RICK CLAYTON v. DON POGGENDORF and MARILYN THOMAS

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
RICK CLAYTON,
Appellant,
v.
DON POGGENDORF and MARILYN THOMAS,
Appellees.
No. 4D17-488
[February 21, 2018]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Richard L. Oftedal, Judge; L.T. Case No.
502015CA003114XXXXMB.
James D. Tittle and M. Daniel Logan of Tittle, Kairalla & Logan, PL,
West Palm Beach, for appellant.
Marshall J. Osofsky of the Law Office of Paul A. Krasker, P.A., West
Palm Beach, for appellees.
WARNER, J.
In this appeal of a final judgment enforcing a settlement agreement,
appellant contends that the trial court erred in concluding that notice of
late payment sent to the attorney who represented him in the underlying
litigation was sufficient notice to appellant to accelerate the debt due
under the settlement agreement. He also claims that the court erred in
finding the agreement ambiguous and taking testimony from the appellees
to explain their view of the settlement agreement and amounts due. We
hold that the court did not err in concluding that the attorney who
accepted notice was acting with apparent authority, but the court erred in
determining that the agreement was ambiguous as to the amounts due.
Appellant Clayton purchased a business from appellees Poggendorf and
Thomas, executing a stock purchase agreement obligating Clayton to make
payments to appellees. When he failed to make payments, appellees filed
suit. That litigation resulted in a settlement agreement between the
parties. The agreement provided for a schedule of payments to be made
by appellant to appellees. Specifically those provisions stated:
WHEREAS, the Parties agree to fully and completely
resolve all claims by and between them and hereby mutually
release and waive any and all claims they had, have, or may
have in the future in any way related to the purchase and sale
of Sun Dome, the Contract, the Promissory Note and the
Litigation, and agree to voluntarily dismiss their claims in the
Litigation under the following terms:
1. Payments to Plaintiffs: In full settlement of this
dispute, Clayton will make payments to Thomas and
Poggendorf as follows (“Settlement Payment”):
A.) A down payment of Thirty Thousand Five Hundred
and 00/100 Dollars ($30,500.00) concurrently with the
signature of this Agreement;
B.) Periodic Payments to Plaintiffs as follows:
$4,592.51 by September 1, 2015;
$4,592.51 by October 1, 2015;
$4,592.51 by November 1, 2015;
$4,592.51 by December 1, 2015;
$4,592.51 by January 1, 2016;
$4,592.51 by February 1, 2016;
$4,592.51 by March 1, 2016;
$4,592.51 by April 1, 2016
Payments of $3,592.51 on the first day of each month
from May 1, 2016 through the last payment on April 1, 2022.
The parties agree that the Settlement Payment is
sufficient and adequate consideration for this Agreement.
Clayton shall wire transfer all periodic payments
hereunder to Plaintiffs’ TD Bank bank account [Routing
number and account number omitted].
Time is of the essence for all payments hereunder.
However, Clayton shall be entitled to five (5) calendar days’
notice of any late payments. There shall be no further
requirement of any written notice for any material breaches or
defaults hereunder.
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Breach for Non-Payment and Acceleration and
Consent Judgment: Clayton’s failure to may any payment
hereunder when due, or within five calendar (5) days of written
notice of the late payment, time being of the essence, shall
entitle Plaintiffs to file a motion with the Court seeking entry
of an agreed Consent Judgment for the total amount of
$235,629.80 plus interest at 5.5% less any payments
received up to the date of the breach under this Agreement.
The agreement contained typical provisions explaining that the
agreement embodied the full agreement between the parties and all
representations were merged into the agreement, which could not be
modified except by written agreement signed by all parties.
The parties thereafter filed a joint stipulation for dismissal, with the
court retaining jurisdiction to enforce the settlement agreement. Clayton
made the initial $30,500 payment and then made several periodic
payments. On January 1, 2016, however, he failed to make the periodic
payment. On January 5, 2016, Attorney Jason Maier, acting on behalf of
Poggendorf and Thomas, emailed to Clayton’s attorney in the litigation,
James Tittle, a notice of nonpayment with five days opportunity to cure,
advising Clayton of the default. The notice was sent via email. Counsel
for Clayton responded the next day from a different email address and
advised Maier:
Jason: A TD Bank wire has been sent, please advise if it is not
received by January 7th.
My understanding is that the bank did not process remote
wire transfers over the weekend. Thanks and please let me
know when the wire arrives.
Following this email, Poggendorf and Thomas received payment.
Thereafter, Clayton failed to make a periodic monthly payment on March
1. On March 7, 2016, counsel for Poggendorf and Thomas emailed to
attorney Tittle another notice of default and notice to cure regarding
Clayton’s failure to pay. Thereafter, Clayton wired the March payment on
March 11, 2016.
In April and June 2016, Clayton again did not send timely payments,
and Maier sent an email notice to Tittle on April 7, 2016, and June 6,
2016, advising of the default. As with the prior notices, Clayton wired
payments to Poggendorf and Thomas within the five-day cure time. In
each of these emails, there was a notation that the email was being sent
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to Tittle in his capacity as attorney for Clayton. Maier asked that if Tittle
was no longer representing Clayton to advise him, and he would send a
letter directly to Clayton. There was no response from Tittle or Clayton.
On July 1st when Clayton did not send the payment, Maier again sent
the notice of late payment to Tittle. This time, however, no payment
arrived within the five day cure period. As a result, Maier filed a motion
for entry of consent final judgment against Clayton pursuant to the terms
of the Settlement Agreement. Maier sent an email to Tittle and attached a
proposed final judgment asking that Clayton agree to its entry. Four days
later, Tittle responded. He stated that he had been out of town and asked
if they could schedule a telephone conference for the next day, which
occurred. The day after the phone call, Tittle sent an email advising that
he was not representing Clayton, but then followed up later that same day
with an email advising that he had been retained to represent Clayton.
Tittle indicated that there was a problem with the notice and the
calculations in the proposed final judgment and that an evidentiary
hearing would be needed. Maier, on behalf of Poggendorf and Thomas,
then moved for an evidentiary hearing to obtain a final judgment.
At the evidentiary hearing, Clayton argued that he had not received
proper notice of late payments, because they were sent to Tittle, who was
not representing him at the time of the notice of default. However, based
upon the various email correspondence, as well as testimony, the court
found that Poggendorf and Thomas had complied with the notice provision
of the Agreement by sending the notices to Tittle. As to the amounts, over
objection the trial court allowed Thomas to explain how the amounts in
the settlement agreement were calculated, and from that evidence
concluded that the agreement was ambiguous as to whether the initial
payment of $30,500 should be deducted from the Consent Final Judgment
Amount. The court determined that it should not be deducted. The court
then entered final judgment for $184,519.68 plus interest. The judgment
was calculated by deducting periodic payments made from the Consent
Final Judgment amount set forth in the settlement agreement. The court
did not deduct the $30,500 initial payment. From this judgment, Clayton
appeals.
Clayton argues that the court erred in enforcing the settlement
agreement when he had not received proper notice of late payment
pursuant to the agreement. He contends that notice was required to be
sent to him and not Tittle, who he claimed was not his attorney after the
termination of the litigation. The court, however, decided that Clayton had
received notice through Tittle which complied with the Settlement
Agreement. Because we conclude that there was competent substantial
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evidence to support the court’s finding that Tittle acted with apparent
authority of Clayton when dealing with the notices of default, the court did
not err in enforcing the agreement.
It is axiomatic that an agent has the authority to bind a principal. Even
where there is no express agent/principal relationship, a principal may be
bound by the acts of an agent acting with apparent authority. In Stiles v.
Gordon Land Co., 44 So. 2d 417, 421-22 (Fla. 1950), our supreme court
explained apparent authority as follows:
The authority of an agent to bind a principal may be real or it
may be apparent only, and members of the public acting in
good faith may rely on either, unless in the case of apparent
authority the circumstances are such as to put a reasonable
person on inquiry. By apparent authority is meant, such
authority as the principal wrongfully permits the agent to
assume or which the principal by his actions or words holds
the agent out as possessing. Apparent authority rests on the
doctrine of estoppel and arises from the fact of representations
or actions by the principal and a change of position by a third
person who in good faith relies on such representations or
actions.
(citations omitted); see also Denton v. Good Way Oil 902 Corp., 48 So. 3d
103, 107 (Fla. 4th DCA 2010). Apparent authority arises from the
authority a principal knowingly tolerates or allows an agent to assume, or
which the principal by his actions or words holds the agent out as
possessing. Regions Bank v. Maroone Chevrolet, L.L.C., 118 So. 3d 251,
255 (Fla. 3d DCA 2013). “[A]pparent agency exists only where the principal
creates the appearance of authority.” Id. The focus is on the conduct of
the principal, not the agent. Id.
Although Clayton asserts that he, as the principal, did nothing to give
Tittle apparent authority to act for him as his agent, the trial court found
to the contrary, and there is competent substantial evidence to support its
judgment. As Poggendorf and Thomas point out, four notices of default
were sent in six months prior to the July default which triggered the
acceleration. After attorney Maier sent the January 2016 default notice to
attorney Tittle, the principal (Clayton) responded by wiring the required
amounts. Tittle followed this payment up with an email to Maier to make
sure the payment was received. After each of the next three notices was
sent to Tittle, Clayton acted appropriately by making the required payment
within the five day cure period, thus showing by his conduct that Tittle
had authority to receive the notice on his behalf. Each email specifically
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asked Tittle to advise Maier if he was no longer representing Clayton.
Thus, whether or not Tittle was formally retained to represent him, by
Clayton’s conduct in curing the default each time a notice of default was
sent to Tittle, he vested Tittle with the authority to accept the notices of
default on which Poggendorf and Thomas relied in good faith.
Apparent authority rests on the doctrine of estoppel. Estoppel requires:
1) representation of a material fact by the party estopped (Clayton) to the
party claiming the estoppel (Poggendorf and Thomas) that is contrary to
the fact later asserted by the estopped party; 2) reliance on that
representation by the party claiming the estoppel; and 3) the party
claiming estoppel detrimentally changed their position due to such
reliance. Zurstrassen v. Stonier, 786 So. 2d 65, 68-69 (Fla. 4th DCA 2001).
Clayton, by his conduct in allowing Tittle to accept the notices of default,
represented that the notices of default complied with the Settlement
Agreement. Poggendorf and Thomas clearly relied on that representation
by continuing to send the email notices to Tittle. Finally, Poggendorf and
Thomas changed their position by not sending the notices directly to
Clayton. The trial court did not err in finding that Poggendorf and Thomas
had complied with the provisions of default under the settlement
agreement.
With respect to the amount of the final judgment, Clayton argues that
the trial court erred in concluding that the Settlement Agreement was
ambiguous as to the deduction of the initial payment of $30,500 from the
Consent Judgment amount. We agree with Clayton that there was no
ambiguity, and the court erred in failing to reduce the Consent Judgment
by the initial payment.
In Nationstar Mortgage Co. v. Levine, 216 So. 3d 711, 715 (Fla. 4th DCA
2017), we addressed what is meant by an ambiguity in an agreement:
An agreement is ambiguous if as a whole or by its terms and
conditions it can reasonably be interpreted in more than one
way. See Fla. Power & Light Co. v. Hayes, 122 So. 3d 408,
411 (Fla. 4th DCA 2013) (quoting Miller v. Kase, 789 So. 2d
1095, 1097-98 (Fla. 4th DCA 2001)). Contractual ambiguities
are either “patent” or “latent.” Prime Homes, Inc. v. Pine Lake,
LLC, 84 So. 3d 1147, 1151 (Fla. 4th DCA 2012).
“Patent ambiguities are on the face of the document, while
latent ambiguities do not become clear until extrinsic
evidence is introduced and requires parties to interpret the
language in two or more possible ways.” Id. at 1151–52. A
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patent ambiguity is intrinsically apparent on the face of the
document due to “the use of defective, obscure, or insensible
language.” Emergency Assocs. of Tampa, P.A. v. Sassano,
664 So. 2d 1000, 1002 (Fla. 2d DCA 1995). A latent
ambiguity, on the other hand, “arises when the language in
a contract is clear and intelligible, but some extrinsic fact or
extraneous evidence creates a need for interpretation or a
choice between two or more possible meanings.” Riera v.
Riera, 86 So. 3d 1163, 1166 (Fla. 3d DCA 2012) (quoting GE
Fanuc Intelligent Platforms Embedded v. Brijot Imaging Sys.,
Inc., 51 So. 3d 1243, 1245 (Fla. 5th DCA 2011)); see also
Taylor v. Taylor, 183 So. 3d 1121, 1122 (Fla. 5th DCA 2015)
(“A latent ambiguity exists where the language of an
agreement is facially clear but an extrinsic fact or extraneous
circumstance creates a need for interpretation or reveals an
insufficiency in the contract or a failure to specify the rights
or duties of the parties in certain situations.”); Mac-Gray
Servs., Inc. v. Savannah Assocs. of Sarasota, LLC, 915 So. 2d
657, 659 (Fla. 2d DCA 2005) (explaining that a latent
ambiguity can only be “brought to light when extraneous
circumstances reveal ‘an insufficiency in the contract not
apparent from the face of the document’ ” (quoting Hunt v.
First Nat'l Bank, 381 So. 2d 1194, 1197 (Fla. 2d DCA 1980))).
As noted in Emergency Assocs. of Tampa, P.A. v. Sassano, with respect to
patent ambiguities,
Florida courts have consistently declined to allow the
introduction of extrinsic evidence to construe such an
ambiguity because to do so would allow a trial court to rewrite
a contract with respect to a matter the parties clearly
contemplated when they drew their agreement. The end result
would be to give a trial court free reign to modify a contract by
supplying information the contracting parties did not choose
to include.
664 So. 2d at 1002 (citations omitted). Indeed, the Supreme Court put it
more bluntly in Hamilton Constr. Co. v. Bd. of Pub. Instruction of Dade Cty.,
65 So. 2d 729, 731 (Fla. 1953):
The parties selected the language of the contract. Finding it
to be clear and unambiguous, we have no right – nor did the
lower court – to give it a meaning other than that expressed in
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it. To hold otherwise would be to do violence to the most
fundamental principle of contracts.
On the other hand, latent ambiguities arise where an extrinsic or
collateral fact make the contract ambiguous. “If a contract fails to specify
the rights or duties of the parties under certain conditions or in certain
situations, then the occurrence of such condition or situation reveals an
insufficiency in the contract not apparent from the face of the document.”
Hunt, 381 So. 2d at 1197.
Reviewing the contract, the language is unambiguous. As set forth
above, Paragraph 1 of the Settlement Agreement starts with a
representation that the payments listed in that paragraph are the
“Settlement Payment.” That consists of both the initial payment of
$30,500 as well as the periodic payments, listed in 1(A) and 1(B)
respectively. The sentences and paragraphs which follow the enumeration
of the specific amounts of payments do not pertain solely to 1(B), as argued
by appellees. For instance, the second sentence states: “The parties agree
that the Settlement Payment is sufficient and adequate consideration for
this Agreement.” (emphasis added). The Settlement Payment consisted of
both the initial payment as well as all of the periodic payments. The
provision on breach, which is bolded in the original agreement, states that
if Clayton fails to pay any payment within five days of notice of
nonpayment, Plaintiffs may file “a motion with the Court seeking entry of
an agreed Consent Judgment for the total amount of $235,629.80 plus
interest at 5.5% less any payments received up to the date of breach under
this Agreement.” (emphasis added). The Consent Judgment amount is
thus reduced by any payment under the agreement, which would include
the $30,500. There is nothing ambiguous in the language of the
agreement, and to limit the amounts reducing the Consent Judgment
amount to only those under paragraph 1(B) would require the court to
ignore the specific language of the agreement. If the parties had intended
to deduct only the periodic payments, they would have said “any periodic
payment.”
Before determining the issue of ambiguity, the trial court allowed
Thomas to testify to the settlement negotiations and how the amounts were
calculated for the settlement agreement. This evidence was not “extrinsic”
to the contract, as is required to clarify a latent ambiguity. Instead, it went
to the heart of the negotiation of the agreement. Then the court relied on
this parol evidence to determine that the agreement must be ambiguous,
because the Plaintiffs would not be made whole if the $30,500 payment
were deducted. The court erred by looking to the parol evidence to
determine that the agreement was ambiguous.
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Furthermore, the merger clause of the agreement provides that terms
may not be added to the agreement: “This Agreement and the documents
and Exhibits attached hereto represent the full and complete ·terms
between the parties and no prior, subsequent, or other terms shall be
deemed to control, except any written subsequent modification to this
Agreement which references this agreement and is signed and notarized
by the Parties.” By construing the breach clause as allowing the deduction
of only periodic payments, the court added terms to the agreement
contrary to this clause.
The court was motivated by the parol evidence from Thomas that they
would not be made whole if the $30,500 were deducted from the amount
in the agreement. But this was a settlement agreement. Parties frequently
settle lawsuits for less than they are owed simply to reduce the expense
and uncertainty of litigation. There is no showing that the agreement was
so inequitable as to justify the court’s interference with its express terms.
Because the agreement was unambiguous, the court erred in failing to
reduce the consent judgment by the initial payment of $30,500. While we
affirm the judgment to the extent that the court enforced the judgment,
we reverse and remand for the trial court to correct the final judgment by
reducing it by $30,500 and adjusting the interest calculation accordingly.
TAYLOR and DAMOORGIAN, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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