Garfinkle, Matter of
| Decision Date | 12 April 1982 |
| Docket Number | No. 81-5098,81-5098 |
| Citation | 672 F.2d 1340 |
| Parties | In the Matter of Barbara GARFINKLE, Bankrupt. Arthur DOOLEY, Trustee, and Penthouse International, Ltd., Plaintiffs-Appellants, v. Kenneth J. WEIL, Trustee in Bankruptcy, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Gunn, Venney & Buhler and Lefrak, Fisher, Myerson & Mandell, Robert E. Venney, Miami, Fla., for plaintiffs-appellants.
Frates, Floyd, Peterson, Stewart & Greer, James B. Tilghman, Jr., Miami, Fla., for defendant-appellee.
Appeal from the United States District Court for the Southern District of Florida.
Before GODBOLD, Chief Judge, RONEY and WOOD *, Circuit Judges.
This is an appeal from the United States District Court for the Southern District of Florida which upheld the Findings of Fact and Conclusions of Law of the Bankruptcy Court. Appellants, Penthouse International, Ltd. (hereinafter "Penthouse") and Arthur Dooley, Trustee and disclosed agent of Penthouse, seek to recover $500,000 deposited with the appellee, Kenneth J. Weil, Trustee in Bankruptcy in the Estate of Barbara Garfinkle, Bankrupt, pursuant to a Contract for Purchase and Sale (hereinafter the "Contract") of a Miami Beach, Florida oceanfront hotel, the Eden Roc (hereinafter the "Hotel"). We affirm.
The Barbara Garfinkle bankruptcy estate included a parcel of real property upon which the Hotel was located. In 1978, the legalization of casino gambling in Dade County, Florida, which incorporates Miami Beach, became the subject of a state-wide referendum. In late September or early October of 1978, Dooley approached the Trustee in Bankruptcy with regard to buying the Hotel.
The parties began negotiating a contract and discussed several matters relevant to this appeal. First, Dooley demanded as a condition of negotiation that the Bankruptcy Court sign and approve any contract before November 7, 1978, the day of the referendum vote. Although the outcome of the referendum would materially affect the value of the Hotel, Penthouse claimed that it was interested in buying the Hotel regardless of the outcome of the casino gambling vote.
Second, Penthouse wanted to acquire fee simple title. There were two 999-year leases on the Hotel and an underlying fee. The Trustee in Bankruptcy proposed that the court cancel the leases at closing; any liens against either the leasehold or the fee would be paid out of the fund created by the sale proceeds. The Trustee could then convey fee simple title. Penthouse indicated that the procedure was acceptable.
The parties also discussed the manner in which any possible appeal by the Bankrupt would be handled. At the time of negotiations, the Bankrupt asserted that the Bankruptcy Court had no jurisdiction over the Hotel and had expressed an intention to appeal any order approving a sale. Dooley proposed that a title insurance policy insure over the risk, i.e., not except risk of loss from an appeal by the Bankrupt from its coverage, and that the sale then be closed under Rule 805 of the Bankruptcy Rules. 1 Penthouse did not object to this procedure.
Finally, the parties discussed enforcement of the Contract against the Trustee in Bankruptcy. The Trustee in Bankruptcy took the position that the Contract need contain no provisions for enforcement against him because, as an officer of the Bankruptcy Court, he could be compelled to perform by the Court. Penthouse agreed with this position.
The proposed Contract was submitted to the creditors of the Bankrupt's Estate on an order to show cause entered by the Bankruptcy Judge on October 19, 1978. The proposed Contract provided for a $10,000,000 purchase price and for a deposit of $500,000 which the purchaser would forfeit upon failure to close in accordance with the Contract. The Contract was publicized by the Bankruptcy Court's Order to Show Cause Re Sale of Assets which invited all interested persons to attend a November 3, 1978 hearing, at which objections to the sale and higher or better offers would be considered.
At the schedule hearing, the bidding was restricted to persons having a deposit of $500,000. Appellants were the successful bidders at the increased price of $15,500,000. Between November 3 and November 6, 1978, the parties drafted what would become the Bankruptcy Court's Order Approving and Confirming Sale of Assets Free and Clear of Liens. Signed on November 6, 1978, that Order set forth the procedure for cancelling the two 999-year leases on the Hotel and directed the Trustee in Bankruptcy to close the sale in accordance with the Contract. The Trustee in Bankruptcy then executed the Contract in accordance with the proposed terms. On the same day, the Bankruptcy Judge specifically requested that Penthouse inform the Trustee of its "economic decision" following the referendum since Penthouse could forfeit its deposit if it chose not to go through with the sale. Dooley assured the Court that the purchaser would notify the Trustee when such a decision was made.
On November 7, 1978, the state-wide casino gambling referendum was soundly defeated. Thereafter, the Trustee in Bankruptcy proceeded to discharge his contractual obligations. Pursuant to the Contract, the Trustee delivered a Commitment for Title Insurance from Pioneer National Title Insurance Company to Penthouse. 2 The Trustee in Bankruptcy also attempted repeatedly to determine if and when the appellants would close, but was not given an answer.
When Penthouse received the title commitment, it hired a Florida real estate attorney to "see whether the contract was a valid and enforceable contract or what the options were with respect to that contract given the title commitment." Penthouse objected to the Commitment for Title Insurance, claiming that all entries in Schedule B-I (list of things to be done or documents to be provided before policy is issued) and Schedule B-II (exceptions to coverage) constituted defects in title and demanded that the Trustee in Bankruptcy cure these defects within ten days upon pain of rescission. The Trustee interpreted the letter as a letter of rescission because it cited as defects the very procedures for handling known problems that had been previously negotiated. On January 31, the Trustee wrote Dooley explaining why the Commitment for Title Insurance met the Contract requirements and further expressed his continued willingness to close the sale. The Trustee in Bankruptcy received no reply and on February 15, 1979, he wrote appellants and informed them that the Bankrupt's Estate would retain the $500,000 deposit.
On February 16, 1979, Penthouse filed an Adversary Complaint in the Bankruptcy Court seeking recovery of the $500,000 deposit. Dooley claimed that (1) the Trustee in Bankruptcy had defaulted by failing to provide marketable title and/or title as required by the Contract; (2) the Contract was void and unenforceable for lack of mutuality; and (3) the plaintiffs were not bound by the Contract because the Bankruptcy Court had permitted another party to bid on the Hotel without posting a $500,000 deposit. 3
The Bankruptcy Court dismissed the claim which was directed to the alleged impropriety of the bidding process with prejudice and without leave to amend. The court further found that the Commitment for Title Insurance showed that a title insurance policy would be issued and that title would be conveyed in compliance with the Contract. The court also stated that Penthouse was estopped and/or had waived its right to claim relief from forfeiture of its deposit based on matters the parties had agreed to during the negotiating and contracting process. Finally, the court observed that plaintiffs were precluded from receiving relief because they stood before it with unclean hands. The Bankruptcy Court entered judgment in favor of the Trustee in Bankruptcy and the District Court affirmed these rulings without opinion.
The Bankruptcy Court's findings must be affirmed unless clearly erroneous. Acacia Mutual Life Ins. Co. v. Perimeter Park Invest. Assoc., 616 F.2d 150 (5th Cir. 1980); Fruehauf Corp. v. Revitz, 569 F.2d 1364 (5th Cir. 1978).
The test for ... this Court, is not whether a different conclusion from the evidence would be appropriate, but whether there is sufficient evidence in the record to prevent clear error in the trial judge's findings.
Highland Village Bank v. Bardwell, 610 F.2d 228, 230 (5th Cir. 1980). Strict application of the clearly erroneous doctrine becomes paramount when, as here, the District Court affirmed the Bankruptcy Court's findings. DeMet v. Harralson, 399 F.2d 35, 38 (5th Cir. 1978).
Appellants contend that the Trustee in Bankruptcy should return the $500,000 deposit since the title to the Hotel did not conform with Paragraph 6 of the Contract. Paragraph 6 requires the Trustee to convey to appellants at closing "good, marketable and insurable title." It further provides:
Title shall be deemed good, marketable and insurable for the purposes hereof if (an acceptable title insurance company) will issue an ALTA owner's policy (standard form B-1969) insuring title without any exceptions other than (i) taxes for the year of closing and subsequent years, (ii) applicable zoning, plat restrictions or other restrictions common to the subdivision (provided the same do not provide for the forfeiture or reversion of the Property, and provided further that neither the same nor any deed restrictions prohibits or interferes with any uses presently being made of the subject Property or with the use of the premises for gambling should the same be hereafter permitted by law), and (iii) the Tenant Leases set forth on Exhibit 'B' hereto.
Relying primarily on Exhibit 8, an attorney's opinion letter which reviews the title commitment of Pioneer Title 4 against the requirements of Paragraph 6, appellants raise several objections.
In general, appellants claim that the title is not marketable. Marketable...
To continue reading
Request your trial
-
In re Shelton, Case No. 17bk35941
...afforded, courts may conclude that the silence of affected parties equates to their acceptance. See, e.g. , Dooley v. Weil (In re Garfinkle ), 672 F.2d 1340, 1347 (11th Cir. 1982) ("Silence or acquiescence may be sufficient conduct to create an estoppel if under the circumstances there was ......
-
In re Sandlin, Case No. 06-03792-TOM-13 (Bankr. N.D. Ala. 4/8/2010)
...knowledge thereof; and (3) an intention to relinquish such right, privilege, advantage, or benefit." Dooley v. Weil (In re Garfinkle), 672 F.2d 1340, 1347 (11th Cir. 1982). In Weisbart & Co. v. First Nat'l Bank of Dalhart, the Fifth Circuit Court of Appeals noted that [i]ntention is a prime......
-
U.S. v. Blankenship
...waive its rights under a contract—that is, a party may choose not to enforce a contract if the other side breaches. In re Garfinkle, 672 F.2d 1340, 1347 (11th Cir. 1982) ("A party may waive any right which it is legally entitled to, including rights secured by contract."). A contract does n......
-
In re Sharpe
...a claim or taking a legal position when his conduct with regard to that claim is contrary to his position.' Matter of Garfinkle, 672 F.2d 1340, 1346-47 (11th Cir.1982)." Matter of T & B General Contracting, Inc., 833 F.2d 1455, 1461 (11th The plaintiffs argue that the defendant should be es......