PINNACLE HOLDING, INC., APPELLANT,
v.
BIOLOGICS, INC., APPELLEE
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Pinnacle Holding sought to enforce a repurchase right against Biologics for specialized medical beds under a 1991 letter agreement. Biologics claimed the agreement was novated when Pinnacle sold the beds to MediBed in 1992, but the court reversed summary judgment, finding that the parties' intent regarding novation was a factual question for the jury.
Summary judgment was improper because whether the parties intended the 1992 transaction to novate the 1991 agreement remains a factual dispute that must be resolved by the trier of fact. The cancellation of the promissory note does not automatically extinguish the repurchase provision, and the parties' intent is determinative of whether novation occurred.
[1] A novation requires the agreement of all parties to a new contract, the extinguishment of the original obligation, and the validity of the new contract.
[2] Whether an alteration of contract terms constitutes a novation depends on the parties' intent, which is ordinarily a question of fact.
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Join FLexlaw to unlock all legal intelligence“The four essential elements of a novation are: (1) the existence of a previously valid contract, (2) the agreement of all the parties to a new contract, (3) the extinguishment of the original contractual obligation, and (4) the validity of the new contract.”
Establishes the legal standard for determining novation
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Join FLexlaw to unlock all legal intelligencePinnacle and Biologics contracted in November 1991 for the purchase of ten medical beds, with $52,000 due via promissory note and $50,000 in cash. The…
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RYDER, Acting Chief Judge.
Pinnacle Holding, Inc. seeks review of a summary final judgment based on the doctrine of novation. Because we conclude that the cancellation of the promissory note does not alter the efficacy of the letter agreement’s repurchase provision and as we hold that the disputed element of novation addresses intent, an issue reserved for the finder of fact, we reverse.
Pinnacle Holding, Inc. and Biologies, Inc. contracted by letter agreement dated November 21, 1991 for the purchase of ten specialized medical beds. The letter agreement set out the investment arrangement by which Pinnacle would purchase the beds from Biologies. Another firm, Airfluid Systems, Inc., would arrange for delivery, placement and management of the beds. $52,-000.00 of the $102,000.00 purchase price was payable pursuant to a one-year promissory note, and the remaining $50,000.00 was paid in cash. The letter agreement provided for repurchase “[i]f, after twelve (12) months, Pinnacle is not completely satisfied with its investment in the 10 Beds for any reason. ...” A separate promissory note was executed pursuant to the letter agreement. The letter agreement also included a formula for the division of rental payment proceeds among Airfluid, Pinnacle and Biologies. Pinnacle was to pay half its rental proceeds to Biologies until it fully repaid the $52,000.00 promissory note.
On May 1, 1992, a third party, MediBed, Inc., purchased from Pinnacle the same ten beds. MediBed executed a promissory note to Biologies for $50,000.00 to replace the note Biologies held from Pinnacle that Biologies cancelled. Effective May 1, 1992, Pinnacle gave MediBed an identical repurchase right as Biologies gave Pinnacle. Chris Jarratt, the vice president of MediBed, averred by affidavit that he insisted that Pinnacle give him the same buy-back right so that Me-diBed could return the beds to Pinnacle which could in turn return the beds to Bio-logies. By letter dated January 22, 1993, MediBed exercised its repurchase right. Pinnacle exercised its repurchase right with Biologies by letter dated January 27, 1993. Biologies denied Pinnacle’s request.
Pinnacle sued Biologies for breach of the November 1991 agreement. Biologies answered and pleaded novation of its obligations under the May 1992 transaction and moved for summary judgment based upon novation. From the trial court’s grant of final judgment, this appeal followed.
The four essential elements of a novation are: (1) the existence of a previously valid contract, (2) the agreement of all the parties to a new contract, (3) the extinguishment of the original contractual obligation, and (4) the validity of the new contract. Young v. Morris Realty Co., 569 So. 2d 813, 814 (Fla. 1st DCA 1990). Whether the alteration of the terms of a contract results in a novation depends upon the intention of the parties and is ordinarily a question of fact. Young at 814. The burden of proving a novation is upon the one who asserts it. Electro-Protective Corp. v. Creative Jewelry by Kempf, 513 So. 2d 190, 192 (Fla. 5th DCA 1987). “Although the existence of a novation can be a question of law where the terms of an agreement are not in doubt, Evans v. Borkowski, 139 So. 2d 472 (Fla. 1st DCA), cert. denied, 146 So. 2d 378 (Fla.1962), where there are disputes concerning the terms of an agreement and the intention of the parties at the time of its making, these questions of fact should be submitted to the trier of fact for resolution.” Electro-Protective Corp., 513 So. 2d at 192 (citations omitted).
Whether the parties here intended that the 1992 transaction novated the 1991 transaction is in dispute. Although the 1992 documents signed by Biologies do not contain any repurchase provision, the 1992 agreement between Pinnacle and MediBed closely restates the repurchase clause of the 1991 agreement. Mr. Lewis, the president of Pinnacle, explained that Mr. Hagopian, Biolog-ics’s president and a close friend, had insisted on the repurchase clause. Even had Pinnacle paid off the note, it would still have retained the repurchase right.
Because we conclude that a factual dispute remains with respect to the parties’ intent that the 1992 agreement is a novation of the prior agreement, we reverse the summary final judgment and remand for further proceedings.
Reversed and remanded.
DANAHY and HALL, JJ., concur.
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Thompson v. Jared Kane Co., Inc., 872 So. 2d 356 (Fla. 2d DCA 2004)…; (3) the agreement of the parties that the second contract replace the first; and (4) the validity of the second contract. Id. Whether a novation takes place is dependent upon the intention of the parties. Pinnacle Holding, Inc. v. Biologies, Inc., 643 So. 2d 642 (Fla. 2d DCA 1994). Consent of the parties to substitute the new contract for the old may be implied from the circumstances. Sans Souci v. Div. of Fla. Land Sales & Condos., 448 So. 2d 1116 (Fla. 1st DCA 1984). “Yet, this is not to say that mere kno…
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DE LAS Cuevas v. Nat'l Enters. Inc., 927 So. 2d 41 (Fla. 3d DCA 2006)…of the parties. The intent can be determined by the documents if the terms are not in dispute. If there is a dispute as to the intent of the parties, then it is a question of fact for the trier of fact. See Pinnacle Holding, Inc. v. Biologics, Inc., 643 So. 2d 642 (Fla. 2d DCA 1994). Findings of fact by the trial court carry a presumption of correctness absent an abuse of discretion. Cohen v. Lansburgh, 366 So. 2d 154 (Fla. 3d DCA 1979). In order to prove the intent of the parties that the Modification Agreem…
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Wade v. N.G. Wade Inv. Co., 802 So. 2d 1200 (Fla. 1st DCA 2002)…that there are disputed issues of fact which preclude summary judgment, see Cox v. CSX Intermodal, Inc., 732 So. 2d 1092 (Fla. 1st DCA 1999); Young v. Morris Realty Co., 569 So. 2d 813 (Fla. 1st DCA 1990); Pinnacle Holding, Inc. v. Biologies, Inc., 643 So. 2d 642 (Fla. 2nd DCA 1994); see also Restatement (Second) of Contracts: Evidence of Prior or Contemporaneous Agreements and Negotiations § 214 (1981), and we reverse and remand for further proceedings. WEBSTER and VAN NORTWICK, JJ. concur. WOLF, J., di…
Previewing 3 of 5 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Evans v. Borkowski, 139 So. 2d 472 (Fla. 1st DCA 1962)
- Hartford Accident & Indem. Co. v. Willis, 146 So. 2d 378 (Fla. 1962)
- Murphy v. Pinellas Cnty. Anti-Mosquito Dist., 146 So. 2d 378 (Fla. 1962)
- Young v. Morris Realty Co., 569 So. 2d 813 (Fla. 1st DCA 1990)
- Electro-Protective Corp. v. Creative Jewelry BY Kempf, Inc., 513 So. 2d 190 (Fla. 5th DCA 1987)