CITY OF FORT LAUDERDALE v. TROPICAL PARADISE RESORTS LLC (2023)

The City of Fort Lauderdale appeals an order denying its motion to dismiss a third-party complaint on grounds of sovereign immunity. We affirm in part and reverse in part.

Background

During the early months of the COVID-19 pandemic, the City of Fort Lauderdale created a program to provide temporary housing to the homeless. The City paid in advance for local hotel room blocks, and its police department's outreach task force issued vouchers that allowed beneficiaries of the program to stay in those rooms.

One of the hotels participating in the program was Tropical Paradise Resorts, LLC d/b/a Rodeway Inn & Suites. The City agreed to pay for 72 rooms, for at least 30 nights, with one of the rooms to be used by the police department and City staff as an office.¹ The contract provided that the City's police department would issue vouchers to program beneficiaries and that a City administrator would then coordinate the reservations with the Hotel.

The contract contained an indemnification clause, which provided:

Unless caused by or arising from the gross negligence or willful misconduct of the indemnitee, its employees, or its agents, each party agrees to defend, indemnify, and hold harmless the other party, its affiliates, and their respective directors, officers, employees and agents from and against any and all claims, actions, damages or other liabilities (including reasonable attorneys’ fees, court costs and other costs of defense) involving: (i) tangible property owned or in the care, custody or control of indemnitor; (ii) bodily injury (including death) suffered by indemnitor's employees; and (iii) third party bodily injury (including death) and third party tangible property damage; except that any indemnification by the city of Fort Lauderdale is subject to the monetary limitations set forth in Section 768.28, Florida Statutes (2019).

During this time, a City police officer issued a voucher to a man named Alphonso Washington. Washington checked into the Hotel and stayed there through early August 2020. By August 2020, the City had ended its contract with the Hotel, and a private entity called New Florida Majority, Inc., agreed to pay for the continued stay of some guests who were not eligible to be placed in homeless shelters. Washington was one of those guests.

In early August 2020, Washington allegedly murdered another hotel guest named Charles Morgan. Morgan's estate filed a wrongful death lawsuit against the Hotel. In response to the lawsuit, the Hotel filed a third-party complaint against the City alleging that the City failed to check Washington's background before giving him a voucher to stay there. The Hotel alleged that it incurred damages in defending the lawsuit filed by Morgan's estate.

The Hotel's third-party lawsuit against the City included eight claims: negligence (count one), fraud in the inducement (count two), fraudulent misrepresentation (count three), negligent misrepresentation (count four), breach of warranty (count five), breach of oral contract (count six), breach of contractual duty to indemnify (count seven), and common law indemnification (count eight).

The City moved to dismiss the third-party lawsuit based on sovereign immunity. The circuit court held a hearing and denied the motion to dismiss.

Analysis

Under Florida law, “sovereign immunity is the rule rather than the exception.” City of Fort Lauderdale v. Israel, 178 So. 3d 444, 446 (Fla. 4th DCA 2015) (quoting Pan-Am Tobacco Corp. v. Dep't of Corr., 471 So. 2d 4, 5 (Fla. 1984)). But the rule has two exceptions.

First, the Florida Constitution allows “[p]rovision[s] [to] be made by general law for bringing suit against the state as to all liabilities now existing or hereafter originating.” Art. X, § 13, Fla. Const. Based on that constitutional provision, the Florida Legislature waived sovereign immunity for claims in tort. § 768.28, Fla. Stat. (2020).

Second, in Pan-Am Tobacco, 471 So. 2d at 4, the Florida Supreme Court recognized an exception for breach of contract. Our supreme court held: “[W]here the state has entered into a contract fairly authorized by the powers granted by general law, the defense of sovereign immunity will not protect the state from action arising from the state's breach of that contract.” Id. at 5. But to benefit from the second exception, the action must be based on an express, written contract; an action based on an alleged implied contract remains barred by sovereign immunity. Id. at 6.

i. The Hotel Concedes Counts Two and Three of the Complaint are Barred by Sovereign Immunity

The Hotel concedes that counts two and three are barred by sovereign immunity because they sound in fraud and contain an element of bad faith. See Parker v. State of Fla. Bd. of Regents ex rel. Fla. State Univ., 724 So. 2d 163, 167-69 (Fla. 1st DCA 1998); § 768.28(9)(a), Fla. Stat. (2020) (providing that the state is not liable in tort for acts or omissions of an officer, employee or agent committed in bad faith). We agree that counts two and three must be dismissed.

ii. The Three Remaining Tort Claims - Counts One, Four, and Eight

Counts one, four, and eight are also tort claims that the City argues are barred by sovereign immunity. As explained below, we agree in part.

In count one, the Hotel alleges the City was negligent in failing to: properly “vet” Washington and conduct a background check before providing him with a hotel voucher; notify the Hotel that Washington had a history of violent crimes or conduct a background check; and to advise the Hotel that it needed to retain security after the City terminated its contract and removed its police presence. The Hotel alleges that it incurred damages in defending the suit by Morgan's estate and seeks “full and complete indemnity.”

In count four, the Hotel alleges the City “assured” the Hotel that it would “vet” individuals before giving them a voucher. The Hotel also alleges it reasonably understood that the City would perform “criminal background checks and other assessments” to ensure the individuals to whom it gave vouchers were “qualified” to stay at the Hotel. And, the Hotel relied on that understanding in entering the contract. Finally, the Hotel alleges the City failed to exercise due care in communicating the terms of its “assurance” to the Hotel or in communicating the Hotel's expectations to City employees. The Hotel again seeks “full and complete indemnity” in the suit by Morgan's estate.

In count eight, the Hotel alleges the City has a common law duty to indemnify the Hotel in the suit by Morgan's estate because the Hotel and the City had a “special relationship,” and Morgan's estate seeks to hold the Hotel liable for damages caused solely by the City's negligence, acts, or omissions.

The City argues sovereign immunity is not waived when the plaintiff is not seeking damages based on its own injury. The City cites the following statutory, which states in part:

Actions at law against the state or any of its agencies or subdivisions to recover damages in tort for money damages against the state or its agencies or subdivisions for injury or loss of property, personal injury, or death caused by the negligent or wrongful act or omission of any employee of the agency or subdivision while acting within the scope of the employee's office or employment under circumstances in which the state or such agency or subdivision, if a private person, would be liable to the claimant, in accordance with the general laws of this state, may be prosecuted subject to the limitations specified in this act.

§ 768.28(1), Fla. Stat. (2020).

The City argues that in counts one, four, and eight of the complaint, the Hotel is not seeking damages for any “injury or loss of property, personal injury, or death” for which the City, if a private person, would be “liable to the claimant.” Instead, the Hotel is seeking damages for indemnification based on “injury or loss of property, personal injury, or death” suffered by a third party.

In response, the Hotel relies on Commercial Carrier Corp. v. Indian River County, 371 So. 2d 1010 (Fla. 1979). There, the court found “no logical reason to limit application of our waiver statute to direct actions. Actions for contribution or indemnity grounded on the tortious conduct of the state or its agencies and subdivisions are no less tort claims for purposes of section 768.28 than direct actions.” Id. at 1022.

We agree that the claims at issue are like those in Commercial Carrier. The claims are based on a third-party plaintiff's alleged liability to the original plaintiff for “injury or loss of property, personal injury, or death” under section 768.28(1). Under Commercial Carrier, we agree the Hotel is not barred from seeking indemnification based on the City's alleged negligence. So count eight is not barred by sovereign immunity. But that is not the end of the analysis for counts one and four.

Counts one and four are not claims seeking indemnification for the City's alleged negligence. Instead, those two counts are claims for the City's alleged direct negligence and negligent misrepresentation. Such claims may avoid sovereign immunity if the claims seek relief based on “injury or loss of property, personal injury, or death” under section 768.28(1). But claims that do not seek relief based on “injury or loss of property, personal injury, or death,” and instead seek economic damages for defense of litigation are barred. City of Pembroke Pines v. Corr. Corp. of Am., Inc., 274 So. 3d 1105, 1113 (Fla. 4th DCA 2019) (claims for “economic damages framed in counts for declaratory relief, promissory estoppel, tortious interference with contract, and tortious interference with advantageous business relationship” were barred by sovereign immunity because they “lack[ed] a claim for personal injury, wrongful death, or injury or loss of property”); County of Brevard v. Miorelli Eng'g, Inc., 677 So. 2d 32, 33–34 (Fla. 5th DCA 1996), quashed on other grounds, 703 So. 2d 1049 (Fla. 1997) (a claim for “[f]raud in the inducement causing only economic loss” was barred by sovereign immunity because it did not “fit within any of those categories of injury or loss enumerated in the statute”).

In summary, we agree with the City that the circuit court erred when it denied the motion to dismiss as to counts one and four. We affirm the circuit court's decision to deny the motion to dismiss as to count eight.

iii. The Contract Claims – Counts Five, Six, and Seven

Next, the City argues the circuit court erred when it denied the City's motion to dismiss the Hotel's contract claims. The contractual claims are found in counts five, six, and seven of the Hotel's complaint.

In count five, the Hotel relies on the City's oral assurance, before the execution of the written contract, that its promise to “vet” the individuals eligible for the temporary housing program before giving them hotel vouchers created a warranty. The Hotel alleges the City breached that warranty by failing to conduct a background check before giving Washington a hotel voucher, or by giving him a voucher after conducting a background check and learning of his criminal history.

In count six, the Hotel alleges a direct breach of the City's alleged oral assurance that it would “vet” the individuals eligible for the temporary housing program before giving them hotel vouchers. The Hotel alleges that the City breached that assurance by failing to conduct a proper background check before giving Washington a hotel voucher.

As for counts five and six, the City argues the Hotel's claims are barred by sovereign immunity because they are not based on an express written contract. See Pan-Am Tobacco, 471 So. 2d at 6 (holding sovereign immunity is waived only as to suits on “express, written contracts into which the state agency has the authority to enter”). In response, the Hotel relies exclusively on the City's alleged oral assurance, given before the written contract's existence and the voucher's issuance, that it would “vet” the individuals eligible for the temporary housing program before giving them hotel vouchers. Those alleged promises were not included in the written contract, and the court was limited to considering the allegations within the four corners of the Hotel's complaint. Thus, we agree with the City that the circuit court erred in denying the City's motion to dismiss counts five and six of the complaint.

In count seven, the Hotel alleges the City failed to defend and indemnify the Hotel in the suit filed against it by Morgan's estate and thus breached the written contract's indemnification clause. The City acknowledges the Hotel's claim arises from the indemnification clause, but the City maintains its argument that sovereign immunity bars the claim because the contract was no longer in effect at the time Washington allegedly murdered Morgan.

But the Hotel's count seven exclusively arises from the written contract's terms. So the claim asserted is enough to survive the City's motion to dismiss because the duty allegedly arose during the contract's existence. Thus, we affirm the circuit court's denial of the City's motion to dismiss count seven of the complaint. Our affirmance is without prejudice to assert the defense in a motion for summary judgment. Univ. of S. Fla. Bd. of Trustees v. Moore, 347 So. 3d 545, 551 (Fla. 2d DCA 2022).

Conclusion

The circuit court denied the City's motion to dismiss the entire eight-count complaint based on sovereign immunity. We affirm the circuit court's denial of the motion to dismiss counts seven and eight. We reverse the circuit court's denial of the motion to dismiss counts one, two, three, four, five, and six. We remand for further proceedings on counts seven and eight of the Hotel's complaint.

Affirmed in part, reversed in part, and remanded.

FOOTNOTES

1.   The City concedes the existence of the contract only for purposes of this appeal.

Kuntz, J.

Warner and May, JJ., concur.