DK Arena, Inc. v. Eb Acquisitions I, LLC

• Decision Date: 28 March 2013
• Docket Number: No. SC10–897.,SC10–897.
• Citation: 112 So.3d 85
• Parties: DK ARENA, INC., Petitioner, v. EB ACQUISITIONS I, LLC, Respondent.
• Court: Florida Supreme Court

112 So.3d 85

DK ARENA, INC., Petitioner,

v.EB ACQUISITIONS I, LLC, Respondent.

No. SC10–897.

Supreme Court of Florida.

March 28, 2013.

Alvin Bruce Davis, Tania Cruz and Jeffrey Brian Grossfeld of Squire Sanders & Dempsey, LLP, Miami, FL, for Petitioner.

Gary C. Rosen, Kevin Markow, Daniel Lawrence Wallach and Thomas D. Cantwell of Becker & Poliakoff, P.A., Fort Lauderdale, FL, for Respondent.

QUINCE, J.

Florida's Statute of Frauds provides that all contracts for the sale of land must be memorialized in a written document signed by the parties to the contract or their lawful representatives. See§ 725.01, Fla. Stat. (2012). Nearly fifty years ago, in Tanenbaum v. Biscayne Osteopathic Hospital, Inc., 190 So.2d 777, 779 (Fla.1966), this Court held that the doctrine of “promissory estoppel” is not an exception to the Statute's requirements under Florida law. In this action, petitioner DK Arena, Inc. seeks review of the decision of the Fourth District Court of Appeal in DK Arena, Inc. v. EB Acquisitions I, LLC, 31 So.3d 313 (Fla. 4th DCA 2010), in which the district court held that an oral agreement to modify the parties' contract for the sale of real property was valid and enforceable, notwithstanding the Statute of Frauds, under “the doctrine of estoppel.” Id. at 322.

We have jurisdiction. Seeart. V, § 3(b)(3), Fla. Const.¹ For the reasons set forth below, we quash the decision of the Fourth District in DK Arena to the extent that it is inconsistent with this opinion and remand the case to the district court for further proceedings.

FACTS AND PROCEDURAL HISTORY

The dispute in this case centers on a contract for the sale of real property known as the Mangonia Park Jai Alai Fronton, located in Mangonia Park, Florida. In July 2004, EB Acquisitions I, LLC (“EB”), the respondent in this case, agreed to purchase the fronton property from petitioner DK Arena, Inc. (“DK Arena”). When the deal collapsed, DK Arena filed suit against EB in circuit court in Palm Beach County. In response, EB asserted several counterclaims. Following a bench trial on November 10, 2008, the trial court issued a final judgment finding in favor of EB on all claims. DK Arena appealed the final judgment to the Fourth District, which affirmed in part and reversed in part. See DK Arena, 31 So.3d at 316. This Court granted review of the Fourth District's decision. See DK Arena, Inc. v. EB Acquisitions, LLC, 47 So.3d 1288 (Fla.2010) (table).

Background

The facts of the case, as presented at trial, are as follows. In 2004, the fronton property belonged to petitioner DK Arena, Inc., a Delaware corporation wholly owned by celebrity boxing promoter, Don King. King originally acquired the property in 1999 with the intent of converting it into a boxing arena. When that use was found to be infeasible, the property was made available for sale. The property included a Tri–Rail station operated through a lease to the South Florida Regional Transit Authority. John Markey, CEO of EB Developers, a now-defunct development firm, was made aware of the property's availability during a meeting with a member of the Transit Authority's board of directors. Markey determined that the site would be suitable for a mixed-use commercial and residential development that would incorporate the existing Tri–Rail station. Markey was introduced to King, who agreed to sell the property. Markey formed respondent, EB Acquisitions I, LLC, to facilitate the purchase.

On July 20, 2004, EB entered into a written contract with DK Arena in which EB agreed to purchase the fronton property for $23 million. The contract required EB to place an initial deposit of $1 million into an escrow account. The contract also called for a due diligence period of sixty days from the date of the contract's signing. During that time, EB was permitted to conduct any inspections of the property it deemed necessary. If EB gave notice of cancellation to DK Arena within the sixty-day due diligence period, the contract called for the return of EB's deposit. Failure to give notice of cancellation would be considered EB's “as is” acceptance of the property. Closing was to occur within thirty days of the expiration of the due diligence period, at which time EB was required to pay DK Arena the remaining $22 million of the purchase price. The contract further provided that any modifications to the contract would “not be binding unless in writing, signed and delivered by the party to be bound.”

On the same day the contract was signed, the parties also executed an addendum to the contract. The addendum clarified that EB was permitted to terminate the agreement at any time during the due diligence period and stated that if EB did not give notice of termination within the sixty-day period, the deposit would be released to DK Arena. In addition, paragraph fourteen of the addendum, titled “Land Use Application,” required DK Arena and “and its principal, Mr. Don King,” to participate in the process of seeking local government approval for EB's development project and to participate in the project's marketing and promotion. At trial, King said he understood this provision to mean that he was required to use his personal influence to lobby in support of approval for the project. Despite King's participation, the addendum stated: “This transaction does not create a joint venture or partnership relationship among the Parties.”

Shortly after the contract and the addendum were executed, Markey proposed that the parties amend the agreement to make King a partner in EB's development project. The parties continued to negotiate the terms of this proposed joint venture while EB began to seek government approval for the project. On September 13, 2004, the parties executed a written amendment to the contract extending the due diligence period by fourteen days. Markey testified that over the course of several meetings the parties worked out the key terms of the partnership agreement, which Markey said King agreed to. In his own testimony, King disputed Markey's claim that he agreed to the joint venture, explaining that while he listened to Markey's proposal and passed it on to his lawyers for review, he never agreed to it.

On October 4, the day the extended due diligence period was to expire, King, Markey, and their respective attorneys met at King's office. The parties discussed the status of the development project and Markey expressed concern that the project would not be approved by the Mangonia Park municipal government. Markey was also concerned that the due diligence period would expire before the terms of the parties' joint venture agreement could be “memorialized.” King's actions at this point were disputed at trial. According to Markey, King agreed to hold the due diligence period in indefinite “abeyance” until the joint venture agreement could be completed. By contrast, King asserted that while he agreed to an extension of the due diligence period, the extension was limited to one week and the deposit was to be due on October 11 unless EB cancelled the contract before that date. ² Regardless, it is undisputed that the parties failed to make any written memorandum of the alleged agreement.

The following evening, Markey and King attended a meeting of the Mangonia Park Town Council. Markey presented site plans and renderings of the project, and King described the benefits he believed the project would bring to the community. The council expressed concern that it had not been given enough notice to review the proposal and scheduled an informational meeting for October 26, which King stated he would attend. Following the October 4 meeting, King met several times with County Commissioner Addie Greene. King testified that he tried to obtain Greene's support for the project. Greene told King that MGM had approached her about building an entertainment facility on the property. She encouraged King to review MGM's proposal.

King subsequently failed to attend the October 26 town council meeting. As described by the district court:

Markey spoke on behalf of the project, but the council's skepticism “rapidly turned to hostility.” Commissioner Greene addressed the meeting and disclosed MGM's proposal for the arena property, which would “bring over 2,000 jobs” to the county. She said she had told King that the county preferred the MGM project, not Markey's. Both Markey and his lawyers believed that King's absence from the meeting was “very damaging to the prospect[s]” of the project.

DK Arena, 31 So.3d at 320 (alteration in original). King testified at trial that from his perspective, he believed the escrow payment was due on October 11. He said that once that date had passed and EB failed to release the deposit, he considered EB to be in breach of the contract. Thus, King believed that he was no longer obligated to attend the October 26 meeting.

Evidence was presented at trial that on October 25, the day before the town council meeting, DK Arena faxed a demand to the escrow agent asserting that the due diligence period had expired and demanding the release of the deposit. However, EB did not receive notice of this demand until October 27. Based on the events of the town council meeting the previous day, EB instructed the escrow agent not to release the payment. EB then sent a letter to DK Arena asserting that King had breached the agreement by failing “to cooperate in the governmental and quasi-governmental processes.” EB demanded a return of the deposit, but DK Arena instructed the escrow agent not to release the funds to EB.

DK Arena filed suit alleging a single count of breach of contract and seeking the release of the $1 million escrow deposit. EB filed an answer and asserted several counterclaims, including breach of contract, breach of an oral joint venture agreement, and breach of fiduciary duty. The trial court issued its final judgment on December 5, 2008, finding in favor of EB on all claims.

The Trial Court's Final...