Deer Valley Realty, Inc. v. SB Hotel Assocs. LLC

• Decision Date: 27 April 2016
• Docket Number: Nos. 4D14–2051,4D15–830.,s. 4D14–2051
• Citation: 190 So.3d 203
• Parties: DEER VALLEY REALTY, INC., Appellant, v. SB HOTEL ASSOCIATES LLC, a Delaware limited liability company, et al., Appellee.
• Court: Florida District Court of Appeals

190 So.3d 203

DEER VALLEY REALTY, INC., Appellant,
v.
SB HOTEL ASSOCIATES LLC, a Delaware limited liability company, et al., Appellee.

Nos. 4D14–2051
4D15–830.

District Court of Appeal of Florida, Fourth District.

April 27, 2016.

Raoul G. Cantero, David P. Draigh and Jesse L. Green of White & Case LLP, Miami, and Joseph E. Altschul of Joseph E. Altschul, LLC, Pembroke Pines, for appellant.

Bruce S. Rogow and Tara A. Campion of Bruce S. Rogow, P.A., Fort Lauderdale, and Herman J. Russomanno, Robert J. Borrello and Herman J. Russomanno, III of Russomanno & Borrello, P.A., Miami, for appellee.

MAY, J.

A failed real estate investment resulted in an action to recoup monetary losses. The plaintiff now appeals a judgment for the defendants and a consequent award of attorney's fees and costs. Concerning the underlying trial, the plaintiff argues the trial court erred in: (1) admitting “market crash” evidence and excluding the plaintiff's rebuttal evidence; (2) excluding evidence challenging the credibility of a defense witness; (3) entering a directed verdict for Trump Florida Management, LLC; and (4) denying the plaintiff's motion to amend the complaint to assert a punitive damages claim.¹ The plaintiff also appeals the award of attorney's fees and costs based on separate proposals for settlement and section 817.41(6), Florida Statutes (2014). We affirm the final judgment and the cost judgment without further comment. We reverse the final judgment for attorney's fees.

The plaintiff's complaint was based on the “Offering Documents” that explained Donald Trump's role in the hotel project, which included a license to use his name and brand and provided for Trump Florida Management to act as the initial hotel manager. The Property Report stated in capital letters that “the condominium shall initially be known as the Trump International Hotel ... pursuant to a license agreement with Donald J. Trump. If that license agreement is terminated, rights to the Trump name and servicemarks must cease. This may have a negative impact on the value of your unit.”

The Purchase Agreement and other documents had similar disclosures. The Purchase Agreement contained the following statement: “Buyer has not relied upon ... any representations as to: ... (f) any particular hotel affiliation or maintaining any existing hotel affiliation.”

SB Hotel Associates LLC (“SB Hotel”) obtained a temporary certificate of occupancy in October 2008. A general manager and nine other hotel executives, selected by Donald Trump, were hired for the hotel opening. When buyers entered into reservation and purchase agreements in 2005, the real estate market was at a historic high. By the time the certificate of occupancy was issued and closings were scheduled in May 2009, the market had collapsed.

On May 5, 2009, in an effort to ensure compliance with the “Trump Standard,” Trump Marks Fort Lauderdale LLC (“Trump Marks”), the licensor under the license agreement, issued a default notice to SB Hotel, identifying particular issues that Donald Trump believed SB Hotel needed to address. Trump Marks did not terminate either the license agreement or

190 So.3d 206

hotel management agreement, and did not attempt to remove the Trump name from the project.

On May 13, 2009, SB Hotel sent a letter to each buyer, which scheduled a walk through inspection and closing date of May 28, 2009. The letter advised buyers of the existence of the Trump Marks default notice. It also advised that “[g]iven the uncharted economic climate that we are adapting to, and the impact that the economy has had on both the real estate and hospitality industries, we do not believe that the hotel operation will open if purchasers have closed on fewer [than] fifty percent (50%) of the units.” It informed buyers that they would not be permitted to occupy their units until the hotel opened.

Of the 170 buyers, only one showed up to close. Not long after, the lender failed and was seized by the FDIC. The project went into foreclosure, and SB Hotel's interest was wiped out.

The plaintiff filed a third amended complaint, alleging counts for violation of the federal Interstate Land Sales Full Disclosure Act (“ILSA”), fraud, negligent misrepresentation, fraudulent concealment, and misleading advertising in violation of section 817.41,...