Bruce A. Ungerleider v. Robert P. Gordon ( 2000 )


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  •                                                                                 PUBLISH
    IN THE UNITED STATES COURT OF APPEALS
    FILED
    FOR THE ELEVENTH CIRCUIT COURT OF APPEALS
    U.S.
    ELEVENTH CIRCUIT
    JUNE 13 2000
    ______________________________
    THOMAS K. KAHN
    CLERK
    No. 99-10767
    _____________________________
    D.C. Docket No. 95-00568-CIV-T-23E
    BRUCE A. UNGERLEIDER, M.D.,
    Plaintiff-Appellant,
    versus
    ROBERT P. GORDON,
    HARVEST INTERNATIONAL OF AMERICA, INC.,
    Defendants-Appellees.
    ____________________________________________
    Appeal from the United States District Court
    for the Middle District of Florida
    ____________________________________________
    (June 13, 2000)
    Before COX, Circuit Judge, GODBOLD and MESKILL*, Senior Circuit Judges.
    MESKILL, Senior Circuit Judge:
    *
    Honorable Thomas J. Meskill, Senior U.S. Circuit Judge for the Second Circuit, sitting by
    designation.
    Plaintiff-appellant Bruce A. Ungerleider appeals from a judgment of the
    United States District Court for the Middle District of Florida, Merryday, J.,
    summarily disposing of his claims sounding in securities fraud, common law fraud,
    contract, civil theft and conversion. The sole issue raised by Ungerleider on appeal
    is whether the district court erred in holding that an alleged oral agreement could
    not be enforced under the parol evidence rule. We find no error and affirm.
    BACKGROUND
    In 1991, Ungerleider began making a series of investments in defendant
    Phoenix Information Systems, Inc. (Phoenix), a startup company attempting to
    develop a travel reservations system for use in the United States and abroad.
    Defendant-appellee Robert P. Gordon was the chairman and CEO of Phoenix, as
    well as its largest shareholder. He was also the owner, chairman and CEO of
    defendant-appellee Harvest International of America, Inc. (Harvest). Between
    1991 and 1993, Ungerleider invested over $800,000 in Phoenix, and his interests in
    the company were memorialized in over a dozen written agreements.
    In 1992, Gordon and Harvest agreed to pay Ungerleider a finder's fee if he
    was able to secure additional financing for Phoenix from certain sources, including
    the prominent investor George Soros. Shortly thereafter, Gordon apparently also
    arranged for Robert Conrads to pursue additional financing for Phoenix. Conrads
    2
    succeeded in attracting Soros' interest in the investment. The defendants informed
    Ungerleider that an outside investor had been found, but they refused to identify
    him. The defendants also advised Ungerleider that the investor was unwilling to
    proceed unless Ungerleider relinquished his contractual interests in Phoenix.
    On April 15, 1993, Ungerleider, Gordon, Phoenix and Harvest entered into a
    written agreement whereby Harvest and Phoenix were entitled to retain all the
    money invested by Ungerleider; Ungerleider was to receive 1.2 million shares of
    Phoenix; and all the prior agreements, including the finder's fee agreement, were
    revoked. Two of the relevant provisions of the April 15 agreement are set forth
    below.
    NOW THEREFORE, in consideration of the premises and of the
    undertakings and obligations herein contained and other good and valuable
    consideration, the receipt of which is hereby acknowledged, the parties agree
    as follows:
    ...
    14. Entire contract. This Agreement contains the entire under-
    standing of the parties and supersedes all previous verbal and written
    agreements. There are no other agreements, representations, or
    warranties not set forth herein.
    Paragraph 5 of the agreement stated that Ungerleider was entitled to receive 1.2
    million shares of Phoenix stock, and paragraph 3 stated that Ungerleider was
    3
    "entitled to receive the [Phoenix] Common Stock referred to in paragraph 5 hereof
    and no other stock or other consideration."
    At the time the agreement was signed, Gordon conveyed to Ungerleider a
    stock certificate for 1.2 million shares of Phoenix. Both parties agree that the
    shares were not the same 1.2 million shares that Ungerleider was entitled to under
    the agreement. Ungerleider alleged that he received these initial shares as part of a
    contemporaneous parol agreement with Gordon to induce Ungerleider to sign the
    written agreement. The defendants contended in the district court that these initial
    shares were merely collateral until Ungerleider received the shares called for in the
    written agreement.
    Gordon shortly thereafter regained possession of the initial shares,
    apparently by asking Ungerleider to return the stock certificate in order to effect a
    corporate name change. When Ungerleider was unsuccessful in demanding the
    return of the certificate, and after discovering that Soros was a significant source of
    the additional financing, he filed this suit. The defendants moved to dismiss, and
    the district court granted the motion in part and denied it in part. See Ungerleider
    v. Gordon, 
    936 F. Supp. 915
    (M.D. Fla. 1996). Ungerleider filed an amended
    complaint, stating claims sounding in securities fraud, common law fraud, contract,
    civil theft and conversion. The district court granted an automatic stay with respect
    4
    to defendant Phoenix, which was entering into bankruptcy, and ultimately granted
    summary judgment against Ungerleider on all claims in an unpublished decision.
    The district court certified that its decision constituted a final judgment in
    accordance with Fed. R. Civ. P. 54(b), and this appeal followed.
    DISCUSSION
    The sole issue on appeal is whether the district court correctly held that the
    purported oral agreement between Ungerleider and Gordon was unenforceable
    under the parol evidence rule. Ungerleider argues that the oral agreement was
    enforceable as a contemporaneous agreement that induced the signing of the
    written agreement. Ungerleider also argues that the parol evidence rule should not
    apply because the reference to "other good and valuable consideration" in the
    written agreement rendered the written agreement incomplete. For the reasons set
    forth below, we reject these arguments and affirm the judgment of the district
    court.
    I
    Florida law, of course, recognizes the parol evidence rule. "[E]vidence of a
    prior or contemporaneous oral agreement is inadmissible to vary or contradict the
    unambiguous language of a valid contract. This rule applies when the parties
    intend that a written contract incorporate their final and complete agreement."
    5
    Johnson Enters. of Jacksonville v. FPL Group, 
    162 F.3d 1290
    , 1309 (11th Cir.
    1998) (citation and internal quotation marks omitted); see J.M. Montgomery
    Roofing Co. v. Fred Howland, Inc., 
    98 So. 2d 484
    , 485-86 (Fla. 1957). The rule is
    one of substantive law, not evidence, so it is applied by federal courts sitting in
    diversity. See Johnson 
    Enters., 162 F.3d at 1309
    n.47.
    Ungerleider argued before the district court that "parol evidence is
    admissible to establish a contemporaneous oral agreement which induced the
    execution of a written contract, though it may vary, change, or reform the
    instrument." See Mallard v. Ewing, 
    121 Fla. 654
    , 664, 
    164 So. 674
    , 678 (1935).
    Indeed, Florida courts recognize such an "inducement" exception to the parol
    evidence rule. Johnson 
    Enters., 162 F.3d at 1309
    -10 (citing Mallard). However,
    the party submitting parol evidence under this exception carries a heavy burden of
    proof. "The inducement exception `requires the [oral] agreement to be shown by
    evidence that is clear, precise, and indubitable; that it shall be found that the
    witnesses are credible, that they distinctly remember the facts to which they testify,
    and that they narrate the details exactly and that their statements are true.'" 
    Id. at 1310
    (alteration in original) (quoting 
    Mallard, 121 Fla. at 664
    , 164 So. at 678).
    The district court did not address Ungerleider's argument. Instead,
    "[b]ecause of the specific and comprehensive nature of the written agreement," it
    6
    gave no credence to the "oral representations which occurred after, and which
    contradict, the written agreement." We need not remand for the district court to
    consider the inducement exception in the first instance, i.e., whether there was
    "clear, precise, and indubitable" evidence of the oral agreement, because we hold
    as a matter of law that the inducement exception is inapplicable.
    Under Florida law, the inducement exception does not apply where "the
    alleged oral agreement relate[s] to the identical subject matter embodied in the
    written agreement and . . . directly contradict[s] an express provision of the written
    agreement." Linear Corp. v. Standard Hardware Co., 
    423 So. 2d 966
    , 968 (Fla.
    App. 1 Dist. 1982); see also Bond v. Hewitt, 
    111 Fla. 180
    , 185, 
    149 So. 606
    , 608
    (1933) ("[W]here a written instrument does not purport to contain the entire
    agreement between the parties thereto, nor to have been intended as a complete
    statement or whole contract, and where such instrument was executed pursuant to a
    parol agreement and in part performance thereof, parol evidence is admissible
    when consistent with, and not contrary to, such written instrument." (emphasis
    added)). The Supreme Court of Florida made this clear in McComb v. Hygeia
    Coca-Cola Bottling Works, 
    137 Fla. 260
    , 
    188 So. 219
    (1939), in which it rejected
    the plaintiff's claims that he was entitled to lifetime employment by virtue of an
    7
    oral promise made to induce him to sign a release of liability. The court presented
    the issue as follows:
    When a release of a claim for personal injuries is executed and delivered
    in the form, viz: "For the sole consideration of the sum of One Hundred
    Sixty and 00/100 Dollars . . . received from Hygeia Coca Cola Bottling
    Works, Inc., I do hereby acknowledge full satisfaction and discharge of
    all claims . . .", can it be shown by parol testimony that there was a prior
    or contemporaneous additional consideration for said release?
    
    Id. at 265-66,
    188 So. at 221. The court answered no. "If the plaintiff is allowed to
    show on the trial of the cause other considerations flowing from the alleged injury,
    then the rule against varying the terms of a written instrument will be violated." 
    Id. at 266,
    188 So. at 222. The court expressly considered, but declined to follow,
    Mallard. See 
    id. Here, the
    alleged oral agreement entitling Ungerleider to an additional 1.2
    million shares of stock directly contradicts paragraph 3 of the written agreement,
    which states that Ungerleider was "entitled to receive the [Phoenix] Common
    Stock referred to in paragraph 5 hereof and no other stock or other consideration."
    We see no distinction between paragraph 3 here and the reference to plaintiff's
    "sole consideration" in McComb. The boilerplate "other good and valuable
    consideration" referred to in the preamble of the written agreement is not enough to
    avoid the obvious inconsistency between the alleged oral agreement and paragraph
    3. Therefore, Ungerleider's reliance on the inducement exception is unavailing.
    8
    The decision of the Florida Supreme Court in Jackson v. Parker, 
    153 Fla. 622
    , 
    15 So. 2d 451
    (1943), is not to the contrary. In that case, the plaintiffs were
    heirs intestate to Gladys P. Monroe, who, with her husband, had sold a home to
    defendants Henry and Annibelle Jackson. The terms of the sale were that the
    Jacksons would pay the Monroes $37.50 monthly, up to a total of $4,500, but only
    while Gladys Monroe and her husband lived. To effectuate the sale, the Monroes
    deeded the property to the Jacksons, who in turn executed and returned a
    promissory note secured by a mortgage on the property. The Monroes shortly
    thereafter executed a release for the note and mortgage, which they placed with the
    note and mortgage in a safety deposit box. After Mrs. Monroe's death, the
    executor of her estate refused to deliver the release to the defendants, but even
    without it the defendants stopped making payments on the note. Mrs. Monroe's
    heirs sought to foreclose, and the court was faced with the question of whether
    parol evidence was admissible to determine the effect of the release and the
    purpose of the various documents:
    Here we have four written instruments -- a deed, a mortgage, a note, and
    a complete release and satisfaction of the mortgage and note. Both the
    mortgage and note and the release were found in the lock-box of the
    mortgagee . . . something over seven years after the deed and mortgage
    were executed. . . . [W]hy was the release executed long before most of
    the payments on the mortgage note fell due, and why was the release not
    actually delivered to the mortgagors immediately after it was executed,
    or at least while the mortgagees were still living? Surely the mortgagees
    9
    had some object in view when they executed this release and acknowl-
    edged it before a notary public soon after the mortgage was made to
    them, though it then had nearly ten years to run, and then left the release
    along with the mortgage and note in their lock-box at their bank. When
    a person dies leaving in his lock-box a mortgage and also a release of
    that mortgage, there must be some explanation somewhere, if it can be
    found. What was the reason for leaving this release?
    
    Id. at 636,
    15 So.2d at 458-59. In deciding whether the parol evidence was
    competent, the court set forth several principles of law, including the inducement
    exception of Mallard that "parol evidence is admissible to establish a
    contemporaneous oral agreement which induced the execution of a written
    contract, though it may vary, change, or reform the instrument." 
    Id. at 639,
    15
    So.2d at 460. However, the court was not relying on the inducement exception to
    permit parol evidence to directly contradict the terms of a written agreement.
    Instead, the inducement exception was one of several principles of law suggesting
    that the court could consider parol evidence as to the purpose and effect of several
    related documents, each duly executed and valid on their face. Cf. Navy Mut. Aid
    Ass'n v. Barrs, 
    732 So. 2d 345
    , 347 (Fla. App. 1 Dist. 1998) ("Parol evidence . . . is
    admissible to show the intent of the parties where several documents are part of
    one transaction and must be considered in pari materia to understand the
    transaction."). Therefore Jackson in no way undermines the holding of McComb
    that parol evidence may not directly contradict a contemporaneous written
    10
    agreement, even if the oral agreement was made to induce assent to the written
    agreement. Indeed, the same rule is followed in other jurisdictions. See, e.g.,
    Bernstein v. Financial Indem. Co., 
    263 Cal. App. 2d 324
    , 329, 
    69 Cal. Rptr. 543
    ,
    547 (Ct. App. 2 Dist. 1968); Cantrell v. Lemons, 
    119 Colo. 107
    , 109, 
    200 P.2d 911
    , 912 (1948); Pepsico Truck Rental v. Eastern Foods, 
    145 Ga. App. 410
    , 410-
    11, 
    243 S.E.2d 662
    , 663 (Ct. App. 1 Div. 1978); Frimel v. Blake, 
    360 S.W.2d 258
    ,
    260-61 (Mo. Ct. App. 1962); Cornhusker Dev. & Inv. Group v. Knecht, 
    180 Neb. 873
    , 878, 
    146 N.W.2d 567
    , 571 (1966); Dora v. Dora, 
    392 Pa. 433
    , 437, 
    141 A.2d 587
    , 590 (1958); Gantt v. Van der Hoek, 
    162 S.E.2d 267
    , 272 (S.C. 1968); Hull-
    Dobbs, Inc. v. Mallicoat, 
    57 Tenn. App. 100
    , 104, 
    415 S.W.2d 344
    , 346 (Ct. App.
    1966).
    In sum, the inducement exception permits parol evidence of a
    contemporaneous oral agreement to "vary, change, or reform" a written instrument,
    
    Mallard, 121 Fla. at 664
    , 164 So. at 678, but not to directly contradict it, McComb,
    137 Fla. at 
    265-66, 188 So. at 221
    -22; Linear 
    Corp., 423 So. 2d at 968
    . This will
    not always be an easy distinction to draw, but the distinction appears elsewhere in
    the parol evidence rule. For example, parol evidence is not necessarily barred if
    the written agreement is incomplete, as long as the parol evidence does not
    contradict the written agreement. 
    Jackson, 153 Fla. at 637
    , 15 So.2d at 459;
    11
    
    Mallard, 121 Fla. at 663
    , 164 So. at 678. Similarly, "[t]he rule does not necessarily
    exclude extrinsic proof . . . that there exists a contemporaneous independent
    agreement amounting to a separate transaction." Schwartz v. Zaconick, 
    68 So. 2d 173
    , 175 (Fla. 1953). However, even in that situation the parol evidence may not
    contradict the terms of the written agreement. Anderson v. Ax, 
    104 Fla. 294
    , 298,
    
    139 So. 798
    , 799 (1932); see also 
    Schwartz, 68 So. 2d at 176
    (declining to consider
    parol evidence of contemporaneous oral agreement that makers of promissory note
    were not required to pay interest as specified in note); Johnson v. Johnson, 
    403 So. 2d 1388
    , 1390 (Fla. App. 2 Dist. 1981).
    Here, we have no difficulty in concluding that the parol evidence does more
    than "vary, change, or reform" the written agreement. It directly contradicts the
    written agreement. Therefore, it is not admissible under the inducement exception
    to the parol evidence rule.
    II
    Finally, Ungerleider argues that the reference to "other good and valuable
    consideration" rendered the written agreement incomplete. While that may
    sometimes be the case, see 
    Jackson, 153 Fla. at 637
    , 15 So.2d at 459, we do not
    believe it to be the case here. This is not a case where the consideration recited
    was so nominal that one would necessarily expect that other consideration was
    12
    involved. Compare 
    id. ("Both the
    deed and the mortgage expressed a consideration
    of $10 `and other valuable considerations.'"). Indeed, "[t]he chief and most
    satisfactory index to determine the intent of the parties to an agreement as to
    whether they intended their written contract to be a complete and final statement of
    the whole transaction is whether or not the particular element of the alleged
    extrinsic negotiation is dealt with at all in the writing." Greenwald v. Food Fair
    Stores Corp., 
    100 So. 2d 200
    , 202 (Fla. App. 3 Dist. 1958). Here, the written
    agreement was carefully drafted and lists in detail each of the previous agreements
    that were revoked and each of the payments made by Ungerleider that Harvest and
    Phoenix were entitled to keep. The agreement also states precisely where the
    shares to which Ungerleider was entitled were to come from and how they were to
    be registered:
    a. from Harvest a certificate representing 511,000 shares of [Phoenix]
    Common Stock, $.01 par value, registered in the name of [Ungerleider];
    and
    b. from [Phoenix] a certificate representing 689,000 shares of [Phoenix]
    Common Stock, $.01 par value, registered in the name of Independent
    Trust Corp. Cust. FBO Dr. Bruce Ungerleider Tr. No. 1205303 (243,000
    [Phoenix] shares), Independent Trust Corp. TTEE FBO Dr. Bruce
    Ungerleider Tr. No. 1608459 (58,500 [Phoenix] shares) and Bruce A.
    Ungerleider, M.D. (387,500 [Phoenix] shares).
    Under the circumstances, it is unreasonable to believe that Gordon would have
    agreed to give an additional 1.2 million shares of Phoenix stock to Ungerleider in
    13
    an undocumented collateral agreement, or that Ungerleider would have accepted
    such an informal agreement. Cf. 
    Ungerleider, 936 F. Supp. at 916
    ("The adversity
    between the parties was palpable.").
    Furthermore, the parties expressly stated that the agreement of April 15 was
    a complete integration of the contract: "This Agreement contains the entire
    understanding of the parties and supersedes all previous verbal and written agree-
    ments. There are no other agreements, representations, or warranties not set forth
    herein." Paragraph 3 of the agreement further emphasizes that the agreement
    completely memorializes the parties' understanding as to the consideration due
    Ungerleider. Those provisions should be given effect. See 4 Williston on Con-
    tracts § 633, at 1014 (3rd ed. 1961) ("Since it is only the intention of the parties to
    adopt a writing as a memorial which makes that writing an integration of the
    contract, and makes the parol evidence rule applicable, any expression of their
    intention in the writing in regard to the matter will be given effect.").
    Finally, even if the agreement were incomplete, Florida law "does not permit
    proof of an oral agreement for the purpose of imposing a further contractual
    obligation on one of the parties, of which there is no indication or suggestion in the
    written contract, when such obligation is not only inconsistent with, but repugnant
    to, other plain terms of the instrument." Florida Moss Products Co. v. City of
    14
    Leesburg, 
    93 Fla. 656
    , 661, 
    112 So. 572
    , 574 (1927); 
    Jackson, 153 Fla. at 637
    , 15
    So.2d at 459. The purported oral agreement here is "not only inconsistent with, but
    repugnant to," the written agreement, and it is therefore unenforceable.
    CONCLUSION
    The district court's judgment is AFFIRMED.
    15