in admiralty chisholm, in personam andrea aras, her...

The other counterclaims Defendants sought to add in their Motion for Leave to1

File First Amended Affirmative Defenses and Counterclaims, usury and breach of thecovenant of good faith and fair dealing, were found by this Court to be futile and leavewas denied to amend their Answer to include these claims. (Order on Various Motions,p. 11-12 [DE 276].)

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

IN ADMIRALTY

CASE NO. 05-61238-CIV-COHN/SNOW

RICHARD ROSS,

Plaintiff,

vs.

COLIN CHISHOLM and ANDREA CHISHOLM, in personam, and M/Y ANDREA ARAS, her engines, boiler, machinery, tackle, equipment, freights, furnisings, and appurtenances, etc., in rem._________________________________/

FINDINGS OF FACT AND CONCLUSIONS OF LAW

THIS CAUSE came before the Court for non-jury trial on November 7, 8, 9, 13,

15, and 16, 2006. Plaintiff Richard Ross filed this action for foreclosure of a maritime

lien against the M/Y Andrea Aras, in rem, and for breach of contract against Colin and

Andrea Chisholm, in personam. [Complaint, [DE 1].) Defendants were granted leave to

amend their Answer to add counterclaims against Ross for intentional breach of

fiduciary duty, negligent breach of fiduciary duty, fraud, negligent misrepresentation,

violations of the Florida Deceptive and Unfair Trade Practices Act, violations of the

Florida Consumer Collection Practices Act, and violations of the Federal Truth in

Lending Act. Defendants have also attempted to assert a number of affirmative1

Case 0:05-cv-61238-JIC Document 394 Entered on FLSD Docket 12/29/2006 of 35

Defendants were denied leave to amend their Answer to add a number of2

affirmative defenses on the grounds of futility in this Court’s Order on Various Motionsof August 14, 2006 [DE 276]. Defendants also subsequently filed a Motion for Leave toFile Second Affirmative Defenses, attempting to add the affirmative defenses ofestoppel/waiver, lack of consideration, and usury, which this Court denied in its Order ofOctober 13, 2006 [DE 327].

Any factual findings that may represent conclusions of law are adopted as3

conclusions of law.

2

defenses and were granted leave to amend their Answer to add three: unclean hands,

set-off and recoupment, and the defense that Plaintiff is barred from recovery of a

deficiency judgment beyond the difference between the fair market value of the vessel

and the debt owed. The Court subsequently granted summary judgment in favor of the2

Plaintiff on Defendants’ limited deficiency judgment affirmative defense, finding that the

fair value of the vessel for purposes of calculating the deficiency judgment is $509,000

[DE 369].

The Court granted Summary Judgment for the Plaintiffs and against the

Defendants with respect to Plaintiff’s claims of foreclosure and breach of contract in an

Order dated April 27, 2006 [DE 165]. However, the Court deferred entering judgment

against the Defendants to allow for additional discovery on their various affirmative

defenses and counterclaims. Thus, the only issues remaining for trial were the

Defendants’ counterclaims and affirmative defenses, as summarized above.

FINDINGS OF FACT3

Credibility Determinations:

1. The Court found Defendant Colin Chisholm’s testimony to be almost entirely


3

lacking in credibility. Cross examination of Mr. Chishom revealed that he cannot

remember and cannot explain many of the inconsistencies between his prior

statements and representations, and his current testimony. He also purports to

not remember or not be able to explain many of the key details from the

negotiations and transaction at issue. The Court believes that Mr. Chisholm’s

testimony was at best evasive, and at worst perjurious, and it has been given

minimal weight in the Court’s consideration of this case.

2. In contrast, the Court found Plaintiff Richard Ross’s testimony to be extremely

credible. Mr. Ross testified in a consistent, genuine, and straightforward

manner, responding to questions as he was able, and referring questions he

could not answer to the appropriate people, such as Ron Morgenstein and

Warren Hayes, who also testified at trial. The Court notes with appreciation that

Mr. Ross was honest and open about the transaction at issue in this case, and

about other unrelated transactions when asked, and accordingly gives his

testimony substantial weight in the Court’s consideration of this case.

3. Similarly, the Court found the testimony of Ron Morgenstein and Warren Hayes

to be credible.

4. Although the Court did not find the testimony of Defendant Andrea Chisholm to

be inherently lacking in credibility, it is noted that some inconsistencies between

her testimony and her husband’s testimony do call into question either her own

truthfulness, or the accuracy of the information she was given by her husband.


Because this vessel underwent several name changes over the course of its4

lifetime, this Court will refer to it generically as “the Trumpy” for ease of reference.

The Court did not receive a transcript of the trial held on November 7, 8, 9, 13,5

15, and 16, 2006. Therefore, the testimony of all witnesses will be referred to solely bytheir name without reference to a transcript page number.

Because Colin Chisholm played a larger role in negotiating this transaction6

than his wife, Andrea, the Court refers to Colin Chisholm unless otherwise specified.

4

The Deal

5. In 2002, Plaintiff Richard Ross acquired the “Wishing Star,” a Trumpy4

motoryacht, which had just undergone a $2 million re-fit. (Richard Ross Trial

Testimony.) At the time Mr. Ross purchased the Trumpy, it was surveyed as5

having a $1.4 million fair market value and a $5 million replacement value. (Ron

Morgenstein Trial Testimony.)

6. Mr. Ross later decided to sell the Trumpy. Defendant Colin Chisholm learned

that the vessel was available for sale in September 2004, and he identified it as

being the former “Aras,” a boat that had previously belonged to members of his

family. (Colin Chisholm Trial Testimony.)

7. Mr. Chisholm contacted the broker who had listed the vessel, Luke Brown &

Associates, to inquire about the Trumpy. On October 15, 2004, Mr. Chisholm

sent an email to Ron Morgenstein, of Luke Brown & Associates, advising that his

company, TCN Networks, had taken “most all of [his] available cash up to this

date, around $6.2 Million” but that he controlled “about $30 Million in Network

Television Advertising on CNBC.” (Defendants’ Exhibit 73bb; Plaintiff’s Exhibit

63.) In actuality, however, Chisholm never put any of his own money into TCN6


5

Networks, and he did not actually control any advertising on CNBC, but rather

controlled advertising in CNBC programming on TCN Networks, a network that

had never broadcast. (Colin Chisholm Trial Testimony.) Chisholm also advised

Morgenstein in the October 15, 2006 email that he was interested in purchasing

the Trumpy using owner financing or some other form of “creative financing.”

(Defendants’ Exhibit 73bb; Plaintiff’s Exhibit 63.) Morgenstein responded that

with Chisholm’s permission, he would forward this email to the owner of the

vessel for his consideration. (Id.) The email was forwarded to Ross, the owner

of the vessel, for his consideration. (Plaintiff’s Exhibit 5.) The Court finds that

Chisholm intended that this email, including the false statements about his

wealth, be sent to Ross for his consideration in negotiating a deal.

8. Chisholm directed Ross to the Web site of TCN Networks, which indicated that

TCN Networks reaches millions of viewers in the Carribean, provided information

about the Carribean Music Channel, and listed a number of officers with

biographies. (Colin Chisholm Trial Testimony.) Ross viewed the Web site and

found it to be “impressive.” (Richard Ross Trial Testimony.) In reality, however,

TCN Networks has never broadcast anything, the Caribbean Music Channel is

merely a “development project,” and TCN Networks has no paid employees or

officers. (Colin Chisholm Trial Testimony.) The Court finds that Chisholm falsely

represented to Ross that TCN Networks was a viable company.

9. Prior to reaching an agreement regarding the Chisholms’ purchase of the

Trumpy, Chisholm met with Ross on October 23, 2004 to see the vessel and

have lunch. They spent no more than a few hours together. Prior to this


As with many of the statements in Chisholm’s trial testimony, no explanation7

was provided as to who or what in “Chicago” was to transfer the funds. The Courtinfers that Chisholm intended this reference to pertain to his business in some way.

6

meeting, the Chisholms and Ross had never met. (Richard Ross Trial

Testimony; Colin Chisholm Trial Testimony.)

10. Chisholm represented to Ross in October 2004 that millions of dollars in

investments would be coming into TCN Networks in the near future, but that he

only had available cash to pay 20-30% of the purchase price at that time.

(Richard Ross Trial Testimony.)

11. Other than viewing the TCN Networks Web site and obtaining a “D&B” [Dun &

Bradstreet] report on TCN Networks, Ross conducted no other background

checks on the Chisholms or the company and relied on their representations to

him about their financial condition. (Richard Ross Trial Testimony.)

12. Ross was mislead by Colin Chisholm to believe that Chisholm was a millionaire

with a successful business and the financial capability to afford the vessel.

13. In an arm’s length transaction, Chisholm and Ross negotiated a deal whereby

Chisholm would make an initial deposit, then pay monthly payments for a year,

with a balloon payment of the remaining principal due at the end of the year. In

a subsequent meeting on January 3, 2005, Ross and Chisholm agreed to modify

the deal to increase the down-payment to $220,000, increase the monthly

payment to $7,500, and require an additional lump sum payment of $150,000 to

be due on March 15, 2005. (Defendants’ Exhibit 116.)

14. On January 6, 2005, Chisholm advised Ross that he had directed “Chicago” to7


7

do a wire transfer to his personal account in New York, and had contacted

“Ramon” at Webster Bank to arrange for the transfer of the funds to the Warren

Hayes trust account at SunTrust as soon as those funds arrived. (Plaintiff’s

Exhibit 8.) In November 2004, the last month for which Chisholm disclosed bank

records from Webster Bank, Chisholm had no more than approximately $2,000

in his Webster Bank checking account and no funds in his Webster Bank

savings account. (Plaintiff’s Exhibit 22.) Chisholm testified at trial that he had no

account at Webster Bank at the time the down-payment was made, and that he

does not know anyone named “Ramon.” (Colin Chisholm Trial Testimony.)

15. On January 8, 2005, Chisholm notified Ross that the wire transfer for the down-

payment would be coming within a few days, explaining again that he was having

his company transfer the funds to his personal account, and that he would then

wire the down-payment from the personal account to Alley Maas, because he

“did not feel comfortable doing the wire straight from the Company to Warren.”

(Plaintiff’s Exhibit 9.) However, in actuality, the two wire transfers comprising the

down-payment came from Mellon Bank accounts in the names of Michael Lang

and TCN Networks. (Plaintiff’s Exhibits 20 and 21.) Although Chisholm testified

at trial that he did not know whether the down-payment had been made through

his personal accounts at Webster Bank, (Colin Chisholm Trial Testimony), bank

records confirm that the down-payment came from accounts not in Chisholm’s

name and not at Webster Bank (Plaintiff’s Exhibits 20 and 21.)

16. At the time that the Chisholms were negotiating with Ross for the purchase of the

Trumpy, they were in great debt, including bad debts on credit cards, judgments


8

against them, and back alimony owed to Mr. Chisholm’s former wife. (Andrea

Chisholm Trial Testimony; Colin Chisholm Trial Testimony.) The Court finds that

Chisholms did not disclose the extent of their financial obligations to Mr. Ross

and intentionally deceived him as to the extent of their wealth in an effort to

influence him to provide owner financing, without which they could not have

obtained the Trumpy.

17. The evidence indicates that the due date of the final payment changed during

the process of revising the documents, from December 31, 2005 to December

15, 2005. (Colin Chisholm Trial Testimony.) The Court finds, however, that

Chisholm had several opportunities thereafter to note the changed date in his

review of the documents, and that he signed the documents with the December

15, 2005 final balloon payment due date.

18. The Chisholms closed on the purchase of the Trumpy on January 20, 2006.

Structuring of the Deal as a Trade-In

19. Ross made arrangements to purchase a new vessel around the same time he

was selling the Trumpy to the Chisholms. He requested that the sale of the

Trumpy be structured as a trade-in, whereby he would transfer the Trumpy to

Luke Brown & Associates, receive a trade-in credit towards the purchase of his

new vessel, and Luke Brown & Associates would subsequently transfer the

Trumpy to the Chisholms. The purpose of this structure was to take advantage

of a Florida sales tax provision that would limit the sales tax Ross had to pay on

his purchase of the new vessel. (Warren Hayes Trial Testimony.)

20. Chisholm was not involved in the discussions regarding structuring the deal as a


9

trade-in. (Colin Chisholm Trial Testimony.)

21. The purchase price for the Trumpy did not change following the decision to

structure the deal as a trade-in. At all relevant times during the transaction, the

agreed upon purchase price was $1.2 million. (Colin Chisholm Trial Testimony.)

22. The Court finds that the decision to structure the sale of the Trumpy as a trade-

in, rather than a direct sale from Ross to the Chisholms, had no effect

whatsoever on the Chisholms.

Involvement of Ron Morgenstein

23. Ron Morgenstein, of Luke Brown & Associates, acted as the broker for the sale

of the Trumpy. (Richard Ross Trial Testimony.)

24. Morgenstein had a long-standing relationship with Ross prior to this transaction.

(Richard Ross Trial Testimony.)

25. Morgenstein’s commission on the sale of the vessel was to be paid by the seller,

Ross. (Richard Ross Trial Testimony.)

26. Morgenstein disagreed with Ross’s decision to make a deal with the Chisholms

whereby the seller, Ross himself, would hold paper on the vessel. He had not

seen a deal structured like this before and believed it was unusual. (Richard

Ross Trial Testimony; Ron Morgenstein Trial Testimony.) Morgenstein was

unsure as to whether the Chisholms had the money to pay for the vessel at the

time of purchase, because Chisholm had represented to him that his money was

tied up in his business. (Ron Morgenstein Trial Testimony.)

27. The transaction provided that Luke Brown & Associates would be paid a

commission of 10% on the payments Ross received for the vessel. In the event


10

that Ross did not receive the full payment from the Chisholms and was forced to

foreclose on the mortgage, Ross agreed to re-list the vessel with Luke Brown &

Associates in exchange for their agreement to forgive the remaining commission

due on the full purchase price of the vessel. (Richard Ross Trial Testimony.)

28. Luke Brown & Associates received from Ross 10% of the total down-payment

made by the Chisholms on the vessel, totaling $22,000. Had the Chisholms paid

for the vessel as agreed, Luke Brown & Associates would have received an

additional $98,000 commission. As a result of the Chisholms’ failure to pay,

Luke Brown & Associates has received significantly less in commission on the

vessel.

Representation by Warren Hayes

29. Prior to the transaction with the Chisholms, Ross had used the legal services of

Warren Hayes and the law firm of Alley Maas for other vessel purchases and

sales. (Richard Ross Trial Testimony.)

30. Warren Hayes testified that he represented only Ross in this transaction, but that

Chisholm paid the bills for the representation pursuant to an agreement between

Chisholm and Ross. (Warren Hayes Trial Testimony.)

31. In contrast, both Chisholm and Ross testified that they believed at the time that

Chisholm had retained Warren Hayes to draw up the paperwork for the

transaction. (Richard Ross Trial Testimony; Colin Chisholm Trial Testimony.)

32. Ross testified that he thought it was obvious to the Chisholms that he was

continuing to use Warren Hayes. (Richard Ross Trial Testimony.) Based on

prior deposition testimony that Chisholm acknowledged on cross examination, it


Chisholm explained, when confronted with this prior deposition testimony, that8

he was being “sarcastic” at the time he made these statements. However, the Courtfound this explanation to be entirely lacking in credibility.

An email from Chisholm to Hayes specifically requests the documents in Word9

format because “I can’t edit or make any changes to a PDF File.” (Plaintiff’s Exhibit 42.) Chisholm testified in court, however, that he requested the Word format because hecould not read the documents in PDF format. (Colin Chisholm Trial Testimony.) TheCourt finds this to be yet another example of Chisholm modifying his testimony to fit thelegal theories in this case, rather than testifying truthfully to the details surrounding thetransaction.

11

appears that Chisholm also considered Hayes to be Ross’s lawyer at the time of

the transaction. (Colin Chisholm Trial Testimony).8

33. Warren Hayes initially prepared the documents for the transaction without

speaking with Chisholm. (Warren Hayes Trial Testimony.)

34. Chisholm personally made a number of significant decisions regarding the

details of the transaction, and even edited some of the documents on his own.

For example, Chisholm originated the idea to close the deal more than three

miles out to sea to avoid paying sales tax, and directed Hayes to edit the

documents to reflect this decision (Warren Hayes Trial Testimony.) Chisholm

also at one point requested a Word version of the documents, rather than the

PDF Hayes had sent, because he was not able to edit the PDF. Although9

Chisholm testified that he made changes and sent them back to Hayes for his

review, Hayes denied this, testifying that Chisholm made changes directly to the

Word-format documents and signed them without further input from Hayes.

(Warren Hayes Trial Testimony.) Chisholm was also unable to produce any

documentation to support his claim that he sent his changes back to Hayes for


12

review, despite extensive discovery that allowed him to obtain all of Hayes’

emails and files pertaining to this transaction.

35. Although both Andrea and Colin Chisholm testified that they would not have

gone through with the purchase of the Trumpy had they known that Warren

Hayes represented Ross’s interests, the Court found these claims to be self-

serving, lacking in credibility, and contrary to other evidence presented.

36. The Court finds that the Chisholms knew of Hayes’s former and ongoing

business relationship with Ross and consented to any dual representation that

existed in this transaction.

37. Based on all the evidence and testimony presented, the Court believes that the

parties to the transaction made the decision to hire Warren Hayes, with the

Chisholms paying the bill, to prepare the documents pursuant to their

agreements and facilitate the closing of the transaction. Hayes’s role was to

facilitate closing the transaction in accordance with the agreement negotiated by

Chisholm and Ross. He simply prepared the documents to their specifications

and made them available to the parties to edit and execute as they chose. The

Court also finds that both the Chisholms and Ross understood that only one

lawyer was needed and that Hayes’s work was to benefit both of them, and they

consented to any dual agency or dual representation that took place.

38. Further, Chisholm held himself out to be an experienced businessman, and in

that role, he took an active and affirmative role in the decisions surrounding this

transaction and the actual editing of the documents involved. In light of the fact

that Chisholm directly negotiated the terms of the agreement himself, including


Chisholm testified that he and Andrea thought that having Hayes on their side10

would “level the playing field” against the more experienced and knowledgeable Rossand Morgenstein. (Colin Chisholm Trial Testimony.) However, the Court can find in theevidence no instance in which the Chisholms called on Hayes to represent theirinterests in the negotiations with Ross, to negotiate on their behalf, or to counsel themon the transaction. Thus, the Court finds the Chisholms’ testimony that they relied onHayes to represent their interests lacking in credibility.

13

reviewing and editing the various documents associated with the transaction

before signing them, the Court finds that he understood and knowingly agreed to

the terms of the transaction as well as the nature of Hayes’s representation of

the parties. Thus, any claims by Andrea and Colin Chisholm that they did not

know about the relevant terms of the agreement and were counting on Warren

Hayes to explain them are lacking in credibility.

39. The Court also finds that Warren Hayes did not take any actions that caused

harm to the Chisholms, regardless of whom he represented. The negotiation of

the price of the vessel and the terms of the agreement took place between Ross

and Chisholm directly, and Hayes played no role in those negotiations. He was10

tasked simply with drafting the papers to memorialize those agreements.

Further, Chisholm appears not to have actively sought out Hayes’s advice on the

substance of the transaction, and indeed made changes to the documents

without consulting with Hayes. Finally, the key portion of the transaction that has

caused the Chisholms problems–namely, the requirement that they make timely

payments on the mortgage–was clearly understood by the Chisholms and

required no explanation from Hayes. Mr. Chisholm never testified that he would

not have gone through with the transaction had he known he would have to pay


The Chisholms claim, for example, that they were unaware that Ross was11

structuring the sale as a trade-in to limit his sales tax liability, and that the agreementprovided for Luke Brown and Associates to re-list the vessel in the event of default onthe mortgage. (Colin Chisholm Trial Testimony.) However, they were unable to explainhow the presence of these provisions caused any harm to them, other than makingconclusory statements that they would not have gone through with the transaction hadthey known about these provisions. The Court finds these conclusory statements to belacking in credibility.

14

for the vessel. As to the various other terms of the agreement, of which the

Chisholms claim they were unaware and which they claim caused them harm,11

the Court finds that the Chisholms were aware of the material terms of the

agreement when they closed on the vessel and that none of these terms has

caused any harm to them, whether explained by Warren Hayes or not.

Previous Lending Activities

40. Mr. Ross loaned $2.5 million as part of the financing in the transaction in which

he sold the “Sir Jolly Roger” and purchased the “Wishing Star.” (Richard Ross

Trial Testimony.)

41. This loan, called “floorplan financing” was made to the broker to finance the

acquisition of the trade-in vessel so the broker would not have to outlay the

money to purchase the vessel outright. (Warren Hayes Trial Testimony.)

42. Hayes testified that he knew of no other occasion, aside from his loan to the

Chisholms, when Ross had loaned money to a natural person. (Warren Hayes

Trial Testimony.)

Insurance Policy

43. The Chisholms purchased insurance coverage for the Trumpy through Brown &

Brown. They took out hull coverage, P&I coverage, and breach of warranty


The portions of Lori Dial’s deposition that were read into evidence at trial will12

be cited as “Lori Dial Testimony.”

15

coverage on the vessel. (Lori Dial Testimony.)12

44. The breach of warranty policy was issued on behalf of Richard Ross. This policy

provided coverage for Mr. Ross in the event that the vessel suffered some

casualty and no insurance was in place due to a breach in the terms of the policy

by the Chisholms. (Lori Dial Testimony.)

45. Ross called Brown & Brown on September 8, 2005 requesting the name of the

captain on the vessel because he was attempting to repossess it and could not

locate it. This information was passed along to the underwriters, who advised

Brown & Brown that non-payment on the mortgage was not grounds for

cancellation of the insurance policy. Brown & Brown provided Ross with the

name of the Chisholms’ captain at the time–Sandy Sandrol. (Lori Dial Trial

Testimony.)

46. Ross’s attorney, Tomaselli, informed Brown & Brown via email on September 14,

2005 that Ross was attempting to repossess the vessel and foreclose on the

mortgage. He also advised that they had learned from Captain Sandrol that the

Chisholms may not be using a captain, as required by the insurance policy, on a

regular basis, and that Ross as loss payee was concerned that coverage may be

compromised. This information was passed along to the underwriters via email

on September 14, 2005. (Lori Dial Testimony; Defendants’ Exhibit 43.)

47. The “Yacht Log,” authenticated by both Colin and Andrea Chisholm and entered

into evidence, reflects many occasions prior to December 2005 when the


16

Trumpy was piloted by Colin Chisholm himself, rather than a licensed captain, as

required by the insurance policy. It appears from this Log that the Chisholms

used a captain for trips taken between the time of closing and March 2005.

Starting on March 26, 2005, there are twenty-three entries in the Log reflecting

that Colin Chisholm was at the helm of the vessel, including a trip to the

Bahamas in May 2005. (Plaintiff’s Exhibit 29.)

48. The Court finds, based on the records kept by the Defendants themselves, that

Ross and his attorney reported accurate information to Brown & Brown regarding

the failure of the Chisholms to use an approved captain, as required by the

policy.

49. The underwriters of the insurance policy take the fact that a captain may not be

on board very seriously. Failure to use a captain as required may result in

cancellation of the insurance policy. (Lori Dial Testimony.)

50. Upon receiving the information from Tomaselli about the Chisholms’ failure to

use a captain, the underwriters contacted Colin Chisholm via email on

September 14, 2005 to advise him they had received information that Sandrol

was no longer acting as captain. On September 16, 2005, Chisholm responded

via email, advising that the information they received was “wrong,” saying “Sandy

Sandrol is our Captain and will remain so.” (Lori Dial Testimony; Defendants’

Exhibit 47.)

51. On September 14, 2005, two days prior to giving this response, Colin Chisholm

operated the vessel himself without a captain on a trip with a number of guests

on board. (Plaintiff’s Exhibit 29.)


17

52. The Court finds that Chisholm was untruthful in his response to the underwriters

that Sandrol was acting as captain on board the vessel.

53. Brown & Brown also contacted Sandrol via email on September 16, 2005 to

confirm that he was still acting as the captain of the vessel. (Defendants’ Exhibit

48.) Sandrol responded on September 18, 2005, confirming that he continued to

serve as captain on the vessel. (Defendants’ Exhibit 49.)

54. The Yacht Log contains no entries in which Sandrol is recorded as serving as

captain on board the Trumpy. (Plaintiff’s Exhibit 29.)

In follow-up to Sandrol’s response, Brown & Brown emailed Sandrol again,

inquiring whether he had operated the vessel since being hired, where the vessel

was located, whether he had been hired to do a charter, and whether the vessel

had taken trips without him on board. (Defendants’ Exhibit 51.) Sandrol

responded by stating that these questions were inappropriate as directed to him,

and requesting that Brown & Brown contact the Chisholms’ attorney.

(Defendants’ Exhibit 52.)

56. The underwriters expressed surprise and concern that the captain was unwilling

to answer the fairly simple questions posed. Because company policy does not

allow them to correspond with attorneys, Brown & Brown did not follow up by

contacting Warren Hayes. The underwriters were informed of this policy and

that they would not follow up with Hayes. The underwriters subsequently made

the decision to not renew the policy as of January 2006, and a letter to that effect

was sent to the Chisholms on November 10, 2005. (Lori Dial Testimony.)

57. The reason for the underwriters’ decision not to renew the policy was the lack of


18

communication from the Chisholms regarding their captain. (Lori Dial

Testimony.)

58. The Court finds that the non-renewal of the insurance policy had no effect on the

Chisholms. Their coverage remained in place until January 18, 2006, (Lori Dial

Testimony), and they were no longer in possession of the vessel as of that date.

Attempts to Collect the Debt

59. On March 15, 2005, the due date for the lump sum payment of $150,000 and

monthly payment of $7,500, Chisholm wrote a check to Ross for $157,500 and

asked him to hold it for a little while. Ross deposited the check on March 28,

2005 and it was returned for insufficient funds. Defendants’ Exhibit 187; Warren

Hayes Trial Testimony.)

60. At the time Chisholm wrote this check, and for several months prior, he did not

have more than a few thousand dollars in the account from which the check was

written. (Colin Chisholm Trial Testimony.)

61. In April 2005, Chisholm made several payments to Ross totaling approximately

$172,000. This money came from loans from friends, family, and their vessel

captain at the time, Roy Green. However, none of the bank records disclosed in

this case reflect Chisholm’s receipt of these loans or the various payments made

to Ross. (Colin Chisholm Trial Testimony.) Chisholm was unable to explain

where the funds were deposited, or how they were paid to Ross. Chisholm did

claim, however, that he does not have any bank accounts that were not

disclosed during this litigation, (Colin Chisholm Trial Testimony), although the

Court finds this claim to be lacking in credibility.


Chisholm claimed that the wording of the letter and the legal information in it13

came from a friend who is an attorney. He also claimed he did not send the letter. However, Ruth Larsen and Linda Alton filed a Notice of Claim of Maritime Lien with theUnited States Coast Guard in August 2005. (Plaintiff’s Exhibit 19.) Therefore, theCourt finds Chisholm’s claim that he did not mail the letter or advise his mother-in-lawregarding a maritime lien to be lacking in credibility.

19

62. On April 10, 2005, the Chisholms executed a promissary note in the amount of

$527,582.00 in favor of Andrea’s mother and a friend of the mother. (Plaintiff’s

Exhibit 18.) These funds, like the other loans used to make the April payment to

Ross, do not appear in the Chisholms’ bank records, and it is unclear what they

were used for.

63. Chisholm drafted a letter to his mother-in-law advising her about the legal

implications of a maritime lien, and suggesting that she record a maritime lien on

the Trumpy to secure her debt and ensure she could take back the vessel if it

was repossessed by Ross. (Plaintiff’s Exhibit 17.) 13

64. Chisholm did not inform Ross of the promissary note executed in favor of

Andrea’s mother and friend, in violation of the terms of the promissory note

between Chisholm and Ross. (Colin Chisholm Trial Testimony.)

65. In the summer of 2005, the Chisholms traveled out of Florida with the vessel

without informing Ross, prompting him to file the Verified Complaint in the instant

case on July 27, 2005. (Richard Ross Trial Testimony.) An Order directing the

issuance of a Warrant of Arrest of the vessel was issued by this Court on July

27, 2006. (DE 9,10.) However, the vessel was not arrested at that time because

Ross was unable to locate the vessel. (Richard Ross Trial Testimony.)

66. Although Ross’s attorney took a number of actions in an attempt to locate the


20

vessel, including involving an organization called National Liquidators, they were

unable to locate the vessel. Ross later learned that the Chisholms had traveled

to Georgia and South Carolina with the vessel. Chisholm claims that they moved

the vessel from Florida to avoid the hurricane season. (Richard Ross Trial

Testimony; Colin Chisholm Trial Testimony.)

67. Ross expended approximately $20,000 in attorneys fees and costs attempting to

locate and arrest the vessel during this time period. (Richard Ross Trial

Testimony.)

68. In September 2005, Chisholm made contact with Ross again. Towards the end

of September, Chisholm conveyed, via Warren Hayes, the message that he

wished to make a payment and work out an agreement with Ross. Hayes

conveyed that to Ross’s lawyer, Tomaselli, who responded that Ross was happy

to receive any funds that Chisholm wished to provide and to consider any

proposals for looking forward. (Defendants’ Exhibit 150.)

69. On September 30, 2005, Chisholm contacted Ross via email and advised him

that he could pay all payments due through November 30, 2005, late charges,

$25,000 for Ross’s legal bill, and an additional principal payment of $30,000.

The total amount to be paid was $94,000, leaving only the December balloon

payment to be made. (Defendants’ Exhibit 152.)

70. Chisholm had concerns about making payment without written reinstatement of

the original loan terms. Ross advised Hayes that Chisholm would just have to

trust Ross, as Ross had trusted Chisholm on the loan of $980,000. Hayes

conveyed this to Chisholm, and advised that Ross would not pursue the


21

foreclosure action if payment was made, and the balance was paid on December

14, 2005, per the original agreement. (Defendants’ Exhibit 153.)

71. Chisholm and Ross had a phone conversation in which Ross asked Chisholm to

keep him advised of the location of the vessel his plans to keep it in shape.

Chisholm then sent a follow-up email to Ross, advising him on the maintenance

of the vessel and thanking him for “accepting our offer to work things out.”


72. Ross responded to Chisholm’s email indicating that he had not accepted an offer

to work things out. Chisholm then contacted Hayes on October 8, 2005 to ask

what had happened. (Defendants’ Exhibit 147.) On October 10, 2005, Chisholm

advised Hayes that he had spoken to Ross, and that Ross’s lawyer “did jump on

him to send me that e-mail. It seems everything is fine.” (Defendants’ Exhibit

149.)

73. In October 2005, the Chisholms were served with the Complaint in this action.

They forwarded the materials to Hayes, who advised them that Ross had

declared them in default on the promissory note and was pursuing the action to

obtain a judgment against them. Hayes advised that this judgment was to be

used only if he failed to make the balloon payment on or before December 15,

and that Ross’s attorney was positioning them to be able to move quickly if the

full payment was not made on the due date. (Defendants’ Exhibit 155.)

74. Hayes provided the final payment amount of $763,118.01 and the payment due

date of December 14, 2005 to both Ross and Chisholm via email on November

29, 2005. (Defendants’ Exhibit 161.) Ross sent Hayes an email on that date


The September 2005 payment of $94,000 included $25,000 for Mr. Ross’s14

legal bills incurred as of that date, per an agreement between Chisholm and Ross, soonly $69,000 of that payment is included in this calculation of total payments made onthe loan. Additionally, the Chisholms made payments of $7,500 on February 14, 2005;$69,500 on April 2, 1005; $100,000 on April 14, 2005; $3,000 on April 25, 2005; and$15,375 on June 6, 2005, all of which are included in this calculation of total paymentsmade.

22

stating “let’s hope he can find the bucks.” (Defendants’ Exhibit 169.)

75. On December 13, 2005, Chisholm contacted Ross and advised he would wire

the final payment on December 14, 2005. When Ross called Chisholm on

December 14, 2005 to confirm that the transfer was coming, Chisholm did not

answer the phone. Ross learned that Chisholm had moved the vessel from the

marina the previous day without telling him. At that time Ross made the decision

to have the vessel arrested, and the arrest was effected on December 17, 2005.


76. As of December 14, 2005, Colin Chisholm did not have the funds to make the

final payment due on the vessel. (Colin Chisholm Trial Testimony.) The Court

finds that Chisholm was being untruthful when he contacted Ross on December

13, 2005 to advise he would be wiring the final payment the next day.

Total Debt Owed and Payments Made:

77. The total principal due at the commencement of the loan was $980,000.

78. The Chisholms had made $264,375 in payments as of the date of trial,

November 6, 2006.14

79. The Chisholms had incurred $8,812.50 in late fees as of the date of trial,


Per the Note, the Chisholms are obligated to pay a late fee of 5% of the late15

payment amount for all payments made more than ten days after their due date. TheChisholms owe late fees on the payments due in March, April, May, June, and July2005.

Interest originally accrued at an annual rate of 5%. As of the first instance of16

default on March 24, 2005, interest began accruing at an annual rate of 25%, per theterms of the Note.

23

November 6, 2006.15

80. Interest had accrued on the loan totaling $355,161.41 as of the date of trial,

November 6, 2006.16

81. The total amount due on the Note as of the date of trial, November 6, 2006, was

$1,079,598.91.

82. Interest has continued accruing on the loan since November 6, 2006 at a rate of

$739.45 per day.

83. The vessel was re-sold following the judicial sale for $509,000. The Court finds

that this is the fair value of the vessel, minus the $50,900 commission paid to re-

sell the vessel, for purposes of calculating the deficiency judgment.

CONCLUSIONS OF LAW

As a preliminary matter, the Court seeks to clarify those issues that were

properly presented for trial and those issues that had already been decided prior to trial.

In this Court’s Order of April 27, 2006 [DE 165], summary judgment was granted in

favor of Plaintiff Ross and against Defendants with respect to Plaintiff’s claims of

foreclosure and breach of contract, as well as several of Defendants’ affirmative

defenses. The Court, in essence, found that Plaintiff was entitled to recover a


24

deficiency judgment on the promissory note unless Defendants were able to prove one

of the specific affirmative defenses left pending for trial. Also pending for trial were a

number of counterclaims asserted by Defendants that, if proven, could offset some or

all of the judgement owed to Plaintiff Ross on the promissory note.

Defendants have argued, both at trial and in their Proposed Findings of Fact and

Conclusions of Law, that the transaction should be set aside and the promissory note

and mortgage voided on the basis of two theories not previously plead in the case.

First, Defendants assert that Plaintiff’s failure to introduce the original note and

mortgage at trial is fatal to his claim of recovery on that note because copies of a

promissory note and mortgage are not admissible to the same extent as originals under

Florida law. As this Court explained in its Order of December 7, 2006 [DE 392],

however, the question of Plaintiff’s entitlement to recover under the promissory note

and mortgage was answered when the Court granted summary judgment on this issue

in April 2006. Plaintiff had no burden to prove his right to recover under the note at trial;

any burden of proof at trial was on the Defendants, as they sought to prove their

affirmative defenses and counterclaims. As such, introduction of the original

promissory note and mortgage was not required at trial, and this argument by

Defendants fails.

Second, Defendants argue that the transaction at issue is voidable at Chisholm’s

option because Warren Hayes acted as a dual agent for both Chisholm and Ross

during the transaction. Defendants cite to case law in support of their argument that

where an agent undertakes to represent both buyer and seller in a transaction without

full and complete disclosure of the nature of his representation, the transaction is


25

voidable regardless of whether any improper advantage was gained or any harm was

caused. See Quest v. Barge, 41 So.2d 158 (Fla.1941).

The Court notes at the outset that such a defense to enforcement of this contract

was not properly plead in this case. Defendants filed an Answer [DE 26] and two

subsequent Motions to Amend their Answer to add affirmative defenses and

counterclaims [DE 193 and 297], giving them ample opportunity to assert the defense

that Warren Hayes’ dual representation in this transaction justifies rescission of the

contract at the Chisholms’ option and serves as a defense to enforcement of the

contract. Indeed, the Chisholms knew, and asserted in their original Answer [DE 26],

that Warren Hayes acted on behalf of both parties to the transaction. However, at no

point prior to the eve of trial did Defendants assert that they had not consented to the

nature of Hayes’s involvement in this transaction, nor did they argue that their lack of

consent justified rescission of the contract in defense to Ross’s claims. The Court can

only conclude that this is yet another instance of the Defendants molding their

allegations and testimony to fit the legal theories proposed by counsel.

Defendants attempted to cure their failure to plead this affirmative defense by

making an ore tenus Motion at the conclusion of trial to conform the pleadings to the

evidence. When asked precisely what amendments were sought, Defendants made

the allegation that Warren Hayes acted as a dual agent and that this dual agency was

not consented to by the Defendants, but they still failed to articulate the affirmative

defense of rescission of the contract as a desired amendment. Had they done so, the

Court would have denied such a request. It is well settled in the federal courts that “in

suits seeking to avoid the effect of fraudulent contracts, pleading is of the utmost


26

importance” and that when rescission is relied upon as a defense to a contract, “it must

be specifically pleaded.” Jack Mann Chevrolet v. Associates Inv., 125 F.2d 778, 784

(6th Cir. 1942) (cited in Wright & Miller, Federal Practice and Procedure: Civil 3d §

1271). The policy reasons for requiring prompt and specific pleading of such a defense

are clear, especially as illustrated by the case at bar: rescission of the contract, even if

justified, could not be fully effected now, after a year of litigation, because the vessel

has been sold to new owners and title has transferred. Further, Defendants do not

provide, nor can the Court conceive of, any possible justification for waiting so long to

plead the core allegation of this defense–that the Chisholms did not consent to the role

Hayes played in the transaction. Surely the Chisholms themselves were in the best

possible position to know what the Chisholms did or did not consent to at the time of the

transaction. Such undue delay in making these allegations cannot be justified on the

record before this Court.

However, the point is a moot one, because even if Defendants had properly pled

this defense, it would fail on the evidence presented at trial. The law does not prohibit

an agent, such as Warren Hayes, from acting on behalf of both principals to a

transaction unless the parties have not consented to such representation. In Quest, the

court addressed a situation where a real estate broker acted on behalf of both the buyer

and the seller in negotiating the sale of property. 41 So.2d at 160. The inherent

conflicts of interest in that case were obvious–the buyer desired to get the lowest

possible price, while the seller desired to get the highest possible price. The broker

failed to disclose to the seller the extent of his relationship with the buyers, and the

court found his actions to be “insufficient to charge [the seller] with a full knowledge and


27

consent to the double agency.” Id.

In the case at bar, however, the alleged “dual agent” played a much more limited

role in the transaction, and that role was quite clear to both parties. Hayes was not

responsible for negotiating the terms of the deal, but rather was called in to memorialize

those terms on paper and create the legal structuring of the transaction to provide tax

benefits to both the Chisholms and to Ross. In that respect, the interests of the buyers

and seller were perfectly aligned with respect to Hayes’s representation. There is no

evidence that Hayes provided advice or counsel to either Chisholm or Ross as to the

substantive terms of the deal. Further, Chisholm knew that Ross had used the legal

services of Warren Hayes, and the law firm of Alley Maas, for years; indeed, this high

recommendation was the primary reason that Chisholm agreed to use Hayes for the

work on the Trumpy transaction. The Court made a finding of fact that Chisholm

understood fully the nature of Hayes’s representation in this matter, as well as any

potential conflicts of interest, and consented to that representation when he and Ross

agreed to use Hayes’s services.

It also bears noting that Hayes had no real conflict of interest in his work on this

transaction that would have required disclosure to the parties. Although he had a

longer working relationship with Ross than he did with Chisholm, his primary role in the

Trumpy transaction was to memorialize an agreement already reached by the parties

and to assist them both in realizing tax benefits–tasks in which Chisholm and Ross’s

interests were aligned. Accordingly, the Court can see no conflict of interest

disclosures that should have been made but were not, and the Court concludes that

Hayes had the intelligent consent of all parties to this transaction to any “dual


28

representation” that he may have carried out.

Finally, the Court notes that, per its previous Order on the Plaintiff’s Motions for

Summary Judgment [DE 369], the deficiency judgment to be awarded will be based on

the vessel’s fair value of $509,000, the resale price of the Trumpy following the judicial

sale, minus the commission paid to re-sell the vessel of $50,900.

The Court now turns its attention to the properly plead affirmative defenses and

counterclaims.

A. Unclean Hands

Defendants have asserted and attempted to prove that Plaintiff Ross should not

be permitted to recover under this contract because of his unclean hands. The

equitable principle of unclean hands provides that “whenever a party who seeks to set

the judicial machinery in motion and obtain some equitable remedy has violated

conscience or good faith, or another equitable principle in prior conduct with reference

to the subject at issue, the doors of equity will be shut . . .” 27A Am. Jur. 2d Equity §

126. The Court concludes that Defendants are entitled to no such defense. The Court

sees nothing in Plaintiff Ross’s actions to support a finding of unclean hands, and

everything in the Defendants actions to negate their entitlement to this defense. The

evidence before the Court supports only the conclusion that Defendants were the ones

to present false information, deceive, and defraud the Plaintiff, and that it is the

Defendants who come to court with unclean hands. As such, Defendants’ defense of

unclean hands is entirely without merit.

B. Set-Off and Recoupment


29

In this affirmative defense, Defendants argue that any damages to which they

are entitled must off-set Plaintiff’s entitlement to damages pursuant to the mortgage

foreclosure and the breach of contract. Although this allegation is a statement of the

obvious, the Court allowed Defendants to amend their Answer to add this defense

insofar as it defeats or diminishes Plaintiff’s entitlement to damages. However, as laid

out below, the Court finds that Defendants are entitled to no damages on any of their

counterclaims, and so this affirmative defense is moot.

C. Intentional/Negligent Breach of Fiduciary Duty

Breach of fiduciary duty is a recognized cause of action in Florida. See Doe v.

Evans, 814 So.2d 370, 374 (Fla. 2002). Under Florida law, fiduciary relationships may

be either express or implied. Capital Bank v. MVB, 644 So. 2d 515, 518 (Fla. Dist. Ct.

App. 1994). A fiduciary relationship is implied in law when “confidence is reposed by

one party and a trust accepted by the other.” Id. (quoting Dale v. Jennings, 107 So.

175, 179 (Fla. 1925)). A fiduciary relationship may be found “where there has been a

special confidence reposed in one, who in equity and good conscience, is bound to act

in good faith and with due regard to the interests of the one reposing the confidence.”

Atlantic National Bank v. Vest, 480 So. 2d 1328 (Fla. Dist. Ct. App. 1985). However,

such a fiduciary relationship typically arises only where one party knows or has reason

to know that the other party is placing trust and confidence in him, or is relying on him

for counsel and advice. Capital Bank, 644 So. 2d at 519. Such fiduciary relationships

may arise between lender and borrower, for example, where the lender bank and

borrower have an existing relationship, and the borrower seeks advice and counsel

from the bank as financial adviser. See id.


30

The Court concludes that no such fiduciary relationship was present in the

instant case. Plaintiff and Defendants did not know one another prior to the negotiation

of this transaction. They met on only a few occasions to negotiate the details of the

transaction, and there is no evidence to indicate that the Chisholms sought out Ross’s

advice regarding the purchase of the vessel. Even if they had requested Ross’s advice

and counsel, such a request could not have been considered genuine, given the

extensive misrepresentations made to Ross regarding their financial situation. The

Court notes that the Chisholms did not place their trust and confidence in Ross even so

far as to be truthful with him about the status of their business and their financial

resources. Thus, for the Chisholms to now claim that they placed their trust and

confidence in Ross, and depended on his advice and counsel, flies in the face of the

clearly established evidence to the contrary and is totally lacking in credibility. The

Court finds that no fiduciary relationship existed between Ross and the Chisholms, and

as such, the Chisholms may not recover for either intentional or negligent breach of

fiduciary duty.

D. Fraud/Negligent Misrepresentation

Pursuant to this Court’s Order [DE 276], Defendants were permitted to amend

their Answer to add claims for fraud and negligent misrepresentation based on the

following alleged omissions: (1) that Plaintiff received a $100,000 credit toward his

purchase of a different vessel from the broker; (2) that Plaintiff never actually paid the

$980,000 loan to the broker; (3) that Plaintiff was to pay the broker an additional seller’s

commission through installments as Defendants repaid the loan; (4) that Plaintiff was to

repay a loan from the broker in installments based on Defendants’ repayment, and (5)


When sitting in admiralty, courts generally apply common law fraud. Diesel17

“Repower” v. Islander Invs., 271 F.3d 1318 (11th Cir. 2001). Nevertheless, pursuant tothe promissory note’s chice of law clause, which indicates that Florida law governs, andfinding no conflict with substantive admiralty law, the Court shall apply Florida law withregard to these claims. Stoot v. Fluor Drilling Servs., 851 F.2d 1514, 1517 (5th Cir.1988).

31

that Plaintiff was required to repossess the vessel and return it to the broker in the

event of a default. These alleged omissions are essentially the “behind the scenes

deals” to which Defendants frequently refer in their arguments.

A tortfeasor may commit fraud through nondisclosure, but “only when a duty to

make such disclosure exists.” Friedman v. Am. Guardian Warranty Servs., 837 So. 2d

1165, 1166 (Fla. Dist. Ct. App. 2003). “This duty arises when one party has17

information which the other party has a right to know because there is a fiduciary or

other relation of trust or confidence between the two parties.” Id. As discussed above,

the Court concludes that there was no fiduciary relationship or other relationship of trust

between Ross and the Chisholms, and no duty on the part of Ross to provide this

information to the Chisholms ever arose. Further, to prove a claim for fraud, the

Chisholms must show that Ross intended to induce their reliance on representations he

knew to be false or omissions of information he had an affirmative duty to disclose.

See Susan Fixel, Inc. v. Rosenthal & Rosenthal, 842 So. 2d 204, 209 (Fla. Dist. Ct.

App. 2003). The Court concludes that Ross had no such intent to defraud the

Defendants. Finally, to prove a claim for fraud, the Chisholms must show that they

were injured by the misrepresentations or omissions. Id. No such injury can be shown

in this case. Although Defendants make much of these supposed “behind the scenes

deals” of which they were not made aware, they have been unable to show how these


32

deals affected them in any way. Other than making conclusory and self-serving

statements that they would not have gone through with the transaction had they known

about these deals, which the Court finds to be lacking in credibility, Defendants have

offered no proof of any injury caused by the alleged omissions. As such, the Court

concludes that Defendants have failed to prove a claim for fraud.

A claim for negligent misrepresentation may arise where a tortfeasor “supplies

false information for the guidance of others in their business transactions . . . if [the

tortfeasor] fails to exercise reasonable care or competence in obtaining or

communicating the information.” First Fla. Bank, N.A. v. Max Mitchell & Co., 558 So. 2d

9, 12 (Fla. 1990). Although a claim for negligent misrepresentation does not include the

intent requirements of a claim for fraud, recovery under a theory of negligent

misrepresentation is still based on liability for pecuniary losses caused by the alleged

misrepresentation. Defendants have proven no pecuniary loss caused to them by the

alleged omissions, and so their claim for negligent misrepresentation must also fail.

E. Florida Deceptive and Unfair Trade Practices Act

Defendants were permitted to amend their Answer to include claims under the

Florida Deceptive and Unfair Trade Practices Act as to the same specific omissions

listed above in the discussion of Defendants’ claims for fraud and negligent

misrepresentation. The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”)

broadly proscribes “unfair methods of competition, unconscionable acts or practices,

and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Fla.

Stat. § 501.204(1). To recover under the FDUTPA, a consumer must “plead and prove

that he or she was aggrieved by the unfair and deceptive act.” Veal v. Crown Auto


33

Dealerships, No. 04-CV-323-T-27; 2006 WL 435693, *4; 2006 U.S. Dist. LEXIS 8243,

*13 (M.D. Fla. Feb. 21, 2006) (quoting Macias v. HBC of Fla., 694 So. 2d 88, 90 (Fla.

Dist. Ct. App. 1997)). Defendants allege that the omissions listed above were

deceptive, unfair, misleading, and unconscionable. However, as with the claims for

fraud and negligent misrepresentation, Defendants have failed to prove what harm or

injury was caused to them as a result of the alleged omissions. Absent any evidence

whatsoever of injury, as discussed above, this Court cannot conclude that Defendants

have proven a claim under the FDUTPA.

F. Florida Consumer Collection Practices Act

The Florida Consumer Collection Practices Act (“FCCPA”) proscribes a broad

range of activities on the part of persons collecting debts. See Fla. Stat. § 559.72.

Defendants allege that Plaintiff violated the FCCPA by disclosing information affecting

their financial reputation and regarding their payment status to other persons who did

not have a legitimate business need for the information. See Fla. Stat. § 559.72 (5). At

trial, Defendants provided evidence to show that Ross communicated with Brown &

Brown regarding his difficulties in locating the vessel for purposes of foreclosure and

advised them when he learned that a captain may not be on board, as required by the

insurance policy. However, as the evidence at trial clearly showed, the location of the

vessel and the presence of a captain to operate the vessel are both matters relevant to

the renewal or non-renewal of the insurance policy. Thus, the insurance underwriters

had an obvious business need for the information that was provided to them, and Ross,

as loss payee under the breach of warranty policy, had an obvious and legitimate

reason for communicating with Brown & Brown about these matters. As such, the


34

Court cannot find that Brown & Brown lacked a legitimate business interest in the

information conveyed to them by Ross and his agents, or indeed that any information

was improperly conveyed to Brown & Brown. Accordingly, the Court concludes that

Defendants have not proven a claim under the FCCPA.

G. Federal Truth in Lending Act

Defendants were permitted to amend their Answer to include a counterclaim for

violations of the Federal Truth in Lending Act (“TILA”) because they alleged that Plaintiff

is a “creditor” under the meaning of the Act: a party who regularly extends credit which

is payable by agreement in more than four installments or for which the payment of a

finance charge is or may be required as contemplated by TILA. See 15 U.S.C. §

1602(f). Defendants also alleged that Ross, as a “creditor” under the meaning of the

Act, failed to provide the required disclosures to the Defendants. However, at trial,

Defendants were able to show only one instance in which Plaintiff had extended credit

in the past. Such a showing is hardly adequate to prove that Plaintiff “regularly

extends” credit, as required to establish that he is a “creditor” within the meaning of the

Act. Accordingly, the Court concludes that Defendants have failed to prove their claim

under the Federal Truth in Lending Act.

CONCLUSION

For the foregoing reasons, it is hereby ORDERED AND ADJUDGED as follows:

1. Plaintiff Richard Ross shall recover $659,950.31 from Defendants Colin

and Andrea Chisholm on his mortgage foreclosure and breach of contract


35

claims, including all interest due on the note through the date of this

Judgment.

2. Defendants Colin and Andrea Chisholm failed to prove any of their

counterclaims. Accordingly, Defendants will take nothing from this action.

3. Plaintiff Richard Ross shall recover reasonable costs and attorney’s fees

expended in the process of foreclosure, filing and prosecution of this

action, and defense of Defendants’ counterclaims.

4. A separate Final Judgment will be entered consistent with the Court’s

Findings of Facts and Conclusions of Law.

DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,

Florida, on this 28th day of December, 2006.

Copies provided to:

John J. Tomaselli, Esq.Michael W. McLeod, Esq.Ronald S. Nisonson, Esq.


in admiralty chisholm, in personam andrea aras, her...

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