A Hess gas station franchisee won a reversal from the Fourth District Court of Appeal on a claim the company negligently supervised a salesman who fraudulently misrepresented potential earnings.
A Hess gasoline station franchisee convinced the Fourth District Court of Appeal to reverse a St. Lucie court’s dismissal of a lawsuit alleging negligent supervision.
Stuart Kalmanowitz, the franchisee whose company paid $2.5 million for a station-convenience store, sued Amerada Hess Corp. and the company’s Florida sales representative, Tim Brink, in 2004.
Kalmanowitz won $2 million in compensatory damages and $12 million in punitive damages at trial, but the verdict was set aside by Judge Burton Connor, then a St. Lucie circuit judge and now on the appeals court. He was not on the panel hearing the case.
Brink allegedly grossly overstated or falsified the projected earnings that Kalmanowitz relied upon when making the purchase. In addition, Kalmanowitz bought the land above the market rate for comparable properties.
Kalmanowitz later learned the seller, McDowell Investments Inc., was owned by Brink’s sister-in-law and he had done the same thing to other investors. Brink made profits of $1.45 million from land sales to Hess franchisees.
In its defense, Hess noted the retail agreements with franchisees specifically state Hess makes no representations on potential income or prospects for success. The only warranty was that Hess had good title to the fuel and other products sold.
Over six years of litigation, numerous counts against Hess were thrown out, but Kalmanowitz tried to keep the negligent supervision claim alive. He asserted Hess failed to do a background check when it hired Brink that would have revealed facts bearing on his qualifications. Brink held a position with "limited oversight," and Hess had a duty to supervise him, Kalmanowitz maintained.
In 2009, Hess got the negligent supervision count dismissed based on the argument that its inclusion in an amended complaint it was time barred. The judge agreed and threw out Kalmanowitz’s case in 2010.
Fourth District Judge Mark Polen, writing for the panel Wednesday, said the negligent supervision count was not time barred because it related back to the original complaint. The judge said Florida civil procedure rules allow for an amendment which merely makes more specific what has already been alleged generally.
"The original complaint alleged that neither Hess nor Mike McAfee (Brink’s supervisor) did anything to remedy the wrongdoing caused by the unauthorized misrepresentations of their own agent," Polen said. "Finally and most importantly, the original complaint alleged that Hess, as Brink’s employer, is responsible for Brink’s fraudulent inducement and that Hess knew or should have known about its agent’s fraudulent scheme."
The Fourth District reversed on the key issue of negligent supervision and sent the case back to St. Lucie circuit court.
Fourth District Judge W. Matthew Stevenson and Palm Beach Circuit Judge August Bonavita, sitting by designation, concurred.
Marjorie G. Graham of Marjorie Gadarian Graham P.A. in Palm Beach Gardens, who represented Kalmanowitz on appeal, did not respond to a request for comment by deadline.
“It’s definitely too soon to say that this will go to trial,” said Hess appellate attorney, Thomas Julin of Hunton & Williams in Miami.
He said Hess had alternative grounds for summary judgment that would again be raised, notably Kalmanowitz should have relied on the retail agreement, not anything Brink might have said about projected earnings.