Maguire v. Southern Homes of Palm Beach

• Decision Date: 17 June 2008
• Docket Number: Case No. 07-22085-CIV.
• Citation: 591 F.Supp.2d 1263
• Parties: Maureen MAGUIRE, Plaintiff, v. SOUTHERN HOMES OF PALM BEACH, L.L.C., Defendant.
• Court: U.S. District Court — Southern District of Florida

591 F.Supp.2d 1263

Maureen MAGUIRE, Plaintiff, v. SOUTHERN HOMES OF PALM BEACH, L.L.C., Defendant.

Case No. 07-22085-CIV.

United States District Court, S.D. Florida.

June 17, 2008.

COPYRIGHT MATERIAL OMITTED

Eric Nissim Assouline, Peter Emerson Berlowe, Sheri M. Alter, Assouline & Berlowe, Dania Beach, FL, for Plaintiff.

Melissa R. Alvarez, David Noel Arizmendi, Jeremy C. Sahn, Bilzin Sumberg

Baena Price & Axelrod LLP, Miami, FL, for Defendant.

ORDER ON SOUTHERN HOMES OF PALM BEACH, L.L.C.'S MOTION TO DISMISS THE COMPLAINT

EDWIN G. TORRES, United States Magistrate Judge.

This matter is before the Court on Defendant's Motion to Dismiss Amended Complaint [D.E. 9], to which Plaintiff filed a Response. [D.E. 10].¹ Defendant's Motion is ripe for disposition. After careful consideration of the Motion and the Response, and for the reasons that follow, Defendant's Motion will be Granted in Part and Denied in Part.

I. BACKGROUND

On June 27, 2005, Plaintiff entered into a Purchase and Sales Agreement ("Agreement") for the purchase of a condominium unit to be constructed at a site known as "Waterside" that was being developed by Defendant. On August 14, 2007, Plaintiff filed a three count Complaint against Defendant alleging violation of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. § 1701 et seq. ("ILSFDA"), breach of contract, and violation of the Florida Deceptive and Unfair Trade Practices Act, Florida Statutes §§ 501.201 et seq. ("FDUTPA").

The pending motion to dismiss asserts that Plaintiff failed to state a cause of action as to all three counts. Defendant raises three arguments to support this contention: (i) count I should be dismissed because the Agreement is exempt from the requirements of the ILSFDA [D.E. 9 ¶ 4]; (ii) Plaintiff's claim for breach of contract is premature and without any basis in fact [D.E. 9 ¶ 17]; and (iii) Defendant did not engage in a deceptive or unfair trade practice because the Agreement is exempt from ILSA, and Plaintiff failed to allege any separate and distinct damages [D.E. 9 ¶ 18].

The Plaintiff opposes the motion responding: (i) the Agreement is not exempt from the ILSFDA because the obligation of construction within two years is illusory and conditional [D.E. 10 at 5]; (ii) Defendant raised an affirmative defense that is to be raised in its answer [D.E. 10 at 8]; and (iii) Plaintiff alleges a sufficient factual basis to state a cause of action under FDUTPA. [D.E. 10 at 10].

II. ANALYSIS

Defendant maintains that Plaintiff failed to sufficiently allege a cause of action in the Complaint. Fed.R.Civ.P. 12(b)(6). A motion brought under 12(b)(6) tests the facial sufficiency of a complaint and is to be read alongside Fed.R.Civ.P. 8(a)(2), which requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Pursuant to Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007), to survive a 12(b)(6) motion to dismiss, a complaint must contain factual allegations which are "enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true." Although a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff is still obligated to provide the "grounds" for his entitlement to relief, and "a formulaic recitation of the elements of a cause of action will not do." Berry v. Budget Rent A Car Systems, Inc., 497 F.Supp.2d 1361, 1364 (S.D.Fla.2007) (quoting Twombly, 127 S.Ct. at 1964-65). Taking the facts as true, a court may grant a motion to dismiss if no construction of the factual allegations will support the cause of action. Berry, 497 F.Supp.2d at 1364 (citing Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993)). A well-pleaded complaint will survive a motion to dismiss "even if it strikes a savvy judge that actual proof of these facts is improbable, and `that a recovery is very remote and unlikely.'" Twombly, 127 S.Ct. at 1965 (internal citation omitted).²

A. Interstate Land Sales Full Disclosure Act

Count I of the Complaint alleges violations of 15 U.S.C. § 1704(a) and 15 U.S.C. § 1703(d), provisions of the ILSDA. The ILSFDA is an anti-fraud statute that uses disclosure as its primary tool to protect purchasers from unscrupulous sales of undeveloped home sites. Winter v. Hollingsworth Props., Inc., 777 F.2d 1444, 1446-47 (11th Cir.1985). Specifically, the ILSFDA prohibits the sale of any lot not exempt under section 1702 unless the seller complies with the provisions of the ILSFDA, including disclosure of a property report prior to signing a contract. 15 U.S.C. § 1703(a). Selling a condominium falls within the definition of selling a "lot" within the meaning of the ILSFDA. Winter, 777 F.2d at 1449.

Defendant argues it is exempt from the provisions of the Act under 15 U.S.C. § 1702(a)(2), which provides "the provisions of this chapter shall not apply to ... the sale or lease of land under a contract obligating the seller or lessor to erect [a residential, commercial, or industrial] building within a period of two years." In response, Plaintiff references sections of the Agreement on the face of the Complaint to contend that the contractual obligation to build within two years is only illusory, thus nullifying the exemption. The issue before us boils down to whether, as a matter of law, the Agreement has a tangible obligation to complete the condominium on the lot within two years, or whether its other provisions render that apparent obligation illusory and therefore subject to the provisions of ILSFDA.

The interpretation of the ILSDA, a federal statute, is governed by federal law. See Kamen v. Kemper Financial Servs., Inc., 500 U.S. 90, 97, 111 S.Ct. 1711, 114 L.Ed.2d 152 (1991). However, state law governs the interpretation of a given contract in the decision of whether the "obligation" to complete construction is illusory. See, e.g., Stein v. Paradigm Mirsol, L.L.C., 551 F.Supp.2d 1323 (M.D.Fla. 2008); Samara Dev. Corp. v. Marlow, 556 So.2d 1097 (Fla.1990). Accordingly, the Court will look to Florida contract law in its determination of this issue.

Under Florida law, a court must determine whether the terms of the contract are susceptible to an interpretation as a matter of law. See, e.g., Hamilton Const. Co. v. Board of Public Instruction of Dade County, 65 So.2d 729 (Fla.1953) (where contracts are clear and unambiguous, they should be construed as written, and the court can give it no other meaning). A court must also determine whether, instead, the terms used are unclear, indefinite or ambiguous, in which case an issue of fact may exist as to what the contract required. See, e.g., Arriaga v. Florida Pacific Farms, L.L.C., 305 F.3d 1228, 1246-47 (11th Cir.2002) (whether a contract provision is ambiguous is a question for the court, and the court can resolve that ambiguity if the facts are undisputed); Royal Am. Realty, Inc. v. Bank of Palm Beach & Trust Co., 215 So.2d 336, 338 (Fla. 4th DCA 1968) (holding that contract language is ambiguous where "it is, in fact, reasonably or fairly susceptible to the different constructions being advocated by the parties").

If an issue of fact does exist as to the terms of the contractual agreement, then the trier of fact should consider parol evidence. E.g., Arriaga, 305 F.3d at 1247 (summarizing types of parol evidence available under Florida law to ascertain meaning of ambiguous contracts); First Capital Income & Growth Funds, Ltd.-Series XII v. Baumann, 616 So.2d 163, 165 (Fla. 3d DCA 1993) (parol evidence can be presented when the terms of the agreement are ambiguous). To determine the intent of the parties, the trier of fact may "receive evidence extrinsic to the contract for the purpose of determining the intent of the parties at the time of the contract." Gulf Cities Gas Corp. v. Tangelo Park Serv. Co., 253 So.2d 744, 748 (Fla. 4th DCA 1971). One can also consider circumstances surrounding the parties at the time the contract was made. See, e.g., Clark v. Clark, 79 So.2d 426, 428 (Fla.1955). Additionally, "custom and usage" may be considered in construing ambiguous terms. See, e.g., Farr v. Poe & Brown, Inc., 756 So.2d 151, 152-53 (Fla. 4th DCA 2000).

Plaintiff argues first that Defendant is not exempt from the ILSFDA because "the Agreement allowed the condominium to be completed in more than two years— in fact as much as 90 days more than two years," so the obligation to build was illusory. This argument is based on the theory that the Agreement must be non-illusory and unconditional, yet this contract's provisions prevents Defendant from taking advantage of the exemption under the ILSFDA. To support this position, Plaintiff's Complaint expressly references these and other provisions. We must thus determine if these provisions may be construed as a matter of law, and whether that construction supports Plaintiffs claim that the contract's two-year provision is illusory, at least at the pleading stage. In other words, if these provisions, when measured together, render the Agreement ambiguous, then Plaintiff's claim cannot be disposed of on a motion to dismiss and may require factual development and a trial.

Recent Florida cases, however, have construed these contract provisions as a matter of law and have noted that they are generally permissible and do not automatically remove a seller from an exemption under the ILSFDA. See Kamel v. Kenco/the Oaks at Boca Raton, LP, 2008 WL 2245831 (S.D.Fla. May 29, 2008); Rondini v. Evernia Props., LLLP, 2008 WL 793512 (S.D.Fla. Feb. 13, 2008); Stein, 551 F.Supp.2d at 1330-31. The delays listed in the Agreement that would allow for extension of the two year period have a well established and limited definition that fit into the generally accepted category and do not render the Agreement illusory. Stein, 551 F.Supp.2d at 1330-31. They are...