Imperial Point Colonnades Condominium, Inc. v. Mangurian

• Decision Date: 04 April 1977
• Docket Number: No. 76-1657,76-1657
• Citation: 549 F.2d 1029
• Parties: 1977-1 Trade Cases 61,362 IMPERIAL POINT COLONNADES CONDOMINIUM, INC., a Florida non-profit Corporation, in its own interest and behalf of its members, Plaintiffs, Clayton P. Thompson, William M. Wyant, and Virginia Wyant, his wife, Individually and in behalf of all others similarly situated, Plaintiffs- Appellants, v. Harry T. MANGURIAN, Jr., and Dorothy Mangurian, his wife, and Drexel Properties, Inc., a Florida Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1029

549 F.2d 1029

1977-1 Trade Cases 61,362

IMPERIAL POINT COLONNADES CONDOMINIUM, INC., a Florida non-profit Corporation in its own interest and behalf of its members, Plaintiffs Clayton P. Thompson, William M. Wyant, and Virginia Wyant his wife, Individually and in behalf of all others similarly situated, Plaintiffs- Appellants, v. Harry T. MANGURIAN, Jr., and Dorothy Mangurian, his wife and Drexel Properties, Inc., a Florida Corporation, Defendants-Appellees.

No. 76-1657.

United States Court of Appeals, Fifth Circuit.

April 4, 1977.

Rehearing and Rehearing En Banc Denied April 28, 1977.

Jeffrey E. Streitfeld, Alan S. Becker, Becker & Poliakoff, P.A., Miami Beach, Fla., for plaintiffs-appellants.

Brian C. Deuschle, Donald C. Hain, Ft. Lauderdale, Fla., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before MORGAN and GEE, Circuit Judges, and HUNTER, ^* District Judge.

LEWIS R. MORGAN, Circuit Judge:

In this case we must decide a question concerning when a cause of action accrues under the four year statute of limitations for private treble-damage antitrust suits, Clayton Act § 4B, 15 U.S.C. § 15b. Plaintiffs purchased new condominiums from one of the defendants. As a condition of the purchase, they were required to enter a 99 year lease of nearby recreational facilities with the other defendant, who is president and sole stockholder of the first defendant. Plaintiffs allege that this requirement constitutes an unlawful tying agreement and that the defendants have conspired together to restrain interstate commerce by means of it.

The district court granted summary judgment for defendants on the ground that plaintiffs' suit, filed more than four years after they purchased the condominiums and joined the lease, was barred by the statute of limitations. That court held that plaintiffs' only cause of action accrued when they purchased the condominiums and joined the lease, rejecting plaintiffs' argument that new causes of action, not barred, accrued when the defendants committed acts with respect to the lease within the limitations period. For the reasons stated in this opinion, we reverse and remand. We do not, of course, pass on any of the other issues that remain to be resolved below. ¹

I. FACTS.

Defendant Harry T. Mangurian, Jr. is and, at all times material to this action, has been president, director, and sole stockholder of a Florida corporation known as Drexel Properties, Inc. Drexel Properties, the other defendant, is the developer and was the owner of a 23 building, 552 unit residential condominium project located in Florida and called Imperial Point Colonnades Condominium.

Mangurian also is the owner of land adjacent to Imperial Point Colonnades upon which recreational facilities have been built. Mangurian leased the land and its facilities to Drexel Properties on February 1, 1969 for a term of 99 years. ² The lease provides that on April 1, 1972, and at the end of every three years thereafter, the annual rent shall be adjusted with reference to the Department of Labor's Consumer Price Index in such a way that the rent will remain constant in real purchasing power. Record Vol. I at 9-10.

When a person bought a condominium in Imperial Point Colonnades from Drexel Properties, the contract of sale provided that the purchase was subject to the terms of the Declaration of Condominium by which Drexel Properties had submitted the land to the condominium form of ownership. ³ This Declaration, in turn, contains a number of provisions relating to the recreational lease. It requires each unit purchaser, as a condition precedent to ownership, to accept assignment from Drexel Properties of a 1/552 undivided interest in the lease and to assume an obligation to Mangurian for a like proportion of the rent. It also requires each unit purchaser to pledge his unit to Mangurian as security for fulfillment of the obligation under the lease. ⁴ Finally, it requires, as a condition to any subsequent transfer of ownership of the condominium units, that the transferee assume the transferor's obligation under the lease.

On January 4, 1969 plaintiffs William M. Wyant and Virginia Wyant (husband and wife) signed an agreement with Drexel Properties to purchase a condominium unit in Imperial Point Colonnades. On May 28 of that year the Wyants accepted assignment of a 1/552 undivided interest in the recreational lease and executed a pledge of their unit as security for their obligations under the lease, and Drexel Properties transferred title to the unit to them. On December 6, 1969 plaintiff Clayton P. Thompson signed a similar purchase agreement with Drexel Properties, and on July 28, 1970 he accepted assignment of his portion of the lease, executed the required pledge, and received title to a unit.

On July 15, 1975 Drexel Properties, as agent for the lessor, sent unit owners a letter informing them that the lessor had "elected" to increase the rent on the recreational lease pursuant to the cost-of-living escalator clause. Record Vol. III at 425-28. ⁵ The quarterly rent due from each unit owner, which was $148.50 at the inception of the lease and which apparently had been increased to $171.86 sometime after January 1, 1973, now was increased to $216.06, retroactive to April 1, 1975. The letter also stated that the lessor did "not believe that recent legislation abrogating the enforcement of cost of living clauses in leases is valid to deprive persons of vested contractual rights." ⁶ Finally, the letter warned that those unit owners who previously had reduced their quarterly rental payments from $171.86 back to $148.50 were considered to be in "default of their contractual obligations," and it requested that deficiencies be paid "forthwith." ⁷

Meanwhile, on January 8, 1975 Thompson and the Wyants, who had continued to pay the rent demanded, filed suit in federal district court against Mangurian and Drexel Properties. ⁸ Count I of the complaint, after outlining the purchase and lease arrangements described above, alleged that the requirement that purchasers become parties to the lease constituted a tying agreement unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1, ⁹ and Section 3 of the Clayton Act, 15 U.S.C. § 14. ¹⁰ It also alleged that defendants, through use of the tying agreement and enforcement of the lease, had conspired and were conspiring in retraint of interstate commerce in violation of Section 1 of the Sherman Act. Plaintiffs alleged that they were damaged by being required to pay rent on the lease whether they used the recreational facilities or not, by being prohibited from transferring ownership of their units free from the lease, and by being precluded from contracting with other concerns for recreational facilities. The complaint sought treble damages, costs, and attorneys fees under 15 U.S.C. § 15, injunctive relief under 15 U.S.C. § 26, and a declaration that the lease assignments were illegal and void. ¹¹

Defendants pleaded the statute of limitations as a bar to the prayer for damages and laches as a bar to the prayer for equitable relief. Both parties submitted documents, answers to interrogatories, and other discovery materials. The district court then granted defendants' motion for summary judgment on the ground that the statute of limitations barred plaintiffs' suit for damages. That court did not discuss whether laches barred the request for equitable relief. Imperial Point Colonnades Condominium, Inc. v. Mangurian, 407 F.Supp. 870 (S.D.Fla.1976). Plaintiffs appeal.

II. GENERAL PRINCIPLES.

Section 4B of the Clayton Act, 15 U.S.C. § 15b, which Congress added effective January 7, 1956, places the following limitation on private treble-damage suits under 15 U.S.C. § 15: ¹²

Any action to enforce any cause of action under (section 15) of this title shall be forever barred unless commenced within four years after the cause of action accrued.

Much confusion has surrounded the question, critical to resolution of this case, of when a plaintiff's antitrust cause of action should be considered to have "accrued." ¹³ The leading case on this issue is Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971), where the Supreme Court summarized its understanding of when a cause of action accrues:

The basic rule is that damages are recoverable under the federal antitrust acts only if suit therefor is 'commenced within four years after the cause of action accrued,' 15 U.S.C. 15b, plus any additional number of years during which the statute of limitations was tolled. Generally, a cause of action accrues and the statute begins to run when the defendant commits an act that injures a plaintiff's business. (cites) This much is plain from the treble-damage statute itself. 15 U.S.C. § 15.

401 U.S. at 338, 91 S.Ct. at 806. The Court went on to explain how this rule operates where a plaintiff alleges that he has been injured by a conspiracy to violate the antitrust statutes, id.:

In the context of a continuing conspiracy to violate the antitrust laws, . . . this has usually been understood to mean that each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover the damages caused by that act and that, as to those damages, the statute of limitations runs from the commission of the act. ¹⁴

Under Zenith, where defendants are alleged to have committed acts injurious to a plaintiff pursuant to an unlawful conspiracy, and where defendants committed some such acts more than four years before plaintiff commenced suit, and other such acts less than four years before plaintiff commenced suit, the plaintiff is allowed to recover damages resulting only from those acts committed less than four years before commencement of his suit. This much is clear from our own leading case on the subject, Poster Exchange, Inc. v. National Screen Service Corp., 517 F.2d...