Hilsenroth v. Kessler, 82-983

• Decision Date: 06 December 1983
• Docket Number: No. 82-983,82-983
• Citation: 446 So.2d 147
• Parties: Henry HILSENROTH, Appellant, v. Alfred KESSLER, individually, Robert J. Dominix, Richard Kessler, as Personal Representative of the Estate of Sydney Kessler, and Benjamin Budowsky, Appellees.
• Court: Florida District Court of Appeals

Page 147

446 So.2d 147

Henry HILSENROTH, Appellant, v. Alfred KESSLER, individually, Robert J. Dominix, Richard Kessler, as Personal Representative of the Estate of Sydney Kessler, and Benjamin Budowsky, Appellees.

No. 82-983.

District Court of Appeal of Florida Third District.

Dec. 6, 1983.

As Modified on Denial of Rehearing

March 26, 1984.

Lapidus & Stettin and Herbert Stettin, Miami, for appellant.

Ress, Gomez, Rosenberg & Howland and Sheldon Rosenberg, James A. Horland, Robey & Pelstring and R. James Pelstring, Miami, for appellees.

Before HENDRY, NESBITT and BASKIN, JJ.

NESBITT, Judge.

In September, 1972, Hilsenroth contracted to purchase land from Alfred Kessler as trustee for himself, Budowsky, Dominix, and Sydney Kessler, now deceased. The express purpose was to build apartment houses. The contract allowed Hilsenroth to rescind before closing if the property was subject to a moratorium on the issuance of building permits. Thereafter, on December 1, 1972, the Dade County Pollution Control Department issued a moratorium on building permits which prohibited further connections to the sewer system. The moratorium lasted until December, 1978, and applied to all of the property being sold to Hilsenroth. Unaware of this restriction, Hilsenroth closed on the property in June, 1973. He paid approximately $200,000 in return for which he received 2.5 acres free and clear of mortgages. The remaining property was acquired subject to an existing first mortgage and individual promissory notes, in favor of each of the four members of the selling group, secured by a single purchase money second mortgage.

In September, 1973, Hilsenroth learned of the sewer moratorium from his engineers. One month later, he sought a declaratory decree (the 1973 suit) concerning his right to a moratorium in principal and interest under the terms of the second mortgage. Hilsenroth prevailed at trial and on appeal. Kessler v. Hilsenroth, 325 So.2d 72 (Fla. 3d DCA 1975). At a hearing in this case on June 20, 1974, Hilsenroth first learned from Kessler's testimony that Kessler had known of the moratorium prior to closing.

At the end of 1975, Hilsenroth filed suit to rescind the contract to purchase the property on the grounds of fraud and deceit. Only one member of the selling group, Dominix, counterclaimed for enforcement of his note and foreclosure on his second mortgage. That counterclaim was abated until the end of the sewer moratorium. All of the sellers obtained a summary judgment on Hilsenroth's claim for rescission upon the theory that by seeking and obtaining a moratorium in payments due under the mortgage in the 1973 suit, Hilsenroth had elected his remedies, had chosen to affirm the contract, and could not rescind. This was affirmed on appeal. Hilsenroth v. Kessler, 353 So.2d 874 (Fla. 3d DCA 1977), cert. denied, 366 So.2d 881 (Fla.1978).

The moratorium ended in 1978. In April, 1979, the members of the selling group (excluding Dominix who had filed a counterclaim for foreclosure in the 1975 suit) filed a suit to foreclose on their mortgage. Hilsenroth counterclaimed seeking money damages for fraud and deceit and breach of contractual warranties. In February, 1980, Hilsenroth filed an amendment to his 1975 suit seeking the same relief as in his counterclaim in the 1979 foreclosure suit. The 1975 and 1979 suits were consolidated.

At a nonjury trial, the judge found that Hilsenroth was entitled to compensatory damages for breach of contractual warranties and for fraud and deceit. Punitive damages were imposed against Alfred Kessler as the one whom the court found had withheld the information regarding the moratorium. Compensatory damages were limited to architectural fees incurred from the closing date until the suit was filed for declaratory relief. The trial court specifically denied recovery under benefit of the bargain or out-of-pocket theories of recovery because Hilsenroth failed to mitigate damages. ¹ The court further determined that the selling group was entitled to foreclose on its purchase money mortgage and recover the principal, interest, and real estate taxes paid by it. Hilsenroth was not permitted to set off the compensatory and punitive awards against the mortgage indebtedness. Finally, the court determined that the sellers were not entitled to attorneys' fees and costs. Both sides appeal.

We first consider the cross-appeal by the sellers in which they allege that the damage award in favor of Hilsenroth was improper. The compensatory damages award against Dominix was based on the 1980 amendment to the complaint for rescission originally filed in 1975. The 1975 case resulted in a summary judgment in favor of the sellers. This terminated the trial court's jurisdiction over the complaint, General Capital Corp. v. Tel Service Co., 212 So.2d 369 (Fla. 2d DCA 1968), and thus no amendment to the complaint could be made. ²

With respect to the remaining sellers, affirmative relief was granted to Hilsenroth based on the 1980 amended complaint as well as Hilsenroth's counterclaim to these sellers' foreclosure action. We have already determined that the summary judgment in favor of the sellers in the 1975 suit left the trial court without jurisdiction to consider an amended complaint against Dominix. The same is true with respect to these defendants and thus the purchaser's recovery for compensatory and punitive damages on this basis must be reversed.

Furthermore, as a claim for affirmative relief, Hilsenroth's counterclaim for...