Jankus v. Edge Investors, L.P.

• Decision Date: 31 August 2009
• Docket Number: Case No. 08-80200-CIV.
• Citation: 650 F.Supp.2d 1248
• Parties: Richard JANKUS, plaintiff, v. The EDGE INVESTORS, L.P., defendant.
• Court: U.S. District Court — Southern District of Florida

650 F.Supp.2d 1248

Richard JANKUS, plaintiff, v. The EDGE INVESTORS, L.P., defendant.

Case No. 08-80200-CIV.

United States District Court, S.D. Florida.

August 31, 2009.

COPYRIGHT MATERIAL OMITTED

James Daniel Ryan, Ryan & Ryan Attorneys PA, Timothy Powers O'Neill, Schwed, McGinley, Kahle, LLC, North Palm Beach, FL, for plaintiff.

Sandra Jessica Millor, Stephen James Binhak, Greenberg Traurig, Miami, FL, Geoffrey Michael Cahen, Greenberg Traurig et al., Boca Raton, FL, for defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR RECONSIDERATION [DE # 67] & AMENDED ORDER PARTIALLY GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [DE # 31] & DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [DE# 21]

DANIEL T.K. HURLEY, District Judge.

THIS CAUSE is before the court upon the defendant's motion for reconsideration of order entered April 8, 2009 partially granting the plaintiff's motion for summary judgment [DE# 67], plaintiffs response in opposition [DE# 69] and the defendant's reply [DE# 70]. Upon consideration, the court has determined to grant the defendant's motion for reconsideration, withdraw its opinion memorandum entered April 8, 2009 [DE# 66], and substitute the following opinion memorandum in its stead.

I. Facts and Procedural Background

The Edge is a developer and seller of residential condominium properties located in Florida, including The Edge West Palm Beach Condominium, a 16-story condominium building consisting of 307 units located at 300 Australian Avenue, West Palm Beach, Florida.

On July 6, 2005, Jankus signed a contract to purchase ("Purchase Agreement") a $345,000.000 condominium unit from The Edge. Pursuant to the Agreement, Jankus has paid deposits totaling $74,400.00 toward that purchase.

The Purchase Agreement contains the following language pertaining to the "completion date":

Seller agrees to substantially complete construction of the Unit, in the manner specified in this Agreement, by a date no later than two (2) years from the date Buyer signs this Agreement, subject, however, only to delays caused by matters which are legally recognized as defenses to contract actions in the jurisdiction where the building is being erected (the "Outside Date").

Purchase Agreement ¶ 7 [DE# 10-3].

On June 27, 2007, the City of West Palm Beach issued a certificate of conditional occupancy for The Edge, certifying that the structure "is complete enough to be safely occupied ... prior to issuance of the final certificate of occupancy." The certificate provides that it is valid for a period of 30 days, and that final certificate of occupancy must be obtained within that period, failing which occupancy maybe terminated.¹ The City issued a second certificate of conditional occupancy on July 27, 2007, listing most of the same outstanding items (minus the FPL transformer issue), and issued a final certificate of occupancy on August 27, 2007.

In his pending three-count complaint, Jankus claims that the Edge violated the Interstate Land Sales Full Disclosure Act (ILSA) by failing to give him a property report disclosure and notice of his related right to rescind under 15 U.S.C. § 1703(c). He also claims that the Edge violated the ILSA by using a contract form that does not contain a limitations of damage provision and notice and right to cure in accordance with 15 U.S.C. § 1703(d) or a legal description of the property as required by § 1703(d)(1). He seeks various remedies in his ILSA claim, including rescission of the contract, damages, interest, costs and attorneys' fees. (Count 1).

Jankus also asserts a state law breach of contract claim based on The Edge's alleged failure to complete construction of the unit within two years of his execution of the Purchase Agreement. (Count 2). Finally, he asserts claim under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), contending that The Edge's violation of the ILSA constitutes a per se violation of the FDUTPA, and further, that The Edge made certain deceptive or misleading representations regarding the price of title insurance charges passed through under the contract (Count 3).

II. Issues Presented on Cross Motions for Summary Judgment

Both parties have moved for summary judgment on all three claims [DE# 21, 31].

With regard to the ILSA rescission claim, plaintiff alleges that this condominium sale is subject to the ILSA and that defendant failed to provide him with certain disclosures in violation of the ILSA. Specifically, plaintiff complains that he was not provided with a property report and that there was no provision in the Purchase Agreement of his corresponding right of revocation.

It is undisputed that Jankus did not receive a property report meeting the requirements of § 1703(a) of ILSA. It is also undisputed that the Purchase Agreement does not contain language prescribed by § 1703(c) pertaining to a buyer's right to rescind in the event of such nondisclosure.

The defendant counters that is exempt from the ILSA's requirements because the Purchase Agreement promised to complete construction within two years.²

The building exemption at issue, 15 U.S.C. § 1702(a)(2), provides:

§ 1702. Exemptions

(a) Sale or lease of lots generally. Unless the method of disposition is adopted for the purpose of evasion of this title, the provisions of this title shall not apply to—

(2) the sale or lease of any improved land on which there is a residential, commercial, condominium or industrial building, or the sale or lease of land under a contract obligating the seller or lessor to erect such a building thereon within a period of two years.

Plaintiff contends that defendant is not entitled to claim this building exemption because it failed to unconditionally commit to complete construction of his unit within two years. Specifically, plaintiff contends that the developer's two year building obligation is illusory because it is subject to extension for any "matters which are legally recognized as defenses to contract actions" in Florida. Under plaintiff's view, this qualification gives the seller a too wide breadth of discretion to extend the completion date based on foreseeable and unforeseeable events, rendering its two year building commitment illusory.

Thus, the issue presented is whether the Purchase Agreement contains a true commitment to construct the condominium unit within two years or whether the commitment is illusory in light of the conditions for extension.

For reasons discussed below, this court agrees that the Agreement is exempt from ILSA under the building exemption set forth at 15 U.S.C. § 1702(a)(2) and shall accordingly grant the defendant's motion for summary judgment as it relates to the plaintiff's ILSA rescission claim only. In light of this conclusion, it is unnecessary to reach the defendant's alternative challenge to the timeliness of the ILSA rescission claim.

The parties' cross-motions for summary judgment are otherwise denied as to all remaining claims.

III. Standard of Review

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

An issue is "material" if it is a legal element of the claim under applicable substantive law that may affect the resolution of the action. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). An issue is "genuine" if the record, taken as a whole, could lead a rational trier of fact to find for the non-moving party. Id.

The movant may meet this standard by presenting evidence demonstrating the absence of a dispute of material fact, or by showing that the nonmoving party has not presented evidence in support of an element of its case on which it bears the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322-33, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). It is not necessary for the moving party to supply affidavits or other similar materials negating the opponent's claim. Id.

Once the movant meets its initial burden of proof, the nonmovant must "go beyond the pleadings" and by affidavit, deposition testimony, answers to interrogatories and admission, designate "specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. at 2552-53. The nonmovant need not present evidence that would be admissible at trial, but "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249, 106 S.Ct. 2505, 91 L.Ed.2d 202.

At the same time, credibility determinations, the weighing of evidence, and the drawing of inferences from the facts are the function of the jury, and therefore the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Anderson, 477 U.S. at 255, 106 S.Ct. 2505, 91 L.Ed.2d 202. The nonmovant need not be given the benefit of every inference, but only of every reasonable inference. Brown v. City of Clewiston, 848 F.2d 1534, 1540 n. 12 (11th Cir.1988).

IV. Discussion

A. ILSA Claim

1. ILSA Statutory Goal

The Interstate Land Sales Full Disclosure Act (ILSA) is "an anti-fraud statute utilizing disclosure as its primary tool," designed to "protect purchasers from unscrupulous sales of undeveloped home sites." Winter v. Hollingsworth Properties, Inc., 777 F.2d 1444-1447 (11th Cir.1985). Toward this end, ILSA requires developers to inform buyers, prior to purchase of subdivision lots, of facts which would enable a reasonably prudent individual to make an informed decision about purchasing the property. Paquin v. Four Seasons of Tennessee,...