N. Fla. Mango, LP v. LLS Holdings, LLC
| Docket Number | 4D2022-2034 |
| Decision Date | 08 November 2023 |
| Parties | NORTH FLORIDA MANGO, LP, Appellant, v. LLS HOLDINGS, LLC, Appellee. |
| Court | Florida District Court of Appeals |
Not final until disposition of timely filed motion for rehearing.
Appeal from the Circuit Court for the Fifteenth Judicial Circuit Palm Beach County; John S. Kastrenakes, Judge; L.T. Case No 502021CA009385.
Keith T. Grumer of Grumer Law, P.A., Weston, for appellant.
Maury L. Udell of Beighley, Myrick, Udell &Lynne, P.A., Miami for appellee.
A dispute over a land-sale transaction involving four corporate entities and their respective principals lays the foundation for this appeal. The buyer argues the trial court erred in granting summary judgment for the seller and failing, on rehearing, to address its second claim for declaratory relief. We agree and reverse.
The buyer entered a contract with the seller to purchase a warehouse building, which housed an ice-skating rink on half of the property.[1] The ice-skating rink was rented and operated by another entity through a lease.
The lease's details were not disclosed to the buyer during contract negotiations. Rather, the seller's broker assured the buyer the ice-skating rink would not remain in operation after closing. He specifically relayed,
In response, the buyer indicated he also didn't want to run the iceskating rink but, because two years still remained on the lease, he would "entertain" a lease to another entity. The contract did not, however, disclose the lease nor reserve any rights of possession or occupancy.
The contract provided for the conveyance of "ALL FIXTURES &EQUIPMENT FOR THE OPERATION OF THE BUILDING UNITS, AND BUSINESS AS CURRENTLY RUN." The contract also called for the seller to convey the property by statutory warranty deed, "free of liens, easements, and encumbrances of record or known to Seller." (Emphasis added). The contract set forth the closing procedures for the transaction and addressed the delivery of possession as one of the covenants.
The Closing Procedure paragraph provided:
(a) Possession and Occupancy: Seller will deliver possession and occupancy of the Property to Buyer at Closing. Seller will provide keys, remote controls, and any security/access codes necessary to operate all locks, mailboxes, and security systems.
(Emphasis added).
Twice, the parties executed addenda to the contract extending the closing date. The first addendum extended the closing to May 7, 2021. The second addendum extended the closing to July 30, 2021, and required the buyer to pay a deposit of $500,000, to be either credited on the day of closing or constitute non-refundable "money earned." The second addendum stated if closing did not happen on the agreed date, the contract would terminate automatically.
During the due diligence period, the seller provided the buyer with a copy of the existing lease.
In anticipation of closing, the buyer obtained a title insurance policy from Chicago Title. Under that policy, Chicago Title would not insure the property if a tenant had a preexisting lease. The policy stated, "rights of tenants occupying all or part of the insured land under unrecorded leases or rental agreements" are considered exceptions to title. Because of the title insurance commitment in the contract, the seller was aware of the buyer's policy with Chicago Title and its title exception.
On July 22, 2021, the parties exchanged closing documents. The seller provided a mechanic's lien affidavit, confirming it had "full, complete and undisputed possession of the [p]roperty and that there are no leases, options, interest or demands held thereon." (Emphasis added).
On July 26, 2021, the seller's attorney asked the buyer's attorney if she had a tenant estoppel letter form. This confused the buyer, who did not anticipate taking the property subject to a lease. On July 27, 2021, three days before closing, the seller filed an amended mechanic's lien affidavit, addressing the lease for the first time.
The seller's attorney then wrote to the buyer's attorney:
The lease's continued existence, the seller's failure to turn over possession, and the tenant's continued operation of the ice-skating rink were not envisioned in the contract and triggered the exception in Chicago Title's Title Insurance Commitment. The buyer considered this a breach of the contract and immediately proposed a written transition agreement, which the seller rejected.
The buyer's principal did not attend the closing on July 30, 2021, but sent documents and funds to be held in escrow. On July 30, the buyer alleged it was ready, willing, and able to close. To wit, funds were wired to Chicago Title and all documents for the transaction were signed and delivered.
The seller refused to terminate the lease, surrender possession, and turn over the keys, notwithstanding its contractual obligation to do so at closing. This created a standoff, and the closing did not occur.
The buyer sued the seller for specific performance and declaratory relief. The buyer asked the trial court to find the seller's actions tantamount to breach-specifically, the seller's failure to deliver possession, occupancy, and marketable title. The buyer also sought to compel the sale and force the seller to deliver possession, occupancy, and marketable title.
The seller moved to dismiss, which the trial court denied. The seller then filed an answer and affirmative defenses, alleging failure to state a claim, anticipatory breach, unclean hands, inability to comply, termination by operation of law, and failure to join an indispensable party.
The buyer was the first to move for summary judgment. The buyer alleged it was entitled to specific performance because "but for" the seller's breaches, the buyer was "ready willing and able to close." The buyer asked the trial court to declare the seller in breach for its failure to deliver possession, occupancy, and marketable title.
Although the seller conceded the contract and its addenda governed, the seller disputed the buyer's interpretation of the contract's terms and the nature of the parties' rights. The seller specifically argued: (1) the lease was disclosed; (2) the lease did not make title unmarketable; (3) the seller did not breach; and (4) the contract terminated automatically when the closing did not occur. The seller also argued the buyer failed to refute its affirmative defenses.
The seller then cross-moved for summary judgment. The seller argued: (1) specific performance was not an adequate remedy; (2) the buyer was on notice of the lease and was not entitled to specific performance to terminate it; (3) the buyer accepted the seller's "business as currently run"; (4) the lease was not an encumbrance; (5) the buyer waived any title defects; and (6) the buyer accepted the property as is.
The buyer opposed the seller's motion, arguing: (1) disclosure of the lease was irrelevant; (2) the buyer performed its obligation on the closing day by delivering funds and documents to the closing agent; and (3) retaining possession was a title exception and breach of the contract. The buyer also argued summary judgment was inappropriate for the seller and precluded by issues of fact-notably, the parties' disagreement on the meaning of certain contract terms.
During the hearing, the trial court indicated the parties did not have a meeting of the minds on the agreement's essential terms, yet the trial court entered final judgment in the seller's favor. The trial court's order stated specific performance should not be ordered, inter alia, because doing so would include eliminating a valid leasehold. The trial court found the buyer never closed on the property, allowing the contract to terminate by its terms. The trial court also found the lease was not an encumbrance on title. And even assuming the lease was an encumbrance under Florida law, the trial court found the buyer failed to object when it learned about the lease "two months" before closing. The trial court expressly told the buyer it "should have" proceeded with closing and sued for damages.
The buyer filed a motion for rehearing, claiming the trial court failed to rule on the buyer's request for declaratory relief regarding the contract's terms. The trial court denied the motion. From the summary judgment and order denying its motion for rehearing, the buyer appeals.
On appeal, the buyer argues the trial court erred in: (1) denying its motion for summary judgment; (2) failing to rule on its declaratory relief claim; and (3) denying its motion for rehearing. The seller responds the trial court correctly granted summary judgment because the contract terminated by its terms when the buyer failed to close. We agree with the buyer for several reasons.
First, as the buyer argued at the summary judgment hearing, genuine issues of material fact precluded the entry of summary judgment for the seller. Second, the trial court failed to declare the terms of the contract as requested by the buyer. And third, the trial court inconsistently enforced the terms of an agreement that it found to have lacked a meeting of the minds.
We review de novo an order granting summary judgment. Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 130 (Fla. 2000). "A...
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