Opinion
No. 4D98-3178.
Opinion filed March 15, 2000.
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; John A. Frusciante, Judge; L.T. No. 92-20363(11).
Arthur J. England, Jr., of Greenberg Traurig, P.A., Miami, and Jeffrey P. Kaiser of Law Offices of Jeffrey P. Kaiser, Coral Springs, for appellants.
Linda R. Spaulding of Conrad Scherer, Fort Lauderdale, for appellees.
This is an appeal by Khosrow Maleki, P.A. and Khosrow Maleki, M.D., individually, from the trial court's granting of a Final Summary Judgment and Final Declaratory Judgment in favor of appellees, M.A. Hajianpour, M.D., P.A., M.A. Hajianpour, M.D., individually, and Zoya Physical Therapy and Rehabilitation Center, Inc. Because there remain genuine issues of material fact, we reverse and remand for a trial on the breach of contract and declaratory judgment causes of action.
This case involves a dispute between the parties over their respective rights and obligations under a two-year employment agreement. The employment agreement granted certain stock option rights to Dr. Maleki in Dr. Hajianpour's practice which vested at the end of the two-year term. Prior to the end of the term, Dr. Hajianpour notified Dr. Maleki that he was terminating the employment agreement. Dr. Maleki contested Dr. Hajianpour's right to terminate the agreement and attempted to exercise his stock option rights. This resulted in appellees filing suit seeking declaratory relief. The relevant facts are as follows.
In June 1990, the parties executed a two-year agreement commencing on September 1, 1990. Under the terms of the agreement, Dr. Maleki, an orthopedic surgeon, through his professional association, was to render medical and surgical services to Dr. Hajianpour's professional association as an independent contractor. In order to do so, Dr. Maleki relocated to Broward County. In consideration for such services, Dr. Maleki was to be paid a sum certain for the first 12 months and another sum certain the second 12 months of the Agreement. The Agreement also provided the following termination and right to purchase stock options clauses:
5. TERM. The obligations of the parties hereto shall commence on September 1, 1990, and shall continue for one two year term; provided, however, that either party may terminate this Agreement at any time, upon sixty days prior written notice to the other without cause . . .
6. RIGHT OF FIRST OPTION/TERMS. If this Agreement is still in full force and effect at the conclusion of the two year period, then MALEKI shall have the right to purchase from HAJIANPOUR or HAJIANPOUR, P.A., an equal ownership interest in the issued stock of HAJIANPOUR, P.A. on the terms and conditions hereinafter set forth. This option to purchase such stock will automatically terminate at the expiration of the two (2) month period following the termination date of this Agreement.
Under the terms of the above clauses, Dr. Maleki's two-year term commenced on September 1, 1990 and ended on August 31, 1992. If the Agreement was in full force and effect at the conclusion of the two-year term, Dr. Maleki was vested with the right to exercise his stock options to purchase half of the stock in Dr. Hajianpour's medical practice.
After Dr. Maleki substantially completed his two-year term under the Agreement, Dr. Hajianpour, on June 4, 1992, hand-delivered a letter of that same date from Dr. Hajianpour's counsel, notifying Dr. Maleki that he was giving formal notice of terminating their agreement effective September 1, 1992. Dr. Hajianpour also presented Dr. Maleki with a proposed draft of a new agreement. The new agreement eliminated any provision for the purchase of stock options and had a commencement date of September 1, 1992. On June 8, 1992, Dr. Maleki was sent a second letter notifying him that Dr. Hajianpour was terminating their Agreement effective September 1, 1992. Dr. Maleki responded to the correspondence, disputing the contents of Dr. Hajianpour's letter.
Thereafter, Dr. Maleki informed Dr. Hajianpour that he intended to exercise his stock option rights to purchase an interest in Dr. Hajianpour's practice. Dr. Hajianpour then filed a complaint for declaratory relief to determine whether he had any obligation to sell an ownership interest in his practice to Dr. Maleki even though he terminated their agreement. Dr. Maleki filed a counterclaim seeking relief for anticipatory breach of contract, fraud in the inducement, declaratory judgment, and breach of contract.
In his counterclaim, Dr. Maleki claimed that Dr. Hajianpour breached the implied covenant of good faith and fair dealing in the performance of the contract by intentionally seeking to deprive him of the right to exercise his stock options. Further, he claimed that his right to exercise his stock options vested and was in full force and effect since Dr. Hajianpour's notice of termination had an effective date of September 1, 1992.
The trial court granted summary judgment and final declaratory judgment in favor of appellees on all issues raised. In entering declaratory relief in favor of appellees, the trial court held as follows:
a) The termination provision in the Agreement was unambiguous and governed the effective date of termination;
b) The Plaintiffs/Counter-Defendants' letters dated June 4, 1992 and June 8, 1992 effectively terminated the Agreement prior to September 1, 1992;
c) Based upon the termination, neither party had any rights or obligations under the Agreement; and
d) Plaintiffs/Counter-Plaintiffs had no obligation to sell stock to Defendants/Counter-Plaintiffs under the Agreement after it was terminated.
It is well settled that a party moving for summary judgment must show conclusively the absence of any genuine issue of material fact and the court must draw every possible inference in favor of the party against whom a summary judgment is sought. See Moore v. Morris, 475 So.2d 666, 668 (Fla. 1985). A summary judgment should not be granted unless the facts are so crystallized that nothing remains but questions of law. See Holl v. Talcott, 191 So.2d 40 (Fla. 1966). If the evidence raises any issue of material fact, if it is conflicting, if it will permit different reasonable inferences, or if it tends to prove the issues, it should be submitted to the jury as a question of fact to be determined by it. See Moore, 475 So.2d at 668. A fact is material if, but for the misrepresentation, the aggrieved party would not have entered into the contract. See Ribak v. Centex Real Estate Corp., 702 So.2d 1316, 1317 (Fla. 4th DCA 1997).
Under Florida law, the implied covenant of good faith and fair dealing is a part of every contract. See County of Brevard v. Miorelli Eng'g, Inc., 703 So.2d 1049, 1050 (Fla. 1997) ("[E]very contract includes an implied covenant that the parties will perform in good faith."). "[A] party's good-faith cooperation is an implied condition precedent to performance of a contract; where that cooperation is unreasonably withheld, the recalcitrant party is estopped from availing himself of his own wrong doing."Burger King Corp. v. Weaver, 169 F.3d 1310, 1315 (11th Cir. 1999) (quoting Harrison Land Dev., Inc. v. R H Holding Co., 518 So.2d 353, 355 (Fla. 4th DCA 1987)).
A duty of good faith must relate to the performance of an express term of the contract and is not an abstract and independent term of a contract which may be asserted as a source of breach when all other terms have been performed pursuant to the contract requirements. See Hospital Corp. of America v. Florida Med. Ctr., Inc., 710 So.2d 573 (Fla. 4th DCA), rev. denied, 727 So.2d 905 (Fla. 1998); Bernstein v. True, 636 So.2d 1364 (Fla. 4th DCA 1994). Thus, a cause of action for breach of the implied covenant cannot be maintained (a) in derogation of the express terms of the underlying contract or (b) in the absence of breach of an express term of the underlying contract. See Burger King, 169 F.3d at 1318; Hospital Corp., 710 So.2d at 575.
Before a duty of good faith may attach, the party seeking to claim a breach of that duty must establish that there was a term of the contract that the other party was obligated to perform.See Hospital Corp., 710 So.2d at 575. In Hospital Corp., no implied duty was found to exist where there was no enforceable executory contractual obligation.
In this case, Dr. Maleki alleged a breach of the implied duty of good faith and fair dealing in connection with the parties' contract, specifically, Dr. Hajianpour's obligation to sell Dr. Maleki one-half of the stock issued for his medical practice. Dr. Maleki alleged that Dr. Hajianpour breached the implied duty of good faith and fair dealing by terminating him on the day after his option to purchase an equal ownership interest vested, solely to avoid having to perform that obligation.
Dr. Maleki claims that termination, while Dr. Hajianpour's right, was in this case used for an improper purpose to avoid his obligations under the contract. Thus, Dr. Hajianpour tried to avoid his obligation to sell after enjoying the benefits of Dr. Maleki's performance by terminating Dr. Maleki "without cause." Unlike Hospital Corp., in this case, there remained an enforceable executory contractual obligation on Dr. Hajianpour's part which gave rise to the alleged breach of implied duty of good faith. As such, issues of fact remain as to whether Dr. Hajianpour breached the implied duty of good faith and fair dealing under the agreement.
Further, issues of fact remain regarding the termination letters. The termination letters gave Dr. Maleki more than sixty days' notice as required under the agreement; however, they had an effective date of September 1, 1992, the day after Dr. Maleki fulfilled his two-year term, and when his right to exercise his stock option had vested. While Dr. Hajianpour was within his right to terminate the agreement at any time, it is suspect that he gave an effective date after Dr. Maleki completed his obligation. This fact supports Dr. Maleki's position that Dr. Hajianpour's termination of their Agreement was used solely to defeat Dr. Maleki from obtaining an equal ownership in the business, while still obtaining Dr. Maleki's services up until the last possible moment.
Dr. Maleki also argues that he was fraudulently induced into entering into the contract with Dr. Hajianpour by relying upon Dr. Hajianpour's representations that Dr. Maleki would be allowed to exercise his stock option rights to purchase an equal ownership in the practice. Dr. Hajianpour maintains that such claim is barred by the economic loss rule. At the summary judgment hearing, the trial court held that Dr. Maleki's fraudulent inducement claim was barred by the economic loss rule. We agree. Based on the allegations made and the evidence presented, such count was not distinct and separate from Dr. Maleki's breach of contract claims.
In this case, as in Hotels of Key Largo, Inc. v. RHI Hotels, Inc., 694 So.2d 74 (Fla. 3d DCA), rev. denied, 700 So.2d 685 (Fla. 1997), the fraudulent misrepresentations are inseparably embodied in the essence of the parties' agreement, and therefore, appellant's fraudulent inducement claim is barred by the economic loss rule.
Based on the foregoing, we reverse and remand for a trial on the breach of contract and declaratory judgment causes of action. As to all other issues raised, we affirm.
Affirmed in part; reversed in part and remanded.
POLEN, J., and GLICKSTEIN, HUGH S., Senior Judge, concur.
NOT FINAL UNTIL THE DISPOSITION OF ANY TIMELY FILED MOTION FOR REHEARING.