POSTED BY RICHARD D. TUSCHMAN ON JULY 23, 2012
Although written employment contracts or offer letters are not required by Florida law, employers should clearly state the terms of a new hire’s offer in writing to avoid any misunderstandings – or, worse, claims of breach of contract or fraudulent inducement.
A recent case from Florida’s Fourth District Court of Appeals, Ioannides v. Romagosa (Fla. 4th DCA, July 11, 2012), illustrates these principles. Dr. Tim Ioaniddes is a dermatologist who recruited Dr. Ricardo Romagosa to open one of his satellite offices in Stuart and work with him for three years under a contract. The parties anticipated that, after three years, Dr. Romago would become a partner.
When recruiting Dr. Romagosa, Dr. Ioannides allegedly told him that his “total annual compensation from salary and bonuses would easily exceed $500,000 per year for the years prior to making partner.” Thereafter, the two doctors entered into a contract that contained specific provisions regarding how Dr. Romagosa’s salary and bonuses would be calculated.
Dr. Romagosa began working for Dr. Ioannides, but the relationship soon soured. Dr. Romagosa left the practice after 23 months and sued Dr. Ioannides, claiming that Dr. Ioaniddes fraudulently induced him into entering into his employment contract by orally representing that he would earn more than $500,000 per year. The case went to trial, and the jury awarded Dr. Romagosa $760,000 damages on his fraudulent inducement claim.
But on appeal, the Fourth DCA vacated the award to Dr. Romagosa and remanded the case to the trial court with directions to enter judgment in favor of Dr. Ioannides.
Why the reversal of fortune? Because, under Florida law, a party cannot recover in fraud for alleged oral misrepresentations that are adequately covered or expressly contradicted in a later written contract. And in this case, the parties’ written contract adequately covered the issue of Dr. Romagosa’s compensation. Thus, regardless of whether Dr. Ioannides actually told Dr. Romagosa that his compensation “would easily exceed $500,000 per year,” and regardless of whether this statement was true, Dr. Ioannides could not be held liable for fraudulent inducement. The terms of Dr. Romagos’s compensation were detailed in a subsequent written contract, and it was that contract that determined the parties’ legal rights and obligations.
For Florida employers, the lesson of the Ioannides case is clear. Set forth the terms of a new hire’s employment in writing in an offer letter or employment contract. And make it clear that the offer letter or contract, and not any prior representations, will determine the parties’ legal rights and obligations.