Okeechobee Resorts, L.L.C. v. E Z Cash Pawn, Inc.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
July Term 2014
OKEECHOBEE RESORTS, L.L.C.,
Appellant,
v.
E Z CASH PAWN, INC.,
Appellee.
No. 4D13-2674
[ September 3, 2014 ]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Joseph Marx, Judge; L.T. Case No.
502012CA002728XXXXMB.
Tara A. Finnigan of Tara A. Finnigan P.A., West Palm Beach, for
appellant.
Ronald M. Gaché and Scott A. Simon of Shapiro, Fishman & Gaché,
LLP, Boca Raton, for appellee.
HANZMAN, MICHAEL, Associate Judge.
Introduction
This case – like many preceding it – involves claims seeking to enforce
an alleged oral modification of a written contract which expressly prohibits
any parol alteration of its terms and conditions. The transaction at issue
(a pawn contract) also is subject to the “Florida Pawnbroking Act,” which
in pertinent part requires that extensions of a default date (the type of
modification appellant sought to enforce here) be “evidenced by a written
memorandum.” § 539.001(11)(b), Fla. Stat. (2011). Given this legislative
edict and the bargain struck by the parties, the trial court granted
appellee’s motion for summary judgment and thereafter entered Final
Judgment in its favor. Appellant claims error, asserting: (a) that neither
the contract nor the statute in fact requires that all modifications be in
writing; and (b) that its “detrimental reliance” upon appellee’s oral
promises to extend the default date enables it to side-step any contractual
or statutory impediment to enforcement of the alleged modification. We
affirm.
Facts
Appellee (the defendant below) E Z Cash Pawn, Inc. is a pawnbroker
licensed under the Florida Pawnbroking Act codified in Chapter 539. On
April 15, 2011, appellant (the plaintiff below) Okeechobee Resorts, LLC
secured a loan from E Z Cash and pledged a Chevrolet truck as collateral.
The parties’ written agreement contained a maturity date of May 15, 2011,
and a default date of June 14, 2011. In the event of default, E Z Cash was
permitted to sell the truck.
The contract contained three other clauses relevant to our disposition.
It first provided that any pawn “may be extended upon mutual agreement
of the parties.” Though this particular clause did not require that any
such extension be in writing, the contract went on to recite that: (a) “[n]o
oral representation shall in any way change or modify these written
conditions and such oral representation shall in no way be binding upon
the issuer of this pawn ticket”; and (b) “verbal agreements for additional
days are non binding.” The parties agree that the contract’s terms and
conditions were never modified in writing.
Okeechobee failed to repay the loan prior to the written default date,
and E Z Cash proceeded to sell the truck as authorized by the contract.
Seven months later, Okeechobee brought suit based upon the allegation
that E Z Cash had orally agreed to extend the default date; a promise
Okeechobee allegedly relied upon to its detriment. Specifically,
Okeechobee alleged that: (a) prior to the June 14 default date, the parties
orally agreed to extend the pawn until June 24; (b) on June 23, the parties
again orally agreed to extend the pawn until June 29; and (c) on June 28,
the parties orally agreed to a final extension through July 5, 2011.
Okeechobee claimed that in reliance on these oral extensions it sold other
property in order to raise the funds needed to repay the loan. Okeechobee
further alleged that it deposited sufficient funds into its attorney’s trust
account before expiration of the claimed July 5 deadline, and that when
its lawyer attempted to pay off the loan, she was told the truck already had
been sold.1
1 We question how the sale of this other property – while possibly done in
“reliance” upon E Z Cash’s alleged promise to extend the default date – was
“detrimental,” unless perhaps Okeechobee was forced to sell at a price below fair
market value. Nevertheless, for purposes of our analysis, we assume that
Okeechobee would be able to demonstrate “detrimental reliance” upon the alleged
2
Governing Law
The question of when a party may attempt to enforce an alleged oral
modification of a written contract has no doubt been a much litigated
subject. And while courts faced with such claims have arguably delivered
a somewhat mixed message, a careful examination of precedent reveals
that the issue is not particularly complex.
When a written contract is silent on the question of modification, or
expressly permits modification – yet fails to specify that a writing is
required – an oral modification is enforceable so long as it is not precluded
by statute. See Schroeder v. Manceri, 893 So. 2d 603, 606 (Fla. 4th DCA
2005) (oral extension of default date was enforceable as it was not required
to be in writing by statute or terms of contract); The Race, Inc. v. Lake &
River Recreational Props., Inc., 573 So. 2d 409, 410-11 (Fla. 1st DCA 1991).
In these two scenarios, no legislatively imposed public policy mandates
that the modification be in writing, and the parties themselves have not
bargained for such a requirement. As a result, the contract may be
modified through a “subsequent agreement” or the parties’ “subsequent
conduct,” provided that the amendment is “supported by proper
consideration.” St. Joe Corp. v. McIver, 875 So. 2d 375, 381, 382 (Fla.
2004).
The issue becomes slightly more complicated when a statute or the
contract itself requires that any agreement (or modification) be in writing.
In the former instance, the Legislature has decided, as a matter of public
policy, to “intercept the frequency and success of actions based on nothing
more than loose verbal statements or mere innuendos[,]” and thereby
foreclose potentially fraudulent claims. Yates v. Ball, 181 So. 341, 344
(Fla. 1937). In the latter instance, the parties themselves have
contractually agreed to do exactly the same thing. They have bargained
for predictability and certainty and have foreclosed (or at least attempted
oral representations, as well as the other elements of a claim based upon the
doctrine of promissory estoppel – defined as:
[t]he principle that a promise made without consideration may
nonetheless be enforced to prevent injustice if the promisor should
have reasonably expected the promisee to rely on the promise and
if the promisee did actually rely on the promise to his or her
detriment.
DK Arena, Inc. v. EB Acquisitions I, LLC, 112 So. 3d 85, 93 (Fla.
2013) (quoting BLACK'S LAW DICTIONARY 631 (9th ed. 2009)).
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to foreclose) any chance of being subjected to litigation premised upon
alleged oral modifications of their written document.
Contracts are voluntary undertakings, and contracting parties are free
to bargain for – and specify – the terms and conditions of their agreement.
That freedom is indeed a constitutionally protected right. Nw. Nat’l Life
Ins. Co. v. Riggs, 203 U.S. 243, 252-53 (1906); Hoffman v. Boyd, 698 So.
2d 346, 348 (Fla. 4th DCA 1997). Contracting parties are at liberty to
address any issue they see fit, including the question of whether their
agreement may be modified at all, and, if so, how. See, e.g., Atl. Beach
Mgmt., Inc. v. Breakers of Fort Walton Beach Condos., Inc., 589 So. 2d 315,
316 (Fla. 1st DCA 1991). When contracting parties elect to adopt a term
or condition, including one addressing the question of modification, it is
not the province of a court to second guess the wisdom of their bargain, or
to relieve either party from the burden of that bargain by rewriting the
document. See Pol v. Pol, 705 So. 2d 51, 53 (Fla. 3d DCA 1997) (“[A] court
cannot rewrite the clear and unambiguous terms of a voluntary contract.”);
Int’l Expositions, Inc. v. City of Miami Beach, 274 So. 2d 29, 30-31 (Fla. 3d
DCA 1973) (“[C]ourts may not rewrite, alter, or add to the terms of a written
agreement between the parties and may not substitute their judgment for
that of the parties in order to relieve one from an alleged hardship of an
improvident bargain.”). Rather, it is a court’s duty to enforce the contract
as plainly written. See Rybovich Boat Works, Inc. v. Atkins, 587 So. 2d
519, 521-22 (Fla. 4th DCA 1991) (reversing trial court’s refusal to give
effect to an unambiguous “anti-waiver” clause contained in the parties’
written contract).
So when a contract plainly provides that any modification must be in
writing, all claims – however labeled – founded upon an alleged oral
modification should generally be disposed of as a matter of law. The
parties have dealt with the issue through a provision designed – and
intended – to protect them against the risk of “being enmeshed in, and
harassed by” protracted litigation based upon alleged oral modifications,
Cohen v. Pullman Co., 243 F.2d 725, 729 (5th Cir. 1957); LynkUs
Commc’s., Inc. v. WebMD Corp., 965 So. 2d 1161 (Fla. 2d DCA 2007), and
courts should in most cases do no more than enforce the contract as
written.
The law of course is rarely so clear, and in Professional Insurance Corp.
v. Cahill, 90 So. 2d 916, 918 (Fla. 1956), our Supreme Court held that
even when an agreement expressly precludes oral modifications:
[a] written contract or agreement may be altered or modified
by an oral agreement if the latter has been accepted and acted
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upon by the parties in such manner as would work a fraud on
either party to refuse to enforce it.
The Cahill court did not elaborate on precisely what is required in order to
prove that an alleged oral agreement had “been accepted and acted upon
by the parties,” or under what circumstances a failure to enforce such a
modification would “work a fraud.” Id. But Cahill involved a situation
where the plaintiff alleged that an oral modification to his employment
agreement required that he perform services not within the scope of the
initial contract, that he in fact performed those services, and that the
defendant accepted and benefited from that additional work (i.e.,
consideration not required by the initial contract). Id. at 917.
In the almost sixty years since Cahill was decided, our courts have
repeatedly confronted claims grounded upon alleged oral modifications of
contracts containing a so-called “no oral modification clause.” The vast
majority of resulting appellate decisions have disposed of these cases by
accurately reciting – and then proceeding to apply – the standard adopted
in Cahill. See, e.g., J. Lynn Constr., Inc. v. Fairways at Boca Golf & Tennis
Condo. Ass’n, 962 So. 2d 928 (Fla. 4th DCA 2007); WSOS-FM, Inc. v.
Hadden, 951 So. 2d 61 (Fla. 5th DCA 2007); Blue Paper, Inc. v. Provost,
914 So. 2d 1048 (Fla. 4th DCA 2005); Arvilla Motel, Inc. v. Shriver, 889 So.
2d 887 (Fla. 2d DCA 2004); W.W. Contracting, Inc. v. Harrison, 779 So. 2d
528 (Fla. 2d DCA 2000); Jupiter Square S.C. Assocs., Inc. v. Tomary, Inc.,
571 So. 2d 538 (Fla. 4th DCA 1990); King Partitions & Drywall, Inc. v.
Donner Enters., Inc., 464 So. 2d 715 (Fla. 4th DCA 1985); Commerce Nat’l
Bank v. Van Denburgh, 252 So. 2d 267 (Fla. 4th DCA 1971); Long Key
Corp. v. Willis-Burch, Inc., 133 So. 2d 655 (Fla. 3d DCA 1961); Larnel
Builders, Inc. v. Nicholas, 123 So. 2d 284 (Fla. 3d DCA 1960).
Other decisions, however, have muddied the waters a bit. Some have
casually remarked that an oral modification of a written contract
containing a “no oral modification” clause is enforceable anytime a party
alleges “conduct which would render it a fraud upon one party for the other
to refuse to perform the alleged oral modification,” Wilson v. Woodward,
602 So. 2d 547, 549-50 (Fla. 2d DCA 1992), a metric markedly different
from the requirements imposed by Cahill. And in Canada v. Allstate
Insurance Co., 411 F.2d 517, 519-20 (5th Cir. 1969), the former Fifth
circuit suggested that the Cahill rule “goes even further” than articulated
by our Supreme Court and allows “an oral modification of a written
contract under circumstances of detrimental reliance even though the
contract contains a provision prohibiting its alteration except in writing.”
In other words, the Canada court opined that a claim of “promissory
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estoppel” was itself sufficient to circumvent a contractual bar to
enforcement of an oral modification. Id. at 520.
Later, in Fidelity & Deposit Co. of Maryland v. Tom Murphy Construction
Co., 674 F.2d 880 (11th Cir. 1982), the Eleventh Circuit (as successor to
the Fifth) revisited this issue and clarified that “Cahill and Canada stand
for the proposition that oral modifications are effective despite prohibitive
language in the contract only where clear and unequivocal evidence of a
mutual agreement is present.” Id. at 885. This test – if literally applied –
would enable the “exception” to swallow the “rule,” as the purpose of a “no
oral modification” provision is to prevent parties from attempting to prove
a subsequent oral “mutual agreement” in the first place, no matter how
“unequivocal” the evidence of mutual assent may be. Put another way,
the clause is designed to “intercept” such a claim at the outset. See Yates,
181 So. at 344. Thus, we interpret the Eleventh Circuit’s use of the phrase
“unequivocal evidence of a mutual agreement” as merely descriptive of the
exacting standard imposed by Cahill.
Other appellate opinions have loosely said that “the parties to a
contract may modify the written agreement by subsequent oral agreement
or course of dealing with one another despite the requirement of a writing
in order to modify.” Linear Corp. v. Standard Hardware Co., 423 So. 2d
966, 968 (Fla. 1st DCA 1982); Gallagher v. Dupont, 918 So. 2d 342, 347
(Fla. 5th DCA 2005); White v. Ocean Bay Marina, Inc., 778 So. 2d 412, 412
(Fla. 3d DCA 2001); Crosslands Props., Inc. v. Univest Crossland Trace,
Ltd., 516 So. 2d 320, 322 (Fla. 2d DCA 1987). This standard – if literally
applied – would permit a written contract with a “no oral modification”
clause to be amended by nothing other than a “subsequent oral
agreement” or – alternatively – by a “course of dealing.” Such an “either -
or” approach is indeed applicable in cases involving a claimed oral
modification of an oral contract, or of a written contract which does not
contain a “no oral modification clause.” St. Joe Corp., 875 So. 2d at 381,
382. But Cahill’s requirements are not disjunctive, and a party seeking to
enforce an oral modification in the face of a “no oral modification” clause
must show that the parties accepted and acted upon the alleged
modification (i.e., mutual assent and a course of dealing consistent with
the alleged amendment) and that a refusal to enforce the modification
would “work a fraud” because the party seeking to enforce the modification
provided – and the resisting party accepted – additional consideration for
the modification. See, e.g., Coral Reef Drive Land Dev., LLC v. Duke Realty
Ltd. P’ship, 45 So. 3d 897, 902 (Fla. 3d DCA 2010) (oral modifications to
contracts are permitted despite provisions that all modifications must be
in writing “when one party provides additional consideration for the
modification accepted by the other party”); Rhodes v. BLP Assocs., Inc.,
6
944 So. 2d 527, 530 (Fla. 4th DCA 2006) (“A written agreement may be
modified by the subsequent conduct or course of dealing of the parties,”
provided the modification is by “mutual consent[] and supported by
consideration.”).
Despite what may appear to be the judicial choirs’ lack of perfect
harmony, Cahill undoubtedly remains our Supreme Court’s governing
precedent on the question of when a party may enforce an alleged oral
modification of a written contract which expressly requires that any
modification be in writing. There also is no doubt that Cahill requires that
a party pursuing such a claim allege and prove more – indeed much more
– than just a “mutual agreement,” or just “detrimental reliance,” or just
“subsequent conduct,” or just generalized “inequitable conduct.” Rather,
a plaintiff must again allege – and eventually prove – that the oral
amendment was “accepted and acted upon by the parties in such a
manner as would work a fraud on either party to refuse to enforce it.”
Cahill, 90 So. 2d at 918. This requires that a plaintiff plead (and again
eventually prove): (a) that the parties agreed upon and accepted the oral
modification (i.e., mutual assent); and (b) that both parties (or at least the
party seeking to enforce the amendment) performed consistent with the
terms of the alleged oral modification (not merely consistent with their
obligations under the original contract); and (c) that due to plaintiff’s
performance under the contract as amended the defendant received and
accepted a benefit that it otherwise was not entitled to under the original
contract (i.e., independent consideration). Absent such a showing, the
parties will be held to the bargain as negotiated and memorialized in their
written agreement.
Analysis
Applying the Cahill standard here, we conclude that the trial court
correctly granted summary judgment disposing of Okeechobee’s claims.
The parties’ agreement specified that oral representations were “not
binding upon the issuer of the pawn ticket,” and that “verbal agreements
for additional days are non binding.” While it is true – as Okeechobee
advocates – that the agreement does not contain a garden variety “no oral
modification” clause mandating that all modifications of any type be in
writing, the contract clearly precludes the enforcement of an alleged oral
agreement for “additional days” to pay the debt. To avoid this bargained
for proscription, Okeechobee was required to allege facts (and at the
summary judgment stage present evidence sufficient to create a genuine
issue of material fact) sufficient to invoke Cahill’s limited exception to the
well-settled rule requiring that courts enforce contracts as written.
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Okeechobee did neither. It instead maintained below – and asserts here
– only that the parties orally agreed to the extension, and that, in
“detrimental reliance” on E Z Cash’s assent, it sold unrelated property in
order to raise the funds needed to pay off its loan. The act of selling this
property was not actual “performance” of the contract as allegedly
modified, and it conferred no benefit on E Z Cash. For that reason,
Okeechobee also could not allege or present facts demonstrating that a
refusal to enforce this alleged oral amendment would “work a fraud” by
enabling E Z Cash to unfairly reap a benefit it was not entitled to under
the initial agreement. E Z Cash in fact received nothing more than it
initially bargained for – the right to dispose of the collateral in the event of
Okeechobee’s default.
Because Okeechobee failed to plead any facts – or present any summary
judgment evidence – that could trigger the Cahill exception, the trial court
was obligated to enforce the contract as plainly written. The parties
bargained for the right not to be entangled in vexatious and prolonged
litigation based upon alleged oral modifications of their agreement, and
the trial court’s order correctly held them to that bargain.2
Affirmed.
DAMOORGIAN, C.J., and FORST, J., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
2 Aside from the pure contract issue, and as previously mentioned, in this case,
governing legislation also required that any extensions of the default date be
“evidenced by a written memorandum.” § 539.001(11)(b), Fla. Stat. (2011). This
provision, like the “statute of frauds” contained in Chapter 725, evinces “a
legislative prerogative, grounded in a policy judgment that certain contracts
should not be enforceable unless supported by written evidence.” DK Arena, Inc.,
112 So. 3d at 93. The Legislature has mandated that the default date in a pawn
agreement (and any extensions thereof) be specified in writing, and it is not our
function to question that policy decision. Furthermore, allegations of detrimental
reliance of the type pled here, or other generalized equitable claims, may not be
used to breathe life into a contract the legislature has declared unenforceable.
Id. In any event, as we find thatOkeechobee’s claims are barred by the terms of
the contract itself, we need not further address this issue.
8