HRB Tax Group, Inc. v. Florida Investigation Bureau, Inc.

Fourth DCA

HRB Tax Group, Inc. v. Florida Investigation Bureau, Inc.
4th DCA
5/17/23, Judge Damoorgian

Topics: Amendment of Pleadings; Punitive Damages

The Fourth DCA shot down a claim for punitive damages. The Florida Investigation Bureau, Inc. sued HRB Tax Group, Inc., alleging fraud from one of the defendant’s employees telling the plaintiff that their tax liability could be reduced by investing $250,000 to a bank account in Hong Kong. The plaintiff alleges that it never received any returns on the investment and that the third party and the defendant’s employee ignored multiple requests to return the money.

The trial court permitted the amendment adding a claim for punitive damages, and the defendant appealed An amendment to permit a claim of punitive damages is one of the non-final orders that can be immediately appealed. The DCA reminds us review of an order allowing a claim of punitive damages is reviewed de novo.

The standard for claiming punitive damages is well settled. Section 768.72(1), Florida Statutes (2020) and Rule 1.190(f) provide that no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages. And section 768.72(2) provides that a “defendant may be held liable for punitive damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence.” § 768.72(2), Fla. Stat. To impute an employee’s conduct on an employer under the punitive damages statute, a plaintiff must establish that the employee’s conduct constituted “intentional misconduct” or “gross negligence,” and establish one of the following:

  1. The employer, principal, corporation, or other legal entity actively and knowingly participated in such conduct;
  1. The officers, directors, or managers of the employer, principal, corporation, or other legal entity knowingly condoned, ratified, or consented to such conduct; or
  1. The employer, principal, corporation, or other legal entity engaged in conduct that constituted gross negligence and that contributed to the loss, damages, or injury suffered by the claimant.

§ 768.72(3)(a)–(c), Fla. Stat.

The DCA reversed the trial court’s order allowing the punitive damages claim for two separate reasons. First, the proposed amended complaint sought to add a claim for punitive damages to the existing vicarious liability claim only. The trial court, however, partially relied on evidence relating to the direct negligence claim asserted against the defendant, which was based on the defendant’s creation and handling of the reciprocal referral program. The direct negligence claim, however, did not include a request for punitive damages. All of the facts supporting the punitive damages request for the vicarious liability had to be tied to facts regarding that count, not a different count.

Second, the vicarious liability claim in the amended complaint contained no allegations of wrongdoing by the defendant. For example, the vicarious liability claim did not allege that:

(1) the defendant “actively and knowingly participated in” the employee’s conduct; (2) the defendant’s officers, directors, or managers “knowingly condoned, ratified, or consented to” the employee’s conduct; or (3) the defendant engaged in its own conduct that constituted “gross negligence” and contributed to the plaintiff’s damages. Instead, the vicarious liability count alleges misconduct only by the employee. There was no allegation that the officers, directors, or managers knowingly participated in or condoned, ratified, or consented to the employee’s conduct, or that the defendant engaged in conduct constituting gross negligence.

Reversed. 104503_i.pdf

Terry P. Roberts
Director of Appellate Practice Fischer Redavid PLLC
PDF Version

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