to them by Ross and his agents, or indeed that any information
was improperly conveyed to Brown & Brown. Accordingly, the Court concludes that
Defendants have not proven a claim under the FCCPA.
G. Federal Truth in Lending Act
Defendants were permitted to amend their Answer to include a counterclaim for
violations of the Federal Truth in Lending Act (“TILA”) because they alleged that Plaintiff
is a “creditor” under the meaning of the Act: a party who regularly extends credit which
is payable by agreement in more than four installments or for which the payment of a
finance charge is or may be required as contemplated by TILA. See 15 U.S.C. §
1602(f). Defendants also alleged that Ross, as a “creditor” under the meaning of the
Act, failed to provide the required disclosures to the Defendants. However, at trial,
Defendants were able to show only one instance in which Plaintiff had extended credit
in the past. Such a showing is hardly adequate to prove that Plaintiff “regularly
extends” credit, as required to establish that he is a “creditor” within the meaning of the
Act. Accordingly, the Court concludes that Defendants have failed to prove their claim
under the Federal Truth in Lending Act.
CONCLUSION
For the foregoing reasons, it is hereby ORDERED AND ADJUDGED as follows:
1. Plaintiff Richard Ross shall recover $659,950.31 from Defendants Colin
and Andrea Chisholm on his mortgage foreclosure and breach of contract
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35
claims, including all interest due on the note through the date of this
Judgment.
2. Defendants Colin and Andrea Chisholm failed to prove any of their
counterclaims. Accordingly, Defendants will take nothing from this action.
3. Plaintiff Richard Ross shall recover reasonable costs and attorney’s fees
expended in the process of foreclosure, filing and prosecution of this
action, and defense of Defendants’ counterclaims.
4. A separate Final Judgment will be entered consistent with the Court’s
Findings of Facts and Conclusions of Law.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,
Florida, on this 28th day of December, 2006.
Copies provided to:
John J. Tomaselli, Esq.Michael W. McLeod, Esq.Ronald S. Nisonson, Esq.
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