ANTHONY NICHOLSON, APPELLANT,
v.
JOHN G. ARIKO, JR., APPELLEE
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Nicholson appeals a declaratory judgment interpreting a 1982 partnership agreement (Florida North Agreement) that allocated partnership sale proceeds unfavorably to him. The court reversed, finding the trial court erred in rescinding a 1985 fifty-fifty profit-sharing agreement based on alleged misrepresentation.
The court reversed, holding that a person's interpretation of a complex contractual formula is not a misrepresentation of fact but rather a legal conclusion, and therefore cannot form the basis for fraud relief. The court also found Ariko's reliance on Nicholson's interpretation was not reasonable as a matter of law, particularly given Ariko's status as an experienced businessman who could have obtained and reviewed the original agreement.
[1] A party's interpretation of a complex contractual provision, which is capable of different legal interpretations, does not constitute a misrepresentation of fact for purp…
[2] Reasonable reliance on another party's interpretation of a contract is a required element to prove fraud.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“A person's interpretation of a complex formula in a document is not a misrepresentation of fact. Rather it is essentially a legal conclusion, which is capable of being interpreted in different ways, as this lawsuit vividly illustrates.”
Establishes the core legal principle that contract interpretation cannot constitute actionable fraud
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Join FLexlaw to unlock all legal intelligenceNicholson and Ariko were partners under the 1982 Florida North Agreement governing partnership properties. In 1985, they entered a separate fifty-fift…
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SHARP, Chief Judge.
Nicholson appeals from a final declaratory judgment in which the trial court interpreted an exceedingly complicated provision in a 1982 partnership agreement more favorably to Ariko (appellee) than to himself. Pursuant to that agreement (the Florida North Agreement), the trial court ruled that Nicholson’s share of the sale proceeds of the properties owned by the partnership must be offset by all refinancing monies previously received by Nicholson on the properties.1 We reverse.
We find that the trial court’s interpretation of the Florida North Agreement clause is a plausible one, and that it is supported by the evidence adduced at trial. Were we to affirm on this basis, we would only question why Nicholson was not given credit for some $118,750 which he was required to put back into the project because of deficits, after receipt of the refinancing proceeds.
However, we do not reach these issues because we find no basis in the record to support the trial court’s finding that a 1985 agreement entered into between Nicholson and Ariko by which they agreed to share the profits and deficits equally (the “fifty-fifty” agreement), should be rescinded. Ariko claimed that he should be relieved from this agreement because of fraud or material misrepresentations by Nicholson. The essence of the claimed misrepresentation was that Ariko did not have a copy of the Florida North Agreement, and that Nicholson told him under its distribution formula, Nicholson would receive two-thirds of the sale proceeds and Ariko one-third.
We think such a representation is not a proper basis for a fraud or misrepresentation remedy. A person’s interpretation of a complex formula in a document is not a misrepresentation of fact. Rather it is essentially a legal conclusion, which is capable of being interpreted in different ways, as this lawsuit vividly illustrates. See, generally, Innkeepers International, Inc. v. McCoy Motels Ltd,., 324 So. 2d 676 (Fla. 4th DCA 1975), cert. denied, 336 So. 2d 106 (Fla.1976) (meaning of an agreement is a question of law to be determined by the court). This is not the kind of wool from which the yarn of fraud is spun. Further, we find no basis in this record to explain why Ariko, an experienced business man, did not insist on a copy of the Florida North Agreement and read it for himself. His reliance on Nicholson’s interpretation was not shown to be reasonable or justified, as required to prove fraud. Saunders Leasing System, Inc. v. Gulf Central Distribution Center, Inc., 513 So. 2d 1303 (Fla. 2d DCA 1987), rev. denied, 520 So. 2d 584 (Fla.1988); Uvanile v. Denoff, 495 So. 2d 1177 (Fla. 4th DCA 1986); Davanzo v. Miami National Bank, 301 So. 2d 797 (Fla. 3d DCA 1974), cert. denied, 315 So. 2d 185 (Fla.1975).
Accordingly, we reverse the judgment, which was based on the Florida North Agreement, and we remand for entry of judgment based on the 1985, or fifty-fifty agreement.
REVERSED; REMANDED.
DAUKSCH and COBB, JJ., concur. . Subsequently, numerous offers were received to purchase the property. Ultimately, Nicholson came to believe the Florida North Agreement was ambiguous as to the distribution of proceeds due to a complicated formula and uncertainty as to the legal effect of this formula. Basically, section 8.7 of the Florida North Agreement provides that Delaware Properties receives one-half the net sales or refinancing proceeds from the sale of the properties, and the other one-half is divided between Nicholson and Newcastle pursuant to the stated formula.
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Citator
Cited By
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Nicholson v. Ariko, 565 So. 2d 843 (Fla. 5th DCA 1990)…John G. Ariko, Jr., had an interest. We reverse. In an earlier appeal, this case was remanded to the trial court for entry of judgment based on a 1985 agreement requiring distribution of the partnership funds on an equal basis. Nicholson v. Ariko, 539 So. 2d 1141 (Pla. 5th DCA 1989), rev. denied, 548 So. 2d 662 (Fla.1989). Thereafter, the trial court issued a supplemental final judgment, which was in accordance with this court’s directions to distribute the proceeds equally. However, the order provided for a…
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Chateau Cmtys., Inc. v. Ludtke, 783 So. 2d 1227 (Fla. 5th DCA 2001)…lant's motion to dismiss, we must assume for purposes of this appeal (but we do not decide) that the three pleaded claims state a cause of action and that the alleged misrepresentations are actionable under some set of facts. See Nicholson v. Ariko, 539 So. 2d 1141 (Fla. 5th DCA), review denied, 548 So. 2d 662 (Fla.1989). Nor do we decide that ultimate facts to support each of the elements of fraud (or any other tort) have been sufficiently pleaded as required under Florida law.…
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Nourachi v. First Am. Title Ins. Co., 44 So. 3d 602 (Fla. 5th DCA 2010)…lack of justifiable reliance is especially compelling. See Wasser v. Sasoni, 652 So. 2d 411, 413 (Fla. 3d DCA 1995) (sophisticated party not justified in relying on fact available to party through reasonable diligence); see also Nicholson v. Ariko, 539 So. 2d 1141, 1142 (Fla. 5th DCA 1989) (party may not reasonably rely upon interpretation of legal document to support claim for fraud). If this type of information is imputed to a lay purchaser, it must certainly be imputed to a title insurer trained and duty-b…
Authorities Cited
- Innkeepers Int'l, Inc. v. McCOY Motels, Ltd., 324 So. 2d 676 (Fla. 4th DCA 1975)
- Saunders Leasing Sys., Inc. v. Gulf Cent. Distrib. Ctr., Inc., 513 So. 2d 1303 (Fla. 2d DCA 1987)
- Uvanile v. Denoff, 495 So. 2d 1177 (Fla. 4th DCA 1986)
- Vito Davanzo v. Miami Nat'l Bank, 301 So. 2d 797 (Fla. 3d DCA 1974)
- Chivers v. Argyros, 315 So. 2d 185 (Fla. 1975)
- Vito Davanzo v. Miami Nat'l Bank, 315 So. 2d 185 (Fla. 1975)