Arvilla Motel, Inc. v. Shriver

• Decision Date: 03 December 2004
• Docket Number: No. 2D04-1395.,2D04-1395.
• Citation: 889 So.2d 887
• Parties: ARVILLA MOTEL, INC., a Florida corporation, Appellant, v. Stewart SHRIVER, Appellee.
• Court: Florida District Court of Appeals

889 So.2d 887

ARVILLA MOTEL, INC., a Florida corporation, Appellant, v. Stewart SHRIVER, Appellee.

No. 2D04-1395.

District Court of Appeal of Florida, Second District.

December 3, 2004.

Rehearing Denied January 12, 2005.

Patricia Fields Anderson, St. Petersburg, for Appellant.

Peter D. Graham of Zacur & Graham, P.A., St. Petersburg, for Appellee.

VILLANTI, Judge.

Arvilla Motel, Inc. (Arvilla), challenges a final judgment that required it to specifically perform on a contract to sell the Arvilla Motel, valued at over 1.5 million dollars, to Stewart Shriver. The dispute between Arvilla and Shriver centers around the closing date and a "time is of the essence" clause. The trial court found that the "time is of the essence" clause was either waived or modified and Shriver did not breach the contract by failing to timely close. We disagree and therefore reverse the trial court's order granting specific performance.

On July 19, 2002, Casimir and Joann Kowalczyk, the sole shareholders in Arvilla, agreed to sell their gulf-front motel on Treasure Island to their next-door neighbor, Shriver, for $1,550,000. Casimir, as president of Arvilla, and Shriver signed a standard form commercial real estate contract. The contract contained a "time is of the essence" clause in bold letters on the first page. The contract set the closing date for the sale of the motel on September 30, 2002. On July 25, 2002, within one week of the date of the original contract, Shriver and Casimir specifically agreed to move the closing date to August 26, 2002, in a signed addendum to the contract. The Kowalczyks testified that the closing date was important to them because they were moving to Chicago and wanted to close before Labor Day weekend.

Over the next month, Shriver and the Kowalczyks had a rather informal business relationship. The contract set deadlines for delivering the title commitment, a survey showing the coastal construction control line, environment reports, rent rolls, permits, certificates of occupancy, and other records. Although the Kowalczyks delayed in complying with these deadlines, Shriver never complained.

As the closing date approached, confusion erupted. The general counsel of the bank handling Shriver's assumption of Arvilla's loan, John Van Voris, said that he called the Kowalczyks' attorney, David Bacon, on August 16. Van Voris said that he spoke to assistant Jodi Furlong, who told him that the parties would establish an exact closing date when Bacon returned from vacation. Furlong denies that this conversation occurred. On August 21, 2002, Shriver and the bank's lending officer, Richard Callihan, visited the Kowalczyks at the Arvilla Motel. During that visit, someone¹ told the Kowalczyks that their attorney, Bacon, would not be able to close until August 30 because he was on vacation. The Kowalczyks were visibly upset and said, "[O]kay, we'll contact Mr. Bacon." When Shriver and Callihan left the motel, Casimir immediately called Bacon's office to speak to Furlong. Furlong told Casimir that closing was still set for August 26, but the bank would not be ready to close until August 30. Meanwhile, Shriver immediately went to the office of his real estate broker, Michael Seimetz. He told Seimetz that the closing would be postponed because the bank could not finish the paperwork until August 30. Shriver told Seimetz that the Kowalczyks had been informed of the postponement and showed little or no reaction. Consequently, Seimetz immediately faxed a letter to Bacon's office, informing him that the parties had all met that day to discuss postponing the closing until August 30. Bacon was not in his office because he was on vacation. However, upon receiving the fax, Furlong called Bacon to tell him about the letter and her conversation with Casimir. Bacon dictated and sent a letter to Seimetz on the same day, reiterating that the closing must occur on August 26, in accordance with the contract's terms. On August 23, Shriver's attorney, Peter Graham, appeared on the scene, sending a letter to Bacon stating that the closing could not occur until August 30 because he had not had sufficient time to review the title commitment. Bacon responded on August 26, stating that the contract had never been amended to extend the closing date and assuring Graham that there were "no title matters of concern."

In the meantime, the Kowalczyks accepted a backup offer for $1,600,000 from another buyer, James Maurer. The backup offer was set to close on August 27 if the August 26 closing with Shriver did not go through. August 26 came and went without a closing. Late in the day, Casimir notified Shriver that the contract was terminated for failure to close. On August 27, the Kowalczyks prepared to close the deal with Maurer, but were unable to because Shriver filed a lis pendens on the property. The Kowalczyks instead sold all the stock in their company, Arvilla, to Maurer and moved to Chicago. Nevertheless, the bank continued to draft loan papers for Shriver, which were not actually finalized until September 10.

In October 2002, Shriver sued Arvilla for specific performance, claiming that the Kowalczyks had agreed to close the transaction on August 30, 2002. After a nonjury trial, the court concluded that Arvilla had either waived or modified the "time is of the essence" clause and ordered specific performance of the contract.²

A "time is of the essence" clause is not necessarily a "stock phrase." Rybovich Boat Works, Inc. v. Atkins, 587 So.2d 519, 521 (Fla. 4th DCA 1991). Where it clearly appears from the contract that time is essential, courts will recognize the parties' expressed intention. Id. However, this court warned against trying to "achieve this result by merely putting into the contract the words `time is of the essence of this contract.'" Jackson v. Holmes, 307 So.2d 470, 472 (Fla. 2d DCA 1975) (quoting 3A Corbin, Contracts § 715 (1960)). "[T]o give effect to such a cryptic provision, [the court must know]: What performance at what time is a condition of which party's duty to do what?" Id. at 472 (quoting 3A Corbin, Contracts § 715). We also quoted Corbin's advice not to apply a general provision that time is of the essence to all of the many "promises for sundry performance, varying in amount and importance," because parties often insert the provision in the contract without any realization of its significance. Id."In short, a `time is of the essence' provision will be given effect in an equitable proceeding [provided] it is shown to be clearly applicable to the contract requirement against which it is sought to be applied." Id. (refusing to apply a "time is of the essence" clause contained within a paragraph concerning the ultimate closing to a provision concerning bank loan certification).

In Arvilla's case, there was an express "time is of the essence" clause in the contract between Arvilla and Shriver. The first page of the contract plainly states in bold letters, "Time is of the essence in this Contract." While this clause was contained in a standard printed form, the parties clearly intended it to apply to the closing date. It is contained under the heading "PURCHASE AND SALE," apparently referring to ultimate sale of the motel. Jackson warns against finding a general "time is of the essence" provision applicable to all of the many promises for sundry performance. Here, Casimir and Shriver specifically agreed in an addendum to move the closing date to over a month earlier than specified in the contract — the closing date was singled out as being significant. There was an expressed "time is of the essence" clause in the contract, and the addendum, which referenced the contract, specifically addressed an earlier closing date, signifying that it was the intention of the parties to close on August 26.

Because the record reflects that the parties clearly intended to make time essential as to the closing date, we conclude that Arvilla had "an immediate right to cancel the contract if the [buyer was] unable to timely demonstrate an ability" to perform. See Garcia v. Alfonso, 490 So.2d 130, 131 (Fla. 3d DCA 1986). Arvilla, the nondefaulting party, was not required to grant an extension of time for the closing and was within its rights to declare forfeiture after Shriver made no attempt to close on August 26. See Seabreeze Rest., Inc. v. Paumgardhen, 639 So.2d 69 (Fla. 2d DCA 1994) (finding that where express language of the contract made time of the essence with regard to a November 30 closing date, seller had right to refuse purchaser's request for extension and could thereafter, on December 2, demand release of $10,000 escrow deposit because the purchaser failed to close by November 30). Because there was a valid "time is of the essence" clause that specifically applied to the closing date, we turn to the trial court's ruling that it was either modified or waived.

Shriver argues that the Kowalczyks orally agreed to extend the closing date until August 30. A written contract may be modified by an oral agreement if the parties have accepted and acted upon...