Blue Lakes Apartments, Ltd. v. George Gowing, Inc.

• Decision Date: 13 March 1985
• Docket Number: No. 83-1609,83-1609
• Citation: 464 So.2d 705,10 Fla. L. Weekly 655
• Parties: 10 Fla. L. Weekly 655 BLUE LAKES APARTMENTS, LTD., Appellant/Cross Appellee, v. GEORGE GOWING, INC., Appellee/Cross Appellant.
• Court: Florida District Court of Appeals

Page 705

464 So.2d 705

10 Fla. L. Weekly 655

BLUE LAKES APARTMENTS, LTD., Appellant/Cross Appellee, v. GEORGE GOWING, INC., Appellee/Cross Appellant.

No. 83-1609.

District Court of Appeal of Florida Fourth District.

March 13, 1985.

Peter Sachs and Spencer M. Sax of Sachs & Weiss, P.A., Boca Raton, for appellant/cross appellee.

Philip J. Gouze, Fort Lauderdale, for appellee/cross appellant.

HURLEY, Judge.

This is an appeal from a breach of contract action involving the purchase and sale of a condominium unit. It questions whether the seller was guilty of anticipatory repudiation and, if so, whether the trial court correctly calculated the buyer's damages. We affirm in part and reverse in part.

Blue Lakes Apartments, Ltd. (Blue Lakes/seller) is the developer of a large condominium complex in Broward County. George Gowing, Inc. (Gowing/buyer) worked on the project as a subcontractor doing interior trim work. When the units were first offered for sale, well before their completion, Gowing contracted to purchase two identical units for $54,000 apiece. He planned to resell them for a profit and, in fact, later resold one of the units for $72,000. This appeal centers on the contract for the other unit.

The contract called for a deposit of $5,400 and contained the following pertinent provisions:

CLOSING: ... This transaction shall be closed upon notification from the Seller to the purchaser....

DEFAULT BY PURCHASER: Purchaser's failure to close this transaction ... shall be considered a breach of this Agreement and all monies deposited hereunder together with interest ... may be retained by Seller as agreed and liquidated damages....

DEFAULT BY SELLER: In the event the Seller fails to close ... Purchaser shall have the right prior to closing only either to cancel and terminate this Agreement, in which event Purchaser's damages shall be limited to the return of the entire deposit ... without interest ... Neither party shall have the right of specific performance. ¹

The parties also executed a mortgage financing rider which, by its terms, became part of the contract. The rider indicated that Gowing desired "an institutional mortgage for financing the purchase of the ... Condominium Unit from a lender recommended by the Seller." The principal sum of the mortgage was to be $48,600 payable over twenty-nine years "at the prevailing rate of interest in effect at the time of closing." The rider further provided that, as an alternative to institutional financing, "the Seller, at its sole option, shall have the right to provide mortgage financing by taking back a purchase money mortgage...." In this regard, the rider granted the Seller "the right to reject the Purchaser's credit if it proves inadequate, in which event, the Seller may return to the Purchaser all deposits ... and the parties will be mutually relieved from all liability...."

Pursuant to the rider, Blue Lakes recommended Biscayne Federal Savings & Loan Association ("the bank") to which Gowing submitted a loan application. Through a mix-up, the bank failed to notify Gowing that his loan had been denied. (The same bank approved a loan for Gowing's other unit.) The bank did notify Blue Lakes, however, which in turn instructed its attorney to return Gowing's deposit. Accordingly, the attorney sent a check for $5,400 to Gowing, stating that it represented "a return of your deposit and the cancellation of your contract in accordance with your instructions." By this time, the apartments had begun to appreciate in value and were selling for approximately $60,000. Consequently, Gowing returned the check immediately, expressing the view that the contract remained "in full force and effect." Blue Lakes, however, stood firm and again returned the check. The accompanying letter stated that the seller was invoking its rights under the last paragraph of the mortgage financing rider.

Within days, Gowing instituted suit for specific performance. ² The case was eventually tried by the court sitting without a jury. At its conclusion, the court ruled for Gowing, awarding $6,000 compensatory damages, $12,000 punitive damages, plus costs. The court, however, refused to honor the contractual provision for attorney's fees to the prevailing party. Its rationale was that the verdict exacted a sufficient penalty from the seller. Both parties appealed.

Blue Lakes first contends that the trial court erred by finding a breach of contract. According to its view, the mortgage financing rider created a condition precedent and, thus, all contractual obligations dissolved when Gowing failed to obtain financing from Biscayne Federal or the seller. This interpretation, however, is not supported by the rider's plain language. Nowhere does it state that the buyer is restricted to the one institutional lender recommended by the seller. Indeed, at oral argument, Blue Lakes' counsel candidly admitted that the rider left the buyer free to obtain financing from the lender of his choice. Furthermore, the rider does not prohibit the buyer from closing with cash, a point conceded by the seller throughout the case. Finally, we note that the mortgage financing rider was drafted by the seller. This too augurs against the rigid interpretation advanced by the seller. If there is any "doubt as to the meaning the parties intended by the contract language, the language will ordinarily be interpreted in a light less favorable to the party drawing the contract." MacIntyre v. Green's Pool Service, Inc., 347 So.2d 1081, 1084 (Fla. 3d DCA 1977). Thus we hold that the trial court properly rejected the seller's stringent interpretation.

The parties' contract gave the seller the right to schedule a closing after reasonable notice to the buyer. Rather than follow this route, the seller terminated the contract by twice returning the buyer's deposit. It is difficult to conceive of a more clear-cut act of repudiation. "The doctrine of anticipatory repudiation is part of the law of contracts in Florida." Southern Crane Rentals, Inc. v. City of Gainesville, 429 So.2d 771, 773 (Fla. 1st DCA 1983).

(1) Where an obligor repudiates a duty before he has committed a breach by non-performance and before he has received all of the agreed exchange for it, his repudiation alone gives rise to a claim for damages for total breach.

(2) Where performances are to be exchanged under an exchange of promises, one party's repudiation of a duty to render performance discharges the other party's remaining duties to render performance.

Therefore, the nonbreaching party is relieved of its duty to tender performance and has an immediate cause of action against the breaching party.

Hospital Mortgage Group v. First Prudential Development Corp., 411 So.2d 181, 182 (Fla.1982) (quoting Restatement (Second) of Contracts § 253 (1979)).

Anticipatory repudiation does not automatically entitle the non-breaching party to damages. It "obviates the requirement that the conditions be performed, but not that they be performable." Ibid.

The holder of the duty based upon a condition precedent cannot profit from an anticipatory repudiation of a contract that he would have breached himself. It follows that if performance of the conditions precedent is excused the ability to perform them must still be shown.

Hospital Mortgage...