Florida’s Statute of Frauds – Part II
Florida’s Statute of Frauds provides in relevant part:
No action shall be brought … upon any agreement that is not to be performed within the space of 1 year from the making thereof … unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith ….
Fla. Stat. § 725.01 (emphasis added). In a previous article, we discussed the Statute of Frauds as it applies to the sale of real property.
However, another “core feature of the statute is that it applies … to agreements that are “not to be performed within the space of 1 year from the making thereof.” LynkUs Communs., Inc. v. WebMD Corp., 965 So. 2d 1161, 1165 (Fla. 2d DCA 2007) (quoting Fla. Stat. § 725.01). “For the statute to make an agreement unenforceable, ‘it must be apparent that it was the understanding of the parties that [the agreement] was not to be performed within a year from the time it was made.’” Id.
In LynkUs Communs., Inc. v. WebMD Corp., 965 So. 2d 1161, 1164 (Fla. 2d DCA 2007), LynkUs filed suit against the defendant for failing to carry out an oral agreement under which it would provide a wireless communications solution to the defendant’s customers. Relevant to the instant appeal was LynkUs’ claims for fraud, negligent misrepresentation, and promissory estoppel. Id. The trial court granted summary judgment in favor of the defendant “on these claims on the ground that they were barred by the statute of frauds.” Id.
On appeal, LynkUs contended, “that the trial court erred in applying the statute of frauds as a bar to the claims at issue here.” LynkUs Communs., Inc., 965 So. 2d at 1164. “LynkUs further urges that the doctrine of part performance prevents application of the statute under the circumstances present here.” Id. At the outset, the Second District found the alleged agreement could not be performed within one year and thus within the Statute. Id. at 1165. Next, the Court rejected “LynkUs’s contention that the doctrine of part performance precluded application of the statute of frauds.” Id. at 1166.
“To begin with, there was no part performance of the alleged business arrangement which is the basis for LynkUs’s claims.” LynkUs Communs., Inc., 965 So. 2d at 1166. “It is undisputed that LynkUs never provided the ‘solution’ to the [defendant’s] customers ….” Id. “Furthermore, the doctrine of part performance does not apply to actions ‘for the recovery of damages for alleged breach of an oral contract’ within the operation of the statute of frauds.” Id. (citations omitted) (emphasis added). “LynkUs similarly fails in its argument that the statute of frauds cannot be applied to a claim for promissory estoppel.” Id. at 1167 (emphasis added). The Second District affirmed summary judgment in favor of the defendant. Id.
In City of Orlando v. W. Orange Country Club, Inc., 9 So. 3d 1268, 1269 (Fla. 5th DCA 2009), the plaintiff owned and operated a country club and golf course. In 1997, the plaintiff entered into negotiations with the municipal defendants whereby the defendants would provide reclaimed water to the plaintiff at no charge, for twenty years. Id. The defendants drafted a contract to that effect. Id. The plaintiff signed the contract but “[t]he contract was never approved by the governing boards of either [d]efendant, and was never signed on behalf of either [d]efendant.” Id. at 1270.
The plaintiff spent approximately $150,000 to convert its systems to accept the reclaimed water. City of Orlando, 9 So. 3d at 1270. In 2005, the municipal defendants passed a resolution adopting water rates to be charged to customers who had been receiving free water but who had not entered into a contract. Id. The defendants notified the plaintiff that because its contract had never been approved or executed, it would be required to pay for reclaimed water. Id.
The plaintiff sued the defendants seeking to force them to provide reclaimed water at no charge pursuant to the terms of the contract, which it had signed but the defendants had not. City of Orlando, 9 So. 3d at 1270. “The defendants argued that the statute of frauds barred enforcement of the contract as a matter of law.” Id. at 1271. “The trial court rejected this argument, and instead found that [d]efendants were estopped from denying the terms of the contract,” based upon plaintiff’s expenditure of funds “to modify its system in reliance on the promise of free reclaimed water for twenty years, as set forth in the contract.” Id.
On appeal, the Fifth District reasoned, “it is undisputed that [p]laintiff seeks to enforce a contract that called for performance for more than a year, and which was not signed by or on behalf of either party which [p]laintiff seeks to hold liable for performance.” City of Orlando, 9 So. 3d at 1271. “Therefore, the statute of frauds plainly bars enforcement of the contract.” Id. Reversing summary judgment in favor of the plaintiff the Court held, “[w]ith respect to the trial court’s determination that the [d]efendants can be held liable for performance of the contract under an estoppel theory, the law is well-settled that ‘[t]he doctrine of promissory estoppel cannot be used to circumvent the statute of frauds.’” Id. (quotation omitted) (emphasis added).
In Stamer v. Free Fly, Inc., 277 So. 3d 179, 180 (Fla. 5th DCA 2019), Stamer entered into a franchise agreement and personal guaranty with the plaintiff to operate a real estate franchise in 2004. The agreement was renewed in 2009 for a five-year period ending in 2014. Id. In 2014, the plaintiff approached Stamer about renewing the franchise agreement for another five-year period. Id. Unbeknownst to the plaintiff, Stamer was already in negotiations with a competing real estate company for the sale of his business assets. Id.
For two-and-a-half months, Stamer assured the plaintiff of his intent to renew the franchise agreement, “while stating the exact opposite during negotiations with” a third party. Stamer, 277 So. 3d at 180. Believing that Stamer intended to remain in the system, the plaintiff allowed Stamer to continue operating the franchise even after the franchise agreement expired. Id. Shortly thereafter, instead of returning renewal paperwork as expected, Stamer sent the plaintiff an email enumerating additional terms he wanted to negotiate prior to renewing the franchise agreement. Id.
Throughout negotiations with the plaintiff, Stamer expressed his intention to sign on for at least another five years, and the parties discussed the terms of the anticipated five-year renewal agreement. Stamer, 277 So. 3d at 180. “Yet, the record reflects that Stamer’s ‘negotiations’ were a veiled attempt to draw out the renewal process until he could close his pending deal with” the third party. Id. To that end, Stamer continued negotiations with plaintiff for several more weeks until he sold all his business assets to the third party. Id. The plaintiff filed suit against Stamer, alleging breach of the franchise agreement, fraudulent misrepresentation, negligent misrepresentation, promissory estoppel, and unjust enrichment. Id.
In awarding judgment in favor of the plaintiff on its fraudulent misrepresentation and promissory estoppel claims, the trial court found that Stamer’s representations “were ‘fraudulent promises to enter into a five-year renewal with [plaintiff], made with a specific intent not to perform the promises at the time the promises were made.” Stamer, 277 So. 3d at 180–81. On appeal, Stamer argued that the trial court erred in finding in favor of the plaintiff “on the fraudulent misrepresentation and promissory estoppel claims because the oral agreement giving rise to those claims was not intended to be performed within one year, and therefore, was barred by Florida’s statute of frauds ….” Id. at 181.
At the outset, the Court found that the oral agreement to renew for five years could not be performed within one year. Stamer, 277 So. 3d at 181. “The statute of frauds precludes actions brought on any agreement or promise that cannot be performed within one year unless the agreement or promise is in writing and signed by the party to be charged therewith.” Id. The Court reversed because “[i]t is well-settled that a party cannot avoid the writing requirement of the statute of frauds by reformulating what amounts to a breach of an oral contract into a fraud claim.” Id. (emphasis added). It “also reverse[d] the trial court’s judgment in favor of [plaintiff] on the promissory estoppel claim.” Id. at 182. “Florida law is clear that promissory estoppel is not an exception to the statute of frauds.” Id. (emphasis added).